__________________________________________________________
SELECTIVE INSURANCE GROUP, INC.,
ISSUER
AND
NATIONAL CITY BANK,
TRUSTEE
Senior Convertible Notes due 2032
__________________________________________________________
INDENTURE
Dated as of September 24, 2002
__________________________________________________________
CROSS REFERENCE TABLE*
TIA Section.................................. Indenture Section
310(a)(1).................................... 7.10
(a)(2).................................. 7.10
(a)(3).................................. N.A.
(a)(4).................................. N.A.
(b)..................................... 7.08; 7.10
(c)..................................... N.A.
311(a)....................................... 7.11
(b)..................................... 7.11
(c)..................................... N.A.
312(a)....................................... 2.05
(b)..................................... 15.03
(c)..................................... 15.03
313(a)....................................... 7.06
(b)(1).................................. N.A.
(b)(2).................................. 7.06
(c)..................................... 15.02
(d)..................................... 7.06
314(a)....................................... 4.02; 4.03; 15.02
(b)..................................... N.A.
(c)(1).................................. 15.04
(c)(2).................................. 15.04
(c)(3).................................. N.A.
(d)..................................... N.A.
(e)..................................... 15.05
(f)..................................... N.A.
315(a)....................................... 7.01
(b)..................................... 7.05; 15.02
(c)..................................... 7.01
(d)..................................... 7.01
(e)..................................... 6.11
316(a) (last sentence)....................... 2.08
(a)(1)(A)............................... 6.05
(a)(1)(B)............................... 6.04
(a)(2).................................. N.A.
(b)..................................... 6.07
317(a)(1).................................... 6.08
(a)(2).................................. 6.09
(b)..................................... 2.04
318(a)....................................... 15.01
N.A. means Not Applicable.
ii
----------------
* Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of the Indenture.
TABLE OF CONTENTS*
Page
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions....................................................1
SECTION 1.02 Other Definitions..............................................7
SECTION 1.03 Incorporation by Reference of the TIA..........................8
SECTION 1.04 Rules of Construction..........................................8
SECTION 1.05 Acts of Holders................................................9
ARTICLE 2
THE SECURITIES
SECTION 2.01 Form and Dating...............................................10
SECTION 2.02 Execution and Authentication..................................12
SECTION 2.03 Registrar, Paying Agent, Conversion Agent and
Bid Solicitation Agent..................................12
SECTION 2.04 Paying Agent to Hold Money and Securities in Trust............13
SECTION 2.05 Securityholder Lists..........................................13
SECTION 2.06 Transfer and Exchange.........................................13
SECTION 2.07 Replacement Securities........................................15
SECTION 2.08 Outstanding Securities; Determinations of Holders' Action.....16
SECTION 2.09 Temporary Securities..........................................16
SECTION 2.10 Cancellation..................................................17
SECTION 2.11 Persons Deemed Owners.........................................17
SECTION 2.12 Global Securities.............................................17
SECTION 2.13 CUSIP Numbers.................................................22
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.01 Right to Redeem; Notices to Trustee...........................22
SECTION 3.02 Selection of Securities to Be Redeemed........................22
SECTION 3.03 Notice of Redemption..........................................23
SECTION 3.04 Effect of Notice of Redemption................................24
SECTION 3.05 Deposit of Redemption Price...................................24
SECTION 3.06 Securities Redeemed in Part...................................24
SECTION 3.07 Conversion Arrangement on Call for Redemption.................25
SECTION 3.08 Purchase of Securities at Option of the Holder................25
SECTION 3.09 Purchase of Securities at Option of the
Holder upon Change in Control...........................32
SECTION 3.10 Effect of Purchase Notice or Change in
Control Purchase Notice.................................35
------------------------
* Note: This Table of Contents shall not, for any purpose, be deemed to be
part of the Indenture.
i
SECTION 3.11 Deposit of Purchase Price or Change in
Control Purchase Price..................................36
SECTION 3.12 Securities Purchased in Part..................................36
SECTION 3.13 Repayment to the Company......................................36
ARTICLE 4
COVENANTS
SECTION 4.01 Payment of Securities.........................................37
SECTION 4.02 SEC and Other Reports.........................................37
SECTION 4.03 Compliance Certificate........................................37
SECTION 4.04 Further Instruments and Acts..................................38
SECTION 4.05 Maintenance of Office or Agency...............................38
SECTION 4.06 Delivery of Certain Information...............................38
SECTION 4.07 Covenant to Comply With Securities Laws
Upon Purchase of Securities.............................38
SECTION 4.08 Waiver of Compliance..........................................39
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge or Transfer Assets.....................39
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.............................................40
SECTION 6.02 Acceleration..................................................41
SECTION 6.03 Other Remedies................................................42
SECTION 6.04 Waiver of Past Defaults.......................................42
SECTION 6.05 Control by Majority...........................................43
SECTION 6.06 Limitation on Suits...........................................43
SECTION 6.07 Rights of Holders to Receive Payment..........................43
SECTION 6.08 Collection Suit by Trustee....................................44
SECTION 6.09 Trustee May File Proofs of Claim..............................44
SECTION 6.10 Priorities....................................................44
SECTION 6.11 Undertaking for Costs.........................................45
SECTION 6.12 Waiver of Stay, Extension or Usury Laws.......................45
ARTICLE 7
TRUSTEE
SECTION 7.01 Duties of Trustee.............................................46
SECTION 7.02 Rights of Trustee.............................................47
SECTION 7.03 Individual Rights of Trustee..................................48
SECTION 7.04 Trustee's Disclaimer..........................................48
SECTION 7.05 Notice of Defaults............................................48
SECTION 7.06 Reports by Trustee to Holders.................................49
SECTION 7.07 Compensation and Indemnity....................................49
SECTION 7.08 Replacement of Trustee........................................50
ii
SECTION 7.09 Successor Trustee by Merger...................................50
SECTION 7.10 Eligibility; Disqualification.................................51
SECTION 7.11 Preferential Collection of Claims Against Company.............51
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01 Discharge of Liability on Securities..........................51
SECTION 8.02 Repayment to the Company......................................51
ARTICLE 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders....................................51
SECTION 9.02 With Consent of Holders.......................................52
SECTION 9.03 Compliance with TIA...........................................53
SECTION 9.04 Revocation and Effect of Consents, Waivers and Actions........53
SECTION 9.05 Notation on or Exchange of Securities.........................53
SECTION 9.06 Trustee to Sign Supplemental Indentures.......................53
SECTION 9.07 Effect of Supplemental Indentures.............................54
ARTICLE 10
SPECIAL TAX EVENT CONVERSION
SECTION 10.01 Optional Conversion to Semiannual Coupon Note upon Tax Event..54
ARTICLE 11
CONVERSION
SECTION 11.01 Conversion Privilege..........................................54
SECTION 11.02 Conversion Procedure..........................................55
SECTION 11.03 Fractional Shares.............................................57
SECTION 11.04 Taxes on Conversion...........................................57
SECTION 11.05 Company to Provide Stock......................................57
SECTION 11.06 Adjustment for Change in Capital Stock........................58
SECTION 11.07 Adjustment for Rights Issue...................................58
SECTION 11.08 Adjustment for Other Distributions............................59
SECTION 11.09 When Adjustment May Be Deferred...............................62
SECTION 11.10 When No Adjustment Required...................................62
SECTION 11.11 Notice of Adjustment..........................................63
SECTION 11.12 Voluntary Increase............................................63
SECTION 11.13 Notice of Certain Transactions................................63
SECTION 11.14 Reorganization of Company; Special Distributions..............63
SECTION 11.15 Company Determination Final...................................64
SECTION 11.16 Trustee's Adjustment Disclaimer...............................64
SECTION 11.17 Simultaneous Adjustments......................................65
SECTION 11.18 Successive Adjustments........................................65
SECTION 11.19 Rights Issued in Respect of Common
Stock Issued Upon Conversion............................65
iii
ARTICLE 12
PAYMENT OF INTEREST
SECTION 12.01 Interest Payments.............................................65
SECTION 12.02 Defaulted Interest............................................66
SECTION 12.03 Interest Rights Preserved.....................................67
ARTICLE 13
CONTINGENT CASH INTEREST
SECTION 13.01 Contingent Cash Interest......................................67
SECTION 13.02 Payment of Contingent Cash Interest;
Contingent Cash Interest Rights Preserved...............68
SECTION 13.03 Bid Solicitation Agent........................................68
ARTICLE 14
TAX MATTERS
SECTION 14.01 Tax Treatment.................................................68
SECTION 14.02 Comparable Yield and Projected Payment Schedule...............69
ARTICLE 15
MISCELLANEOUS
SECTION 15.01 TIA Controls..................................................70
SECTION 15.02 Notices.......................................................70
SECTION 15.03 Communication by Holders with Other Holders...................71
SECTION 15.04 Certificate and Opinion as to Conditions Precedent............71
SECTION 15.05 Statements Required in Certificate or Opinion.................71
SECTION 15.06 Separability Clause...........................................71
SECTION 15.07 Rules by Trustee, Paying Agent, Conversion Agent
and Registrar...........................................72
SECTION 15.08 Calculations..................................................72
SECTION 15.09 Legal Holidays................................................72
SECTION 15.10 GOVERNING LAW.................................................72
SECTION 15.11 No Recourse Against Others....................................72
SECTION 15.12 Successors....................................................72
SECTION 15.13 Multiple Originals............................................72
Appendix 1 Projected Payment Schedule
Exhibit A-1 Form of Face of Global Security
Exhibit A-2 Form of Certificated Security
Exhibit B-1 Transfer Certificate
Exhibit B-2 Form of Letter to be Delivered by Accredited Investors
iv
INDENTURE dated as of September 24, 2002 by and among SELECTIVE INSURANCE
GROUP, INC., a New Jersey corporation (the "Company") and National City Bank, a
national banking association (the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of Senior
Convertible Notes due 2032 (collectively, the "Securities" and each,
individually, a "Security") having the terms, tenor, amount and other provisions
hereinafter set forth, and, to provide therefor, the Company has duly authorized
the execution and delivery of this Indenture.
All things necessary to make the Securities, when the Securities are duly
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company, in accordance with their
and its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"144A Global Security" means a permanent Global Security in the form of the
Security attached hereto as Exhibit A-1, 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.
"Average Sale Price" means the average of the Sale Prices of the Common
Stock for the shorter of:
(a) 30 consecutive Trading Days ending on the last full Trading Day prior
to the Time of Determination with respect to the rights, warrants or
options or distribution in respect of which the Average Sale Price is being
calculated, or
(b) the period (x) commencing on the date next succeeding the first public
announcement of (i) the issuance of rights, warrants or options or (ii) the
distribution, in each case, in respect of which the Average Sale Price is
being calculated and (y) proceeding through the last full Trading Day prior
to the Time of Determination with respect to the rights, warrants or
options or distribution in respect of which the Average Sale Price is being
calculated (excluding days within such period, if any, which are not
Trading Days), or
(c) the period, if any, (x) commencing on the date next succeeding the
Ex-Dividend Time with respect to the next preceding (i) issuance of rights,
warrants or options or (ii) distribution, in each case, for which an
adjustment is required by the provisions of Section 11.06(c), 11.07 or
11.08 hereof and (y) proceeding through the last full Trading Day prior to
the Time of Determination with respect to the rights, warrants or options
or distribution in respect of which the Average Sale Price is being
calculated (excluding days within such period, if any, which are not
Trading Days).
In the event that the Ex-Dividend Time (or in the case of a subdivision,
combination or reclassification, the effective date with respect thereto) with
respect to a dividend, subdivision, combination or reclassification to which
Section 11.06(a), (b), (d) or (e) hereof applies occurs during the period
applicable for calculating "Average Sale Price" pursuant to the definition in
the preceding sentence, "Average Sale Price" shall be calculated for such period
in a manner determined by the Board of Directors to reflect the impact of such
dividend, subdivision, combination or reclassification on the Sale Price of the
Common Stock during such period.
"Bankruptcy Law" means title 00, Xxxxxx Xxxxxx Code, or any similar Federal
or state law for the relief of debtors.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of such board.
"Business Day" means each day of the year other than a Saturday or a Sunday
or other day on which banking institutions in The City of New York are required
or authorized to close.
"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 or other equity issued by that
corporation.
"Certificated Securities" means any of the Securities that are in the form
of the Securities attached hereto as Exhibit A-2.
2
"Common Stock" shall mean the shares of Common Stock, $2.00 par value per
share, of the Company as it exists on the date of this Indenture or any other
shares of Capital Stock of the Company into which the Common Stock shall be
reclassified or changed.
"Company" means the party named as the "Company" 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.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by any two Officers.
"Contingent Cash Interest" shall mean such cash interest payable, as
described in Article 13 hereof.
"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 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000 Xxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000, or such other address as the Trustee may designate
from time to time by notice to 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 Company).
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
"Debt" means with respect to the Company at any date, without duplication,
obligations (other than nonrecourse obligations) for borrowed money or evidenced
by bonds, debentures, notes or similar instruments.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Ex-Dividend Time" means with respect to stockholders of the Company
entitled to receive rights, warrants or options or a distribution, the time
immediately prior to the commencement of "ex-dividend" trading for such rights,
warrants or options or distribution on Nasdaq or such other national or regional
exchange or market on which the Common Stock is then listed or quoted.
"Global Securities" means any of the Securities that are in the form of the
Securities attached hereto as Exhibit A-1, and to the extent that such
Securities are required to bear the Legend required by Section 2.06 hereof, 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.
3
"Indenture" means this instrument, as amended or supplemented from time to
time in accordance with the terms hereof, including, if applicable, the
provisions of the TIA that are deemed to be a part hereof.
"Institutional Accredited Investor Security" means a Security in the form
of the Security attached hereto as Exhibit A-2, representing Securities sold to
Institutional Accredited Investors.
"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.
"Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is sold
as set forth on the face of the Security.
"Nasdaq" means the Nasdaq Stock Market's National Market.
"NYSE" means the New York Stock Exchange.
"Officer" means the Chairman of the Board, the Vice Chairman, the Chief
Executive Officer, the President, any Executive Vice President, any Senior Vice
President, any Vice President, the Treasurer or the Secretary or any Assistant
Treasurer or Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 15.04 and 15.05 hereof, signed in the name of
the Company by any two Officers, and delivered to the Trustee. An Officers'
Certificate given pursuant to Section 4.03 hereof shall be signed by the
principal executive financial or accounting Officer of the Company but need not
contain the information specified in Sections 15.04 and 15.05 hereof.
"Opinion of Counsel" means a written opinion containing the information
specified in Sections 15.04 and 15.05, from legal counsel who is acceptable to
the Trustee. The counsel may be an employee of, or counsel to, the Company or
the Trustee.
"Original Issue Discount" of any Security means the difference between the
Issue Price and the Principal Amount at Maturity of the Security as set forth on
the face of the Security, which shall accrue as set forth in the form of
Security.
"person" or "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.
"Principal Amount at Maturity" of a Security means the principal amount at
maturity as set forth on the face of the Security.
"Record Date" means either a Regular Record Date or a Contingent Cash
Interest Record Date.
4
"Redemption Date" or "redemption date" means the date specified for
redemption of the Securities in accordance with the terms of the Securities and
this Indenture.
"Redemption Price" or "redemption price" shall have the meaning set forth
in paragraph 6 of the Securities.
"Regular Cash Dividends" means quarterly or other periodic cash dividends
on the Common Stock as declared by the Board of Directors as part of its cash
dividend payment practices that are not designated by the Board of Directors as
extraordinary or special or other non-recurring dividends.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, with direct
responsibility for the administration of this Indenture and also means, any
other officer to whom any corporate trust matter is referred because of such
person's knowledge of and familiarity with the particular subject.
"Restricted Security" means a Security required to bear the restrictive
legend set forth in the form of Security set forth in Exhibits A-1 and A-2 of
this Indenture.
"Rule 144" means Rule 144 under the Securities Act (or any successor rule
having substantially similar provisions), as it may be amended from time to
time.
"Rule 144A" means Rule 144A under the Securities Act (or any successor rule
having substantially similar provisions), as it may be amended from time to
time.
"Sale Price" of Capital Stock on any date means (a) 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 in the composite
transactions for the principal United States securities exchange on which the
Capital Stock is traded or, if the Capital Stock is not listed on a United
States national or regional securities exchange, as reported by the National
Association of Securities Dealers Automated Quotation System or by the National
Quotation Bureau Incorporated or (b) in the absence of such quotation, such
price as the Company shall reasonably determine on the basis of such quotations
as most accurately reflecting the price that a fully-informed buyer, acting on
his own accord, would pay to a fully-informed seller, acting on his own accord
in an arms-length transaction, for a share of such Capital Stock.
"SEC" means the United States Securities and Exchange Commission.
"Security" or "Securities" means any of the Company's Senior Convertible
Notes due 2032, 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.
5
"Stated Maturity", when used with respect to any Security, means the date
specified in such Security as the fixed date on which an amount equal to the
Principal Amount at Maturity of such Security is due and payable.
"Subsidiary" means (a) a corporation, a majority of whose Capital Stock
with voting power, under ordinary circumstances, to elect directors is, at the
date of determination, directly or indirectly owned by the Company, by one or
more Subsidiaries of the Company or by the Company and one or more Subsidiaries
of the Company, (b) a partnership in which the Company or a Subsidiary of the
Company holds a majority interest in the equity capital or profits of such
partnership, or (c) any other person (other than a corporation or a partnership)
in which the Company, a Subsidiary of the Company or the Company and one or more
Subsidiaries of the Company, directly or indirectly, at the date of
determination, has (x) at least a majority ownership interest or (y) the power
to elect or direct the election of a majority of the directors or other
governing body of such person.
"Tax Event" means that the Company shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after September 18, 2002, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application (including through litigation or a settlement
involving the Company) of such laws or regulations by any legislative body,
court, governmental agency or regulatory authority, in each case which amendment
or change is enacted, promulgated, issued or announced or which interpretation
is issued or announced or which action is taken, on or after September 18, 2002,
there is more than an insubstantial risk that accrued Original Issue Discount
payable on the Securities either (i) would not be deductible on a current
accrual basis or (ii) would not be deductible under any other method, in either
case in whole or in part, by the Company (by reason of deferral, disallowance,
or otherwise) for United States federal income tax purposes.
"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.
"Time of Determination" means the time and date of the earlier of (a) the
determination of stockholders entitled to receive rights, warrants or options or
a distribution, in each case, to which Section 11.07 or 11.08 hereof applies and
(b) the Ex-Dividend Time.
"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 is then 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.
6
"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.
SECTION 1.02 Other Definitions.
Term Defined in
Section
"Act"..................................................... 1.05(a)
"Agent Members"........................................... 2.12(e)
"beneficial owner"........................................ 3.09(a)
"Bid Solicitation Agent".................................. 2.03
"cash".................................................... 3.08(b)
"Change in Control"....................................... 3.09(a)
"Change in Control Purchase Date"......................... 3.09(a)
"Change in Control Purchase Notice"....................... 3.09(c)
"Change in Control Purchase Price"........................ 3.09(a)
"Common Stock Record Date"................................ 13.01
"Company Notice".......................................... 3.08(e)
"Company Notice Date"..................................... 3.08(c)
"Contingent Cash Interest Payment Date"................... 13.02
"Contingent Cash Interest Record Date".................... 13.02
"Continuing Directors".................................... 3.09(a)
"Conversion Agent"........................................ 2.03
"Conversion Date"......................................... 11.02
"Conversion Rate"......................................... 11.01
"Defaulted Interest"...................................... 12.02
"Depositary".............................................. 2.01(a)
"DTC"..................................................... 2.01(a)
"Event of Default"........................................ 6.01
"Ex-Dividend Measurement Period".......................... 11.08
"Exchange Act"............................................ 3.08(d)
"Extraordinary Cash Dividend"............................. 11.08
"Five-Trading-Day Measurement Period"..................... 13.01
"Institutional Accredited Investors"...................... 2.01(b)
"Interest Payment Date"................................... 10.01
"Legal Holiday"........................................... 15.09
"Legend".................................................. 2.06(f)
"Market Price"............................................ 3.08(d)
"Notice of Default"....................................... 6.01
"Option Exercise Date".................................... 10.01
"Paying Agent"............................................ 2.03
"Protected Purchaser"..................................... 2.07
"Purchase Date"........................................... 3.08(a)
"Purchase Notice"......................................... 3.08(a)
7
"Purchase Price".......................................... 3.08(a)
"QIBs".................................................... 2.01(a)
"Registrar"............................................... 2.03
"Regular Record Date"..................................... 10.01
"Relevant Cash Dividends"................................. 11.08
"Relevant Value".......................................... 13.01
"Restated Principal Amount"............................... 10.01
"Rights".................................................. 11.19
"Rights Agreement"........................................ 11.19
"Rule 144A Information"................................... 4.06
"Securities Act".......................................... 3.08(d)
"Security Market Price"................................... 13.01
"Semiannual Period"....................................... 13.01
"Special Record Date"..................................... 12.02
"Tax Event Date".......................................... 10.01
"Tax Original Issue Discount"............................. 14.02
SECTION 1.03 Incorporation by Reference of the TIA. Whenever this Indenture
refers to a provision of the TIA, such 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.
"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 1.04 Rules of Construction. Unless the context otherwise requires:
(a) a defined term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with United States generally accepted accounting
principles as in effect from time to time;
8
(c) "or" is not exclusive;
(d) "including" means including, without limitation; and
(e) words in the singular include the plural, and words in the plural
include the singular.
SECTION 1.05 Acts of Holders.
(a) Any request, demand, 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 (which may take the form
of an electronic writing or messaging or otherwise be in accordance with
customary procedures of the Depositary or the Trustee) of substantially similar
tenor signed by such Holders in person or by agent duly appointed in writing
(which may be in electronic form); and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, when it is hereby expressly required, to the
Company. 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 (either of which may be in
electronic form) 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
electronic delivery) or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing or delivering such instrument or writing acknowledged to such
officer the execution (or electronic delivery) thereof. When 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 (electronic or otherwise), or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the register maintained
by the Registrar.
(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 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 resolution of the Board of Directors, fix in
advance a record date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice,
9
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 within six months after the record date.
ARTICLE 2
THE SECURITIES
SECTION 2.01 Form and Dating. The Securities and the Trustee's certificate
of authentication shall be substantially in the form of Exhibits A-1 and A-2
attached hereto, 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 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 and registered in the name of The
Depository Trust Company ("DTC") or the nominee thereof (such depositary, 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 at Maturity 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) Institutional Accredited Investor Securities. Except as provided in
Section 2.12(a)(i) and in this Section 2.01 or 2.06, owners of beneficial
interests in Global Securities will not be entitled to receive physical delivery
of Certificated Securities. Securities offered and sold within the United States
to institutional "accredited investors" as defined in Rule 501(a)(1), (2), (3)
and (7) under the Securities Act ("Institutional Accredited Investors") shall be
issued, if in the form of Certificated Securities, initially in the form of an
Institutional Accredited Investor Security, duly executed by the Company and
authenticated by the Trustee as hereinafter provided.
(c) Global Securities in General. Each Global Security shall represent such
of the outstanding Securities as shall be specified therein and each shall
provide that it shall represent the aggregate Principal Amount at Maturity of
outstanding Securities
10
from time to time endorsed thereon and that the aggregate Principal Amount at
Maturity of outstanding Securities represented thereby may from time to time be
reduced or increased, as appropriate, to reflect exchanges, redemptions and
conversions.
Any adjustment of the aggregate Principal Amount at Maturity of a Global
Security to reflect the amount of any increase or decrease in the Principal
Amount at Maturity 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.
(d) Book-Entry Provisions. This Section 2.01(d) shall apply 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 2.01(d), authenticate and deliver initially one or more Global
Securities that (i) shall be registered in the name of the Depositary, (ii)
shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for such
Depositary and (iii) shall bear legends substantially to the following effect:
"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, IN WHOLE
BUT NOT IN PART, 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."
(e) Certificated Securities. Securities not issued as interests in the
Global Securities will be issued in certificated form substantially in the form
of Exhibit A-2 attached hereto.
(f) U.S. Tax Legend. All Securities shall bear the following legend:
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF
SECTIONS 1272, 1273 AND 0000 XX XXX XXXXXX XXXXXX INTERNAL REVENUE CODE OF
1986, AS AMENDED. THE ISSUE PRICE OF
11
THIS NOTE WAS $380.12 PER $1,000 OF PRINCIPAL AMOUNT AT MATURITY; THE
AMOUNT OF ORIGINAL ISSUE DISCOUNT, INCLUDING CASH INTEREST PAYABLE THROUGH
SEPTEMBER 24, 2009 TAXABLE AS ORIGINAL ISSUE DISCOUNT UNDER TREASURY
REGULATION SECTION 1.1273-1, IS PROJECTED TO BE $1,595.93 PER $1,000 OF
PRINCIPAL AMOUNT AT MATURITY; HOWEVER, THE ACTUAL AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS INDETERMINABLE AS OF THE ISSUE DATE; THE ISSUE DATE IS
SEPTEMBER 24, 2002; AND THE YIELD TO MATURITY FOR THE PURPOSES OF ACCRUING
TAX ORIGINAL ISSUE DISCOUNT IS 6.60% PER ANNUM, CALCULATED ON A SEMIANNUAL
BOND EQUIVALENT BASIS.
SECTION 2.02 Execution and Authentication. The Securities shall 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 an individual who
was at the time of the execution of the Securities the proper Officer of the
Company shall bind the Company, notwithstanding that such individual has ceased
to hold such office prior to the authentication and delivery of such Securities
or did not hold such office 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 officer of the
Trustee 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 Securities for original issue in
an aggregate Principal Amount at Maturity of up to $305,000,000 upon a Company
Order without any further action by the Company. The aggregate Principal Amount
at Maturity of Securities outstanding at any time may not exceed the amount set
forth in the foregoing sentence, except as provided in Section 2.07 hereof
The Securities shall be issued only in registered form without coupons and
only in denominations of $1,000 of Principal Amount at Maturity and any integral
multiple thereof.
SECTION 2.03 Registrar, Paying Agent, Conversion Agent and Bid Solicitation
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 Company shall also appoint a bid solicitation agent
(the "Bid Solicitation Agent") to act pursuant to Article 13. 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
12
agents and one or more additional conversion agents. The term Paying Agent
includes any additional paying agent, including any named pursuant to Section
4.05 hereof. The term Conversion Agent includes any additional conversion agent,
including any named pursuant to Section 4.05 hereof.
The Company shall enter into an appropriate agency agreement with any
Registrar or co-registrar, Paying Agent, Conversion Agent or Bid Solicitation
Agent (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, Conversion Agent or Bid Solicitation Agent, the Trustee
shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 7.07 hereof. The Company or any Subsidiary or an Affiliate
of either of them may act as Paying Agent, Registrar, Conversion Agent or
co-registrar. None of the Company or any Subsidiary or any Affiliate of the
Company or any Subsidiary may act as Bid Solicitation Agent.
The Company initially appoints the Trustee as Registrar, Conversion Agent,
Paying Agent and Bid Solicitation Agent in connection with the Securities.
SECTION 2.04 Paying Agent to Hold Money and Securities in Trust. Except as
otherwise provided herein, not later than 10:00 a.m., New York City time, on
each due date of 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 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 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 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 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 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 Common Stock.
SECTION 2.05 Securityholder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of the
names and addresses of Securityholders. If the Trustee is not the Registrar, the
Company shall cause to be furnished to the Trustee at least semiannually on
March 9 and September 9 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 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 2.06 Transfer and Exchange. Subject to Section 2.12 hereof,
(a) 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
13
designated as Registrar or co-registrar pursuant to Section 2.03 hereof, the
Company shall execute, and the Trustee upon receipt of a Company Order 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 at Maturity. The Company
shall not charge a service charge for any registration of transfer or exchange,
but the Company or the Trustee may require payment of a sum sufficient to pay
all taxes, assessments or other governmental charges that may be imposed in
connection with the registration of transfer or exchange of the Securities from
the Securityholder requesting such registration of transfer or exchange.
At the option of the Holder, Certificated Securities may be exchanged for
other Securities of any authorized denomination or denominations, of a like
aggregate Principal Amount at Maturity, 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 upon
receipt of a Company Order 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 in
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 hereof and this Section 2.06(b). Transfers
of a Global Security shall be limited to transfers of such Global Security in
whole, or in part, 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 2.03 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 registration
of transfer or exchange of Securities.
(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.
14
(f) If Securities are issued upon the registration of transfer, exchange or
replacement of Securities subject to restrictions on transfer and bearing the
legends set forth on the form of Security attached hereto as Exhibits A-1 and
A-2 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, 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 or that such
Securities are not "restricted" within the meaning of Rule 144. 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,
upon receipt of a Company Order, 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 an Affiliate of the Company, the
Company shall use reasonable efforts to reinstate the Legend.
The Trustee and the Registrar shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Security (including any transfers between or among Depositary
participants or beneficial owners of interests in any Global Security) other
than to require delivery of such certificates and other documentation or
evidence as are expressly required by, and to do so if and when expressly
required by the terms of, this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements hereof.
SECTION 2.07 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
protected purchaser within the meaning of Article 8 of the Uniform Commercial
Code (a "Protected Purchaser"), the Company shall execute and upon receipt of a
Company Order, 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 at Maturity, bearing
a 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, 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.
15
Every new Security issued pursuant to this Section 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.
The provisions of this Section 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 2.08 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 2.10
hereof and delivered to it for cancellation and those described in this Section
2.08 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 at Maturity of
Securities have given or concurred in any request, demand, authorization,
direction, notice, consent or waiver 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 or waiver, 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 2.07 hereof, the replaced
Security ceases to be outstanding unless the Trustee and the Company receive
proof satisfactory to each of them that the replaced Security is held by a
Protected Purchaser unaware that such Security has been replaced, in which case
the replacement security shall be deemed not to be outstanding.
If the Paying Agent holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following the Purchase Date or a Change
in 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 in Control
Purchase Date or Stated Maturity, as the case may be, such Securities shall
cease to be outstanding and Original Issue Discount and interest (including
Contingent Cash Interest), if any, or cash interest 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.
If a Security is converted in accordance with Article 11, then from and
after the time of conversion on the Conversion Date, such Security shall cease
to be outstanding and Original Issue Discount and interest (including Contingent
Cash Interest), if any, or cash interest shall cease to accrue on such Security.
SECTION 2.09 Temporary Securities. Pending the preparation of definitive
Securities, the Company may execute, and upon a Company Order, the Trustee shall
16
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.
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 2.03,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities the Company shall execute and upon Company Order the
Trustee shall authenticate and deliver in exchange therefor a like Principal
Amount at Maturity 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 hereof, 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 11 hereof. 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 procedures.
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 in Control Purchase Price in respect thereof and interest (including
Contingent Cash Interest), if any, or cash 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. Notwithstanding any other provisions of
this Indenture or the Securities, (i) transfers of a Global Security, in whole
or in part, shall be made only in accordance with Sections 2.06 and 2.12(a)(i)
hereof, (ii) transfer of a beneficial interest in a Global Security for a
Certificated Security shall comply with Sections 2.06 and 2.12(a)(i) hereof, and
(iii) transfers of a Certificated Security shall comply with Sections 2.06 and
2.12(a)(ii) hereof and transfer of a Certificated Security for a Beneficial
Interest in a Global Security shall comply with Sections 2.06 and 2.12(a)(iii)
hereof.
17
(a) 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 Section 2.12(a) 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) shall
prohibit or render ineffective any transfer of a beneficial interest in a Global
Security effected in accordance with the other provisions of this Section
2.12(a).
(i) 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. Upon receipt by the
Trustee of a request for 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 B-1 attached hereto,
and, if requested by the Company or the Registrar, certification in
the form set forth in Exhibit B-2 attached hereto, that such
beneficial interest in the Global Security is being transferred to an
Institutional Accredited Investor that satisfies the definitions set
forth in subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act;
(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 at Maturity 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 or Registrar so requests, an Opinion of
Counsel or other evidence reasonably satisfactory to them 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 at
Maturity of Securities represented by the Global Security to be decreased
by the aggregate Principal Amount at Maturity of the Certificated Security
to be issued, shall authenticate and deliver 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 at Maturity of the Certificated Security so issued.
(ii) Transfer and Exchange of Certificated Securities. When Certificated
Securities are presented to the Registrar with a request:
18
(x) to register the transfer of such Certificated Securities; or
(y) to exchange such Certificated Securities for an equal Principal
Amount at Maturity 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 registration of
transfer or exchange:
(A) 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
(B) 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, if
being transferred pursuant to clause (1), (2) or (3) of this
Section 2.12(a)(ii)(B), are accompanied by the additional
information and documents specified in each such clause, as
applicable:
(1) 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
(2) if such Certificated Securities are being transferred to the
Company, a certification to that effect; or
(3) if such Certificated Securities are being transferred
pursuant to an exemption from registration (1) a
certification to that effect (in the form set forth in
Exhibit B-1 and B-2 attached hereto, if applicable) and (2)
if the Company or Registrar so requests, an opinion of
counsel or other evidence reasonably satisfactory to them as
to the compliance with the restrictions set forth in the
Legend.
(iii) 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:
(A) so long as the Securities are Restricted Securities,
certification, in the form set forth in Exhibit B-1 attached hereto,
that such Certificated Security is being transferred to a QIB in
accordance with Rule 144A; and
19
(B) 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 at Maturity of the Securities represented
by the Global Security, such instructions to contain information
regarding the Depositary account to be credited with such increase;
and
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 at Maturity of Securities represented by the Global Security to
be increased by the aggregate Principal Amount at Maturity of the Certificated
Security to be exchanged, and 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 at Maturity of the
Certificated Security so cancelled. If no Global Securities are then
outstanding, the Company shall issue and the Trustee, upon receipt of a Company
Order, shall authenticate a new Global Security in the appropriate Principal
Amount at Maturity.
(b) Subject to the succeeding paragraph, every Security shall be subject to
the restrictions on transfer provided in the Legend including the requirement of
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 B-1 attached hereto, 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 or, if earlier, upon the expiration of the holding
period applicable to sales thereof under paragraph (k) of Rule 144. 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, 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, the Trustee and
the Registrar and in form acceptable to the Company, to the effect that the
transfer of such Security has been made in compliance with Rule 144), be
exchanged for a new Security, of like tenor and aggregate Principal Amount at
Maturity, 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 and the Registrar 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.
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(d) As used in the preceding two paragraphs of this Section 2.12, the term
"transfer" encompasses any sale, pledge, transfer, hypothecation or other
disposition of any Security.
(e) The provisions of clauses (i), (ii), (iii), (iv) and (v) of this
Section 2.12(e) shall apply only to Global Securities:
(i) Notwithstanding any other provisions of this Indenture or the
Securities, except as provided in Section 2.12(a)(i) hereof, a Global
Security shall not be exchanged in whole or in part for a Security
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 (A) 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 Exchange Act, and a successor Depositary is not appointed by the
Company within 90 days; (B) the Company elects to discontinue use of the
system of book-entry transfer through DTC (or any successor depositary); or
(C) an Event of Default has occurred and is continuing with respect to the
Securities. Any Global Security exchanged pursuant to clause (A) of this
sub-section shall be so exchanged in whole and not in part, and any Global
Security exchanged pursuant to clause (B) of this sub-section 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.
(ii) 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 at
Maturity 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 Registrar. With
regard to any Global Security to be exchanged in part, to give effect to
any conversion, redemption or other disposition of such part or otherwise,
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 at Maturity 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.
(iii) Subject to the provisions of clause (v) of this Section 2.12(e),
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.
21
(iv) In the event of the occurrence of any of the events specified in
clause (i) above, the Company will promptly make available to the Trustee a
reasonable supply of Certificated Securities in definitive, fully
registered form, without interest coupons.
(v) 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 in issuing the Securities may use
"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.
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.01 Right to Redeem; Notices to Trustee. The Company, at its
option, may redeem the Securities in accordance with the provisions of
paragraphs 6 and 8 of the Securities. Prior to September 24, 2007, the Company
may not redeem the Securities. Beginning on September 24, 2007, the Company may
redeem the Securities for cash in whole at any time, or in part from time to
time. If the Company elects to redeem Securities pursuant to paragraph 6 of the
Securities, it shall notify the Trustee in writing of the Redemption Date, the
Principal Amount at Maturity of Securities to be redeemed, the Redemption Price
and the amount of accrued and unpaid cash interest, if any, payable on the
Redemption Date.
The Company shall give the notice to the Trustee provided for in this
Section 3.01 by a Company Order, at least 45 days before the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee). If fewer than
all the Securities are to be redeemed, the record date relating to such
redemption shall be selected by the Company and given to the Trustee, which
record date shall not be less than ten days after the date of notice to the
Trustee.
SECTION 3.02 Selection of Securities to Be Redeemed. If less than all the
outstanding Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed
22
pro rata or by lot or by any other 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 at least 30 days but not more than 60 days before the Redemption Date
from outstanding Securities not previously called for redemption. The Trustee
may select for redemption portions of the Principal Amount at Maturity of
Securities that have denominations larger than $1,000.
Securities and portions of them the Trustee selects shall be in Principal
Amounts at Maturity 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 promptly notify
the Company in writing of the Securities or portions of Securities to be
redeemed.
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 3.03 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:
(a) the Redemption Date;
(b) the Redemption Price, or if then not ascertainable, the manner of
calculation thereof, and accrued and unpaid cash interest, if any, or the
amount of Contingent Cash Interest, if any, payable on the Redemption Date;
(c) the Conversion Rate;
(d) the name and address of the Paying Agent and Conversion Agent;
(e) that Securities called for redemption may be converted at any time
before the close of business on the second Business Day immediately
preceding the Redemption Date, even if not otherwise convertible at such
time;
(f) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 9 of the Securities;
(g) if applicable, the election of the Company (which, subject to the
provisions of Article 11 of the Indenture, shall be irrevocable) to deliver
shares of Common Stock or to pay cash in lieu of delivery of such shares
with respect to any Security that may be converted after mailing of such
notice prior to the Redemption Date;
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(h) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price and accrued and unpaid cash
interest, if any, or the Redemption Price and Contingent Cash Interest, if
any;
(i) if fewer than all the outstanding Securities are to be redeemed,
the certificate number and Principal Amounts at Maturity of the particular
Securities to be redeemed;
(j) that, unless the Company defaults in making payment of such
Redemption Price and any cash interest which is due and payable, Original
Issue Discount or cash interest, including Contingent Cash Interest and
semiannual interest, will cease to accrue on and after the Redemption Date;
(k) the CUSIP number of the Securities; and
(l) any other information the Company desires, in its own discretion,
to present.
At the Company's request, the Trustee shall give the notice of redemption
to Holders in the Company's name and at the Company's expense; provided, that
the Company makes such request at least five Business Days (unless a shorter
period shall be satisfactory to the Trustee) prior to the date such notice of
redemption must be mailed.
SECTION 3.04 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 (together with accrued and unpaid cash
interest, if any, or together with any Contingent Cash Interest, if any, to but
not including the date of redemption) 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 (together with accrued and unpaid cash interest, if any, or together with
any Contingent Cash Interest, if any, to but not including the date of
redemption) stated in the notice.
SECTION 3.05 Deposit of Redemption Price. Prior to 10:00 a.m. New York City
time, on any 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, and any accrued and unpaid interest (either cash interest
or Contingent Cash Interest, if any) to but not including the date of redemption
with respect to, 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 11 hereof. If such money is then held by the
Company in trust and is not required for such purpose it shall be discharged
from such trust.
SECTION 3.06 Securities Redeemed in Part. Upon surrender of a Security that
is redeemed in part, the Company shall execute and the Trustee shall
authenticate and
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deliver to the Holder a new Security in an authorized denomination equal in
Principal Amount at Maturity to the unredeemed portion of the Security
surrendered.
SECTION 3.07 Conversion Arrangement on Call for Redemption. In connection
with any redemption of Securities, the Company may arrange for the purchase and
conversion of any Securities called for redemption by an agreement with one or
more investment banks or other purchasers to purchase such Securities by paying
to the Trustee in trust for the Securityholders, on or prior to 10:00 a.m. New
York City time on the Redemption Date, an amount that, together with any amounts
deposited with the Trustee by the Company for the redemption of such Securities,
is not less than the Redemption Price of, and any accrued and unpaid interest
(either cash interest or Contingent Cash Interest) with respect to, such
Securities. Notwithstanding anything to the contrary contained in this Article
3, the obligation of the Company to pay the Redemption Prices of such Securities
shall be deemed to be satisfied and discharged to the extent such amount is so
paid by such purchasers. If such an agreement is entered into, any Securities
not duly surrendered for conversion by the Holders thereof may, at the option of
the Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such Holders and (notwithstanding anything to the contrary
contained in Article 11) surrendered by such purchasers for conversion, all as
of immediately prior to the close of business on the second Business Day prior
to the Redemption Date, subject to payment of the above amount as aforesaid. The
Trustee shall hold and pay to the Holders whose Securities are selected for
redemption any such amount paid to it for purchase and conversion in the same
manner as it would moneys deposited with it by the Company for the redemption of
Securities. Without the Trustee's prior written consent, no arrangement between
the Company and such purchasers for the purchase and conversion of any
Securities shall increase or otherwise affect any of the powers, duties,
responsibilities or obligations of the Trustee as set forth in this Indenture,
and the Company agrees to indemnify the Trustee from, and hold it harmless
against, any loss, liability or expense arising out of or in connection with any
such arrangement for the purchase and conversion of any Securities between the
Company and such purchasers, including the costs and expenses incurred by the
Trustee in the defense of any claim or liability arising out of or in connection
with the exercise or performance of any of its powers, duties, responsibilities
or obligations under this Indenture.
SECTION 3.08 Purchase of Securities at Option of the Holder.
(a) General. Securities shall be purchased by the Company pursuant to
paragraph 7 of the Securities as of September 24, 2009, 2012, 2017, 2022 and
2027 (each, a "Purchase Date"), at the purchase price of $380.12 per $1,000 of
Principal Amount at Maturity as of September 24, 2009, of $431.23 per $1,000 of
Principal Amount at Maturity as of September 24, 2012, of $532.15 per $1,000 of
Principal Amount at Maturity as of September 24, 2017, of $656.68 per $1,000
Principal Amount at Maturity as of September 24, 2022, and of $810.36 per $1,000
Principal Amount at Maturity as of September 24, 2027, in each case plus accrued
and unpaid cash interest, if any, to the Purchase Date (each, a "Purchase
Price", as applicable), at the option of the Holder thereof, upon:
(i) delivery to the Paying Agent, by the Holder, of a written notice
of purchase (a "Purchase Notice") at any time from the opening of business
on the date that
25
is 20 Business Days prior to a Purchase Date until the close of business on
such Purchase Date stating:
(A) the certificate number of the Security which the Holder will
deliver to be purchased,
(B) the portion of the Principal Amount at Maturity of the
Security which the Holder will deliver to be purchased, which portion
must be a Principal Amount at Maturity of $1,000 or an integral
multiple thereof,
(C) that such Security shall be purchased as of the Purchase Date
pursuant to the terms and conditions specified in paragraph 7 of the
Securities and in this Indenture, and
(D) in the event the Company elects, pursuant to Section 3.08(b)
hereof, to pay the Purchase Price to be paid as of such Purchase Date,
in whole or in part, in shares of Common Stock but such portion of the
Purchase Price shall ultimately be payable to such Holder entirely in
cash because any of the conditions to payment of the Purchase Price in
Common Stock is not satisfied prior to the close of business on such
Purchase Date, as set forth in Section 3.08(d) hereof, whether such
Holder elects (1) to withdraw such Purchase Notice as to some or all
of the Securities to which such Purchase Notice relates (stating the
Principal Amount at Maturity and certificate numbers of the Securities
as to which such withdrawal shall relate), or (2) to receive cash in
respect of the entire Purchase Price for all Securities (or portions
thereof) to which such Purchase Notice relates; and
(ii) delivery of such Security to the Paying Agent prior to, on or
after the Purchase Date (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 3.08 only if the
Security so delivered to the Paying Agent shall conform in all respects to
the description thereof in the related Purchase Notice, as determined by
the Company.
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 3.10
hereof, fails to indicate such Holder's choice with respect to the election set
forth in clause (D) of Section 3.08(a)(i) hereof, such Holder shall be deemed to
have elected to receive cash in respect of the 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 3.08, a portion of a Security if the Principal Amount at Maturity 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.
26
Any purchase by the Company contemplated pursuant to the provisions of this
Section 3.08 shall be consummated by the delivery of the consideration to be
received by the Holder (together with accrued and unpaid cash interest, if any,
or together with any Contingent Cash Interest, if any,) as promptly as
practicable following the later of the Purchase Date and the time of delivery of
the Security, but in no event more than three Business Days following the later
of the Purchase Date or 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 3.08(a) shall
have the right to withdraw such Purchase Notice at any time prior to the close
of business on the Business Day prior to the Purchase Date by delivery of a
written notice of withdrawal to the Paying Agent in accordance with Section 3.10
hereof.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price. The
Securities to be purchased pursuant to Section 3.08(a) hereof may be paid for,
at the election of the Company, in U.S. legal tender ("cash") or Common Stock,
or in any combination of cash and Common Stock, subject to the conditions set
forth in Sections 3.08(c) and (d) hereof. The Company shall designate, in the
Company Notice delivered pursuant to Section 3.08(e) hereof, whether the Company
will purchase the Securities for cash or Common Stock, or, if a combination
thereof, the percentages or amounts of the Purchase Price of Securities in
respect of which it will pay in cash or Common Stock; provided, that the Company
will pay cash for fractional interests in Common 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 this Section 3.08 shall receive the
same percentage of cash or Common Stock in payment of the Purchase Price for
such Securities, except (i) as provided in Section 3.08(d) hereof with regard to
the payment of cash in lieu of fractional shares of Common Stock and (ii) in the
event that the Company is unable to purchase the Securities of a Holder or
Holders for Common Stock because any necessary qualifications or registrations
of the Common 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 Securityholders except pursuant to this Section
3.08(b) or pursuant to Section 3.08(d) hereof in the event of a failure to
satisfy, prior to the close of business on the Purchase Date, any condition to
the payment of the Purchase Price, in whole or in part, in Common Stock.
At least three Business Days before the 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 3.08(e) hereof,
27
(iii) if the Company elects to pay the Purchase Price, or a specified
percentage thereof, in Common Stock, that the conditions to such manner of
payment set forth in Section 3.08(d) have been or will be complied with,
and
(iv) whether the Company desires the Trustee to give the Company
Notice required by Section 3.08(e) hereof.
(c) Purchase with Cash. On each Purchase Date, at the option of the
Company, the Purchase Price of Securities in respect of which a Purchase Notice
pursuant to Section 3.08(a) hereof has been given, or a specified percentage
thereof, may be paid by the Company with cash equal to the aggregate Purchase
Price of such Securities. If the Company elects to purchase Securities with
cash, the Company Notice, as provided in Section 3.08(e) hereof, 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 (the "Company Notice Date").
(d) Payment by Issuance of Common Stock. On each Purchase Date, at the
option of the Company, the Purchase Price of Securities in respect of which a
Purchase Notice pursuant to Section 3.08(a) hereof has been given, or a
specified percentage thereof, may be paid by the Company by the issuance of a
number of shares of Common Stock equal to the quotient obtained by dividing (i)
the amount of cash to which the Securityholders would have been entitled had the
Company elected to pay all or such specified percentage, as the case may be, of
the Purchase Price of such Securities in cash by (ii) the Market Price of a
share of Common Stock, subject to the next succeeding paragraph.
The Company will not issue a fractional share of Common Stock in payment of
the Purchase Price. Instead the Company will pay cash for the current market
value of the fractional share. The current market value of a fraction of a share
shall be determined by multiplying the Market Price by such fraction and
rounding the product to the nearest whole cent. It is understood that if a
Holder elects to have more than one Security purchased, the number of shares of
Common Stock shall be based on the aggregate amount of Securities to be
purchased.
Upon a payment by Common Stock pursuant to the terms hereof, that portion
of accrued Original Issue Discount, cash interest or Contingent Cash Interest,
if any, attributable to the period from the Issue Date to the Purchase Date with
respect to the purchased Security shall not be cancelled, extinguished or
forfeited but rather shall be deemed paid in full to the Holder through the
delivery of the Common Stock in exchange for the Security being purchased
pursuant to the terms hereof, and the fair market value of such Common Stock
(together with any cash payments in lieu of fractional shares of Common Stock)
shall be treated as issued, to the extent thereof, first in exchange for the
accrued Original Issue Discount, cash interest or Contingent Cash Interest, if
any, through the Purchase Date, and the balance, if any, of the fair market
value of such shares of Common Stock shall be treated as issued in exchange for
the Issue Price of the Security being purchased pursuant to the provisions
hereof. If the Company elects to purchase the Securities by the issuance of
shares of Common Stock, the Company Notice, as provided in Section 3.08(e)
hereof, shall be sent to the Holders (and to beneficial owners as required by
applicable law) not later than the Company Notice Date.
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The Company's right to exercise its election to purchase the Securities
pursuant to this Section 3.08 through the issuance of shares of Common 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 election
to purchase all or a specified percentage of the Securities with Common
Stock as provided herein;
(ii) the shares of Common Stock having been admitted for listing or
admitted for listing subject to notice of issuance on the principal United
States securities exchange on which the Common Stock is then listed or, if
the Common Stock is not then listed on a national or regional securities
exchange, as quoted on the National Association of Securities Dealers
Automated Quotation System;
(iii) the registration of the shares of Common Stock to be issued in
respect of the payment of the Purchase Price under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in each case, if required;
(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
Common Stock are in conformity with this Indenture and (B) the shares of
Common Stock to be issued by the Company in payment of the Purchase Price
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 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 under law or material contracts, and, in the case of
such Officers' Certificate, stating that conditions (i), (ii), (iii) and
(iv) 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 conditions (ii) and (iii) above have been satisfied.
Such Officers' Certificate shall also set forth the number of shares of
Common Stock to be issued for each $1,000 Principal Amount at Maturity of
Securities and the Sale Price of a share of Common Stock on each Trading Day
during the period for which the Market Price is calculated. The Company may pay
the Purchase Price (or any portion thereof) in Common Stock only if the
information necessary to calculate the Market Price is published in a daily
newspaper of national circulation. If the foregoing conditions are not satisfied
with respect to a Holder or Holders prior to the close of business on the
Purchase Date and the Company has elected to purchase the Securities pursuant to
this Section 3.08 through the issuance of shares of Common Stock, the Company
shall pay the entire Purchase Price of the Securities of such Holder or Holders
in cash.
The "Market Price" of the Common Stock means the average of the Sale Prices
of the Common Stock for the five Trading Day period ending on the third Business
Day (if the third Business Day prior to the applicable Purchase Date is a
Trading Day or, if not, then on the last
29
Trading Day prior to such Business Day) prior to the applicable Purchase Date,
appropriately adjusted to take into account the occurrence, during the period
commencing on the first of such Trading Days during such five Trading Day period
and ending on such Purchase Date, of any event described in Section 11.06, 11.07
or 11.08 hereof; subject, however, to the conditions set forth in Sections 11.09
and 11.10 hereof.
(e) Notice of Election. The Company's notice of election to purchase with
cash or Common Stock or any combination thereof shall be sent to the Holders
(and to beneficial owners as required by applicable law) in the manner provided
in Section 15.02 hereof at the time specified in Section 3.08(c) or (d) hereof,
as applicable (the "Company Notice"). Such Company Notice shall state the manner
of payment elected and shall contain the following information:
In the event the Company has elected to pay the Purchase Price (or a
specified percentage thereof) with Common Stock, the Company Notice shall:
(i) state that each Holder will receive Common Stock with a Market
Price determined as of a specified date prior to the Purchase Date equal to
such specified percentage of the Purchase Price of the Securities held by
such Holder (except any cash amount to be paid in lieu of fractional
shares);
(ii) set forth the method of calculating the Market Price of the
Common Stock; and
(iii) state that because the Market Price of Common Stock will be
determined prior to the Purchase Date, Holders will bear the market risk
with respect to the value of the Common Stock to be received from the date
such Market Price is determined to the Purchase Date.
In any case, each Company Notice shall include a form of Purchase Notice to
be completed by a Securityholder and shall state:
(i) the Purchase Price, the Conversion Rate and accrued and unpaid
cash interest, including Contingent Cash Interest, if any, that will be
accrued and payable with respect to the Securities as of the Purchase Date;
(ii) whether the Company will pay the Purchase Price in cash or in
Common Stock or any combination thereof, specifying the percentage of each;
(iii) the name and address of the Paying Agent and the Conversion
Agent;
(iv) that Securities as to which a Purchase Notice has been given may
be converted pursuant to Article 11 hereof only if the applicable Purchase
Notice has been withdrawn in accordance with the terms of this Indenture;
(v) that Securities must be surrendered to the Paying Agent to collect
payment of the Purchase Price and accrued and unpaid cash interest (or
accrued and unpaid Contingent Cash Interest), if any;
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(vi) that the Purchase Price for any Security as to which a Purchase
Notice has been given and not withdrawn, together with any cash interest
payable or any Contingent Cash Interest payable with respect thereto, will
be paid promptly following the later of the Purchase Date and the time of
surrender of such Security as described in (v);
(vii) the procedures the Holder must follow to exercise rights under
this Section 3.08 and a brief description of those rights;
(viii) briefly, the conversion rights of the Securities and that
Holders who want to convert Securities must satisfy the requirements set
forth in paragraph 9 of the Securities;
(ix) the procedures for withdrawing a Purchase Notice (including,
without limitation, for a conditional withdrawal pursuant to the terms of
Section 3.08(a)(i)(D) or Section 3.10 hereof);
(x) that, unless the Company defaults in making payment of such
Purchase Price and cash interest, if any, Original Issue Discount and cash
interest, including Contingent Cash Interest, if any, on Securities
surrendered for purchase will cease to accrue on and after the Purchase
Date; and
(xi) 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.
Upon determination of the actual number of shares of Common Stock to be
issued for each $1,000 Principal Amount at Maturity of Securities, the Company
will issue a press release and publish such determination on the Company's web
site on the World Wide Web or through such other public medium as the Company
may use from time to time.
(f) 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 created by
the Company.
The Company shall use its reasonable efforts to list or cause to have
quoted any shares of Common Stock to be issued to purchase Securities on the
principal United States securities exchange or over-the-counter or other
domestic market on which any other shares of the Common Stock are then listed or
quoted. The Company will promptly inform the Trustee in writing of any such
listing.
(g) Procedure upon Purchase. The Company shall deposit cash (in respect of
a cash purchase under Section 3.08(c) hereof or for fractional interests as
applicable) or shares of Common Stock, or a combination thereof, as applicable,
at the time and in the manner as provided in Section 3.11 hereof, sufficient to
pay the aggregate Purchase Price of, and any accrued and unpaid interest or any
Contingent Cash Interest, if any, with respect to all Securities
31
to be purchased pursuant to this Section 3.08. As soon as practicable after the
Purchase Date, the Company shall deliver to each Holder entitled to receive
Common Stock through the Paying Agent, a certificate for the number of full
shares of Common Stock issuable in payment of the Purchase Price and cash in
lieu of any fractional interests. The person in whose name the certificate for
Common Stock is registered shall be treated as a holder of record of shares of
Common Stock on the Business Day following the Purchase Date. Subject to Section
3.08(d) hereof, no payment or adjustment will be made for dividends on the
Common Stock the record date for which occurred on or prior to the Purchase
Date.
(h) Taxes. If a Holder of a Security is paid in Common Stock, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on such
issue of shares of Common Stock. However, the Holder shall pay any such tax
which is due because the Holder requests the shares of Common Stock to be issued
in a name other than the Holder's name. The Paying Agent may refuse to deliver
the certificates representing the Common 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 Common 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 3.09 Purchase of Securities at Option of the Holder upon Change in
Control.
(a) If there shall have occurred a Change in Control on or before September
24, 2009, Securities shall be purchased by the Company, at the option of the
Holder thereof, at a purchase price specified in paragraph 7 of the Securities
(the "Change in Control Purchase Price"), as of the date that is no later than
30 Business Days after the occurrence of the Change in Control but in no event
prior to the date on which such Change in Control occurs (the "Change in Control
Purchase Date"), subject to satisfaction by or on behalf of the Holder of the
requirements set forth in Section 3.09(c) hereof.
A "Change in Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its subsidiaries, taken as a
whole, to any "person" or "group" (as such terms are used in Section 13(d) of
the Exchange Act), (ii) the adoption of a plan relating to the liquidation or
dissolution of the Company, (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" or "group" (as such terms are used in Section 13(d) of the
Exchange Act) becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly through one
or more intermediaries, of more than 50% of the voting power of the outstanding
voting stock of the Company, or (iv) the first day on which more than a majority
of the members of the Board of Directors of the Company are not Continuing
Directors.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors who (i) was a member of the Board of Directors on
September 24, 2002 or (ii) was nominated for election to the Board of Directors
with the approval of, or whose
32
election to the Board of Directors was ratified by, at least a majority of the
Continuing Directors who were members of the Board of Directors at the time of
such nomination or election.
(b) Within 15 days after the occurrence of a Change in Control, the Company
shall mail a written notice of Change in 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 in Control Purchase Notice to be
completed by the Securityholder and shall state:
(i) briefly, the events causing a Change in Control and the date of
such Change in Control;
(ii) the date by which the Change in Control Purchase Notice pursuant
to this Section 3.09 must be given;
(iii) the Change in Control Purchase Date;
(iv) the Change in Control Purchase Price and any accrued and unpaid
cash interest payable with respect to the Securities as of the Change in
Control Purchase Date;
(v) the name and address of the Paying Agent and the Conversion Agent;
(vi) the Conversion Rate and any adjustments thereto resulting from
the Change in Control;
(vii) that Securities as to which a Change in Control Purchase Notice
has been given may be converted pursuant to Article 11 hereof only if the
Change in Control Purchase Notice has been withdrawn in accordance with the
terms of this Indenture;
(viii) that Securities must be surrendered to the Paying Agent to
collect payment of the Change in Control Purchase Price and accrued and
unpaid cash interest, if any;
(ix) that the Change in Control Purchase Price for any Security as to
which a Change in Control Purchase Notice has been duly given and not
withdrawn, together with any accrued and unpaid cash interest payable with
respect thereto, will be paid promptly following the later of the Change in
Control Purchase Date and the time of surrender of such Security as
described in Section 3.09(b)(viii) hereof;
(x) briefly, the procedures the Holder must follow to exercise rights
under this Section 3.09;
(xi) briefly, the conversion rights of the Securities;
(xii) the procedures for withdrawing a Change in Control Purchase
Notice;
(xiii) that, unless the Company defaults in making payment of such
Change in Control Purchase Price and cash interest, if any on Securities
surrendered for purchase, Original Issue Discount and any cash interest on
Securities surrendered for purchase will cease to accrue on and after the
Change in Control Purchase Date; and
33
(xiv) the CUSIP number of the Securities.
(c) A Holder may exercise its rights specified in Section 3.09(a) hereof
upon delivery of a written notice of purchase (a "Change in Control Purchase
Notice") to the Paying Agent at any time prior to the close of business on the
Business Day prior to the Change in Control Purchase Date, stating:
(i) the certificate number or numbers of the Security or Securities
which the Holder will deliver to be purchased;
(ii) the portion of the Principal Amount at Maturity of the Security
which the Holder will deliver to be purchased, which portion must be $1,000
or an integral multiple thereof; and
(iii) that such Security shall be purchased pursuant to the terms and
conditions specified in paragraph 7 of the Securities.
The delivery of such Security to the Paying Agent at any time after the
delivery of the Change in 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 in Control Purchase Price therefor;
provided, however, that such Change in Control Purchase Price shall be so paid
pursuant to this Section 3.09 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 in Control Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.09, a portion of a Security if the Principal Amount at Maturity 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 3.09 shall be consummated by the delivery of the consideration to be
received by the Holder (together with accrued and unpaid cash interest, if any)
promptly following the later of the Change in Control Purchase Date and the time
of delivery of the Security to the Paying Agent in accordance with this Section
3.09.
Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Change in Control Purchase Notice contemplated by this
Section 3.09(c) shall have the right to withdraw such Change in Control Purchase
Notice at any time prior to the close of business on the Business Day prior to
the Change in Control Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10 hereof.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Change in Control Purchase Notice or written withdrawal thereof.
The Company shall not be required to comply with this Section 3.09 if a
third party mails a written notice of Change in Control in the manner, at the
times and otherwise in
34
compliance with this Section 3.09 and repurchases all Securities for which a
Change in Control Purchase Notice shall be delivered and not withdrawn.
SECTION 3.10 Effect of Purchase Notice or Change in Control Purchase
Notice. Upon receipt by the Paying Agent of the Purchase Notice or Change in
Control Purchase Notice specified in Section 3.08(a) or Section 3.09(c) hereof,
as applicable, the Holder of the Security in respect of which such Purchase
Notice or Change in Control Purchase Notice, as the case may be, was given shall
(unless such Purchase Notice or Change in Control Purchase Notice is withdrawn
as specified in the following two paragraphs) thereafter be entitled to receive
solely the Purchase Price or Change in Control Purchase Price, as the case may
be, and any accrued and unpaid cash interest, with respect to such Security.
Such Purchase Price or Change in Control Purchase Price which price reflects the
Issue Price plus accrued Original Issue Discount and accrued and unpaid cash
interest, including Contingent Cash Interest, if any, shall be paid to such
Holder, subject to receipt of funds and/or securities by the Paying Agent,
promptly following the later of (x) the Purchase Date or the Change in Control
Purchase Date, as the case may be, with respect to such Security (provided that
the conditions in Section 3.08(a) or Section 3.09(c) hereof, 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 3.08(a) or Section
3.09(c) hereof, as applicable. Securities in respect of which a Purchase Notice
or Change in Control Purchase Notice, as the case may be, has been given by the
Holder thereof may not be converted pursuant to Article 11 hereof on or after
the date of the delivery of such Purchase Notice or Change in Control Purchase
Notice, as the case may be, unless such Purchase Notice or Change in Control
Purchase Notice, as the case may be, has first been validly withdrawn as
specified in the following two paragraphs.
A Purchase Notice or Change in Control Purchase Notice, as the case may be,
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 in
Control Purchase Notice, as the case may be, at any time prior to the close of
business on the Business Day prior to the Purchase Date or the Change in Control
Purchase Date, as the case may be, specifying:
(a) the certificate number or numbers of the Security or Securities in
respect of which such notice of withdrawal is being submitted,
(b) the Principal Amount at Maturity of the Security or Securities
with respect to which such notice of withdrawal is being submitted, and
(c) the Principal Amount at Maturity, if any, of such Security which
remains subject to the original Purchase Notice or Change in 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 paragraph or may be in the form of a conditional
withdrawal contained in a Purchase Notice pursuant to the terms of Section
3.08(a)(i)(D) hereof.
There shall be no purchase of any Securities pursuant to Section 3.08
hereof (other than through the issuance of Common Stock in payment of the
Purchase Price, including
35
cash in lieu of fractional shares) or 3.09 hereof 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 in 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 in Control Purchase
Price, as the case may be, and any accrued and unpaid cash interest or
Contingent Cash Interest 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 in 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 in Control Purchase Price, as the case
may be, and any accrued and unpaid cash interest or Contingent Cash Interest
with respect to such Securities) in which case, upon such return, the Purchase
Notice or Change in Control Purchase Notice with respect thereto shall be deemed
to have been withdrawn.
SECTION 3.11 Deposit of Purchase Price or Change in Control Purchase Price.
Prior to 10:00 a.m., New York City time, on the second Business Day following
the Purchase Date or the Change in 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 2.04
hereof) an amount of money (in immediately available funds if deposited on such
Business Day) or Common Stock, if permitted hereunder, sufficient to pay the
aggregate Purchase Price or Change in Control Purchase Price, as the case may
be, of, and any accrued and unpaid cash interest and Contingent Cash Interest,
if any, with respect to all the Securities or portions thereof which are to be
purchased as of the Purchase Date or Change in Control Purchase Date, as the
case may be.
SECTION 3.12 Securities Purchased in Part. Any 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 at Maturity equal to, and in exchange
for, the portion of the Principal Amount at Maturity of the Security so
surrendered which is not purchased.
SECTION 3.13 Repayment to the Company. The Trustee and the Paying Agent
shall promptly return to the Company any cash or shares of Common Stock that
remain unclaimed as provided in paragraph 15 of the Securities, together with
interest or dividends, if any, thereon (subject to the provisions of Section
7.01(f) hereof), held by them for the payment of the Purchase Price or Change in
Control Purchase Price, as the case may be, or contingent interest, if any;
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 hereof
exceeds the aggregate Purchase Price or Change in Control Purchase Price, as the
case may be, of, and the accrued and unpaid contingent interest with respect to,
the Securities or portions thereof which the Company is obligated to purchase as
of the Purchase Date or Change in Control Purchase Date, as the case may be,
whether as a result of withdrawal or otherwise, then promptly after the
36
second Business Day following the Purchase Date or Change in 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 7.01(f) hereof).
ARTICLE 4
COVENANTS
SECTION 4.01 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 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 at Maturity,
Restated Principal Amount, Issue Price plus accrued Original Issue Discount,
Redemption Price, Purchase Price, Change in Control Purchase Price, cash
interest and Contingent 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 in Control Purchase Price, on the Business Day following the applicable
Purchase Date or Change in Control Purchase Date, as the case may be) the
Trustee or the Paying Agent holds, in accordance with this Indenture, money or
securities, if permitted hereunder, sufficient to pay all such amounts then due.
The Company shall, to the extent permitted by law, pay cash interest on
overdue amounts at the rate per annum set forth in paragraph 1 of the
Securities, compounded semiannually, which interest shall accrue from the date
such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
Original Issue Discount.
SECTION 4.02 SEC and Other Reports. If requested by the Trustee, the
Company shall deliver to the Trustee, within 30 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. The Company also shall
comply with the provisions of TIA Section 314(a); provided, that no report
required thereby to be filed with the SEC need be so filed unless this Indenture
is qualified under the TIA. Delivery of such reports, information and documents
to the Trustee is for informational purposes only and the Trustee's receipt of
the same shall not constitute constructive notice of any information contained
therein or determinable from information contained therein, including the
Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 4.03 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, 2002) 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
37
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 4.04 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 the purposes of this
Indenture.
SECTION 4.05 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 Trustee, located at The Depository
Trust Company, Transfer Agent Drop Service, 00 Xxxxx Xxxxxx, Xxxxxxxx Xxxx
Entrance, New York, New York 10041, 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 15.02 hereof.
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 4.06 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 holder of Securities or shares of Common Stock which
are restricted securities issued upon conversion thereof, the Company will
promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder or any beneficial holder of Securities or holder of shares
of Common Stock issued upon conversion of Securities, 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.
SECTION 4.07 Covenant to Comply With Securities Laws Upon Purchase of
Securities. In connection with any offer to purchase or purchase of Securities
under Section 3.08 or 3.09 hereof (provided that such 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), the Company shall to the extent applicable
(a) comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (b) file the
related Schedule TO (or any successor schedule, form or report) under the
Exchange Act, and (c) otherwise comply with all Federal and state securities
laws so as to permit the rights and
38
obligations under Sections 3.08 and 3.09 hereof to be exercised in the time
and in the manner specified in Sections 3.08 and 3.09 hereof.
SECTION 4.08 Waiver of Compliance. The Company may omit in any particular
instance to comply with any covenant or condition set forth in Sections 4.01 to
4.07, inclusive, if before the time for such compliance the Holders of a
majority in aggregate Principal Amount at Maturity of the Securities at the time
outstanding shall notify the Company that they elect to either waive such
compliance in such instance or generally waive compliance with such covenant or
condition, but no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01 When Company May Merge or Transfer Assets. The Company shall
not consolidate with or merge with or into any other person or convey, transfer
or lease all or substantially all of its properties and assets to any person,
nor will the Company permit any Subsidiary to enter into any such transaction or
series of transactions if such transaction or series of transactions, in the
aggregate, would result in a sale, assignment, transfer, lease or other
disposition of all or substantially all of the properties and assets of the
Company and its Subsidiaries on a consolidated basis to any other person or
persons, unless:
(a) either (i) the Company or such Subsidiary shall be the surviving
corporation or (ii) the person (if other than the Company) formed by such
consolidation or into which the Company or such Subsidiary is merged or the
person which acquires by conveyance, transfer or lease the properties and assets
of the Company or such Subsidiary substantially as an entirety (A) shall be
organized and validly existing under the laws of the United States or any state
thereof or the District of Columbia and (B) 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 or
such Subsidiary under the Securities and this Indenture;
(b) immediately after giving effect to such transaction, no 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 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.
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
39
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
or the applicable Subsidiary 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 or the applicable
Subsidiary under this Indenture with the same effect as if such successor had
been named as the Company or the applicable Subsidiary herein; and thereafter,
except in the case of a lease and any obligations the Company or the applicable
Subsidiary may have under a supplemental indenture pursuant to Section 11.14
hereof, the Company or the applicable Subsidiary shall be discharged from all
obligations and covenants under this Indenture and the Securities. Subject to
Section 9.06 hereof, the Company, the applicable Subsidiary, 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 and the applicable Subsidiary.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default. An "Event of Default" occurs if:
(a) the Company defaults in payment of any cash interest (including
interest which becomes payable after the Securities have been converted to
semiannual Coupon Notes following the occurrence of a Tax Event) or any
Contingent Cash Interest and such default continues for 30 days;
(b) the Company defaults in the payment of the Principal Amount at
Maturity (or, if the Securities have been converted to semiannual coupon
notes following a Tax Event pursuant to Section 10.01 of this Indenture,
the Restated Principal Amount), Issue Price plus accrued Original Issue
Discount and any cash interest, including any Contingent Cash Interest,
Redemption Price, Purchase Price or Change in Control Purchase Price on any
Security when the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration, when due for purchase by the Company or
otherwise;
(c) the Company fails to comply with any of its agreements in the
Security or this Indenture (other than those referred to in clauses (a) and
(b) above) and such failure continues for 60 days after receipt by the
Company of a Notice of Default;
(d) default under any Debt, whether such Debt now exists or is created
later, which default results in the acceleration of such Debt and the
principal amount of all Debt so accelerated, together with all Debt due and
payable but not paid prior to the end of any grace period, is $10,000,000
or more, and such acceleration has not been rescinded or annulled within a
period of 10 days after receipt by the Company of a Notice of Default from
the Trustee; provided, however, that if any such default shall be cured,
waived, rescinded or annulled, then the Event of Default by reason thereof
shall be deemed not to have occurred;
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(e) the Company pursuant to or under or within the meaning of any
Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against it in an
involuntary case or proceeding or the commencement of any case
against it;
(iii) consents to the appointment of a Custodian of it or for any
substantial part of its property;
(iv) makes a general assignment for the benefit of its creditors;
(v) files a petition in bankruptcy or answer or consent seeking
reorganization or relief; or
(vi) consents to the filing of such petition or the appointment of or
taking possession by a Custodian; or
(f) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(i) is for relief against the Company in an involuntary case or
proceeding, or adjudicates the Company insolvent or bankrupt;
(ii) appoints a Custodian of the Company or for any substantial part
of its property; or
(iii) orders the winding up or liquidation of the Company;
and such order or decree remains unstayed and in effect for 60 days.
A Default under clause (c) or clause (d) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate Principal Amount at Maturity 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 (c) or clause (d) 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".
The Company shall deliver to the Trustee, within 30 days after it becomes
aware of the occurrence thereof, written notice of any event which with the
giving of notice or the lapse of time, or both, would become an Event of Default
under clause (3) or clause (4) above, its status and what action the Company is
taking or proposes to take with respect thereto.
SECTION 6.02 Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.01(e) or (f) in respect of the Company) occurs
and is continuing, the Trustee by written Notice to the Company, or the Holders
of at least 25% in
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aggregate Principal Amount at Maturity of the Securities at the time outstanding
by notice to the Company and the Trustee, may declare the Issue Price plus
accrued Original Issue Discount and any accrued and unpaid cash interest or any
Contingent Cash Interest (or if the Securities have been converted to semiannual
coupon notes following a Tax Event, the Restated Principal Amount, plus accrued
interest), through the date of declaration on all the Securities to be
immediately due and payable. Upon such a declaration, such Issue Price plus
accrued Original Issue Discount, and such accrued and unpaid cash interest, if
any, or any Contingent Cash Interest shall be due and payable immediately. If an
Event of Default specified in Section 6.01(e) or (f) occurs in respect of the
Company and is continuing, the Issue Price plus accrued Original Issue Discount
and any accrued and unpaid cash interest or any Contingent Cash Interest (or, if
the Securities have been converted to semiannual coupon notes following a Tax
Event, the Restated Principal Amount, plus accrued interest), 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 at Maturity 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
Issue Price plus accrued Original Issue Discount and any accrued and unpaid cash
interest or any Contingent Cash Interest (or, if the Securities have been
converted to semiannual coupon notes following a Tax Event, the Restated
Principal Amount, plus accrued interest), that have become due solely as a
result of acceleration and if all amounts due to the Trustee under Section 7.07
hereof have been paid. No such rescission shall affect any subsequent Default or
impair any right consequent thereto.
SECTION 6.03 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the Issue Price plus accrued Original Issue Discount and any accrued and
unpaid cash interest or any Contingent Cash Interest, (or, if the Securities
have been converted to semiannual coupon notes following a Tax Event, the
Restated Principal Amount, plus accrued interest), 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 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. Except as set forth in Section 2.07 hereof, no remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Past Defaults. Subject to Section 6.02, the Holders
of a majority in aggregate Principal Amount at Maturity 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 (a)
an Event of Default described in Section 6.01(a) or (b), (b) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected or (c) a Default which constitutes a
failure to convert any Security in accordance with the terms of Article 11. When
a Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any
42
consequent right. This Section 6.04 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 6.05 Control by Majority. The Holders of a majority in aggregate
Principal Amount at Maturity 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 6.05 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 6.06 Limitation on Suits. A Securityholder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice stating that an Event
of Default is continuing;
(b) the Holders of at least 25% in aggregate Principal Amount at Maturity
of the Securities at the time outstanding make a written request to
the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee security or indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of such notice, request and offer of security or indemnity;
and
(e) the Holders of a majority in aggregate Principal Amount at Maturity 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.
SECTION 6.07 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 at Maturity (or if the Securities have been converted to
semiannual coupon notes following a Tax Event pursuant to Article 10 hereof, the
Restated Principal Amount, plus accrued and unpaid cash interest), Issue Price
plus accrued Original Issue Discount, Redemption Price, Purchase Price, Change
in Control Purchase Price, or cash interest, including Contingent Cash 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 11 hereof, 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.
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SECTION 6.08 Collection Suit by Trustee. If an Event of Default described
in Section 6.01(a) or (b) hereof 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 7.07 hereof.
SECTION 6.09 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 at Maturity, Restated Principal Amount, Issue
Price plus accrued Original Issue Discount, cash interest, including Contingent
Cash Interest, Redemption Price, Purchase Price, Change in Control Purchase
Price 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
at Maturity, Restated Principal Amount, Issue Price plus accrued Original Issue
Discount, cash interest, including Contingent Cash Interest, if any, Redemption
Price, Purchase Price or Change in Control Purchase Price (or, if the Securities
have been converted to semiannual coupon notes following a Tax Event, the
Restated Principal Amount, plus accrued interest), as the case may be, 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 7.07 hereof) 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 7.07 hereof.
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.
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 7.07 hereof;
SECOND: to Securityholders for amounts due and unpaid on the Securities for
the Principal Amount at Maturity, Restated Principal Amount, Issue Price
plus
44
accrued Original Issue Discount, cash interest, including Contingent Cash
Interest, if any, Redemption Price, Purchase Price or Change in Control
Purchase Price (or, if the Securities have been converted to semiannual
coupon notes following a Tax Event, the Restated Principal Amount, plus
accrued and unpaid cash interest), 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
6.07 or a suit by Holders of more than 10% in aggregate Principal Amount at
Maturity 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 at Maturity,
Restated Principal Amount, Issue Price plus accrued Original Issue Discount,
cash interest, including Contingent Cash Interest, if any, Redemption Price,
Purchase Price or Change in Control Purchase Price (or, if the Securities have
been converted to semiannual coupon notes following a Tax Event, the Restated
Principal Amount, plus accrued and unpaid interest), 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 7
TRUSTEE
SECTION 7.01 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:
(i) the Trustee need perform only those duties that are specifically
set forth in this Indenture and no others; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture, but in
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 7.01(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:
(i) this paragraph (c) does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) 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
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
Subparagraphs (c)(i), (ii) and (iii) of this Section 7.01 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 7.01.
46
(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 7.02 Rights of Trustee. Subject to its duties and responsibilities
under the provisions of Section 7.01 hereof, and, except as expressly excluded
from this Indenture pursuant to said Section 7.01 hereof, subject also 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 resolution of the
Board of Directors;
47
(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 a Responsible Officer of 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;
(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; and
(l) the permissive rights of the Trustee to do things enumerated in this
Indenture shall not be construed as duties.
SECTION 7.03 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 hereof.
SECTION 7.04 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 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 7.05 Notice of Defaults. If a Default occurs and if it is known to
a Responsible Officer of the Trustee, the Trustee shall give to each
Securityholder notice of the Default within 90 days after such Responsible
Officer obtains knowledge of such Default unless such Default shall have been
cured or waived before the giving of such notice. Except in the
48
case of a Default described in Section 6.01(a) or (b) hereof, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of
Securityholders. The second sentence of this Section 7.05 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.
SECTION 7.06 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 (but only if this Indenture is then qualified under the
TIA) and with each securities exchange, if any, on which the Securities are
listed. The Company agrees to promptly notify the Trustee whenever the
Securities become listed on any securities exchange and of any delisting
thereof.
SECTION 7.07 Compensation and Indemnity. The Company agrees:
(a) to pay to the Trustee from time to time such reasonable 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 and its agents for, and to hold them harmless
against, any loss, liability or expense (including reasonable 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 their
part, arising out of or in connection with the acceptance or administration of
this trust, including the reasonable 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 7.07, the
Holders shall have been deemed to have granted to the Trustee 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 at Maturity, Issue Price plus
accrued Original Issue Discount, Redemption Price, Purchase Price,
49
Change in Control Purchase Price, cash interest or Contingent Cash Interest, if
any, as the case may be, on particular Securities.
The Company's payment obligations pursuant to this Section 7.07 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 6.01(e) or (f) hereof, the expenses including the
reasonable charges and expenses of its counsel, are intended to constitute
expenses of administration under any Bankruptcy Law.
SECTION 7.08 Replacement of Trustee. The Trustee may resign by so notifying
the Company; provided, however, that no such resignation shall be effective
until a successor Trustee has accepted its appointment pursuant to this Section
7.08. The Holders of a majority in aggregate Principal Amount at Maturity 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:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or public officer takes charge of the Trustee or its
property; or
(d) 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 7.07 hereof.
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 at Maturity 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 hereof, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
SECTION 7.09 Successor Trustee by Merger. If the Trustee consolidates with,
merges or converts into, or transfers all or substantially all its corporate
trust business or
50
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 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 8
DISCHARGE OF INDENTURE
SECTION 8.01 Discharge of Liability on Securities. When (a) the Company
delivers to the Trustee all outstanding Securities (other than Securities
replaced pursuant to Section 2.07 hereof) for cancellation or (b) all
outstanding Securities have become due and payable and the Company irrevocably
deposits with the Trustee, the Paying Agent (if the Paying Agent is not the
Company or any of its Affiliates) or the Conversion Agent cash or, if expressly
permitted by the terms of the Securities or the Indenture, Common Stock
sufficient to pay all amounts due and owing on all outstanding Securities (other
than Securities replaced pursuant to Section 2.07 hereof), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 7.07 hereof, 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 8.02 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 9
AMENDMENTS
SECTION 9.01 Without Consent of Holders. The Company and the Trustee may
amend this Indenture or the Securities without the consent of any
Securityholder:
(a) to cure any ambiguity, omission, defect or inconsistency;
51
(b) to comply with Article 5 or Section 11.14 hereof;
(c) to secure the Company's obligations under the Securities and this
Indenture;
(d) to add to the Company's covenants for the benefit of the
Securityholders or to surrender any right or power conferred upon the
Company;
(e) to make any change to comply with the TIA, or any amendment
thereto, or to comply with any requirement of the SEC in connection with
the qualification of the Indenture under the TIA, or as necessary in
connection with the registration of the Securities under the Securities
Act; or
(f) to make any change that does not adversely affect the rights of
any Holders (it being understood that any amendment described in clause (a)
of this Section 9.01 made solely to conform this Indenture to the final
offering memorandum provided to investors in connection with the initial
offering of the Securities will be deemed not to adversely affect the
rights or interests of Holders).
SECTION 9.02 With Consent of Holders. With the written consent of the
Holders of at least a majority in aggregate Principal Amount at Maturity of the
Securities at the time outstanding, the Company and the Trustee may amend this
Indenture or the Securities. However, without the consent of each Securityholder
affected, an amendment to this Indenture or the Securities may not:
(a) reduce the percentage in Principal Amount at Maturity of
Securities whose Holders must consent to an amendment;
(b) make any change in the manner or rate of accrual of Original Issue
Discount or cash interest, including Contingent Cash Interest, reduce the
rate of cash interest, including Contingent Cash Interest, referred to in
paragraph 1 of the Securities, reduce the rate of interest referred to in
Section 10.01 upon the occurrence of a Tax Event or extend the time for
payment of Original Issue Discount or cash interest, including Contingent
Cash Interest, if any, on any Security;
(c) reduce the Principal Amount at Maturity, Restated Principal
Amount, Issue Price, accrued Original Issue Discount or cash interest, with
respect to any Security, or extend the Stated Maturity of any Security;
(d) reduce the Redemption Price, Purchase Price or Change in Control
Purchase Price of any Security;
(e) make any Security payable in money or securities other than that
stated in the Security;
(f) make any change in Article 10 hereof, or this Section 9.02, except
to increase any percentage set forth therein;
52
(g) make any change that adversely affects the right to convert any
Security;
(h) make any change that adversely affects the right to require the
Company to purchase the Securities in accordance with the terms thereof and
this Indenture;
(i) change the provisions of this Indenture that relate to modifying
or annexing this Indenture; or
(j) impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the Securities.
It shall not be necessary for the consent of the Holders under this Section
9.02 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 9.02 becomes effective, the Company
shall mail to each Holder a notice briefly describing the amendment.
SECTION 9.03 Compliance with TIA. Every supplemental indenture executed
pursuant to this Article 9 shall comply with the TIA.
SECTION 9.04 Revocation and Effect of Consents, Waivers and Actions. Until
an amendment, consent, 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 amendment, consent, waiver or other action is not made
on the Security. However, any such Holder or subsequent Holder may revoke the
consent as to such Holder's Security or portion of the Security if the Trustee
receives the notice of revocation before the date as of which the amendment,
consent, waiver or action is made effective. After an amendment, consent, waiver
or action becomes effective, it shall bind every Securityholder.
SECTION 9.05 Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article 9 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 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 9.06 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 7.01
hereof) shall be fully protected in relying upon, in addition to the documents
required by Section 15.04 hereof, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.
53
SECTION 9.07 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 10
SPECIAL TAX EVENT CONVERSION
SECTION 10.01 Optional Conversion to Semiannual Coupon Note upon Tax Event.
From and after (a) the date of the occurrence of a Tax Event (the "Tax Event
Date") and (b) the date the Company exercises the option provided for in this
Section 10.01, whichever is later (the "Option Exercise Date"), at the option of
the Company, interest in lieu of future Original Issue Discount or cash interest
shall accrue at the rate of 4.25% per annum, calculated on a semiannual bond
equivalent basis, on a Restated Principal Amount, per $1,000 original Principal
Amount at Maturity (the "Restated Principal Amount") equal to the Issue Price
plus Original Issue Discount accrued through the Option Exercise Date and shall
be payable semiannually on March 24 and September 24 of each year (each an
"Interest Payment Date") to Holders of record at the close of business on each
March 9 or September 9, respectively, (each a "Regular Record Date") immediately
preceding such Interest Payment Date. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months and will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the Option Exercise Date. Within 15 days of the occurrence of a Tax Event,
the Company shall deliver a written notice of such Tax Event by facsimile and
first-class mail to the Trustee and within 15 days of its exercise of such
option the Company shall deliver a written notice of the Option Exercise Date by
facsimile and first-class mail to the Trustee and by first class mail to the
Holders of the Securities. From and after the Option Exercise Date, (a) the
Company shall be obligated to pay at Stated Maturity, in lieu of the Principal
Amount at Maturity of a Security, the Restated Principal Amount thereof plus
accrued and unpaid interest on such Security, (b) "Issue Price and accrued
Original Issue Discount," "Issue Price plus Original Issue Discount" or similar
words, as used herein, shall mean Restated Principal Amount plus accrued and
unpaid interest with respect to any Security and (c) Contingent Cash Interest
will cease to accrue on the Securities. Securities authenticated and delivered
after the Option Exercise Date may, and shall if required by the Trustee, bear a
notation in a form approved by the Trustee as to the conversion of the
Securities to semiannual coupon notes. No other changes to this Indenture shall
result as a result of the events described in this Section 10.01.
ARTICLE 11
CONVERSION
SECTION 11.01 Conversion Privilege. A Holder of a Security may convert such
Security into shares of Common Stock at any time prior to the close of business
on September 23, 2032, subject to the provisions of this Article 11 and
paragraph 9 of the Securities. Upon determination that Holders are or will be
entitled to convert their Securities into Common Stock in accordance with
paragraph 9 of the Securities, the Company will issue a press release and
publish such determination on the Company's website or through such other public
medium as the Company may use at that time. The number of shares of Common Stock
54
issuable upon conversion of a Security per $1,000 of Principal Amount at
Maturity thereof (the "Conversion Rate") shall be determined in accordance with
the provisions of paragraph 9 of the Securities.
A Holder may convert a portion of the Principal Amount at Maturity of a
Security if the portion is $1,000 or an integral multiple of $1,000. Provisions
of this Indenture that apply to conversion of all of a Security also apply to
conversion of a portion of a Security.
The Holders' rights to convert Securities into shares of Common Stock is
subject to the Company's right to elect instead to pay each such Holder the
amount of cash set forth in the next succeeding sentence, in lieu of delivering
such shares of Common Stock, subject to the last sentence of this paragraph. The
amount of cash to be paid pursuant to Section 11.02 hereof for each $1,000
Principal Amount at Maturity of a Security upon conversion shall be equal to the
average Sale Price of the Common Stock for the five consecutive Trading Days
immediately following (i) the date of the Company's notice of its election to
deliver cash upon conversion, if the Company shall not have given a notice of
redemption pursuant to Section 3.03, or (ii) the Conversion Date, in the case of
a conversion following such a notice of redemption specifying an intent to
deliver cash upon conversion, in either case multiplied by the Conversion Rate
in effect on such Conversion Date. The Company shall not pay cash in lieu of
delivering shares of Common Stock upon the conversion of any Security pursuant
to the terms of this Article 11 (other than cash in lieu of fractional shares
pursuant to Section 11.03 hereof) if there has occurred (prior to, on or after,
as the case may be, the Conversion Date or the date on which the Company
delivers its notice of whether such Security shall be converted into Common
Stock or cash pursuant to Section 3.02 hereof) and is continuing an Event of
Default (other than a default in a cash payment upon conversion of such
Security).
SECTION 11.02 Conversion Procedure. To convert a Security, a Holder must
satisfy the requirements in paragraph 9 in the Securities. The date on which the
Holder satisfies all those requirements is the conversion date (the "Conversion
Date"). The Conversion Agent shall notify the Company of the Conversion Date
within one Business Day following the Conversion Date. Within two Business Days
following the Conversion Date, the Company shall deliver to the Holder, through
the Trustee, written notice of whether such Security shall be converted into
shares of Common Stock or paid in cash, unless the Company shall have previously
delivered a notice of redemption pursuant to Section 3.03 hereof. If the Company
shall have notified the Holder that all of such Security shall be converted into
shares of Common Stock, the Company shall deliver to the Holder through the
Conversion Agent, as promptly as practicable but in any event no later than the
fifth Business Day following the Conversion Date a certificate for the number of
full shares of Common Stock deliverable upon the conversion and cash in lieu of
any fractional share determined pursuant to Section 11.03 hereof. Except as
provided in the last sentence in the third paragraph of Section 11.01 hereof, if
the Company shall have notified the Holder that all or a portion of such
Security shall be paid in cash, the Company shall deliver to the Holder
surrendering such Security the amount of cash payable with respect to such
Security no later than the tenth Business Day following such Conversion Date,
together with a certificate for the number of full shares of Common Stock
deliverable upon the conversion and cash in lieu of any fractional share
determined pursuant to Section 11.03 hereof. Except as provided in the last
sentence in the third paragraph of Section 11.01 hereof, the Company may not
change its election with respect to the consideration to be delivered upon
55
conversion of a Security once the Company has notified the Holder in accordance
with this paragraph. If shares of Common Stock are delivered as consideration,
then the person in whose name the certificate representing such shares is
registered shall be treated as a stockholder of record on and after the
Conversion Date; provided, however, that no surrender of a Security on any date
when the stock transfer books of the Company shall be closed shall be effective
to constitute the person or persons entitled to receive the shares of Common
Stock upon such conversion as the record holder or holders of such shares of
Common Stock on such date, but such surrender shall be effective to constitute
the person or persons entitled to receive such shares of Common Stock as the
record holder or holders thereof for all purposes at the close of business on
the next succeeding day on which such stock transfer books are open; such
conversion shall be at the Conversion Rate in effect on the date that such
Security shall have been surrendered for conversion, as if the stock transfer
books of the Company had not been closed. Upon conversion of a Security, such
person shall no longer be a Holder of such Security.
No payment or adjustment will be made for dividends on, or other
distributions with respect to, any Common Stock except as provided in this
Article 11. On conversion of a Security, that portion of accrued Original Issue
Discount and cash interest, including Contingent Cash Interest, if any,
attributable to the period from the Issue Date of the Security through but not
including the Conversion Date, with respect to the converted Security shall not
be cancelled, extinguished or forfeited, but rather shall be deemed to be paid
in full to the Holder thereof through delivery of the Common Stock (together
with the cash payment, if any, in lieu of fractional shares) in exchange for the
Security being converted pursuant to the provisions hereof (except to the extent
that semiannual and contingent interest are paid in cash as provided in
paragraph 9 of the Securities); and such cash, if any, and/or the fair market
value of such shares of Common Stock (together with any such cash payment in
lieu of fractional shares) shall be treated as delivered, to the extent thereof,
first in exchange for accrued Original Issue Discount and cash interest,
including Contingent Cash Interest, if any, accrued through the Conversion Date,
and the balance, if any, of such fair market value of such Common Stock (and any
such cash payment in lieu of fractional shares) shall be treated as issued in
exchange for the Issue Price of the Security being converted pursuant to the
provisions hereof. Notwithstanding the foregoing, accrued cash interest will be
payable upon conversion of Securities made concurrently with or after
acceleration of Securities following an Event of Default.
If the Holder converts more than one Security at the same time, the number
of shares of Common Stock issuable upon the conversion shall be based on the
total Principal Amount at Maturity of the Securities converted.
If the last day on which a Security may be converted is a Legal Holiday,
the Security may be surrendered on the next succeeding day that is not a Legal
Holiday.
A Security surrendered for conversion based on (a) the Common Stock price
may be surrendered for conversion at any time during the applicable calendar
quarter, (b) the Security being called for redemption may be surrendered for
conversion at any time prior to the close of business on the second Business Day
immediately preceding the Redemption Date, even if it is not otherwise
convertible at such time, (c) a credit downgrade may be surrendered for
conversion until the close of business on any Business Day during the period of
the continuance of the credit downgrade as more fully described in paragraph 9
of the Security, and (d) upon the occurrence
56
of certain corporate transactions more fully described in paragraph 9 of the
Security may be surrendered for conversion at any time from and after the date
which is 15 days prior to the anticipated effective date of such transaction
until 15 days after the actual date of such transaction, and if such day is not
a Business Day, the next occurring Business Day following such day; but in each
of (a), (b), (c) and (d) above, in no event later than the close of business on
September 23, 2032.
Upon surrender of a Security that is converted 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 at Maturity to
the unconverted portion of the Security surrendered.
SECTION 11.03 Fractional Shares. The Company will not issue a fractional
share of Common Stock upon conversion of a Security. Instead, the Company will
deliver cash for the current market value of the fractional share. The current
market value of a fractional share shall be determined, to the nearest 1/1,000th
of a share, by multiplying the per share Sale Price of the Common Stock, on the
last Trading Day prior to the Conversion Date, by the fractional amount and
rounding the product to the nearest whole cent.
SECTION 11.04 Taxes on Conversion. If a Holder converts a Security, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
the issue of shares of Common Stock upon the conversion. However, the Holder
shall pay any such tax which is due because the Holder requests the shares to be
issued in a name other than the Holder's name and any income tax which is
imposed on the Holder as a result of the conversion. The Conversion Agent may
refuse to deliver the certificates representing the Common Stock being issued in
a name other than the Holder's name until the Conversion Agent receives a sum
sufficient to pay any tax which will be due because the shares are to be issued
in a name other than the Holder's name. Nothing herein shall preclude the
Company from any tax withholding or directing the withholding of any tax
required by law or regulations.
SECTION 11.05 Company to Provide Stock. The Company shall, prior to
issuance of any Securities under this Article 11, and from time to time as may
be necessary, reserve out of its authorized but unissued Common Stock a
sufficient number of shares of Common Stock to permit the conversion of the
Securities.
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim created by the Company.
The Company will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of Securities, if any, and will list or cause to have quoted such
shares of Common Stock on each national securities exchange or in the
over-the-counter market or such other market on which the Common Stock is then
listed or quoted.
57
SECTION 11.06 Adjustment for Change in Capital Stock. Except as set forth
in Section 11.14 hereof, if, after the Issue Date of the Securities, the
Company:
(a) pays a dividend or makes a distribution on its Common Stock in shares
of its Common Stock or other Capital Stock;
(b) subdivides its outstanding shares of Common Stock into a greater number
of shares;
(c) combines its outstanding shares of Common Stock into a smaller number
of shares; or
(d) issues by reclassification of its Common Stock any shares of its
Capital Stock (other than rights, warrants or options for its Capital Stock);
then the conversion privilege and the Conversion Rate in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of shares or other units of Capital
Stock of the Company which such Holder would have owned immediately following
such action if such Holder had converted the Security immediately prior to such
action.
The adjustment shall become effective immediately after the record date in
the case of a dividend or distribution and immediately after the effective date
in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Security upon conversion of such
Security may receive shares of two or more classes of Capital Stock of the
Company, the Conversion Rate shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is contemplated by this Article 11 with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article 11.
SECTION 11.07 Adjustment for Rights Issue. Except as set forth in Sections
11.14 and 11.19 hereof, if after the Issue Date, the Company distributes any
rights, warrants or options to all holders of its Common Stock entitling them,
for a period expiring within 60 days of the Issue Date for each distribution to
purchase shares of Common Stock at a price per share less than the Sale Price of
the Common Stock as of the Time of Determination, the Conversion Rate shall be
adjusted in accordance with the formula:
R' = R (O + N)
------------------------
(O + [(N x P)/M])
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
58
O = the number of shares of Common Stock outstanding on the record date for
the distribution to which this Section 11.07 is being applied.
N = the number of additional shares of Common Stock offered pursuant to the
distribution.
P = the offering price per share of the additional shares.
M = the Average Sale Price, minus, in the event that there occurs (i) a
distribution to which Section 11.06(d) applies or (ii) a distribution to which
Section 11.08 applies, for which, in each case, (x) the record date shall occur
on or before the record date for the distribution to which this Section 11.07
applies and (y) the Ex-Dividend Time shall occur on or after the date of the
Time of Determination for the distribution to which this Section 11.07 applies,
the fair market value (on the record date for the distribution to which this
Section 11.07 applies) of the
(1) Capital Stock of the Company distributed in respect of each share
of Common Stock in such Section 11.06(d) distribution or
(2) assets of the Company or debt securities or any rights, warrants
or options to purchase securities of the Company distributed in
respect of each share of Common Stock in such Section 11.08
distribution,
as the case may be.
The Board of Directors shall determine fair market values for the purposes
of this Section 11.07.
The adjustment shall become effective immediately after the record date for
the determination of shareholders entitled to receive the rights, warrants or
options to which this Section 11.07 applies. If all of the shares of Common
Stock subject to such rights, warrants or options have not been issued when such
rights, warrants or options expire, then the Conversion Rate shall promptly be
readjusted to the Conversion Rate which would then be in effect had the
adjustment upon the issuance of such rights, warrants or options been made on
the basis of the actual number of shares of Common Stock issued upon the
exercise of such rights, warrants or options.
No adjustment shall be made under this Section 11.07 if the application of
the formula stated above in this Section 11.07 would result in a value of R'
that is equal to or less than the value of R.
SECTION 11.08 Adjustment for Other Distributions. (a) If, after the Issue
Date of the Securities, the Company distributes to all holders of its Common
Stock any of its assets, excluding distributions of Capital Stock or equity
interests referred to in Section 11.08(b), or debt securities or any rights,
warrants or options to purchase securities of the Company (including securities
or cash, but excluding (x) distributions of Capital Stock referred to in Section
11.06 and distributions of rights, warrants or options referred to in Section
11.07 and (y) cash dividends or other cash distributions that are paid out of
consolidated current net earnings or earnings retained in the business as shown
on the books of the Company unless such cash
59
dividends or other cash distributions are Extraordinary Cash Dividends) the
Conversion Rate shall be adjusted, subject to the provisions of Section
11.08(c), in accordance with the formula:
R' = R x M
---------
M - F
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the Average Sale Price , minus, in the event that there occurs a
distribution to which Section 11.06(d) applies, for which (i) the record date
shall occur on or before the record date for the distribution to which this
Section 11.08(a) applies and (ii) the Ex-Dividend Time shall occur on or after
the date of the Time of Determination for the distribution to which this Section
11.08(a) applies, the fair market value (on the record date for the distribution
to which this Section 11.08(a) applies) of any Capital Stock of the Company
distributed in respect of each share of Common Stock in such Section 11.06(d)
distribution.
F = the fair market value (on the record date for the distribution to which
this Section 11.08(a) applies) of the assets, securities, rights, warrants or
options to be distributed in respect of each share of Common Stock in the
distribution to which this Section 11.08(a) is being applied (including, in the
case of cash dividends or other cash distributions giving rise to an adjustment,
all such cash distributed concurrently).
The Board of Directors shall determine fair market values for the purposes
of this Section 11.08(a).
The adjustment shall become effective immediately after the record date for
the determination of shareholders entitled to receive the distribution to which
this Section 11.08(a) applies.
For purposes of this Section 11.08, the term "Extraordinary Cash Dividend"
shall mean any cash dividend with respect to the Common Stock the amount of
which, together with the aggregate amount of cash dividends on the Common Stock
to be aggregated with such cash dividend in accordance with the provisions of
this paragraph, equals or exceeds the threshold percentage set forth in item (i)
below. For purposes of item (i) below, the "Measurement Period" with respect to
a cash dividend on the Common Stock shall mean the 365 consecutive day period
ending on the date prior to the Ex-Dividend Time with respect to such cash
dividend, and the "Relevant Cash Dividends" with respect to a cash dividend on
the Common Stock shall mean the cash dividends on the Common Stock with
Ex-Dividend Times occurring in the Measurement Period.
(i) If, upon the date prior to the Ex-Dividend Time with respect to a
cash dividend on the Common Stock, the aggregate amount of such cash
dividend together
60
with the amounts of all Relevant Cash Dividends equals or exceeds on a per
share basis the sum of (a) 5% of the Sale Price of the Common Stock on the
last Trading Day preceding the date of declaration by the Board of
Directors of the cash dividend or distribution with respect to which this
provision is being applied, and (b) the quotient of the amount of any
Contingent Cash Interest paid on a Security during the Ex-Dividend
Measurement Period and divided by the number of shares of Common Stock
issuable upon conversion of a Security pursuant to Article 11 at the
Conversion Rate in effect on the payment date or such relevant Contingent
Cash Interest Payment Date, then such cash dividend together with all
Relevant Cash Dividends shall be deemed to be an Extraordinary Cash
Dividend, and for purposes of applying the formula set forth in this
Section 11.08(a), the value of "F" shall be equal to (y) the aggregate of
the amount of such cash dividend together with the amount of all Relevant
Cash Dividends, minus (z) the aggregate amount of all Relevant Cash
Dividends for which a prior adjustment in the Conversion Rate was
previously made under this Section 11.08.
(ii) In making the determination required by item (i) above, the
amount of cash dividends paid on a per share basis and the amount of any
Relevant Cash Dividends specified in item (i) above, shall be appropriately
adjusted to reflect the occurrence during such period of any event
described in Section 11.06 hereof.
(b) If, after the Issue Date of the Securities, the Company pays a dividend
or makes a distribution to all holders of its Common Stock consisting of Capital
Stock of any class or series, or similar equity interests, of or relating to a
Subsidiary or other business unit of the Company, the Conversion Rate shall be
adjusted in accordance with the formula:
R' = R x (1 + F/M)
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the average of the Post-Distribution Prices of the Common Stock for the
10 Trading Days commencing on and including the fifth Trading Day after the date
on which "ex-dividend trading" commences for such dividend or distribution on
the principal United States exchange or market which such securities are then
listed or quoted (the "Ex-Dividend Date").
F = the fair market value of the securities distributed in respect of each
share of Common Stock in the distribution to which this Section 11.08(b)
applies, which shall be determined by multiplying the number of securities
distributed in respect of each share of Common Stock in the distribution by the
average of the Post-Distribution Prices of those securities for the 10 Trading
Days commencing on and including the fifth Trading Day after the Ex-Dividend
Date.
"Post-Distribution Price" of Capital Stock or any similar equity interest
on any date means the closing per unit 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
61
average ask prices) on such date for trading of such units on a "when issued"
basis without due bills (or similar concept) as reported in the composite
transactions for the principal United States securities exchange on which such
Capital Stock or equity interest is traded or, if the Capital Stock or equity
interest, as the case may be, is not listed on a United States national or
regional securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System or by the National Quotation
Bureau Incorporated; provided that if on any date such units have not traded on
a "when issued" basis, the Post-Distribution Price shall be the closing per unit
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 for trading of such units on a "regular
way" basis without due bills (or similar concept) as reported in the composite
transactions for the principal United States securities exchange on which such
Capital Stock or equity interest is traded or, if the Capital Stock or equity
interest, as the case may be, is not listed on a United States national or
regional securities exchange, as reported by the National Association of
Securities Dealers Automated Quotation System or by the National Quotation
Bureau Incorporated. In the absence of such quotation, the Company shall be
entitled to determine the Post-Distribution Price on the basis of such
quotations which reflect the post-distribution value of the Capital Stock or
equity interests as it considers appropriate.
(c) In the event that, with respect to any distribution to which Section
11.08 would otherwise apply, the difference "M-F" as defined in the formula set
forth in Section 11.08 is less than $1.00 or "F" is equal to or greater than
"M", then the adjustment provided by Section 11.08 shall not be made and in lieu
thereof the provisions of Section 11.14 shall apply to such distribution.
SECTION 11.09 When Adjustment May Be Deferred. No adjustment in the
Conversion Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Rate. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment and all adjustments that are made and carried forward shall be taken
in the aggregate in order to determine if the 1% threshold is met.
All calculations under this Article 11 shall be made to the nearest cent or
to the nearest 1/1,000th of a share, as the case may be.
SECTION 11.10 When No Adjustment Required. No adjustment need be made for a
transaction referred to in Section 11.06, 11.07, 11.08 or 11.14 hereof if
Securityholders may participate in the transaction. Such participation by
Securityholders may include participation without conversion or upon conversion;
provided, that if such participation is upon conversion, an adjustment shall be
made at such time as the Securityholders are no longer entitled to participate.
No adjustment need be made for rights to purchase Common Stock pursuant to
a Company plan for reinvestment of dividends or interest.
Unless otherwise required by a provision of this Article 11, no adjustment
need be made for a change in the par value or no par value of the Common Stock.
62
To the extent the Securities become convertible pursuant to this Article 11
into cash, no adjustment need be made thereafter as to the cash. Interest will
not accrue on the cash.
No adjustment will be made pursuant to this Article 11 that would result,
through the application of two or more provisions hereof, in the duplication of
any adjustment.
SECTION 11.11 Notice of Adjustment. Whenever the Conversion Rate is
adjusted, the Company shall promptly mail to Securityholders a notice of the
adjustment. The Company shall file with the Trustee and the Conversion Agent
such notice and a certificate from the Company's independent public accountants
briefly stating the facts requiring the adjustment and the manner of computing
it. Upon receipt by it of such notice, and at the written request of the
Company, the Conversion Agent will promptly mail such notice to Securityholders
at the Company's expense. The certificate shall be conclusive evidence that the
adjustment is correct. Neither the Trustee nor any Conversion Agent shall be
under any duty or responsibility with respect to any such certificate except to
exhibit the same to any Holder desiring inspection thereof.
SECTION 11.12 Voluntary Increase. The Company from time to time may
increase the Conversion Rate by any amount for any period of time. Whenever the
Conversion Rate is increased, the Company shall mail to Securityholders and file
with the Trustee and the Conversion Agent a notice of the increase. The Company
shall mail the notice at least 15 days before the date the increased Conversion
Rate takes effect. The notice shall state the increased Conversion Rate and the
period it will be in effect.
A voluntary increase of the Conversion Rate does not change or adjust the
Conversion Rate otherwise in effect for purposes of Section 11.06, 11.07 or
11.08 or 11.14 hereof.
SECTION 11.13 Notice of Certain Transactions. If:
(a) the Company takes any action that would require an adjustment in the
Conversion Rate pursuant to Section 11.06, 11.07 or 11.08 hereof (unless no
adjustment is to occur pursuant to Section 11.10 hereof); or
(b) the Company takes any action that would require a supplemental
indenture pursuant to Section 11.14; or
(c) there is a liquidation or dissolution of the Company;
then the Company shall mail to Securityholders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, binding share exchange, transfer,
liquidation or dissolution. The Company shall file and mail the notice at least
15 days before such date. Failure to file or mail the notice or any defect in it
shall not affect the validity of the transaction.
SECTION 11.14 Reorganization of Company; Special Distributions. If the
Company is a party to a transaction subject to Article 5 hereof (other than a
sale of all or
63
substantially all of the assets of the Company in a transaction in which the
holders of Common Stock immediately prior to such transaction do not receive
securities, cash, property or other assets of the Company or any other Person)
or a merger or binding share exchange which reclassifies or changes its
outstanding Common Stock, the Person obligated to deliver securities, cash or
other assets upon conversion of Securities shall, no later than the closing date
of such transaction, enter into a supplemental indenture. If the issuer of
securities deliverable upon conversion of Securities is an Affiliate of the
successor Company, that issuer shall, no later than the closing date of such
transaction, join in the supplemental indenture.
The supplemental indenture shall provide that the Holder of a Security may
convert it into the kind and amount of securities, cash or other assets which
such Holder would have received immediately after the consolidation, merger,
binding share exchange or transfer if such Holder had converted the Security
immediately before the effective date of the transaction, assuming (to the
extent applicable) that such Holder was not a constituent Person or an Affiliate
of a constituent Person to such transaction. The supplemental indenture shall
provide for adjustments which shall be as nearly equivalent as may be practical
to the adjustments provided for in this Article 11. The successor Company shall
mail to Securityholders a notice briefly describing the supplemental indenture.
If this Section applies, neither Section 11.06 nor 11.07 hereof applies.
If the Company makes a distribution to all holders of its Common Stock of
any of its assets, or debt securities or any rights, warrants or options to
purchase securities of the Company that would otherwise result in an adjustment
in the Conversion Rate pursuant to the provisions of Section 11.08 hereof, then,
from and after the record date for determining the holders of Common Stock
entitled to receive the distribution, a Holder of a Security that converts such
Security in accordance with the provisions of this Indenture shall upon such
conversion be entitled to receive, in addition to the shares of Common Stock
into which the Security is convertible, the kind and amount of securities, cash
or other assets comprising the distribution that such Holder would have received
if such Holder had converted the Security immediately prior to the record date
for determining the holders of Common Stock entitled to receive the
distribution.
SECTION 11.15 Company Determination Final. Any determination that the
Company or the Board of Directors must make pursuant to Section 11.03, 11.06,
11.07, 11.08, 11.09, 11.10, 11.14 or 11.17 hereof is conclusive.
SECTION 11.16 Trustee's Adjustment Disclaimer. The Trustee has no duty to
determine when an adjustment under this Article 11 should be made, how it should
be made or what it should be. The Trustee has no duty to determine whether a
supplemental indenture under Section 11.14 hereof need be entered into or
whether any provisions of any supplemental indenture are correct. The Trustee
shall not be accountable for and makes no representation as to the validity or
value of any securities or assets issued upon conversion of Securities. The
Trustee shall not be responsible for the Company's failure to comply with this
Article 11. Each Conversion Agent (other than the Company or an Affiliate of the
Company) shall have the same protection under this Section 11.16 as the Trustee.
64
SECTION 11.17 Simultaneous Adjustments. In the event that this Article 11
requires adjustments to the Conversion Rate under more than one of Sections
11.06, 11.07 or 11.08 hereof, and the record dates for the distributions giving
rise to such adjustments shall occur on the same date, then such adjustments
shall be made by applying, first, the provisions of Section 11.06 hereof,
second, the provisions of Section 11.08 hereof and, third, the provisions of
Section 11.07 hereof.
SECTION 11.18 Successive Adjustments. After an adjustment to the Conversion
Rate under this Article 11, any subsequent event requiring an adjustment under
this Article 11 shall cause an adjustment to the Conversion Rate as so adjusted.
SECTION 11.19 Rights Issued in Respect of Common Stock Issued Upon
Conversion. Each share of Common Stock issued upon conversion of Securities
pursuant to this Article 11 shall be entitled to receive the appropriate number
of common stock or preferred stock purchase rights, as the case may be (the
"Rights"), if any, that all shares of Common Stock are entitled to receive and
the certificates representing the Common Stock issued upon such conversion shall
bear such legends, if any, in each case as may be provided by the terms of any
shareholder rights agreement adopted by the Company, as the same may be amended
from time to time (in each case, a "Rights Agreement"). If such Rights Agreement
requires that each share of Common Stock issued upon conversion of Securities at
any time prior to the distribution of separate certificates representing the
Rights be entitled to receive such Rights, then, notwithstanding anything else
to the contrary in the foregoing sections of this Article 11, there shall not be
any adjustment to the conversion privilege or Conversion Rate or any other term
or provision of the Securities as a result of the issuance of Rights, the
distribution of separate certificates representing the Rights, the exercise or
redemption of such Rights in accordance with any such Rights Agreement, or the
termination or invalidation of such Rights. Notwithstanding anything in this
Section 11.19 to the contrary, if a Holder of Securities exercising his right of
conversion after the distribution of Rights pursuant to a Rights Agreement is
not entitled to receive the Rights that would otherwise be attributable (but for
the date of conversion) to the shares of Common Stock to be issued upon
conversion, the Conversion Rate will be adjusted for the distribution of such
Rights pursuant to Section 11.08(a). If such an adjustment is made and such
Rights are later redeemed, invalidated or terminated, then a corresponding
reversing adjustment will be made to the Conversion Rate on an equitable basis.
ARTICLE 12
PAYMENT OF INTEREST
SECTION 12.01 Interest Payments. Semiannual, cash or Contingent Cash
Interest on any Security that is payable in cash, and is punctually paid or duly
provided for, on any applicable payment date shall be paid to the person in
whose name that Security is registered at the close of business on the Record
Date or accrual date, as the case may be, for such interest at the office or
agency of the Company maintained for such purpose. Each installment of
semiannual or cash interest or Contingent Cash Interest on any Security shall be
paid in same-day funds by transfer to an account maintained by the payee located
inside the United States, if the Trustee shall have received proper wire
transfer instructions from such payee not later than the related Record Date or
accrual date, as the case may be, or, if no such instructions have been
received, by check mailed to the payee at its address set forth on the
Registrar's books. In the
65
case of a permanent Global Security, semiannual or cash interest or Contingent
Cash Interest payable on any applicable payment date will be paid to the
Depositary, with respect to that portion of such permanent Global Security held
for its account by Cede & Co. for the purpose of permitting such party to credit
the interest received by it in respect of such permanent Global Security to the
accounts of the beneficial owners thereof.
SECTION 12.02 Defaulted Interest. Except as otherwise specified with
respect to the Securities, any semiannual or cash interest or Contingent Cash
Interest on any Security that is payable, but is not punctually paid or duly
provided for, within 30 days following any applicable payment date (herein
called "Defaulted Interest", which term shall include any accrued and unpaid
interest that has accrued on such defaulted amount in accordance with paragraph
1 of the Securities), shall be paid by the Company, at its election in each case
(x) to the Holder as of Special Record Date, as determined in accordance with
clause (a) below, or (y) in the manner set forth in clause (b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the persons in whose names the Securities are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed
to be paid on each Security and the date of the proposed payment (which
shall not be less than 20 days after such notice is received by the
Trustee), and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Trustee for such deposit on or prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of
the persons entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a special record date (the "Special Record
Date") for the payment of such Defaulted Interest which shall be not more
than 15 days and not less than 10 days prior to the date of the proposed
payment and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder of Securities at his address as it appears
on the list of Securityholders maintained pursuant to Section 2.05 hereof
not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest shall be
paid to the persons in whose names the Securities are registered at the
close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (b) of this Section 12.02.
(b) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
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SECTION 12.03 Interest Rights Preserved. Subject to the foregoing
provisions of this Article 12 and Section 2.06 hereof, each Security delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Security shall carry the rights to semiannual or cash and
Contingent Cash Interest accrued and unpaid, and to accrue, which were carried
by such other Security.
ARTICLE 13
CONTINGENT CASH INTEREST
SECTION 13.01 Contingent Cash Interest. The Company shall make Contingent
Cash Interest payments to the Holders of Securities, as set forth in Section
13.02 below, during any six month period from March 25 to September 24 and from
September 25 to March 24, beginning with the six-month period commencing on
September 25, 2009 (each, a "Semiannual Period") if, but only if, the average of
the Security Market Prices for the Applicable Five Trading Day Period equals
120% or more of the Relevant Value of such Security. During any Semiannual
Period when Contingent Cash Interest is payable pursuant to this section, each
Contingent Cash Interest payment due and payable on each $1,000 Principal Amount
at Maturity shall be calculated for any quarterly period within the applicable
Semiannual Period, and in each instance shall equal the greater of the
applicable Conversion Rate at such time with respect to the Securities as
determined in accordance with Article 11 hereof and paragraph 9 of the
Securities, multiplied by the greater of (a) the sum of all Regular Cash
Dividends paid by the Company per share on the Common Stock during the
applicable quarter of such Semiannual Period multiplied by the Conversion Rate
in effect at the time and (b) $0.15 multiplied by 12.9783.
As used in this Article 13, "Applicable Five Trading Day Period" means the
five Trading Days ending on the third Trading Day immediately preceding the
first day of the applicable Semiannual Period; provided, however, that if the
Company declares a dividend on the Common Stock for which the record date (the
"Common Stock Record Date") falls prior to the first day of the next Semiannual
Period, but the payment date for the Common Stock falls within such Semiannual
Period, then, the "Applicable Five Trading Day Period" shall mean the five
Trading Days ending on the third Trading Day immediately preceding such Common
Stock Record Date. "Relevant Value" means the sum of the Issue Price, the
accrued Original Issue Discount and accrued cash interest, if any, on such
Security to the day immediately preceding the first day of the applicable
Semiannual Period. "Security Market Price" means, as of any date of
determination, the average of the secondary market bid quotations per $1,000
Principal Amount at Maturity of Securities obtained by the Bid Solicitation
Agent for $5 million Principal Amount at Maturity of Securities at approximately
4:00 p.m., New York City time, on such determination date from three independent
nationally recognized securities dealers (none of which shall be an Affiliate of
the Company) selected by the Company; provided, however, that if (a) at least
three such bids are not obtained by the Bid Solicitation Agent or (b) in the
Company's reasonable judgment, the bid quotations are not indicative of the
secondary market value of the Securities as of such determination date, then the
Securities Market Price for such determination date shall equal the product of
(i) the Conversion Rate in effect as of such determination date multiplied by
(ii) the average Sale Price of the Common Stock for the five Trading Days ending
on such determination date, appropriately adjusted to take into account the
occurrence, during the period commencing on the first of such Trading Days
during such five Trading Day period and ending
67
on such determination date, of any event described in Section 11.06, 11.07 or
11.08 hereof (subject to the conditions set forth in Sections 11.08 and 11.10
hereof).
The Original Issue Discount of the Securities will continue to accrue
whether or not Contingent Cash Interest payments are made.
SECTION 13.02 Payment of Contingent Cash Interest; Contingent Cash Interest
Rights Preserved. If payable, Contingent Cash Interest on a Security shall be
paid to the Person who is the Holder of that Security as of the record date for
the related Common Stock dividend, or, if the Company does not pay a Regular
Cash Dividend on the Common Stock during a quarter within the Semiannual Period,
to the Person who is the holder of that Security on the 15th day preceding the
last day of such Semiannual Period (the "Contingent Cash Interest Record Date").
Such payments shall be paid on the payment date for the related Common Stock
dividend, or, if the Company does not pay a Regular Cash Dividend on the Common
Stock during a quarter within the Semiannual Period, on the last day of the
Semiannual Period (in each case, a "Contingent Cash Interest Payment Date").
Each payment of Contingent Cash Interest on any Security shall be paid (A) if
such Security is held in the form of a Global Note, in the same-day funds by
transfer to an account maintained by the payee located inside the United States,
or (B) if such Security is held in the form of a Certificated Note, by check,
mailed to the address of such Holder as set forth in the Security Register. In
the case of a Global Note, interest payable on any Contingent Cash Interest
Payment Date will be paid to the Depositary for the purpose of permitting DTC to
credit the interest received by it in respect of such Global Note to the
accounts of the beneficial owners thereof.
Upon determination that Holders of Securities will be entitled to receive
Contingent Cash Interest during a Semiannual Period, prior to the start of such
Semiannual Period, the Company will issue a press release and publish such
information on its website or through such other public medium as the Company
may use at the time.
The Company may unilaterally increase the amount of Contingent Cash
Interest it is required to pay or pay interest or other amounts it is not
obligated to pay but will have no obligation to do so.
SECTION 13.03 Bid Solicitation Agent. The Bid Solicitation Agent shall
solicit bids from securities dealers which the Company indicates that it
believes are willing to bid for the Securities. The Company initially appoints
the Trustee to act as the Bid Solicitation Agent. The Company may change the Bid
Solicitation Agent at its discretion; provided, however, that the Bid
Solicitation Agent may not be an Affiliate of the Company.
ARTICLE 14
TAX MATTERS
SECTION 14.01 Tax Treatment. The parties hereto hereby agree, and each
Holder and any beneficial holder of a Security by its purchase of a Security
hereby agrees (in the absence of administrative pronouncement or judicial ruling
to the contrary):
(a) to treat the Securities as indebtedness of the Company for all
United States federal income tax purposes;
68
(b) to treat the Securities as debt instruments that are subject to
U.S. Treasury Regulation section 1.1275-4(b); and
(c) to treat any payment to and receipt by a Holder of Common Stock
upon conversion of a Security, or upon a purchase by the Company at the
option of the Holder of a Security where the Company elects to pay in
Common Stock, as a contingent payment under U.S. Treasury Regulation
section 1.1275-4(b).
SECTION 14.02 Comparable Yield and Projected Payment Schedule. Solely for
purposes of applying U.S. Treasury Regulation section 1.1275-4 to the Notes:
(a) for United States Federal income tax purposes, the Company shall
accrue interest with respect to outstanding Securities as tax
original issue discount ("Tax Original Issue Discount") according
to the "noncontingent bond method," as set forth in U.S. Treasury
Regulation section 1.1275-4(b) using a comparable yield of 6.90%,
compounded semiannually, and the projected payment schedule
attached as Annex 1 to this Indenture;
(b) the Company shall file with the Trustee promptly at the end of
each calendar year (i) a written notice specifying the amount of
Tax Original Issue Discount for United States federal income tax
purposes (including daily rates and accrual periods) accrued on
outstanding Securities as of the end of such year and (ii) such
other specific information relating to such Tax Original Issue
Discount that the Company determines to be relevant under the
Internal Revenue Code of 1986, as amended from time to time,
including the amount of any adjustment made under the
noncontingent bond method to account for the amount of any
difference between the amount of an actual payment and the amount
of a projected payment; and
(c) the Company acknowledges and agrees, and each Holder and any
beneficial holder of a Security, by its purchase of a Security
shall be deemed to acknowledge and agree, that (i) the comparable
yield means the annual yield the Company would pay, as of the
Issue Date, on a fixed rate, nonconvertible debt security with no
contingent payments, but with terms and conditions otherwise
comparable to those of the Securities, (ii) the projected payment
schedule is determined on the basis of an assumption of linear
growth of stock price and a constant growth in dividend yield,
(iii) the comparable yield and the projected payment schedule are
not determined for any purpose other than for the purpose of
applying U.S. Treasury Regulation section 1.1275-4(b)(4) to the
Security and (iv) the comparable yield and the projected payment
schedule do not constitute a projection or representation
regarding the actual amounts payable on the Securities.
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ARTICLE 15
MISCELLANEOUS
SECTION 15.01 TIA 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 15.02 Notices. Any request, demand, authorization, notice, waiver,
consent or communication shall be in writing and delivered in person or delivery
by courier guaranteeing overnight delivery 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:
Selective Insurance Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy of any notice given pursuant to Article 6 hereof to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
if to the Trustee:
National City Bank
c/o National City Bank of Indiana
000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000 Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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.
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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.
SECTION 15.03 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 15.04 Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(b) an Opinion of Counsel stating that, in the opinion of such
counsel, such actions are authorized or permitted by this Indenture and
that all such conditions precedent have been complied with.
SECTION 15.05 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 to the extent required by
the Trustee:
(a) a statement that each person making such Officers' Certificate or
Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
Officers' Certificate or Opinion of Counsel are based;
(c) 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
(d) a statement that, in the opinion of such person, such covenant or
condition has been complied with.
SECTION 15.06 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.
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SECTION 15.07 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, Conversion Agent and the Paying Agent may make
reasonable rules for their functions.
SECTION 15.08 Calculations. The calculation of the Purchase Price, Change
in Control Purchase Price, Conversion Rate, Market Price, Sale Price of the
Common Stock and each other calculation to be made hereunder shall be the
obligation of the Company. All calculations made by the Company as contemplated
pursuant to this Section 15.08 shall be final and binding on the Company and the
Holders absent manifest error. The Trustee, Paying Agent and Conversion Agent
shall not be obligated to recalculate, recompute or confirm any such
calculations.
SECTION 15.09 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 be taken on such date is a payment in
respect of the Securities, no Original Issue Discount or interest, if any, shall
accrue for the intervening period.
SECTION 15.10 GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN
THIS INDENTURE AND THE SECURITIES.
SECTION 15.11 No Recourse Against Others. A director, officer, employee,
agent, representative, stockholder or equity holder, 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 15.12 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 15.13 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.
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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.
SELECTIVE INSURANCE GROUP, INC.
By: /s/ Xxxx X. Xxxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxxx
Title: Senior Vice President
and Chief Financial
Officer
NATIONAL CITY BANK, as Trustee
By: /s/ Xxx Xxxxx
----------------------------
Name: Xxx Xxxxx
Title: Vice President
ANNEX 1
Projected Payment Schedule*
Projected Interest Payment per
Period Ending $1,000 Principal Amount at Maturity of Notes*
March 24, 2003 8.08
September 24, 2003 8.08
March 24, 2004 8.08
September 24, 2004 8.08
March 24, 2005 8.08
September 24, 2005 8.08
March 24, 2006 8.08
September 24, 2006 8.08
March 24, 2007 8.08
September 24, 2007 8.08
March 24, 2008 8.08
September 24, 2008 8.08
March 24, 2009 8.08
September 24, 2009 8.08
December 1, 2009 -
March 1, 2010 -
June 1, 2010 -
September 1, 2010 -
December 1, 2010 -
March 1, 2011 -
June 1, 2011 -
September 1, 2011 -
December 1, 2011 -
March 1, 2012 1.95
June 1, 2012 1.95
September 1, 2012 1.95
December 1, 2012 1.95
March 1, 2013 1.95
June 1, 2013 1.95
September 1, 2013 1.95
December 1, 2013 1.95
March 1, 2014 1.95
June 1, 2014 1.95
December 1, 2014 1.95
March 1, 2015 1.95
June 1, 2015 1.95
September 1, 2015 1.95
Annex 1-1
Projected Interest Payment per
Period Ending $1,000 Principal Amount at Maturity of Notes*
September 1, 2015 1.95
December 1, 2015 1.95
March 1, 2016 1.95
June 1, 2016 1.95
September 1, 2016 1.95
December 1, 2016 1.95
June 1, 2017 1.95
September 1, 2017 1.95
December 1, 2017 1.95
March 1, 2018 1.95
June 1, 2018 1.95
September 1, 2018 1.95
December 1, 2018 1.95
March 1, 2019 1.95
June 1, 2019 1.95
September 1, 2019 1.95
December 1, 2019 1.95
March 1, 2020 1.95
June 1, 2020 1.95
September 1, 2020 1.95
December 1, 2020 1.95
March 1, 2021 1.95
June 1, 2021 1.95
September 1, 2021 1.95
December 1, 2021 1.95
March 1, 2022 1.95
June 1, 2022 1.95
September 1, 2022 1.95
December 1, 2022 1.95
March 1, 2023 1.95
June 1, 2023 1.95
September 1, 2023 1.95
December 1, 2023 1.95
March 1, 2024 1.95
June 1, 2024 1.95
September 1, 2024 1.95
December 1, 2024 1.95
March 1, 2025 1.95
June 1, 2025 1.95
September 1, 2025 1.95
December 1, 2025 1.95
March 1, 2026 1.95
June 1, 2026 1.95
Annex 1-2
Projected Interest Payment per
Period Ending $1,000 Principal Amount at Maturity of Notes*
September 1, 2026 1.95
December 1, 2026 1.95
March 1, 2027 1.95
June 1, 2027 1.95
September 1, 2027 1.95
December 1, 2027 1.95
March 1, 2028 1.95
June 1, 2028 1.95
September 1, 2028 1.95
December 1, 2028 1.95
March 1, 2029 1.95
June 1, 2029 1.95
September 1, 2029 1.95
December 1, 2029 1.95
March 1, 2030 1.95
June 1, 2030 1.95
September 1, 2030 1.95
December 1, 2030 1.95
March 1, 2031 1.95
June 1, 2031 1.95
September 1, 2031 1.95
December 1, 2031 1.95
March 1, 2032 1.95
June 1, 2032 1.95
Terminal Value at Maturity $1,703.82
* The comparable yield and the schedule of projected payments are determined on
the basis of an assumption of linear growth of the stock price and a constant
growth in dividend yield and are not determined for any purpose other than for
the determination of interest accruals and adjustments thereof in respect of the
Securities for United States federal income tax purposes. The comparable yield
and the schedule of projected payments do not constitute a projection or
representation regarding the amounts payable on Securities.
Annex 1-3
EXHIBIT A-1
[FORM OF FACE OF GLOBAL SECURITY]
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS
1272, 1273 AND 0000 XX XXX XXXXXX XXXXXX INTERNAL REVENUE CODE OF 1986, AS
AMENDED. THE ISSUE PRICE OF THIS NOTE WAS $380.12 PER $1,000 OF PRINCIPAL AMOUNT
AT MATURITY; THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, INCLUDING CASH INTEREST
PAYABLE THROUGH SEPTEMBER 24, 2009 TAXABLE AS ORIGINAL ISSUE DISCOUNT UNDER
TREASURY REGULATION SECTION 1.1273-1, IS PROJECTED TO BE $1,595.93 PER $1,000 OF
PRINCIPAL AMOUNT AT MATURITY; HOWEVER, THE ACTUAL AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS INDETERMINABLE AS OF THE ISSUE DATE; THE ISSUE DATE IS SEPTEMBER 24,
2002; AND THE YIELD TO MATURITY FOR THE PURPOSES OF ACCRUING TAX ORIGINAL ISSUE
DISCOUNT IS 6.60% PER ANNUM, CALCULATED ON A SEMIANNUAL BOND EQUIVALENT BASIS.
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 IN WHOLE,
BUT NOT IN PART, 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.
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
A-1-1
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER,
SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER (X) THE LATER OF THE
LAST DAY SECURITIES OF THIS ISSUE WERE ISSUED AND (Y) THE LAST DATE ON WHICH
SELECTIVE INSURANCE GROUP, INC. (THE "COMPANY" OR THE "ISSUER") OR ANY AFFILIATE
OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY), ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR
FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (E)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF ANY HOLDER THAT IS NOT AN AFFILIATE OF THE COMPANY
AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION OF
THE CONDITIONS SPECIFIED IN THE INDENTURE.
A-1-2
SELECTIVE INSURANCE GROUP, INC.
Senior Convertible Note due 2032
No. A-1 CUSIP: 000000XX0
Issue Date: September 24, 2002
Issue Price: $380.12 Original Issue Discount: $619.88
(for each $1,000 Principal (for each $1,000 Principal
Amount at Maturity) Amount at Maturity)
SELECTIVE INSURANCE GROUP, INC., a New Jersey corporation (herein called
the "Company"), promises to pay to Cede & Co. or registered assigns, the
Principal Amount at Maturity of TWO HUNDRED SIXTY FIVE MILLION DOLLARS
$265,000,000 on September 24, 2032.
This Security shall not bear interest except as specified on the other side
of this Security. Original Issue Discount will accrue as specified on the other
side of this Security. This Security is convertible as specified on the other
side of this Security.
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: September 24, 2002 SELECTIVE INSURANCE GROUP, INC.
By:
-----------------------------
Title:
By:
-----------------------------
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
National City Bank,
as Trustee, certifies that this
is one of the Securities referred
to in the within-mentioned Indenture.
By:
----------------------------
Authorized Officer
A-1-3
[FORM OF REVERSE SIDE OF ALL SECURITIES]
Senior Convertible Notes due 2032
1. Interest.
The Company promises to pay interest in cash on the Principal Amount at
Maturity of this Note at the rate per annum of 1.6155% from the Issue Date, or
from the most recent date to which interest has been paid or provided for, until
September 24, 2009. During such period, the Company will pay cash interest
semiannually in arrears on March 24 and September 24 of each year (each an
"Interest Payment Date") to Holders of record at the close of business on each
March 9 or September 9 (whether or not a business day) (each a "Regular Record
Date") immediately preceding such Interest Payment Date. Cash interest on the
Securities will accrue from the most recent date to which interest has been paid
or duly provided or, if no interest has been paid, from the Issue Date. Cash
interest will be computed on the basis of a 360-day year of twelve 30-day
months.
After September 24, 2009, this Security shall not bear interest, except as
specified in this paragraph or in paragraphs 5 and 11 hereof. If the Principal
Amount at Maturity hereof or any portion of such Principal Amount at Maturity is
not paid when due (whether upon acceleration pursuant to Section 6.02 of the
Indenture, upon the date set for payment of the Redemption Price pursuant to
paragraph 6 hereof, upon the date set for payment of the Purchase Price or
Change in Control Purchase Price pursuant to paragraph 7 hereof or upon the
Stated Maturity of this Security) or if cash interest (including semiannual or
Contingent Cash Interest, if any) due hereon or any portions of such cash
interest is not paid when due in accordance with paragraphs 5 or 11 hereof, then
in each such case the overdue amount shall, to the extent permitted by law, bear
interest at the rate of 4.25% per annum, compounded semiannually, which interest
shall accrue from the date such overdue amount was originally due to the date
payment of such amount, including interest thereon, has been made or duly
provided for. All such interest shall be payable on demand. The accrual of such
interest on overdue amounts shall be in lieu of, and not in addition to, the
continued accrual of Original Issue Discount or cash interest.
Original Issue Discount (the difference between the Issue Price and the
Principal Amount at Maturity of the Security), in the period during which a
Security remains outstanding, shall accrue at 4.25% per annum beginning on
September 24, 2009, on a semiannual bond equivalent basis using a 360-day year
composed of twelve 30-day months.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will make
payments in respect of Redemption Prices, Purchase Prices, Change in 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. In addition,
the Company will pay cash interest from the Issue Date until September 24, 2009,
as more fully described in paragraph 1 hereof. The Company will pay any 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.
A-1-4
3. Paying Agent, Conversion Agent, Registrar and Bid Solicitation Agent.
Initially, National City Bank, a national banking association (the
"Trustee"), will act as Paying Agent, Conversion Agent, Registrar and Bid
Solicitation Agent. The Company may appoint and change any Paying Agent,
Conversion Agent, Registrar or co-registrar or Bid Solicitation Agent without
notice, other than notice to the Trustee except 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, Registrar or co-registrar. None of the Company, any of
its Subsidiaries or any of their Affiliates shall act as Bid Solicitation Agent.
4. Indenture.
The Company issued the Securities pursuant to an Indenture dated as of
September 24, 2002 (the "Indenture"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as in
effect from time to time (the "TIA"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the TIA for a statement of those terms.
The Securities are general unsecured and unsubordinated obligations, of the
Company, limited to $305,000,000 aggregate Principal Amount at Maturity (subject
to Section 2.07 of the Indenture). The Indenture does not limit other
indebtedness of the Company, secured or unsecured.
5. Contingent Cash Interest.
Subject to the conditions of the Indenture and the accrual and record date
provisions specified in this paragraph 5, the Company shall pay Contingent Cash
Interest to the Securityholders during any Semiannual Period, with the initial
six-month period commencing on September 25, 2009, if, but only if, the average
of the Security Market Prices for the Applicable Five Trading Day Period equals
120% or more of the Relevant Value of such Security.
Contingent Cash Interest, if any, will accrue and be payable to holders of
this Security as of the Contingent Cash Interest Record Date or a Common Stock
Record Date, as applicable. Original Issue Discount will continue to accrue at
4.25% whether or not Contingent Cash Interest is paid.
The amount of Contingent Cash Interest payable per $1,000 Principal Amount
at Maturity hereof in respect of any quarterly period of the applicable
Contingent Cash Interest Period shall equal the greater of (x) the sum of all
Regular Cash Dividends paid by the Company per share of Common Stock during that
three-month period of the applicable Contingent Cash Interest Period multiplied
by the number of shares of Common Stock into which $1,000 Principal Amount at
Maturity hereof is convertible pursuant to paragraph 9 hereof as of the accrual
date for such Contingent Cash Interest and (y) $0.15 multiplied by 12.9783.
A-1-5
Upon determination that Securityholders will be entitled to receive
Contingent Cash Interest during a Semiannual Period, the Company shall issue a
press release and publish such information on its web site or through such other
public medium it may use at the time.
6. Redemption at the Option of the Company.
No sinking fund is provided for the Securities. The Securities are
redeemable for cash as a whole, or from time to time in part, at any time at the
option of the Company in accordance with the Indenture at the Redemption Prices
set forth below; provided, that the Securities are not redeemable prior to
September 24, 2007.
The table below shows Redemption Prices of a Security per $1,000 Principal
Amount at Maturity on the dates shown below and at Stated Maturity, which prices
reflect accrued Original Issue Discount calculated to each such date. The
Redemption Price of a Security redeemed between such dates shall include an
additional amount reflecting the additional Original Issue Discount accrued
since the immediately preceding date in the table to, but not including, the
Redemption Date and any accrued and unpaid cash interest.
[Remainder of page intentionally left blank]
A-1-6
(2) (4)
(1) Accrued Original (3) Redemption Price
Redemption Date Note Issue Price Issue Discount Call Premium (1) + (2) + (3)
September 24,
2007..................... $380.12 $ 4.62 $384.74
2008..................... $380.12 2.31 382.43
2009..................... $380.12 380.12
2010..................... $380.12 16.33 396.45
2011..................... $380.12 33.36 413.48
2012..................... $380.12 51.11 431.23
2013..................... $380.12 69.64 449.76
2014..................... $380.12 88.96 469.08
2015..................... $380.12 109.10 489.22
2016..................... $380.12 130.12 510.24
2017..................... $380.12 152.03 532.15
2018..................... $380.12 174.89 555.01
2019..................... $380.12 198.73 578.85
2020..................... $380.12 223.59 603.71
2021..................... $380.12 249.52 629.64
2022..................... $380.12 276.56 656.68
2023..................... $380.12 304.77 684.89
2024..................... $380.12 334.19 714.31
2025..................... $380.12 364.87 744.99
2026..................... $380.12 395.87 776.99
2027..................... $380.12 430.24 810.36
2028..................... $380.12 465.05 845.17
2029..................... $380.12 501.35 881.47
2030..................... $380.12 539.21 919.33
2031..................... $380.12 578.70 958.82
At stated maturity....... $380.12 619.88 1,000.00
If this Security has been converted to a semiannual coupon note following
the occurrence of a Tax Event, the Redemption Price will be equal to the
Restated Principal Amount plus accrued and unpaid interest from the date of such
conversion to but not including the Redemption Date; but in no event will this
Security be redeemable before September 24, 2007.
7. 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, the Securities held
by such Holder on the following Purchase Dates and at the following Purchase
Prices, plus accrued and unpaid cash interest, if any, per $1,000 Principal
Amount at Maturity, upon delivery of 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
A-1-7
day immediately preceding such Purchase Date and upon delivery of the Securities
to the Paying Agent by the Holder as set forth in the Indenture.
Purchase Date Price Purchase
September 24, 2009 $ 380.12
September 24, 2012 $ 431.23
September 24, 2017 $ 532.15
September 24, 2022 $ 656.68
September 24, 2027 $ 810.36
The Purchase Price (equal to the Issue Price plus accrued Original Issue
Discount to the Purchase Date) may be paid, at the option of the Company, in
cash or by the issuance and delivery of shares of Common Stock of the Company,
or in any combination thereof in accordance with the Indenture.
If prior to a Purchase Date this Security has been converted to a
semiannual coupon note following the occurrence of a Tax Event, the Purchase
Price will be equal to the Restated Principal Amount plus accrued and unpaid
cash interest from the date of conversion to the Purchase Date as provided in
the Indenture.
At the option of the Holder and subject to the terms and conditions of the
Indenture, the Company shall become obligated to purchase the Securities held by
such Holder no later than 30 Business Days after the occurrence of a Change in
Control of the Company on or prior to September 24, 2009, but in no event prior
to the date on which such a Change in Control occurs, for a Change in Control
Purchase Price equal to the Issue Price plus accrued Original Issue Discount and
accrued and unpaid cash interest, including Contingent Cash Interest, if any, to
but not including the Change in Control Purchase Date, which Change in Control
Purchase Price shall be paid in cash. If prior to a Change in Control Purchase
Date this Security has been converted to a semiannual coupon note following the
occurrence of a Tax Event, the Change in Control Purchase Price shall be equal
to the Restated Principal Amount plus accrued cash interest from the date of
conversion to the Change in Control Purchase Date.
A third party may make the offer and purchase of the Securities in lieu of
the Company in accordance with the Indenture.
Holders have the right to withdraw any Purchase Notice or Change in 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 securities if permitted under the Indenture) sufficient to
pay the Purchase Price or Change in 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 in 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 in
Control Purchase Date, as the case may be, Original Issue Discount or
A-1-8
cash interest (including semiannual and Contingent Cash Interest), if any, shall
cease to accrue on such Securities (or portions thereof) on such Purchase Date
or Change in Control Purchase Date, as the case may be, and the Holder thereof
shall have no other rights as such (other than the right to receive the Purchase
Price or Change in Control Purchase Price, as the case may be, if any, upon
surrender of such Security).
8. Notice of Redemption.
Notice of redemption 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, and accrued and unpaid cash interest, if any, with respect to, 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, on such
Redemption Date, Original Issue Discount or cash interest (including semiannual
and Contingent Cash Interest), if any, shall cease to accrue on such Securities
or portions thereof. Securities in denominations larger than $1,000 of Principal
Amount at Maturity may be redeemed in part but only in integral multiples of
$1,000 of Principal Amount at Maturity.
9. Conversion.
Conversion Based on Sale Price of Common Stock. Subject to the provisions
of this paragraph 9 and notwithstanding the fact that any other condition to
conversion described below has not been satisfied, Holders may convert the
Securities into Common Stock on a Conversion Date if the Sale Price of the
Common Stock for at least 20 Trading Days in a period of 30 consecutive Trading
Days ending on the last Trading Day of the most recently ended fiscal quarter,
commencing with the quarter ending December 31, 2002, is greater than the
conversion trigger price per share. The "conversion trigger price" for any
fiscal quarter shall be the following percentage of the accreted conversion
price per share (calculated without giving effect to accrued cash interest, if
any) of Common Stock on the last day of such calendar quarter: (a) 120% until
and including September 30, 2009 and (b) declining ratably 0.11% per calendar
quarter thereafter to 110% on the last day of the calendar quarter ending June
30, 2032. If the foregoing condition is satisfied, then the Securities will be
convertible at any time at the option of the Holder, through their maturity.
The "accreted conversion price per share" of Common Stock as of any day
equals the quotient of:
o the Issue Price and accrued Original Issue Discount or accrued cash
interest to that day, divided by
o the number of shares of Common Stock issuable upon conversion of
$1,000 Principal Amount at Maturity of Securities on that day pursuant
to this paragraph 9 and Article 11 of the Indenture.
Conversion Based on Credit Ratings Downgrade. Subject to the provisions of
this paragraph 9 and the Indenture and notwithstanding the fact that any other
condition to conversion has not been satisfied, the Securities shall be
convertible into Common Stock at the
A-1-9
election of a Holder on a Conversion Date at any time that (a) the credit rating
assigned to the Securities by Xxxxx'x Investors Service Inc. and its successors
("Xxxxx'x") is Ba2 or lower or the credit rating assigned to the Securities by
Standard & Poor's Credit Market Services, a division of the XxXxxx-Xxxx
Companies Inc. and its successors ("Standard & Poor's") is BB or lower, or (b)
the Securities are no longer rated by either or both of Moody's or Standard &
Poor's, or (c) either or both of Moody's or Standard & Poor's have suspended or
withdrawn their ratings of the Securities.
Conversion upon Redemption. Subject to the provisions of this paragraph 9
and notwithstanding the fact that any other condition described herein to
conversion has not been satisfied, a Holder may convert into Common Stock a
Security or portion of a Security which has been called for redemption pursuant
to paragraph 6 hereof, but such Securities may be surrendered for conversion
only until the close of business on the second Business Day immediately
preceding the Redemption Date.
Conversion Upon Certain Distributions. Subject to the provisions of this
paragraph 9 and notwithstanding the fact that any other condition to conversion
has not been satisfied, in the event that the Company declares a dividend or
distribution described in Section 11.07 of the Indenture, or a dividend or a
distribution described in Section 11.08 of the Indenture and, in the case of a
dividend or distribution described in Section 11.08 of the Indenture, the sum of
(a) the fair market value, per share, of such dividend or distribution per share
of Common Stock, and (b) the quotient of (1) the amount of Contingent Cash
Interest paid on the Securities during the Ex-Dividend Measurement Period
divided by (2) the number of shares of Common Stock issuable upon conversion of
Securities at the Conversion Rate in effect at the Ex-Dividend Time, as
determined in the Indenture, exceeds 5% of the Sale Price of the Common Stock on
the Business Day immediately preceding the date of declaration for such dividend
or distribution, the Securities may be surrendered for conversion beginning on
the date the Company gives notice to the Holders of such right, which shall not
be less than 20 days prior to the Ex-Dividend Time for such dividend or
distribution, and Securities may be surrendered for conversion at any time
thereafter until the close of business on the Business Day prior to the
Ex-Dividend Time or until the Company announces that such dividend or
distribution will not take place.
Conversion Upon Occurrence of Certain Corporate Transactions. Subject to
the provisions of this paragraph 9 and notwithstanding the fact that any other
condition described herein to conversion has not been satisfied, in the event
the Company is a party to a consolidation, merger or binding share exchange
pursuant to which the Common Stock would be converted into cash, securities or
other property as set forth in Section 11.14 of the Indenture, 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 until 15 days after the actual effective date of such transaction, and at
the effective time of such transaction the right to convert a Security into
Common Stock will be deemed to have changed into a right to convert it into the
kind and amount of cash, securities or other property which the holder would
have received if the holder had converted its Security immediately prior to the
transaction.
A Security in respect of which a Holder has delivered a Purchase Notice or
Change in Control Purchase Notice exercising the option of such Holder to
require the Company to
A-1-10
purchase such Security may be converted only if such notice of exercise is
withdrawn in accordance with the terms of the Indenture.
The initial Conversion Rate is 12.9783 shares of Common Stock per $1,000
Principal Amount at Maturity, subject to adjustment in the case of certain
events described in the Indenture. The Company will deliver cash or a check in
lieu of any fractional share of Common Stock. The ability to surrender
Securities for conversion will expire at the close of business on September 23,
2032.
In the event the Company exercises its option pursuant to Section 10.01 of
the Indenture to have interest in lieu of Original Issue Discount or cash
interest accrue on the Security following a Tax Event, the Holder will be
entitled on conversion to receive the same number of shares of Common Stock such
Holder would have received if the Company had not exercised such option.
Accrued and unpaid interest in lieu of Original Issue Discount and cash
interest, including Contingent Cash Interest, if any, will not be paid on
Securities that are converted following a Tax Event; provided, however, that
Securities surrendered for conversion during the period, in the case of interest
in lieu of Original Issue Discount, from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of business
on such Interest Payment Date, shall be entitled to receive such interest, in
lieu of Original Issue Discount, payable on such Securities on the corresponding
Interest Payment Date and (except Securities with respect to which the Company
has mailed a notice of redemption) Securities surrendered for conversion during
such periods must be accompanied by payment of an amount equal to the interest
in lieu of Original Issue Discount with respect thereto that the registered
Holder is to receive.
To convert a Security, a Holder must (a) complete and manually sign the
conversion notice (or complete and manually sign a facsimile of such notice) and
deliver such notice to the Conversion Agent, (b) surrender the Security to the
Conversion Agent, (c) furnish appropriate endorsements and transfer documents if
required by the Conversion Agent, the Company or the Trustee and (d) pay any
transfer or similar taxes, if required.
A Holder may convert a portion of a Security if the Principal Amount at
Maturity of such portion is $1,000 or an integral multiple of $1,000. No payment
or adjustment will be made for dividends on the Common Stock except as provided
in the Indenture. On conversion of a Security, accrued Original Issue Discount
and any accrued and unpaid cash interest (or interest if the Company has
exercised its option provided for in paragraph 11 hereof), including Contingent
Cash Interest, attributable to the period from the Issue Date (or, if the
Company has exercised the option referred to in paragraph 11 hereof, the later
of (x) the date of such exercise and (y) the date on which interest was last
paid) through the Conversion Date shall not be cancelled, extinguished or
forfeited, but rather shall be deemed to be paid in full to the Holder thereof
through the delivery of the Common Stock (together with the cash payment, if
any, in lieu of fractional shares) in exchange for the Security being converted
pursuant to the terms hereof; and the fair market value of such shares of Common
Stock (together with any such cash payment in lieu of fractional shares) shall
be treated as issued, to the extent thereof, first in exchange for Original
Issue Discount and any accrued and unpaid cash interest (or interest, if the
Company
A-1-11
has exercised its option provided for in paragraph 11 hereof), including
Contingent Cash Interest, accrued through the Conversion Date, and the balance,
if any, of such fair market value of such Common Stock (and any such cash
payment) shall be treated as issued in exchange for the Issue Price of the
Security being converted pursuant to the provisions hereof.
The Conversion Rate will be adjusted in accordance with Article 11 of the
Indenture for dividends or distributions on Common Stock payable in Common Stock
or other Capital Stock; subdivisions, combinations or certain reclassifications
of Common Stock; distributions to all holders of Common Stock of certain rights
to purchase Common Stock for a period expiring within 60 days of the Issue Date
at less than the Sale Price of the Common Stock at the Time of Determination;
and distributions to such holders of assets or debt securities of the Company or
certain rights to purchase securities of the Company (excluding certain cash
dividends or distributions) and certain rights pursuant to shareholder rights
plans. The Company from time to time may voluntarily increase the Conversion
Rate.
If the Company is a party to a consolidation, merger or binding share
exchange or a transfer of all or substantially all of its assets, or upon
certain distributions described in the Indenture, the right to convert a
Security into Common Stock may be changed into a right to convert it into
securities, cash or other assets of the Company or another person.
10. [INTENTIONALLY OMITTED.]
11. Tax Event.
(a) From and after (i) the date (the "Tax Event Date") of the occurrence of
a Tax Event and (ii) the date the Company exercises the option provided for in
this paragraph 11, whichever is later (the "Option Exercise Date"), at the
option of the Company, interest in lieu of future Original Issue Discount shall
accrue at the rate of 4.25% per annum on a principal amount per Note (the
"Restated Principal Amount") equal to the Issue Price plus Original Issue
Discount accrued through the Option Exercise Date and shall be payable
semiannually on March 24 and September 24 of each year (each an "Interest
Payment Date") to Holders of record at the close of business on each March 9 and
September 9, respectively, (each a "Regular Record Date") immediately preceding
such Interest Payment Date. Interest will be computed on a semiannual bond
equivalent basis using a 360-day year comprised of twelve 30-day months and will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the Option Exercise Date.
(b) Interest on any Security that is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the person in
whose name that Security is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Company maintained
for such purpose. Each installment of interest on any Security shall be paid in
same-day funds by transfer to an account maintained by the payee located inside
the United States.
12. Defaulted Interest.
Except as otherwise specified with respect to the Securities, any Defaulted
Interest on any Security shall forthwith cease to be payable to the registered
Holder thereof on the relevant
A-1-12
Regular Record Date or accrual date, as the case may be, and such Defaulted
Interest shall be paid by the Company as provided for in Section 12.02 of the
Indenture.
13. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount at Maturity 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 in 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.
14. Persons Deemed Owners.
The registered Holder of this Security may be treated as the owner of this
Security for all purposes.
15. 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 laws. 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.
16. Amendment; Waiver.
Subject to certain exceptions set forth in the Indenture, (a) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in aggregate Principal Amount at Maturity of the Securities at
the time outstanding and (b) certain Defaults may be waived with the written
consent of the Holders of a majority in aggregate Principal Amount at Maturity
of the Securities at the time outstanding. 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 to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 5 or Section 11.14
of the Indenture, to secure the Company's obligations under this Security or to
add to the Company's covenants for the benefit of the Securityholders or to
surrender any right or power conferred, to comply with any requirement of the
SEC in connection with the qualification of the Indenture under the TIA, or as
necessary in connection with the registration of the Securities under the
Securities Act or to make any change that does not adversely affect the rights
of any Holders.
A-1-13
17. Defaults and Remedies.
Under the Indenture, Events of Default include (a) default in payment of
any cash interest (including any interest which becomes payable after the
Securities have been converted to notes paying semiannual interest following the
occurrence of a Tax Event) or any Contingent Cash Interest and such default
continues for 30 days; (b) default in payment of the Principal Amount at
Maturity (or, if the Securities have been converted to semiannual coupon notes
following a Tax Event, the Restated Principal Amount), Issue Price plus accrued
Original Issue Discount or cash interest, Redemption Price, Purchase Price or
Change in Control Purchase Price, as the case may be, in respect of the
Securities when the same becomes due and payable; (c) failure by the Company to
comply with other agreements in the Indenture or the Securities, subject to
notice and lapse of time; (d) default in the payment of any principal when due
or resulting in acceleration of other indebtedness of the Company for borrowed
money where the aggregate principal amount with respect to which the default or
acceleration has occurred exceeds $10,000,000, and such acceleration has not
been rescinded or annulled within a period of 10 days after receipt by the
Company of a Notice of Default, subject to notice and lapse of time; provided,
however, that if any such default shall be cured, waived, rescinded or annulled,
then the Event of Default by reason thereof shall be deemed not to have
occurred; and (e) certain events of bankruptcy or insolvency. If an Event of
Default occurs and is continuing, the Trustee, or the Holders of at least 25% in
aggregate Principal Amount at Maturity of the Securities at the time
outstanding, may declare all the Securities to be due and payable immediately.
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Issue Price plus Original Issue Discount and any accrued and
unpaid cash interest or any Contingent Cash Interest (or, if the Securities have
been converted to semiannual coupon notes following a Tax Event, the Restated
Principal Amount, plus accrued interest) on the Securities becoming due and
payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives indemnity or security reasonably satisfactory
to it. Subject to certain limitations, Holders of a majority in aggregate
Principal Amount at Maturity of the Securities at the time outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of amounts specified in clause (a) or (b) above) if it determines
that withholding notice is in their interests.
18. Trustee Dealings with the Company.
Subject to certain limitations imposed by the TIA, if applicable, 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.
19. No Recourse Against Others.
A director, officer, employee, agent, representative, stockholder or equity
holder, as such, of the Company shall not have any liability for any obligations
of the Company under the
A-1-14
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.
20. Authentication.
This Security shall not be valid until an authorized signatory of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
21. 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).
22. GOVERNING LAW.
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
SECURITY.
----------------------
A-1-15
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:
Selective Insurance Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
A-1-16
ASSIGNMENT FORM
To assign this Security, fill in the To convert this Security into Common
form below: Stock of the Company, check the box:
I or we assign and transfer this / /
Security to
----------------------------------- To convert only part of this Security,
state the Principal Amount at Maturity
----------------------------------- to be converted (which must be $1,000
or an integral multiple of $1,000):
(Insert assignee's soc. sec. or tax
ID 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 other person's soc. sec. or
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)
A-1-17
-------------------------------------------------------------------------------
Date: Your Signature:
----------------- ---------------------------------------
-------------------------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Security)
X-0-00
XXXXXXX X-0
[Form of Face of Certificated Security]
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS
1272, 1273 AND 0000 XX XXX XXXXXX XXXXXX INTERNAL REVENUE CODE OF 1986, AS
AMENDED. THE ISSUE PRICE OF THIS NOTE WAS $380.12 PER $1,000 OF PRINCIPAL AMOUNT
AT MATURITY; THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, INCLUDING CASH INTEREST
PAYABLE THROUGH SEPTEMBER 24, 2009 TAXABLE AS ORIGINAL ISSUE DISCOUNT UNDER
TREASURY REGULATION SECTION 1.1273-1, IS PROJECTED TO BE $1,595.93 PER $1,000 OF
PRINCIPAL AMOUNT AT MATURITY; HOWEVER, THE ACTUAL AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS INDETERMINABLE AS OF THE ISSUE DATE; THE ISSUE DATE IS SEPTEMBER 24,
2002; AND THE YIELD TO MATURITY FOR THE PURPOSES OF ACCRUING TAX ORIGINAL ISSUE
DISCOUNT IS 6.60% PER ANNUM, CALCULATED ON A SEMIANNUAL BOND EQUIVALENT BASIS.
[INCLUDE IF SECURITY IS A CERTIFICATED SECURITY TO BE HELD BY AN
INSTITUTIONAL ACCREDITED INVESTOR--IN CONNECTION WITH ANY TRANSFER, THE HOLDER
WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOLLOWING RESTRICTIONS.]
THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF
THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER,
SELL, OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE"), WHICH IS TWO YEARS AFTER THE LATER OF (X) THE
LAST DAY SECURITIES OF THIS ISSUE WERE ISSUED AND (Y) AND THE LAST DATE ON WHICH
SELECTIVE INSURANCE GROUP, INC. (THE "COMPANY" OR THE "ISSUER") OR ANY AFFILIATE
OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH
SECURITY), ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON
A-2-1
RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2),(3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (C) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF ANY HOLDER THAT IS NOT
AN AFFILIATE OF THE COMPANY AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION OF
THE CONDITIONS SPECIFIED IN THE INDENTURE.
A-2-2
SELECTIVE INSURANCE GROUP, INC.
Senior Convertible Note due 2032
No. A-1 CUSIP: 000000XX0
Issue Date: September 24, 2002
Issue Price: $380.12 Original Issue Discount: $619.88
(for each $1,000 Principal (for each $1,000 Principal
Amount at Maturity) Amount at Maturity)
SELECTIVE INSURANCE GROUP, INC., a New Jersey corporation (herein called
the "Company"), promises to pay to Cede & Co. or registered assigns, the
Principal Amount at Maturity of TWO HUNDRED SIXTY FIVE MILLION $265,000,000 on
September 24, 2032.
This Security shall not bear interest except as specified on the other side
of this Security. Original Issue Discount will accrue as specified on the other
side of this Security. This Security is convertible as specified on the other
side of this Security.
Additional provisions of this Security are set forth on the other side of
this Security.
Dated: September 24, 2002 SELECTIVE INSURANCE GROUP, INC.
By:
-------------------------------
Title:
By:
-------------------------------
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
NATIONAL CITY BANK,
as Trustee, certifies that this
is one of the Securities referred
to in the within-mentioned Indenture.
By:
------------------------------
Authorized Officer
A-2-3
[Form of Reverse Side of Certificated Security is the same
the Form of Reverse Side of Global Security]
X-0-0
XXXXXXX X-0
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) (or any successor provision) under the Securities Act of 1933,
as amended (the "Securities Act"), the undersigned registered owner of this
Security hereby certifies with respect to $__________ Principal Amount at
Maturity 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:
|_| The 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 is to an institutional
accredited investor, as described in Rule 501(a)(1), (2), (3) or
(7) 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 an offshore
transaction in accordance with Rule 904 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.)
X-0-0
XXXXXXX X-0
Form of Letter to be Delivered by Accredited Investors
Selective Insurance Group, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
National City Bank
c/o National City Bank of Indiana
000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000 Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Corporate Trust Department
Dear Sirs:
We are delivering this letter in connection with the proposed transfer of
$_________ Principal Amount at Maturity of the Senior Convertible Notes due 2032
(the "Securities") issued by Selective Insurance Group, Inc. (the "Company"),
which are convertible into shares of the Company's Common Stock, $2.00 par value
per share (the "Common Stock").
We hereby confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are
accredited investors within the meaning of Rule 501(a)(1), (2) or (3) under
the Securities Act (an "Institutional Accredited Investor");
(ii) the purchase of Securities by us is for our own account or for
the account of one or more other Institutional Accredited Investors or as
fiduciary for the account of one or more trusts, each of which is an
"accredited investor" within the meaning of Rule 501(a)(7) under the
Securities Act and for each of which we exercise sole investment discretion
or (B) we are a "bank," within the meaning of Section 3(a)(2) of the
Securities Act, or a "savings and loan association" or other institution
described in Section 3(a)(5)(A) of the Securities Act that is acquiring
Securities as fiduciary for the account of one or more institutions for
which we exercise sole investment discretion;
(iii) we will acquire Securities having a minimum principal amount at
maturity of not less than $[ ] for our own account or for any separate
account for which we are acting;
(iv) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of
purchasing Securities; and
(v) we are not acquiring Securities with a view to distribution
thereof or with any present intention of offering or selling Securities or
the Common Stock issuable upon
B-2-1
conversion thereof, except as permitted below; provided, that the
disposition of our property and property of any accounts for which we are
acting as fiduciary shall remain at all times within our control.
We understand that the Securities were originally offered and sold in a
transaction not involving any public offering within the United States within
the meaning of the Securities Act and that the Securities and the Common Stock
issuable upon conversion thereof (the Securities and such Common Stock
hereinafter referred to as the "Securities") have not been registered under the
Securities Act, and we agree, on our own behalf and on behalf of each account
for which we acquire any Securities, that if in the future we decide to resell
or otherwise transfer such Securities prior to the date (the "Resale Restriction
Termination Date") which is two years after the later of the last day the
Securities of this issue were issued and the last date on which the Company or
an affiliate of the Company was the owner of the Security, such Securities may
be resold or otherwise transferred only (i) to Selective Insurance Group, Inc.
or any subsidiary thereof, or (ii) for as long as the Securities are eligible
for resale pursuant to Rule 144A, to a person it reasonably believes is a
"qualified institutional buyer" (as defined in Rule 144A under the Securities
Act) that purchases for its own account or for the account of a qualified
institutional buyer to which notice is given that the transfer is being made in
reliance on Rule 144A, or (iii) to an Institutional Accredited Investor that is
acquiring the Security for its own account, or for the account of such
Institutional Accredited Investor for investment purposes and not with a view
to, or for offer or sale in connection with, any distribution in violation of
the Securities Act, or (iv) pursuant to another available exemption from
registration under the Securities Act (if applicable), or (v) pursuant to a
registration statement which has been declared effective under the Securities
Act and, in each case, in accordance with any applicable securities laws of any
state of the United States or any other applicable jurisdiction and in
accordance with the legends set forth on the Securities. We further agree to
provide any person purchasing any of the Securities from us other than pursuant
to clause (v) above a notice advising such purchaser that resales of such
securities are restricted as stated herein. We understand that the trustee or
the transfer agent, as the case may be, for the Securities will not be required
to accept for registration of transfer any Securities pursuant to (iii) or (iv)
above except upon presentation of evidence satisfactory to the Company that the
foregoing restrictions on transfer have been complied with. We further
understand that any Securities will be in the form of definitive physical
certificates and that such certificates will bear a legend reflecting the
substance of this paragraph other than certificates representing Securities
transferred pursuant to clause (v) above.
We acknowledge that the Company, others and you will rely upon our
confirmations, acknowledgments and agreements set forth herein, and we agree to
notify you promptly in writing if any of our representations or warranties
herein ceases to be accurate and complete.
B-2-2
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
-------------------------------
(Name of Purchaser)
By:
----------------------------
Name:
Title:
Address:
