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Exhibit 4.2
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TERAYON COMMUNICATION SYSTEMS, INC.
5% Convertible Subordinated Notes
Due 2007
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INDENTURE
Dated as of July 26, 2000
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STATE STREET BANK AND TRUST COMPANY OF CALIFORNIA, N.A.,
as Trustee
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TABLE OF CONTENTS/1/
Page
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
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Section 1.1. Definitions............................................................................. 1
Section 1.2. Other Definitions....................................................................... 6
Section 1.3. Incorporation by Reference of Trust Indenture Act....................................... 7
Section 1.4. Rules of Construction................................................................... 7
ARTICLE 2.
THE SECURITIES
Section 2.1. Designation, Form and Dating............................................................ 8
Section 2.2. Execution and Authentication............................................................ 8
Section 2.3. Registrar, Paying Agent and Conversion Agent............................................ 9
Section 2.4. Paying Agent To Hold Money in Trust..................................................... 9
Section 2.5. Securityholder Lists.................................................................... 10
Section 2.6. Transfer and Exchange................................................................... 10
Section 2.7. Replacement Securities.................................................................. 16
Section 2.8. Outstanding Securities.................................................................. 16
Section 2.9. Treasury Securities..................................................................... 17
Section 2.10. Temporary Securities.................................................................... 17
Section 2.11. Cancellation............................................................................ 18
Section 2.12. CUSIP Numbers........................................................................... 18
ARTICLE 3.
REDEMPTION AND REPURCHASE
Section 3.1. Provisional and Optional Redemption by the Company...................................... 18
Section 3.2. Election To Redeem; Notice to Trustee................................................... 19
Section 3.3. Selection of Securities To Be Redeemed.................................................. 19
Section 3.4. Notice of Redemption.................................................................... 19
Section 3.5. Deposit of Redemption Price............................................................. 20
Section 3.6. Securities Payable on Redemption Date................................................... 21
Section 3.7. Securities Redeemed in Part............................................................. 21
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/1/ This Table of Contents shall not, for any purpose, be deemed to be part
of this Indenture.
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Section 3.8. Conversion Arrangement on Call for Redemption........................................... 21
Section 3.9. Repurchase of Securities at Option of the Holder upon Change in Control................. 22
Section 3.10. Notice; Method of Exercising Repurchase Right........................................... 23
Section 3.11. Effect of Repurchase Notice............................................................. 25
Section 3.12. Deposit of Repurchase Price............................................................. 25
Section 3.13. Securities Repurchased in Part.......................................................... 26
Section 3.14. Compliance with Securities Laws upon Repurchase of Securities........................... 26
Section 3.15. Repayment to the Company................................................................ 26
ARTICLE 4.
CONVERSION
Section 4.1. Conversion Privilege.................................................................... 26
Section 4.2. Conversion Procedure.................................................................... 27
Section 4.3. Adjustments Below Par Value............................................................. 28
Section 4.4. Taxes on Conversion..................................................................... 28
Section 4.5. Company To Provide Stock................................................................ 28
Section 4.6. Adjustment of Conversion Price.......................................................... 29
Section 4.7. No Adjustment........................................................................... 32
Section 4.8. Equivalent Adjustments.................................................................. 33
Section 4.9. Adjustment for Tax Purposes............................................................. 33
Section 4.10. Notice of Adjustment.................................................................... 33
Section 4.11. Notice of Certain Transactions.......................................................... 33
Section 4.12. Effect of Reclassification, Consolidation, Merger or Sale on Conversion
Privilege............................................................................... 34
Section 4.13. Trustee's Disclaimer.................................................................... 35
Section 4.14. Voluntary Reduction..................................................................... 35
ARTICLE 5.
SUBORDINATION
Section 5.1. Securities Subordinated to Senior Indebtedness.......................................... 36
Section 5.2. Securities Subordinated to Prior Payment of All Senior Indebtedness on
Dissolution, Liquidation, Reorganization, Etc., of the Company.......................... 36
Section 5.3. Securityholders To Be Subrogated to Right of Holders of Senior Indebtedness............. 37
Section 5.4. Obligations of the Company Unconditional................................................ 38
Section 5.5. Company Not To Make Payment with Respect to Securities in Certain
Circumstances........................................................................... 38
Section 5.6. Notice to Trustee....................................................................... 39
Section 5.7. Application by Trustee of Monies Deposited with It...................................... 40
Section 5.8. Subordination Rights Not Impaired by Acts or Omissions of the Company or
Holders of Senior Indebtedness.......................................................... 40
Section 5.9. Trustee To Effectuate Subordination..................................................... 40
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Section 5.10. Right of Trustee To Hold Senior Indebtedness............................................ 41
Section 5.11. Article 5 Not To Prevent Events of Default.............................................. 41
Section 5.12. No Fiduciary Duty Created to Holders of Senior Indebtedness. 41
Section 5.13. Article Applicable to Paying Agents..................................................... 41
Section 5.14. Certain Conversion Deemed Payment....................................................... 41
ARTICLE 6.
COVENANTS
Section 6.1. Payment of Securities................................................................... 42
Section 6.2. SEC Reports; 144A Information........................................................... 42
Section 6.3. Liquidation............................................................................. 43
Section 6.4. Compliance Certificates................................................................. 44
Section 6.5. Notice of Defaults...................................................................... 44
Section 6.6. Payment of Taxes and Other Claims....................................................... 44
Section 6.7. Corporate Existence..................................................................... 44
Section 6.8. Maintenance of Properties............................................................... 44
Section 6.9. Further Instruments and Acts............................................................ 45
Section 6.10. Maintenance of Office or Agency......................................................... 45
Section 6.11. Resale of Certain Securities; Reporting Issuer.......................................... 45
Section 6.12. Registration Rights..................................................................... 45
Section 6.13. Additional Interest..................................................................... 46
Section 6.14. Stay, Extension and Usury Laws.......................................................... 46
ARTICLE 7.
SUCCESSOR CORPORATION
Section 7.1. When Company May Merge, Etc............................................................. 47
Section 7.2. Successor Corporation Substituted....................................................... 47
ARTICLE 8.
DEFAULT AND REMEDIES
Section 8.1. Events of Default....................................................................... 48
Section 8.2. Acceleration............................................................................ 49
Section 8.3. Other Remedies.......................................................................... 50
Section 8.4. Waiver of Defaults and Events of Default................................................ 50
Section 8.5. Control by Majority..................................................................... 51
Section 8.6. Limitation on Suits..................................................................... 51
Section 8.7. Rights of Holders To Receive Payment.................................................... 51
Section 8.8. Collection Suit by Trustee.............................................................. 51
Section 8.9. Trustee May File Proofs of Claim........................................................ 52
Section 8.10. Priorities.............................................................................. 52
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Section 8.11. Undertaking for Costs................................................................... 53
Section 8.12. Restoration of Rights and Remedies...................................................... 53
Section 8.13. Rights and Remedies Cumulative.......................................................... 53
Section 8.14. Delay or Omission Not Waiver............................................................ 53
ARTICLE 9.
TRUSTEE
Section 9.1. Duties of Trustee....................................................................... 54
Section 9.2. Rights of Trustee....................................................................... 55
Section 9.3. Individual Rights of Trustee............................................................ 56
Section 9.4. Trustee's Disclaimer.................................................................... 56
Section 9.5. Notice of Default or Events of Default.................................................. 56
Section 9.6. Reports by Trustee to Holders........................................................... 56
Section 9.7. Compensation and Indemnity.............................................................. 57
Section 9.8. Replacement of Trustee.................................................................. 57
Section 9.9. Successor Trustee by Merger, Etc........................................................ 58
Section 9.10. Eligibility; Disqualification........................................................... 58
Section 9.11. Preferential Collection of Claims Against Company....................................... 59
ARTICLE 10.
ACTION AND DISCHARGE OF INDENTURE
Section 10.1. Termination of Company's Obligations.................................................... 59
Section 10.2. Application of Trust Money.............................................................. 60
Section 10.3. Repayment to Company.................................................................... 60
Section 10.4. Reinstatement........................................................................... 60
ARTICLE 11.
DMENTS, SUPPLEMENTS AND WAIVERS
Section 11.1. Without Consent of Holders.............................................................. 61
Section 11.2. With Consent of Holders................................................................. 61
Section 11.3. Compliance with Trust Indenture Act..................................................... 62
Section 11.4. Revocation and Effect of Consents....................................................... 62
Section 11.5. Notation on or Exchange of Securities................................................... 63
Section 11.6. Trustee To Sign Amendments, Etc.; Notices............................................... 63
ARTICLE 12.
MISCELLANEOUS
Section 12.1. Trust Indenture Act Controls............................................................ 63
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Section 12.2. Notices................................................................................. 63
Section 12.3. Communications by Holders with Other Holders............................................ 64
Section 12.4. Certificate and Opinion as to Conditions Precedent...................................... 65
Section 12.5. Record Date for Vote or Consent of Securityholders...................................... 65
Section 12.6. Rules by Trustee, Paying Agent, Registrar............................................... 65
Section 12.7. Legal Holidays.......................................................................... 66
Section 12.8. Governing Law........................................................................... 66
Section 12.9. No Adverse Interpretation of Other Agreements........................................... 66
Section 12.10. No Recourse Against Others.............................................................. 66
Section 12.11. Successors.............................................................................. 66
Section 12.12. Multiple Counterparts................................................................... 66
Section 12.13. Separability............................................................................ 66
Section 12.14. Table of Contents, Headings, Etc........................................................ 66
Signatures............................................................................................. S-1
Exhibit A.............................................................................................. A-1
</TABLE>
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INDENTURE dated as of July 26, 2000 between Terayon Communication Systems,
Inc., a Delaware corporation (the "Company"), and State Street Bank and Trust
Company of California, N.A. as trustee (the "Trustee").
Both parties agree as follows for the benefit of the other and for the
equal and ratable benefit of the registered holders of the Company's 5%
Convertible Subordinated Notes Due 2007.
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
------------
The terms defined in this Section 1.1 (except as herein otherwise expressly
provided or unless the context otherwise requires) for all purposes of this
Indenture and of any indenture supplemental hereto shall have the respective
meanings specified in this Section 1.1.
"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 person means the power to direct 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.
"Agent" means any Registrar, Paying Agent or Conversion Agent.
"Board of Directors" means the Board of Directors of the Company or any
authorized committee of the Board of Directors.
"Business Day" means a day that is not a Legal Holiday.
"Cash" or "cash" means such coin or currency of the United States as at any
time of payment is legal tender for the payment of public and private debts.
"Closing Price" with respect to any securities on any day shall mean the
closing sale price regular way on such day or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices, regular
way, in each case on the principal national security exchange or quotation
system on which such security is quoted or listed or admitted to trading, or, if
not quoted or listed or admitted to trading on any national securities exchange
or quotation system, the average of the closing bid and asked prices of such
security on the over-the-counter market on the day in question as reported by
the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors for that purpose, or a price determined in good faith by the Board of
Directors or, to the extent permitted by applicable law, a duly authorized
committee thereof, whose determination shall be conclusive.
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"Common Stock" means any stock of any class of the Company which has no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which is not subject to redemption by the Company. Subject to the
provisions of Section 4.12, however, shares issuable on conversion of Securities
shall include only shares of Common Stock, $0.001 par value per share (which is
the class designated as Common Stock of the Company at the date of this
Indenture), or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion to which the total number
of shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the party named as such in this Indenture until a successor
replaces it pursuant to this Indenture and thereafter means the successor.
"Consolidated Net Worth" means, with respect to any Person, the
consolidated stockholders' equity (excluding any capital stock that by its terms
is, or upon the happening of an event or passage of time would be, required to
be redeemed prior to the maturity of the Securities or is redeemable at the
option of the holder thereof at any time prior to such maturity or is
convertible or exchangeable for debt securities at any time prior to such
maturity at the option of the holder thereof) of such Person and its
consolidated subsidiaries, as determined in accordance with generally accepted
accounting principles.
"Corporate Trust Office" of the Trustee means the office of the Trustee at
which this Indenture is administered, which office initially is located at 633
West 5/th/ Street, 12/th/ Floor, Los Angeles, CA 90071, attention: Corporate
Trust Administration.
"Default" or "default" means any event which is, or after notice or passage
of time, or both, would be, an Event of Default.
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in global form, The Depository Trust Company as the Depositary
with respect to the Securities, until a successor shall have been appointed and
becomes such pursuant to the applicable provisions of this Indenture, and
thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Indebtedness" means the Company's obligations under any
particular Senior Indebtedness in which the instrument creating or evidencing
the same or the assumption or guarantee thereof, or related agreements or
documents to which the Company is party, expressly provides that such
Indebtedness shall be "Designated Senior Indebtedness" for purposes of this
Indenture. The instrument, agreement or other document evidencing any
Designated Senior Indebtedness may place limitations or conditions on the right
of such Senior Indebtedness to exercise the rights of Designated Senior
Indebtedness provided under this Indenture.
2
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"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Holder" or "Securityholder" means the person in whose name a Security is
registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from time to
time.
"Initial Purchasers" means Deutsche Bank Securities Inc. and Lehman
Brothers, Inc., as initial purchasers under the Purchase Agreement.
"Instrument" means any agreement, indenture, instrument or other document
under which any obligation is evidenced, assumed, guaranteed or secured.
"Market Capitalization" means an amount determined by multiplying the
number of shares of Common Stock outstanding on the applicable date by the
current market price of the Common Stock (determined as provided in Section
4.6(e)) as of such date.
"Non-U.S. Person" means a Person that is not a U.S. Person.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Chief Executive Officer, the Chief Financial Officer, the General
Counsel, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers of the
Company; provided, however, that for purposes of Section 6.4 "Officers'
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company.
"Opinion of Counsel" means a written opinion from legal counsel acceptable
to the Trustee. The counsel may be an employee of or counsel to the Company.
"Payment Dates" means February 1 and August 1, the payment dates of the
Securities.
"Payment Default" means any default in the payment of principal of (or
premium, if any) or interest on Senior Indebtedness.
"Payment in full" or "paid in full" means payment in full in cash.
"Person" or "person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or other agency or political subdivision thereof.
"PORTAL Market" means the Private Offerings, Resales and Trading through
Automated Linkages Market operated by the National Association of Securities
Dealers, Inc. or any successor thereto.
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"Principal" or "principal" of a debt security, including the Securities,
means the principal of the security plus, when appropriate, the premium, if any,
on the security.
"Purchase Agreement" means the Purchase Agreement dated July 20, 2000 among
the Company and the Initial Purchasers.
"Purchase Option" means the option to purchase up to $75,000,000 in
aggregate principal amount of Securities granted by the Company to the Initial
Purchasers pursuant to Section 4 of the Purchase Agreement.
"QIB" means a "Qualified Institutional Buyer" as that term is defined in
Rule 144A.
"Record Dates" means January 15 and July 15, the record dates of the
Securities.
"Redemption Date" or "redemption date," when used with respect to any
Security to be redeemed, means the date fixed for such redemption pursuant to
this Indenture, as set forth in the form of Security annexed as Exhibit A
---------
hereto.
"Redemption Price" or "redemption price," when used with respect to any
Security to be redeemed, means the price fixed for such redemption pursuant to
this Indenture, as set forth in the form of Security annexed as Exhibit A
---------
hereto.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date hereof between the Company and the Initial Purchasers and
certain permitted assigns.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Reorganization Securities" means securities of the Company or any other
corporation provided for by a plan of reorganization or readjustment of the
Company (a) which are equity securities that do not provide for any mandatory
payments to holders thereof, including by way of dividends or mandatory
redemption; or (b) the payment of which is subordinated, at least to the extent
provided in Article 5 with respect to the Securities, to the payment of all
Senior Indebtedness which may at the time be outstanding.
"Representative" means the indenture trustee or other trustee, agent or
representative for any class of Senior Indebtedness.
"Rule 144" means Rule 144 as promulgated under the Securities Act.
"Rule 144A" means Rule 144A as promulgated under the Securities Act.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means the 5% Convertible Subordinated Notes Due 2007 or any of
them (each a "Security"), as amended or supplemented from time to time, that are
issued under this Indenture.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Agent" means, on any date, the Representative of the class of
Senior Indebtedness having the highest principal amount (including all revolving
credit, letter of credit and other working capital commitments) then
outstanding.
"Senior Indebtedness" means the following, whether outstanding upon
issuance of the Securities or thereafter incurred or created: (a) the principal
of and premium, if any, and interest on, and fees, costs, enforcement expenses,
collateral protection expenses and other reimbursement or indemnity obligations
in respect of all indebtedness or obligations of the Company to any Person for
money borrowed that is evidenced by a note, bond, debenture, loan agreement, or
similar instrument or agreement; (b) commitment or standby fees due and payable
to lending institutions with respect to credit facilities available to the
Company; (c) all noncontingent obligations of the Company (i) for the
reimbursement of any obligor on any letter of credit, banker's acceptance, or
similar credit transaction, (ii) under interest rate swaps, caps, collars,
options, and similar arrangements, and (iii) under any foreign exchange
contract, currency swap agreement, futures contract, currency option contract,
or other foreign currency hedge; (d) all obligations of the Company for the
payment of money relating to capitalized lease obligations; (e) any liabilities
of others described in the preceding clauses that the Company has guaranteed or
which are otherwise its legal liability; and (f) renewals, extensions,
refundings, refinancings, restructurings, amendments, and modifications of any
such indebtedness or guarantee; other than any indebtedness or other obligation
of the Company that by its terms is not superior in right of payment to the
Securities.
"Significant Subsidiary" means a "significant subsidiary" as defined in
Reg. (S)210.1-02(w) of Regulation S-X under the Exchange Act.
"Subsidiary" means any corporation, association or other business entity of
which at least a majority of the total capital stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by the Company or one or more of the Company's other Subsidiaries or
a combination thereof.
"TIA" means the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 and as in effect on the date of this Indenture,
except as provided in Section 11.3, and except to the extent any amendment to
the Trust Indenture Act expressly provides for application of the Trust
Indenture Act as in effect on another date.
"Transfer Restricted Security" means securities that bear or are required
to bear the legend set forth in Section 2.6(c) or (d).
"Trustee" means State Street Bank and Trust Company of California, N.A.
until a successor replaces it in accordance with the provisions of this
Indenture and thereafter means the successor.
"Trust Officer" means any officer in the Corporate Trust Office of the
Trustee, including any senior vice president, vice president, assistant vice
president, assistant secretary, assistant treasurer,
5
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trust officer or any other officer customarily performing functions similar to
those performed by any of the above-designated officers who shall, in any case,
be responsible for the administration of this Indenture or have familiarity with
it, and also means, with respect to a particular corporate matter, any other
officer of the Trustee to whom corporate trust matters are referred because of
his knowledge of and familiarity with the particular subject.
"U.S. Person" has the meaning specified in Regulation S.
SECTION 1.2. Other Definitions.
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Defined
Term in Section
---- ---------------
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"Additional Interest"........................................................... 6.12(a)
"Aggregate Market Premium"...................................................... 4.6(d)
"Bankruptcy Law"................................................................ 8.1
"beneficial owner".............................................................. 3.9
"Change in Control"............................................................. 3.9
"Clearstream"................................................................... 2.6(c)
"Code".......................................................................... 3.1
"Company Benefit Plan".......................................................... 4.6(c)
"Company Notice"................................................................ 3.10(a)
"Company Order"................................................................. 2.2
"Continuing Directors".......................................................... 3.9
"Conversion Agent".............................................................. 2.3
"Conversion Price".............................................................. 4.6
"Conversion Shares"............................................................. 4.1
"Custodian"..................................................................... 8.1
"Distribution Date"............................................................. 4.6(c)
"Euroclear"..................................................................... 2.6(c)
"Event of Default".............................................................. 8.1
"Global Note"................................................................... 2.6(a)
"Group"......................................................................... 3.9(1)
"Legal Holiday"................................................................. 12.7
"Make-Whole Payment"............................................................ 3.1(a)
"Notice Date"................................................................... 3.1(a)
"Optional Redemption"........................................................... 3.1
"Paying Agent".................................................................. 2.3
"Payment Blockage Period"....................................................... 5.5
"Payment of the Securities"..................................................... 5.5
"Registrar"..................................................................... 2.3
"Registration Default".......................................................... 6.12
"Registration Statement"........................................................ 6.12(a)
"Repurchase Date"............................................................... 3.9
"Repurchase Price".............................................................. 3.9
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Defined
Term in Section
---- ----------
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"Repurchase Notice"............................................................. 3.10(b)
"Restricted Securities"......................................................... 2.6(c)
"Trading Days".................................................................. 4.6(e)
"Trigger Event"................................................................. 4.6(f)
"U.S. Government Obligations"................................................... 10.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.
--------------------------------------------------
This Indenture is hereby made subject to, and shall be governed by, the
provisions of the TIA required to be part of and to govern indentures qualified
under the TIA. 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 or any other
obligor on the Securities.
All other terms used in this Indenture that are defined in the TIA, defined
by a TIA reference to another statute or defined by SEC rule and not otherwise
defined herein have the meanings assigned to them therein.
SECTION 1.4. Rules of Construction.
----------------------
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with generally accepted accounting principles in effect on the
date hereof, and any other reference in this Indenture to "generally accepted
accounting principles" refers to generally accepted accounting principles in
effect on the date hereof;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
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ARTICLE 2.
THE SECURITIES
SECTION 2.1. Designation, Form and Dating.
-----------------------------
(a) The Securities shall be designated as the "5 % Convertible Subordinated
Notes Due 2007." Other than as provided in Section 2.6, the Securities and the
Trustee's certificate of authentication to be borne by the Securities shall be
substantially in the form of Exhibit A attached hereto, which is incorporated in
---------
and made part of this Indenture. The Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to the terms and
provisions of the Securities and to be bound thereby. In addition to such
legends as may be required pursuant to Section 2.6, any of the Securities may
have imprinted thereon such legends or endorsements as the officers executing
the same may approve (execution thereof to be conclusive evidence of such
approval) and as are not inconsistent with the provisions of this Indenture, or
as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Securities may be listed or any trading system in which the Securities may
be admitted, or to conform to usage. Each Security shall be dated the date of
its authentication.
SECTION 2.2. Execution and Authentication.
-----------------------------
Two Officers of the Company shall sign the Securities for the Company by
manual or facsimile signature. If an Officer whose signature is on a Security
no longer holds that office at the time the Trustee authenticates the Security,
the Security shall be valid nevertheless. A Security shall not be valid until
an authorized signatory of the Trustee manually signs the certificate of
authentication on the Security. The signature shall be conclusive evidence that
the Security has been authenticated under this Indenture.
The Trustee shall authenticate and make available for delivery Securities
for original issue in the aggregate principal amount of up to $500,000,000, upon
a written order or orders of the Company signed by two Officers or by an Officer
and an Assistant Treasurer or Assistant Secretary of the Company (a "Company
Order"). The Company Order shall specify the amount of Securities to be
authenticated and the date on which the original issue of Securities is to be
authenticated. Upon the exercise of the Purchase Option by the Initial
Purchasers, additional Securities in the aggregate principal amount of up to
$75,000,000 shall be executed by the Company in the aforementioned manner and
delivered to the Trustee for authentication, and shall thereupon be
authenticated and delivered by the Trustee upon Company Order. The aggregate
principal amount of Securities outstanding under this Indenture at any time may
not exceed $575,000,000, except as provided in Section 2.7.
The Trustee shall act as the initial authenticating agent. Thereafter, the
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
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The Securities shall be issuable only in registered form without coupons
only in denominations of $1,000 and any integral multiple thereof.
SECTION 2.3. Registrar, Paying Agent and Conversion Agent.
---------------------------------------------
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange (the "Registrar"), an
office or agency where Securities may be presented for payment (the "Paying
Agent"), an office or agency where Securities may be presented for conversion
(the "Conversion Agent") and an office or agency for service of notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Registrar shall keep a register of the Securities and of
their transfer and exchange. The Company may have one or more co-Registrars,
one or more additional Paying Agents and one or more additional Conversion
Agents. The term "Registrar" includes any co-Registrar, the term "Paying Agent"
includes any additional Paying Agent and the term "Conversion Agent" includes
any additional Conversion Agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. 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 Agent not a party to this Indenture. If the
Company fails to maintain a Registrar, Paying Agent or a Conversion Agent or
fails to give the foregoing notice, the Trustee shall act as such. The Company
or any Affiliate of the Company may act as Paying Agent (except for the purposes
of Section 6.3 and Article 10), Registrar or Conversion Agent.
The Company initially appoints the Trustee as Registrar, Paying Agent and
Conversion Agent in connection with the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust.
------------------------------------
If the Company shall at any time act as its own Paying Agent, it will, on
or before each due date of the principal of and premium, if any, or interest
(together with any Additional Interest in respect thereof) on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal of, premium, if any, or interest
on any of the Securities (together with any Additional Interest in respect
thereof) so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, prior
to 10:00 a.m., New York City time, on each due date of the principal of and
premium, if any, or interest (together with any Additional Interest in respect
thereof) on any Securities, deposit with a Paying Agent a sum sufficient to pay
such amount, such sum to be held in trust for the benefit of the Persons
entitled to such principal, premium, if any, or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.
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The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section 2.4, that such
Paying Agent will, subject to Section 5.7:
(1) hold all sums held by it for the payment of the principal of, premium,
if any, or interest on Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee written notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of principal,
premium, if any, or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company in trust for the payment of the principal of, and premium, if any,
or interest (together with any Additional Interest in respect thereof) on any
Security and remaining unclaimed for two years after such principal and premium,
if any, or interest has become due and payable shall be paid, subject to
applicable escheatment laws, to the Company on written request of the Company,
or (if then held by the Company) shall be discharged from such trust; and the
Holder of such Security shall thereafter, as an unsecured general creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in a newspaper
selected by the Company and published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 2.5. 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 furnish
to the Trustee at least five Business Days prior to each semi-annual interest
Payment Date and at such other times as the Trustee may request in writing a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange.
----------------------
(a) Upon surrender for registration of transfer of any Security to the
Registrar or any co-registrar, and satisfaction of the requirements for such
transfer set forth in this Section 2.6, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Securities of any authorized denominations and
of a like
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aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
Securities may be exchanged for other Securities of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at any such office or agency maintained by the
Company pursuant to Section 6.10. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Securityholder making the exchange is entitled
to receive bearing registration numbers not contemporaneously outstanding.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
All Securities presented or surrendered for registration of transfer
or for exchange, redemption or conversion shall (if so required by the Company
or the Registrar) be duly endorsed, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company, and the Securities
shall be duly executed by the Securityholder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax, assessment or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities.
Neither the Company nor the Trustee nor any Registrar or any Company
registrar shall be required to exchange or register a transfer of (a) any
Securities for a period of fifteen (15) days next preceding any selection of
Securities to be redeemed or (b) any Securities or portions thereof called for
redemption pursuant to Section 3.4 or (c) any Securities or portion thereof
surrendered for conversion pursuant to Article 4.
So long as the Securities are eligible for book-entry settlement with the
Depositary, or unless otherwise required by law, all Securities that upon
initial issuance are beneficially owned by QIBs and all Securities that are
beneficially owned by Non-U.S. Persons who acquired such Securities in
accordance with Regulation S will be represented by a Security in global form
registered in the name of the Depositary or the nominee of the Depositary (the
"Global Note"). The transfer and exchange of beneficial interests in the Global
Note shall be effected through the Depositary in accordance with this Indenture
and the procedures of the Depositary therefor. The Trustee shall make
appropriate endorsements to reflect increases or decreases in the principal
amounts of the Global Note as set forth on the face of the Security to reflect
any such transfers. Except as provided below, beneficial owners of the Global
Note shall not be entitled to have certificates registered in their names, will
not receive or be entitled to receive physical delivery of certificates in
definitive form and will not be considered holders of such Securities in global
form.
(b) Any Security in global form may be endorsed with or have incorporated
in the text thereof such legends or recitals or changes not inconsistent with
the provisions of this Indenture as
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may be required by the Custodian, the Depositary or by the National Association
of Securities Dealers, Inc. in order for the Securities to be tradeable on The
PORTAL Market or as may be required for the Securities to be tradeable on any
other market developed for trading of securities pursuant to Rule 144A or
Regulation S or required to comply with any applicable law or any regulation
thereunder or with the rules and regulations of any securities exchange or
automated quotation system upon which the Securities may be listed or traded or
to conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Securities are subject.
(c) Every Security that bears or is required under this Section 2.6(c) to
bear the legend set forth in this Section 2.6(c) (together with any Common Stock
issued upon conversion of the Securities and required to bear the legend set
forth in Section 2.6(d), collectively, the "Restricted Securities") shall be
subject to the restrictions on transfer set forth in this Section 2.6(c)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the Holder of each such Transfer Restricted Security, by such Holder's
acceptance thereof, agrees to be bound by all such restrictions on transfer. As
used in Sections 2.6(c) and 2.6(d), the term "transfer" encompasses any sale,
pledge, transfer or other disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
certificate evidencing such Security (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 2.6(d), if
applicable) shall bear a legend in substantially the following form, unless such
Security has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer), or unless otherwise agreed by the Company in
writing, with written notice thereof to the Trustee:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD UNDER RULE 144(k) (OR
ANY SUCCESSOR THERETO) UNDER THE SECURITIES ACT WHICH IS APPLICABLE
TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN "AFFILIATE" (WITHIN
THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY AT
ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,
IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING
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MADE IN RELIANCE ON RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS
DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S
UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD
TO THIS SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY EXCEPT AS PERMITTED BY THE SECURITIES ACT.
Any Security (or security issued in exchange or substitution therefor)
as to which such restrictions on transfer shall have expired in accordance with
their terms or as to which the conditions for removal of the foregoing legend
set forth therein have been satisfied may, upon surrender of such Security for
exchange to the Registrar in accordance with the provisions of this Section 2.6,
be exchanged for a new Security or Securities, of like tenor and aggregate
principal amount, which shall not bear the restrictive legend required by this
Section 2.6(c).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in Section 2.6(b) and in this Section 2.6(c)), the Global
Note may not be transferred as a whole or in part except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to
act as Depositary with respect to the Global Note. Initially, the Global Note
shall be issued to the Depositary, registered in the name of Cede & Co., as the
nominee of the Depositary, and deposited with the Custodian for Cede & Co. The
Global Note, to the extent that it represents the interests of Non-U.S. Persons,
will be held by Cede & Co. for the accounts of designated agents on behalf of
the Euroclear System ("Euroclear") and Clearstream Banking, Societe Anonyme
("Clearstream"). Non-U.S. Persons holding beneficial interests in the Global
Note may do so only through Euroclear or Clearstream, and any resale or transfer
of any such interest to a U.S. Person shall only be permitted if such Person is
a QIB or is the Company or an Affiliate of the Company.
If at any time the Depositary for the Global Note notifies the Company
that it is unwilling or unable to continue as Depositary for such Global Note,
the Company may appoint a
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successor Depositary with respect to such Global Note. If a successor Depositary
is not appointed by the Company within ninety (90) days after the Company
receives such notice, the Company will execute, and the Trustee, upon receipt of
an Officers' Certificate for the authentication and delivery of Securities, will
authenticate and deliver, Securities in certificated form, in aggregate
principal amount equal to the principal amount of the Global Note, in exchange
for such Global Note.
If a Security in certificated form is issued in exchange for any
portion of the Global Note after the close of business at the office or agency
where such exchange occurs on any record date and before the opening of business
at such office or agency on the next succeeding interest payment date, interest
will not be payable on such interest payment date in respect of such Security,
but will be payable on such interest payment date, subject to the provisions of
paragraphs 1 and 2 of the Security, only to the person to whom interest in
respect of such portion of the Global Note is payable in accordance with the
provisions of this Indenture and the Securities.
Securities in certificated form issued in exchange for all or a part
of the Global Note pursuant to this Section 2.6 shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such Securities in certificated form to the persons in whose names such
Securities in certificated form are so registered.
At such time as all interests in the Global Note have been redeemed,
converted, canceled, exchanged for Securities in certificated form, or
transferred to a transferee who receives Securities in certificated form
thereof, such Global Note shall, upon receipt thereof, be canceled by the
Trustee in accordance with standing procedures and instructions existing between
the Depositary and the Custodian. At any time prior to such cancellation, if
any interest in the Global Note is redeemed, converted, repurchased or canceled,
the principal amount of the Global Note shall, in accordance with the standing
procedures and instructions existing between the Depositary and the Custodian,
be appropriately reduced and an endorsement shall be made on such Global Note,
by the Trustee or the Custodian, at the direction of the Trustee, to reflect
such reduction.
(d) Until the expiration of the holding period applicable to sales thereof
under Rule 144(k) under the Securities Act (or any successor provision), any
stock certificate representing Common Stock issued upon conversion of such
Security shall bear a legend in substantially the following form, unless such
Common Stock has been sold pursuant to a registration statement that has been
declared effective under the Securities Act (and which continues to be effective
at the time of such transfer) or such Common Stock has been issued upon
conversion of Securities that have been transferred pursuant to a registration
statement that has been declared effective under the Securities Act, or unless
otherwise agreed by the Company in writing with written notice thereof to the
transfer agent:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD UNDER RULE 144(k) (OR
ANY SUCCESSOR
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THERETO) UNDER THE SECURITIES ACT WHICH IS APPLICABLE TO THIS
SECURITY OR (Y) BY ANY HOLDER THAT WAS AN "AFFILIATE" (WITHIN THE
MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE COMPANY AT ANY
TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN
EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S
UNDER THE SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR
THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER OR (2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF
PARAGRAPH (k)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES
ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY,
ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY EXCEPT
AS PERMITTED BY THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms or as to which the conditions for removal
of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.6(d).
(e) Any Security or Common Stock issued upon the conversion or exchange of
a Security that, prior to the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), is purchased or owned by the Company or any Affiliate thereof may
not be resold by the Company or such Affiliate unless registered under the
Securities Act or resold pursuant to an exemption from the registration
requirements of the Securities Act in a transaction which results in such
Securities or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
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(f) Each Holder of a Security agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Security in violation of any provision of this
Indenture and/or applicable United States Federal or state securities law.
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
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 the Global Note) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
SECTION 2.7. Replacement Securities.
-----------------------
If any mutilated Security is surrendered to the Company or the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such Security or indemnity as may be required by them to
save each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute, and upon its written request the Trustee shall
authenticate and deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount, bearing a 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 redeemed by the Company
pursuant to Article 3, the Company in its discretion may, instead of issuing a
new Security, pay or redeem such Security, as the case may be.
Upon the issuance of any new Securities under this Section 2.7, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Security issued pursuant to this Section 2.7 in lieu of any
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 2.7 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.8. Outstanding Securities.
-----------------------
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Securities outstanding at any time are all Securities authenticated by the
Trustee, except for those canceled by it, those delivered to it for cancellation
and those described in this Section 2.8 as not outstanding.
If a Security is replaced pursuant to Section 2.7, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent (other than the Company or an Affiliate of the Company)
holds on a redemption date, repurchase date or maturity date money sufficient to
pay the principal of, premium, if any, and accrued interest on Securities
payable on that date, then on and after that date such Securities cease to be
outstanding and interest on them ceases to accrue.
Subject to the restrictions contained in Section 2.9, a Security does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Security.
SECTION 2.9. Treasury Securities.
--------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by any
Affiliate of the Company or of such other obligor shall be disregarded, except
that for purposes of determining whether the Trustee shall be protected in
relying on any such notice, direction, waiver or consent, only Securities which
the Trustee knows are so owned shall be so disregarded. Securities so owned
which have been pledged in good faith shall not be disregarded if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to the Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
SECTION 2.10. Temporary Securities.
---------------------
Until definitive Securities are ready for delivery, the Company may prepare
and execute, and, upon the order of the Company, the Trustee shall authenticate
and deliver temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
with the consent of the Trustee considers appropriate for temporary Securities.
Every such temporary Security shall be executed by the Company and authenticated
by the Trustee upon the same conditions and in substantially the same manner,
and with the same effect, as the definitive Securities. Without unreasonable
delay the Company will execute and deliver to the Trustee definitive Securities
and thereupon any or all temporary Securities may be surrendered in exchange
therefor, at each office or agency maintained by the Company pursuant to Section
6.10 and the Trustee shall authenticate and deliver in exchange for such
temporary Securities an equal aggregate principal amount at maturity of
definitive Securities. Such exchange shall be made by the Company at its own
expense and without any charge therefor. Until so exchanged, the temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities authenticated and delivered hereunder.
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SECTION 2.11. Cancellation.
-------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee any Securities surrendered to them for transfer,
exchange, payment or conversion. The Trustee and no one else shall cancel all
Securities surrendered for transfer, exchange, payment (including redemption or
repurchase), conversion or cancellation and shall dispose of cancelled
Securities in accordance with its procedures for the disposition of cancelled
Securities in effect as of the date of such disposition and thereupon deliver a
certificate of cancellation to the Company. The Company may not issue new
Securities to replace Securities it has paid or delivered to the Trustee for
cancellation or which have been converted.
SECTION 2.12. 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 REPURCHASE
SECTION 3.1. Provisional and Optional Redemption by the Company.
---------------------------------------------------
(a) The Company may, at its option, redeem all or from time to time any
part of the Securities on any date on or after 90 days following the last day of
original issuance and prior to August 7, 2003 (a "Provisional Redemption"), upon
notice as set forth in Section 3.4, at a redemption price of $1,000 per $1,000
principal amount of Securities, plus accrued and unpaid interest, if any, if (i)
the trading price of the Company's Common Stock for 20 Trading Days in a period
of 30 consecutive Trading Days ending on the Trading Day prior to the date of
mailing of the provisional notice of redemption (the "Notice Date") exceeds 150%
of the Conversion Price of the Securities and (ii) the registration statement
covering resales of the Securities and the Common Stock issuable upon conversion
of the Securities is effective and available for use and is expected to remain
effective for the 30 days following the provisional redemption date, unless
registration is no longer required.
Upon any such Provisional Redemption, the Company shall make an additional
payment in cash (the "Make Whole Payment") with respect to the Securities called
for redemption to holders on the Notice Date in an amount equal to $193.55 per
$1,000 principal amount of the Securities, less the amount of any interest
actually paid on such Securities prior to the date of redemption. The
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Company shall make the Make-Whole Payment on all Securities called for
Provisional Redemption, including those Securities converted into Common Stock
between the Notice Date and the date of redemption.
(b) The Company may, at its option, redeem all or from time to time any
part of the Securities on any date on or after August 7, 2003 and prior to
maturity (an "Optional Redemption"), upon notice as set forth in Section 3.4,
and at the redemption prices set forth in paragraph 5 of the form of Security
attached hereto as Exhibit A, together with accrued interest to the date of
---------
redemption.
SECTION 3.2. Election To Redeem; Notice to Trustee.
--------------------------------------
If the Company elects to redeem Securities pursuant to paragraph 5 of the
Securities, it shall notify the Trustee at least 60 days prior to the redemption
date as fixed by the Company (unless a shorter notice shall be satisfactory to
the Trustee) of the redemption date and the principal amount of Securities to be
redeemed. If fewer than all of 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 10 days after the date of
notice to the Trustee.
SECTION 3.3. Selection of Securities To Be Redeemed.
---------------------------------------
If less than all of the Securities are to be redeemed, the Trustee shall,
not more than 60 days prior to the redemption date, select the Securities to be
redeemed by lot, pro rata or by another method the Trustee considers fair and
appropriate; provided that such method is not prohibited by any stock exchange
or market on which the Securities are then listed. The Trustee shall make the
selection from the Securities outstanding and not previously called for
redemption. Securities in denominations of $1,000 may only be redeemed in
whole. The Trustee may select for redemption portions (equal to $1,000 or any
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.4. Notice of Redemption.
---------------------
Notice of redemption shall be given at least 30 days prior to the
redemption date in the case of a Provisional Redemption and at least 20 days but
not more than 60 days before a redemption date in the case of an Optional
Redemption. In each case, the Company shall mail or cause to be mailed a notice
of redemption by first-class mail to each Holder of Securities to be redeemed at
such Holder's address as it appears on the Registrar's books.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the then-current Conversion Price;
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(4) the name and address of the Paying Agent and the Conversion Agent;
(5) that Securities called for redemption must be presented and
surrendered to the Paying Agent to collect the redemption price;
(6) that the Securities called for redemption may be converted at any time
before the close of business on the Business Day immediately preceding the
redemption date;
(7) that Holders who wish to convert Securities must satisfy the
requirements in paragraph 8 of the Securities;
(8) that, unless the Company defaults in making the redemption payment,
interest on Securities called for redemption ceases to accrue on and after the
redemption date and the only remaining right of the Holder is to receive payment
of the redemption price upon presentation and surrender to the Paying Agent of
the Securities;
(9) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the redemption
date, upon presentation and surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion thereof will be
issued; and
(10) subject to Section 2.12, the CUSIP number of the Securities called for
redemption.
At the Company's written request delivered at least 15 days prior to the
date of the mailing of the notice of redemption, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense.
SECTION 3.5. Deposit of Redemption Price.
----------------------------
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an interest
payment date) accrued interest on, all the Securities which are to be redeemed
on that date other than any Securities called for redemption on that date which
have been converted prior to the date of such deposit; provided that if such
payment is made on the Redemption Date, it must be received by the Trustee or
Paying Agent, as the case may be, by 10:00 a.m. New York City time on such date.
If any Security called for redemption is converted, any money deposited
with the Trustee or with any Paying Agent or segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security or any predecessor security to receive interest) be paid to the
Company as soon as practicable upon written request by the Company or, if then
held by the Company, shall be released from such trust.
20
<PAGE>
SECTION 3.6. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest, if any) such Securities shall cease to bear or accrue any interest.
Upon surrender of any such Security for redemption in accordance with said
notice, such Security shall be paid by the Company at the Redemption Price,
together with accrued interest to (but not including) the Redemption Date;
provided, however, that installments of interest whose stated maturity is on or
prior to the Redemption Date shall be payable to the Holders of such Securities
registered as such at the close of business on the relevant Record Dates
according to their terms.
If the Company shall fail to deposit the Redemption Price with the Trustee
and any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and premium, if any, shall, until paid,
bear and accrue interest from the Redemption Date at the rate borne by the
Security.
SECTION 3.7. Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part shall be surrendered at
an office or agency of the Company designated for that purpose (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 his attorney-in-fact duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal
amount of the Security so surrendered.
SECTION 3.8. 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 by an agreement with one or
more investment bankers or other purchasers to purchase such Securities by
paying to the Trustee in trust for the Holders, on or before the Redemption
Date, an amount not less than the applicable Redemption Price of such
Securities, together with interest accrued to the Redemption Date.
Notwithstanding anything to the contrary contained in this Article 3, the
obligation of the Company to pay the Redemption Price of such Securities,
together with interest accrued to, but excluding, the Redemption Date shall be
deemed to be satisfied and discharged to the extent such amount is so paid by
such purchasers. If such an agreement is entered into, a copy of which shall be
filed with the Trustee prior to the Redemption Date, any 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 4) surrendered by such purchasers for conversion, all as of
immediately prior to the close of business on the Redemption Date (and the right
to convert any such Securities shall be deemed to have been extended through
such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner
21
<PAGE>
as it would monies 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. Nothing in the preceding sentence shall be
deemed to limit the rights and protections afforded to the Trustee in Article 9,
including, but not limited to, the right to the indemnification pursuant to
Section 9.7.
SECTION 3.9. Repurchase of Securities at Option of the Holder upon Change in
---------------------------------------------------------------
Control.
-------
If at any time that Securities remain outstanding there shall have occurred
a Change in Control (as hereinafter defined), Securities shall be repurchased by
the Company at the option of the Holder thereof, at a purchase price (the
"Repurchase Price") equal to the principal amount thereof plus accrued interest
up to and including the Repurchase Date (as hereinafter defined), on the date
(the "Repurchase Date") fixed by the Company that is not less than 45 days nor
more than 60 days after the date of the Company Notice (as hereinafter defined),
subject to satisfaction by or on behalf of the Holder of the requirements set
forth in Section 3.10(b).
Whenever in this Indenture there is a reference to the principal of any
Security as of any time, such reference shall be deemed to include reference to
the Repurchase Price payable in respect of such Security to the extent that such
Repurchase Price is, was or would be so payable at such time, and express
mention of the Repurchase Price in any provision of this Indenture shall not be
construed as excluding the Repurchase Price in those provisions of this
Indenture when such express mention is not made.
Any rights of Holders, contractual or otherwise, arising under or pursuant
to any offer to repurchase Securities made by the Company under this Section 3.9
shall be subordinated in right of payment to all Senior Indebtedness to the same
extent as the Securities are subordinated to Senior Indebtedness under the
provisions of Article 5 and such offer to repurchase shall provide that, if at
the time the Securities are required to be repurchased pursuant to such offer,
payment of the Securities is not permitted pursuant to the provisions of Article
5, the Company shall use its best efforts to obtain all necessary waivers from,
or to repay in full, the holders of Senior Indebtedness in order to permit such
repurchase. Notwithstanding the foregoing, any failure by the Company to comply
with this Section 3.9 to offer to repurchase, or to repurchase, the Securities
shall be a default in the performance by the Company hereunder.
A "Change in Control" shall be deemed to have occurred at such time after
the original issuance of the Securities as any of the following occur:
(1) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company and its subsidiaries, taken as a
22
<PAGE>
whole, to any person or group of related persons, as defined in Section 13(d) of
the Exchange Act (a "Group");
(2) the approval by the holders of capital stock of the Company of any plan
or proposal for the liquidation or dissolution of the Company (whether or not
otherwise in compliance with the provisions of the applicable indenture);
(3) any person or Group shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 50% of the aggregate
ordinary voting power represented by the Company's issued and outstanding voting
stock of or any successor to all or substantially all of the Company's assets;
or
(4) the first day on which a majority of the members of the Company's Board
of Directors are not Continuing Directors.
"Beneficial owner" shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act, as in effect on the date of
execution of this Indenture, except that a person shall be deemed to be the
"beneficial owner" of all securities that such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of time.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the original issuance of the Securities or (ii) was
nominated for election or elected to the Board of Directors with the approval
of a majority of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election.
SECTION 3.10. Notice; Method of Exercising Repurchase Right
---------------------------------------------
(a) Within 30 days after the occurrence of a Change in Control, the Company
shall mail a written notice (the "Company Notice") by first-class mail to the
Trustee and to each Holder (and to beneficial owners as required by applicable
law) and shall cause a copy of such notice to be published in a daily newspaper
of national circulation. The notice shall include the form of a Repurchase
Notice (as defined below) to be completed by the Holder and shall state:
(1) the date of such Change in Control and, briefly, the events causing
such Change in Control;
(2) the date by which the Repurchase Notice pursuant to this Section 3.10
must be given;
(3) the Repurchase Date;
(4) the Repurchase Price;
(5) briefly, the conversion rights of the Securities including, without
limitation, the current Conversion Price and any adjustments thereto;
(6) the name and address of the Paying Agent and the Conversion Agent;
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<PAGE>
(7) whether the holders of Senior Indebtedness will permit the payment of
the Repurchase Price;
(8) that Securities as to which a Repurchase Notice has been given may be
converted into Common Stock only to the extent that the Repurchase Notice has
been withdrawn in accordance with the terms of this Indenture;
(9) the procedures that the Holder must follow to exercise rights under
Section 3.9;
(10) the procedures for withdrawing a Repurchase Notice, including a form
of notice of withdrawal;
(11) that the Holder must satisfy the requirements set forth in the
Securities in order to convert the Securities; and
(12) the CUSIP number of the Securities as to which a Repurchase Notice has
been given.
(b) A Holder may exercise its rights specified in Section 3.9 upon
delivery of a written notice of the exercise of such rights (a "Repurchase
Notice") to the Paying Agent at any time prior to the close of business on the
third Business Day prior to the Repurchase Date, stating:
(1) the certificate number of each Security that the Holder will deliver
to be repurchased;
(2) the portion of the principal amount of each Security that the Holder
will deliver to be repurchased, which portion must be $1,000 or an integral
multiple thereof; and
(3) that such Security shall be repurchased pursuant to the terms and
conditions specified in this Indenture.
The delivery of such Security to the Paying Agent prior to, on or after the
Repurchase Date (together with all necessary endorsements) at the office of the
Paying Agent shall be a condition to the receipt by the Holder of the Repurchase
Price therefor; provided, however, that such Repurchase Price shall be so paid
pursuant to Section 3.9 only if the Security so delivered to the Paying Agent
shall conform in all respects to the description thereof set forth in the
related Repurchase Notice.
The Company shall repurchase from the Holder thereof, pursuant to Section
3.9, a portion of a Security if the principal amount of such portion is $1,000
or an integral multiple of $1,000. Provisions of this Indenture that apply to
the repurchase of all of a Security pursuant to Sections 3.9 through 3.15 also
apply to the repurchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Repurchase Notice contemplated by this Section 3.10(b)
shall have the right to withdraw such Repurchase Notice in whole or in a portion
thereof that is $1,000 or an integral multiple thereof at any time prior to the
close of business on the Business Day prior to the Repurchase Date by delivery
of a written notice of withdrawal to the Paying Agent in accordance with Section
3.11.
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<PAGE>
The Paying Agent shall promptly notify the Company of the receipt by it of
any Repurchase Notice or written withdrawal thereof.
SECTION 3.11. Effect of Repurchase Notice.
---------------------------
Upon receipt by the Paying Agent of the Repurchase Notice specified in
Section 3.10(b), the Holder of the Security in respect of which such Repurchase
Notice was given shall (unless such Repurchase Notice is withdrawn as specified
below) thereafter be entitled to receive solely the Repurchase Price with
respect to such Security. Such Repurchase Price shall be paid to such Holder
promptly following the later of (i) the Repurchase Date with respect to such
Security (provided the conditions in Section 3.10(b) have been satisfied) and
(ii) the time of delivery of such Security to the Paying Agent by the Holder
thereof in the manner required by Section 3.10(b). Securities in respect of
which a Repurchase Notice has been given by the Holder thereof may not be
converted into shares of Common Stock on or after the date of the delivery of
such Repurchase Notice unless such Repurchase Notice has first been validly
withdrawn.
A Repurchase Notice may be withdrawn by means of a written notice of
withdrawal delivered by the Holder, with such Holder's signature guaranteed in a
manner satisfactory to the Paying Agent, to the office of the Paying Agent at
any time prior to the close of business on the Business Day prior to the
Repurchase Date to which it relates, specifying:
(1) the certificate number of each Security in respect of which such notice
of withdrawal is being submitted;
(2) the principal amount of the Security or portion thereof with respect to
which such notice of withdrawal is being submitted; and
(3) the principal amount, if any, of such Security that remains subject to
the original Repurchase Notice and that has been or will be delivered for
repurchase by the Company.
SECTION 3.12. Deposit of Repurchase Price.
---------------------------
On or before the Repurchase Date, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company is acting as the Paying
Agent, shall segregate and hold in trust as provided in Section 2.4) an amount
of money sufficient to pay the aggregate Repurchase Price of all the Securities
or portions thereof that are to be repurchased as of such Repurchase Date. The
manner in which the deposit required by this Section 3.12 is made by the Company
shall be at the option of the Company; provided that such deposit shall be made
in a manner such that the Trustee or the Paying Agent shall have immediately
available funds on the Repurchase Date; provided further, that if such payment
is made on the Repurchase Date it must be received by the Trustee or Paying
Agent, as the case may be, by 10:00 a.m., New York City time, on such date.
If the Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Repurchase Price of any Security tendered for repurchase
on the Business Day prior to the Repurchase Date, then, on and after the
Repurchase Date, such Security will cease to be outstanding and interest on such
Security will cease to accrue and will be deemed paid, whether or not such
25
<PAGE>
Security is delivered to the Paying Agent, and all other rights of the Holder in
respect thereof shall terminate (other than the right to receive the Repurchase
Price upon delivery of such Security).
SECTION 3.13. Securities Repurchased in Part.
------------------------------
Any Security that is to be repurchased only in part shall be surrendered at
the office of the Paying Agent (with due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in writing),
and the Company shall execute and the Trustee shall authenticate and deliver to
the Holder of such Security, without service charge, a new Security or
Securities, or such authorized denomination or denominations as may be requested
by such Holder, in aggregate principal amount equal to, and in exchange for, the
portion of the principal amount of the Security so surrendered that is not
repurchased.
SECTION 3.14. Compliance with Securities Laws upon Repurchase of Securities.
-------------------------------------------------------------
In connection with any offer to repurchase or repurchase of Securities
under Section 3.9 hereof (provided that such offer or repurchase constitutes an
"issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) at the time of such offer or
repurchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under
the Exchange Act, (ii) file the related Schedule 13E-4 (or any successor
schedule, form or report) under the Exchange Act, and (iii) otherwise comply
with all federal and state securities laws so as to permit the rights of the
Holders and obligations of the Company under Sections 3.9 through 3.14 to be
exercised in the time and in the manner specified therein.
SECTION 3.15. Repayment to the Company
------------------------
Subject to the provisions of Section 5.7, to the extent that the aggregate
amount of cash deposited by the Company pursuant to Section 3.12 exceeds the
aggregate Repurchase Price of the Securities or portions thereof to be
repurchased, then, promptly after the Business Day following the Repurchase
Date, the Trustee or the Paying Agent, as the case may be, shall return any such
excess to the Company.
ARTICLE 4.
CONVERSION
SECTION 4.1. Conversion Privilege.
--------------------
At any time after 90 days following the latest date of original issuance of
the Securities and prior to the close of business on the Business Day
immediately preceding August 1, 2007, a Holder of a Security may convert such
Security into Common Stock (the shares of Common Stock issuable upon such
conversion, the "Conversion Shares"), at the Conversion Price then in effect,
together with those rights, warrants or options specified in the first sentence
of Section 4.6(f) hereof, to the extent applicable; provided that, if such
Security is called for redemption pursuant to Article 3, such conversion right
shall terminate at the close of business on the Business Day before the
redemption date for such Security (unless the Company shall default in making
the redemption payment then
26
<PAGE>
due, in which case the conversion right shall terminate on the date such default
is cured and such Security is redeemed). The number of shares of Common Stock
issuable upon conversion of a Security shall be determined by dividing the
principal amount of the Security or portion thereof surrendered for conversion
by the Conversion Price in effect on the conversion date. The initial Conversion
Price is set forth in paragraph 8 of the Securities and is subject to adjustment
as provided in this Article 4.
A Holder may convert a portion of a Security equal to $1,000 or any
integral multiple thereof. Provisions of this Indenture that apply to conversion
of all of a Security also apply to conversion of a portion of a Security.
A Security in respect of which a Holder has delivered a Repurchase Notice
pursuant to Section 3.10(b) exercising the option of such Holder to require the
Company to repurchase such Security may be converted only if such Repurchase
Notice is withdrawn by a written notice of withdrawal delivered to the Paying
Agent prior to the close of business on the Repurchase Date in accordance with
Section 3.11.
A Holder of Securities is not entitled to any rights of a holder of Common
Stock until such Holder has converted his Securities into Common Stock and, upon
such conversion, only to the extent such Securities are deemed to have been
converted into Common Stock pursuant to this Article 4.
SECTION 4.2. Conversion Procedure.
--------------------
To convert a Security, a Holder must (i) complete and manually sign the
conversion notice on the back of the Security and deliver such notice to the
Conversion Agent, (ii) surrender the Security to the Conversion Agent, (iii)
furnish appropriate endorsements and transfer documents to the Registrar or the
Conversion Agent, (iv) pay any transfer or other tax, if required by Section 4.4
and (v) if the Security is held in book-entry form, complete and deliver to the
Depositary appropriate instructions pursuant to the Depositary's book-entry
conversion programs. The date on which the Holder satisfies all of the foregoing
requirements is the conversion date. As soon as practicable after the conversion
date, the Company shall deliver to the Holder through the Conversion Agent a
certificate for the number of whole shares of Common Stock issuable upon the
conversion and cash in lieu of any fractional shares pursuant to Section 4.5.
The person in whose name the certificate is registered shall be deemed to
be a stockholder of record on the conversion date; provided, however, that no
surrender of a 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; provided, further, that such conversion shall be at the Conversion
Price in effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
Upon conversion of a Security, such person shall no longer be a Holder of such
Security.
27
<PAGE>
No payment or adjustment will be made for accrued interest on a converted
Security or for dividends or distributions on shares of Common Stock issued upon
conversion of a Security, but if any Holder surrenders a Security for conversion
between the record date for the payment of an installment of interest and the
next interest payment date, then, notwithstanding such conversion, the interest
payable on such interest payment date shall be paid to the Holder of such
Security on such record date. In such event, such Security, when surrendered for
conversion, must be accompanied by delivery of a check payable to the Conversion
Agent in an amount equal to the interest payable on such interest payment date
on the portion so converted. If such payment does not accompany such Security,
the Security shall not be converted; provided, however, that no such check shall
be required if such Security has been called for redemption on a redemption date
within the period between and including such record date and such interest
payment date, or if such Security is surrendered for conversion on the interest
payment date. If the Company defaults in the payment of interest payable on the
interest payment date, the Conversion Agent shall repay such funds to the
Holder.
If a 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
aggregate principal amount of Securities converted.
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 equal in principal amount to the unconverted portion of the Security
surrendered.
SECTION 4.3. Adjustments Below Par Value.
---------------------------
Before taking any action which would cause an adjustment decreasing the
Conversion Price so that the shares of Common Stock issuable upon conversion of
the Securities would be issued for less than the par value of such Common Stock,
the Company will take all corporate action which may be necessary in order that
the Company may validly and legally issue fully paid and nonassessable shares of
such Common Stock at such adjusted Conversion Price.
SECTION 4.4. 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 such conversion. However, the Holder shall pay any such tax which is
due because the Holder requests the shares to be issued in a name other than the
Holder's name. The Conversion Agent may refuse to deliver the certificates
representing the Common Stock being issued in a name other than the Holder's
name until the Conversion Agent receives a sum sufficient to pay any tax which
will be due because the shares are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any tax withholding required by law
or regulations.
SECTION 4.5. Company To Provide Stock.
------------------------
The Company shall, prior to issuance of any Securities hereunder, and from
time to time as may be necessary, reserve, out of its authorized but unissued
Common Stock a sufficient number of shares of Common Stock to permit the
conversion of all outstanding Securities for shares of
28
<PAGE>
Common Stock. The shares of Common Stock or other securities issued upon
conversion of the Securities shall bear any legend required in accordance with
Section 2.6(d).
No fractional shares of Common Stock or scrip representing fractional
shares shall be issued upon conversion of Securities. If more than one Security
shall be surrendered for conversion at one time by the same holder, the number
of full shares which shall be issuable upon conversion shall be computed on the
basis of the aggregate principal amount of the Securities (or specified portions
thereof to the extent permitted hereby) so surrendered. If any fractional share
of Common Stock would be issuable upon the conversion of any Security or
Securities, the Company shall make an adjustment thereof in cash at the current
market value thereof. For these purposes, the current market value of a share of
Common Stock shall be the Closing Price on the first day (which is not a Legal
Holiday) immediately preceding the day on which the Securities (or specified
portions thereof) are deemed to have been converted.
The Company covenants that all shares of Common Stock delivered upon
conversion of the Securities shall be newly issued shares or treasury shares,
shall be duly authorized, validly issued, fully paid and non-assessable and
shall be free from preemptive rights and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of Common Stock upon
conversion of 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.
SECTION 4.6. Adjustment of Conversion Price. The conversion price (the
------------------------------
"Conversion Price") shall be that price set forth in paragraph 8 of the form of
Security attached hereto as Exhibit A and shall be adjusted from time to time by
---------
the Company as follows:
(a) In case the Company shall (i) pay a dividend or other distribution in
shares of Common Stock to holders of Common Stock, (ii) subdivide its
outstanding Common Stock into a greater number of shares, (iii) combine its
outstanding Common Stock into a smaller number of shares or (iv) reclassify its
outstanding Common Stock, the Conversion Price in effect immediately prior
thereto shall be adjusted so that the Holder of any Security thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock which it would have owned or have been entitled to receive had such
Security been converted immediately prior to the happening of such event. An
adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend or distribution and
shall become effective immediately after the effective date in the case of
subdivision, combination or reclassification.
(b) In case the Company shall issue to all or substantially all holders of
its Common Stock, rights, warrants or options entitling such holders (for a
period commencing no earlier than the record date described below and expiring
not more than 45 days after such record date) to subscribe for or purchase
shares of Common Stock (or securities convertible into Common Stock) at a price
per share less than the current market price per share of Common Stock (as
determined in accordance with subsection (e) below) at the record date for the
determination of stockholders
29
<PAGE>
entitled to receive such rights, warrants or options, the Conversion Price in
effect immediately prior thereto shall be adjusted so that the Conversion Price
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on such record date,
plus the number of shares which the aggregate subscription or purchase price for
the total number of shares of Common Stock offered by the rights, warrants or
options so issued (or the aggregate conversion price of the convertible
securities offered by such rights, warrants or options) would purchase at such
current market price, and the denominator of which shall be the number of shares
of Common Stock outstanding on such record date plus the number of additional
shares of Common Stock offered by such rights, warrants or options (or into
which the convertible securities so offered by such rights, warrants or options
are convertible). Such adjustment shall be made successively whenever any such
rights, warrants or options are issued, and shall become effective immediately
after such record date. If at the end of the period during which such rights,
warrants or options are exercisable not all rights, warrants or options shall
have been exercised, the adjusted Conversion Price shall be immediately
readjusted to what it would have been upon application of the foregoing
adjustment substituting the number of additional shares of Common Stock actually
issued (or the number of shares of Common Stock issuable upon conversion of
convertible securities actually issued) for the total number of shares of Common
Stock offered (or the convertible securities offered).
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock any shares of capital stock of the Company (other
than Common Stock) or evidences of its indebtedness, cash, other securities or
other assets, or shall distribute to all or substantially all holders of its
Common Stock, rights, warrants or options to subscribe for or purchase any of
its securities (excluding (i) rights, options and warrants referred to in
subsection (b) above or (f) below; (ii) those dividends, distributions,
subdivisions and combinations referred to in subsection (a) above; and (iii)
dividends and distributions paid in cash in an aggregate amount that, combined
together with (A) all other such cash distributions made within the preceding 12
months in respect of which no adjustment has been made under this Section 4.6
and (B) the fair market value of consideration payable in respect of any
repurchases (including by way of tender offers) by the Company or any of its
Subsidiaries or Affiliates, of Common Stock concluded within the preceding 12
months, in each case in respect of which no adjustment has been made under this
Section 4.6, does not exceed 15% of Market Capitalization as of the record date
for such distribution), then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of such distribution or
purchase by a fraction, the numerator of which shall be the current market price
per share (as defined in subsection (e) below) of the Common Stock on the record
date mentioned below less the fair market value on such record date (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive evidence of such fair market value) of the portion of the capital
stock or evidences of indebtedness, securities or assets so distributed or of
such rights, warrants or options, in each case as applicable to one share of
Common Stock, and the denominator of which shall be the current market price per
share (as defined in subsection (e) below) of the Common Stock on such record
date. Such adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive such distribution.
(d) In case the Company or any of its Subsidiaries shall repurchase
(including by way of tender offer) shares of Common Stock, and the fair market
value of the sum of (i) the aggregate
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consideration paid for such Common Stock, (ii) the aggregate fair market value
of cash dividends and distributions of the type described in clause (iii) of the
preceding paragraph (c) paid within the twelve (12) months preceding the date of
purchase of such shares of Common Stock in respect of which no adjustment
pursuant to this Section 4.6 previously has been made, and (iii) the aggregate
fair market value of any amounts previously paid for the repurchase of Common
Stock of a type described in this paragraph (d) within the twelve (12) months
preceding the date of purchase of such shares of Common Stock in respect of
which no adjustment pursuant to this Section 4.6 previously has been made,
exceeds 15% of Market Capitalization on the date of, and after giving effect to,
such repurchase, then the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the date of such distribution or purchase by a fraction,
the numerator of which shall be the current market price per share (as defined
in subsection (e) below) of the Common Stock on the date of such repurchase,
less the quotient obtained by dividing the Aggregate Market Premium involved in
such repurchase (as defined hereinafter) by the difference between the number of
shares of Common Stock outstanding before such repurchase and the number of
shares of Common Stock the subject of such repurchase, and the denominator of
which shall be the current market price per share (as defined in subsection (e)
below) of the Common Stock on the date of such repurchase. Such adjustment shall
become effective immediately after the date of such repurchase. For purposes of
this subsection (d), the "Aggregate Market Premium" is the excess, if any, of
the aggregate repurchase price paid for all such Common Stock over the aggregate
current market value per share (as defined in subsection (e) below) of all such
repurchased stock, determined with respect to each share involved in each such
repurchase as of the date of repurchase with respect to such share.
(e) For the purpose of any computation under subsections (b), (c) and (d)
above, the current market price per share of Common Stock on any date shall be
deemed to be the average of the Closing Prices for 20 consecutive Trading Days
commencing 30 Trading Days before the record date with respect to any
distribution, issuance or other event requiring such computation. The Closing
Price for each day shall be (i) the last sale price, or the closing bid price if
no sale occurred, of such class of stock on the principal securities exchange on
which such class of stock is listed, if the Common Stock is listed or admitted
for trading on any national securities exchange, (ii) the last reported sale
price of Common Stock on The Nasdaq Stock Market, or any similar system of
automated dissemination of quotations of securities prices then in common use,
if so quoted, or (iii) if not quoted as described in clause (i), the mean
between the high bid and low asked quotations for Common Stock as reported by
the National Quotation Bureau Incorporated if at least two securities dealers
have inserted both bid and asked quotations for such class of stock on at least
5 of the 10 preceding days. If the Common Stock is quoted on a national
securities or central market system, in lieu of a market or quotation system
described above, the Closing Price shall be determined in the manner set forth
in clause (iii) of the preceding sentence if bid and asked quotations are
reported but actual transactions are not, and in the manner set forth in clause
(ii) of the preceding sentence if actual transactions are reported. If none of
the conditions set forth above is met, the Closing Price of Common Stock on any
day or the average of such last reported sale prices for any period shall be the
fair market value of such class of stock as determined by a member firm of the
New York Stock Exchange, Inc. selected by the Company. As used herein the term
"Trading Days" with respect to Common Stock means (i) if the Common Stock is
listed or admitted for trading on any national securities exchange, days on
which such national securities exchange is open for business or (ii) if the
Common Stock is quoted on The Nasdaq Stock Market or any similar
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<PAGE>
system of automated dissemination of quotations of securities prices, days on
which trades may be made on such system.
(f) If the Company implements a Stockholder Rights Plan (as defined
below), the Company agrees that such Stockholder Rights Plan will provide that
upon any conversion of the Securities by any Holder prior to a Trigger Event (as
defined below), the Holders shall receive the rights, warrants or options issued
under such plan. Rights, warrants or options distributed by the Company to all
holders of Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Company's capital stock (either initially or under
certain circumstances), which rights, warrants or options, until the occurrence
of a specified event or events (a "Trigger Event"):
(i) are deemed to be transferred with such shares of Common Stock,
(ii) are not exercisable, and
(iii) are also issued in respect of future issuances of Common Stock,
(a "Stockholder Rights Plan") shall not be deemed distributed for purposes of
this Section 4.6 and no adjustment to the Conversion Price shall be required to
be made until the occurrence of the earliest Trigger Event. In addition, in the
event of any Trigger Event with respect thereto, that shall have resulted in an
adjustment to the Conversion Price under this Section 4.6, (1) in the case of
any such rights, warrants or options which shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Price shall
be readjusted upon such final redemption or repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder of Common Stock with respect to such rights, warrants or options
(assuming such holder had retained such rights, warrants or options), made to
all holders of Common Stock as of the date of such redemption or repurchase, and
(2) in the case of any such rights, warrants or options all of which shall have
expired without exercise by any holder thereof, the Conversion Price shall be
readjusted as if such issuance had not occurred.
In any case in which this Section 4.6 shall require that an adjustment be
made immediately following a record date established for purposes of Section
4.6, the Company may elect to defer (but only until five Business Days following
the filing by the Company with the Trustee of the certificate described in
Section 4.10) issuing to the holder of any Security converted after such record
date the shares of Common Stock and other capital stock of the Company issuable
upon such conversion over and above the shares of Common Stock and other capital
stock of the Company issuable upon such conversion only on the basis of the
Conversion Price prior to adjustment; and, in lieu of the shares the issuance of
which is so deferred, the Company shall issue or cause its transfer agents to
issue due bills or other appropriate evidence of the right to receive such
shares.
Section 4.7. No Adjustment.
-------------
No adjustment in the Conversion Price shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Price as last adjusted; provided, however, that any adjustments which
by reason of this Section 4.7 are not required to be made shall be carried
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<PAGE>
forward and taken into account in any subsequent adjustment. All calculations
under this Article 4 shall be made to the nearest cent or to the nearest one-
hundredth of a share, as the case may be.
No adjustment need be made for rights to purchase Common Stock or issuances
of Common Stock pursuant to a Company plan for reinvestment of dividends or
interest.
No adjustment need be made for a change in the par value or a change to no
par value of the Common Stock.
To the extent that the Securities become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.
Section 4.8. Equivalent Adjustments.
----------------------
In the event that, as a result of an adjustment made pursuant to Section
4.6 above, the holder of any Security thereafter surrendered for conversion
shall become entitled to receive any shares of capital stock of the Company
other than shares of its Common Stock, thereafter the Conversion Price of such
other shares so receivable upon conversion of any Securities shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in this
Article 4.
Section 4.9. Adjustment for Tax Purposes.
---------------------------
The Company shall be entitled to make such reductions in the Conversion
Price, in addition to those required by Section 4.6, as it in its discretion
shall determine to be advisable in order that any stock dividends, subdivision
of shares, distribution of rights to purchase stock or securities, or a
distribution or securities convertible into or exchangeable for stock hereafter
made by the Company to its stockholders shall not be taxable.
Section 4.10. Notice of Adjustment.
--------------------
Whenever the Conversion Price is adjusted, or Securityholders become
entitled to other securities or due bills, the Company shall promptly mail to
Securityholders a notice of the adjustment and file with the Trustee an
Officers' Certificate briefly stating the facts requiring the adjustment and the
manner of computing it. The certificate shall be conclusive evidence of the
correctness of such adjustment and the Trustee may conclusively assume that,
unless and until such certificate is received by it, no such adjustment is
required.
Section 4.11. Notice of Certain Transactions.
------------------------------
In case:
(a) the Company shall declare a dividend (or any other distribution) on its
Common Stock (other than in cash out of retained earnings); or
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<PAGE>
(b) the Company shall authorize the granting to the holders of its Common
Stock of rights, warrants or options to subscribe for or purchase any share of
any class or any other rights, warrants or options; or
(c) of any reclassification of the Common Stock of the Company (other than
a subdivision or combination of its outstanding Common Stock, or a change in par
value, or from par value to no par value, or from no par value to par value), or
of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding-up
of the Company; the Company shall cause to be filed with the Trustee and to be
mailed to each holder of Securities at its address appearing on the list
provided for in Section 2.5, as promptly as possible but in any event at least
ten days prior to the applicable date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution or rights, warrants or options, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution or rights are to be determined, or (y) the date on
which such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective or occur, and the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
Section 4.12. Effect of Reclassification, Consolidation, Merger or Sale on
------------------------------------------------------------
Conversion Privilege.
--------------------
If any of the following shall occur, namely: (i) any reclassification or
change of outstanding shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination); (ii) any consolidation, combination or
merger to which the Company is a party other than a merger in which the Company
is the continuing corporation and which does not result in any reclassification
of, or change (other than a change in name, or par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination) in, outstanding shares of Common Stock; or (iii) any sale or
conveyance of all or substantially all of the assets of the Company, then the
Company, or such successor or purchasing corporation, as the case may be, shall,
as a condition precedent to such reclassification, change, consolidation,
merger, sale or conveyance, execute and deliver to the Trustee a supplemental
indenture providing that the Holder of each Security then outstanding shall have
the right to convert such Security into the kind and amount of shares of stock
and other securities and property (including cash) receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of shares of Common Stock deliverable upon conversion of such
Security immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance. Such supplemental indenture shall provide for
adjustments of the Conversion Price which shall be as nearly equivalent as may
be practicable to the adjustments of the Conversion Price provided for in this
Article 4. If, in the case of any such
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<PAGE>
consolidation, merger, sale or conveyance, the stock or other securities and
property (including cash) receivable thereupon by a holder of Common Stock
includes shares of stock or other securities and property of a corporation other
than the successor or purchasing corporation, as the case may be, in such
consolidation, merger, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors of the Company shall reasonably consider necessary by
reason of the foregoing. The provision of this Section 4.12 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
Notwithstanding the foregoing, a distribution by the Company to all or
substantially all holders of its Common Stock for which an adjustment to the
Conversion Price or provision for conversion of the Securities may be made
pursuant to Section 4.6 shall not be deemed to be a sale or conveyance of all or
substantially all of the assets of the Company for purposes of this Section
4.12.
In the event the Company shall execute a supplemental indenture pursuant to
this Section 4.12, the Company shall promptly file with the Trustee an Opinion
of Counsel stating that such supplemental indenture is authorized or permitted
by this Indenture and an Officers' Certificate briefly stating the reasons
therefor, the kind or amount of shares of stock or securities or property
(including cash) receivable by Holders of the Securities upon the conversion of
their Securities after any such reclassification, change, consolidation, merger,
sale or conveyance, any adjustment to be made with respect thereto and that all
conditions precedent have been complied with.
Section 4.13. Trustee's Disclaimer.
--------------------
The Trustee has no duty to determine when an adjustment under this Article
4 should be made, how it should be made or what such adjustment should be made,
but may accept as conclusive evidence of the correctness of any such adjustment,
and shall be protected in relying upon, the Officers' Certificate with respect
thereto which the Company is obligated to file with the Trustee pursuant to
Section 4.10. The Trustee shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article 4. Each
Conversion Agent (other than the Company or an Affiliate of the Company) shall
have the same protection under this Section 4.13 as the Trustee.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.12, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 4.12.
Section 4.14. Voluntary Reduction.
-------------------
The Company from time to time may reduce the Conversion Price by any amount
for any period of time if the period is at least 20 days or such longer period
as may be required by law and if the reduction is irrevocable during the period;
provided that in no event may the Conversion Price be less than the par value of
a share of Common Stock.
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ARTICLE 5.
SUBORDINATION
Section 5.1. Securities Subordinated to Senior Indebtedness.
----------------------------------------------
The Company covenants and agrees, and each Holder of Securities by his
acceptance thereof likewise covenants and agrees, that all Securities are
subject to the provisions of this Article 5; and each Person holding any
Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions and acknowledges that such
provisions are for the benefit of, and shall be enforceable directly by, the
holders of Senior Indebtedness.
Each Holder of Securities authorizes and directs the Trustee on such
Holder's behalf to take such action as may be necessary or appropriate, in the
sole discretion of the Trustee, to acknowledge or effectuate the subordination
between the Holders of Securities and the holders of Senior Indebtedness as
provided in this Article and appoints the Trustee as such Holder's attorney-in-
fact for any and all such purposes.
The payment of the principal of, premium, if any, and interest on and any
other payment due pursuant to this Indenture or any Securities issued hereunder
(including, without limitation, the payment or deposit of the Redemption Price
or Repurchase Price pursuant to Article 3 and any deposit pursuant to Section
6.3) shall, to the extent and in the manner hereinafter set forth, be
subordinated and subject in right of payment to the prior payment in full of all
Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter created, incurred, assumed or guaranteed.
Section 5.2. Securities Subordinated to Prior Payment of All Senior
------------------------------------------------------
Indebtedness on Dissolution, Liquidation, Reorganization, Etc.,
---------------------------------------------------------------
of the Company.
--------------
Upon any payment or distribution of the assets of the Company of any kind
or character, whether in cash, property or securities (including any collateral
at any time securing the Securities), to creditors upon any dissolution,
winding-up, total or partial liquidation, or reorganization of the Company
(whether voluntary or involuntary, or in bankruptcy, insolvency, reorganization,
liquidation, or receivership proceedings, or upon an assignment for the benefit
of creditors, or any marshalling of the assets and liabilities of the Company,
or otherwise), then in such event:
(a) all Senior Indebtedness (including principal thereof and interest
thereon) shall first be paid in full before any Payment of the Securities (as
defined in Section 5.5) is made;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (including any collateral at
any time securing the Securities) (other than Reorganization Securities), to
which the Holders or the Trustee on behalf of the Holders would be entitled
except for the provisions of this Article 5, including any such payment or
distribution which may be payable or deliverable by reason of the payment of
another debt of the Company being subordinated to the payment of the Securities,
shall be paid or delivered by any debtor, Custodian or other person making such
payment or distribution, directly to the holders of the
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<PAGE>
Senior Indebtedness or their Representative or Representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior Indebtedness may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the principal
of and interest on the Senior Indebtedness held or represented by each, for
application to payment of all Senior Indebtedness remaining unpaid, to the
extent necessary to pay all Senior Indebtedness in full after giving effect to
any concurrent payment or distribution, or provision therefor, to the holders of
such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of this
Section 5.2, any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities (other than Reorganization
Securities), shall be received by the Trustee or the Holders before all Senior
Indebtedness is paid in full, such payment or distribution (subject to the
provisions of Sections 5.6 and 5.7) shall be held in trust for the benefit of,
and shall be immediately paid or delivered by the Trustee or such Holders, as
the case may be, to the holders of Senior Indebtedness remaining unpaid, or
their Representative or Representatives, ratably according to the aggregate
amounts remaining unpaid on account of the principal of and interest on the
Senior Indebtedness held or represented by each, for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full after giving effect to any concurrent payment or
distribution, or provision therefor, to or for the holders of such Senior
Indebtedness.
The Company shall give prompt notice to the Trustee of any dissolution,
winding-up, liquidation or reorganization of the Company.
Upon any distribution of assets of the Company referred to in this Article
5, the Trustee, subject to the provisions of Sections 9.1 and 9.2, and the
Holders shall be entitled to conclusively rely upon any order or decree by any
court of competent jurisdiction in which such dissolution, winding-up,
liquidation or reorganization proceeding is pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee or to the Holders, for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 5; provided that the foregoing shall apply only if
such court, trustee, liquidating trustee or other person has been fully apprised
of the provisions of this Article.
Section 5.3. Securityholders To Be Subrogated to Right of Holders of Senior
--------------------------------------------------------------
Indebtedness.
------------
Subject to the prior payment in full of all Senior Indebtedness, the
Holders shall be subrogated (equally and ratably with the holders of all
indebtedness of the Company which by its express terms is subordinated to
indebtedness of the Company to substantially the same extent as the Securities
are subordinated and is entitled to like rights of subrogation) to the rights of
the holders of Senior Indebtedness to receive payments or distributions of
assets of the Company applicable to the Senior Indebtedness until the principal
of and interest on the Securities shall be paid in full, and for purposes of
such subrogation, no payments or distributions to the holders of Senior
Indebtedness of assets, whether in cash, property or securities, distributable
to the holders of Senior Indebtedness
37
<PAGE>
under the provisions hereof to which the Holders would be entitled except for
the provisions of this Article 5, and no payment pursuant to the provisions of
this Article 5 to the holders of Senior Indebtedness by the Holders shall, as
among the Company, its creditors other than the holders of Senior Indebtedness,
and the Holders, be deemed to be a payment by the Company to or on account of
Senior Indebtedness, it being understood that the provisions of this Article 5
are, and are intended, solely for the purpose of defining the relative rights of
the Holders, on the one hand, and the holders of Senior Indebtedness, on the
other hand.
Section 5.4. Obligations of the Company Unconditional.
----------------------------------------
Nothing contained in this Article 5 or elsewhere in this Indenture or in
any Security is intended to or shall impair the obligation of the Company, which
is absolute and unconditional, to pay to the Holders the principal of and
interest on the Securities, as and when the same shall become due and payable in
accordance with the terms of the Securities, or to affect the relative rights of
the Holders and other creditors of the Company other than the holders of Senior
Indebtedness, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
the happening of an Event of Default under this Indenture, subject to the
provisions of Article 8, and the rights, if any, under this Article 5 of the
holders of Senior Indebtedness in respect of assets, whether in cash, property
or securities, of the Company received upon the exercise of any such remedy.
Section 5.5. Company Not To Make Payment with Respect to Securities in
---------------------------------------------------------
Certain Circumstances
---------------------
Upon the occurrence of a Payment Default, unless and until the amount of
Designated Senior Indebtedness effected by such Payment Default then due shall
have been paid in full, or such default shall have been cured or waived or shall
have ceased to exist, the Company shall not pay principal of, premium, if any,
or interest on the Securities or any other amount due pursuant to this Indenture
or any Securities or make any deposit pursuant to Article 3 or Section 6.3 or
10.1 and shall not repurchase, redeem or otherwise retire any Securities
(collectively, "Payment of the Securities").
Unless Section 5.2 shall be applicable, upon (1) the occurrence of a
default on Designated Senior Indebtedness (other than a Payment Default) that
occurs and is continuing that permits the holders of such Designated Senior
Indebtedness (or their Representative or Representatives) to accelerate its
maturity and (2) receipt by the Company and the Trustee from the Senior Agent of
written notice of such occurrence and the imposition of a Payment Blockage
Period hereunder, then the Company shall not make any Payment of the Securities
for a period (the "Payment Blockage Period") commencing on the earlier of the
date of receipt by the Company or the Trustee of such notice from the Senior
Agent and ending on the earlier of (subject to any blockage of payments that may
then be in effect under this Section 5.5) (x) the date 179 days after such date,
(y) the date such default shall have been cured or waived in writing or shall
have ceased to exist or such Senior Indebtedness shall have been discharged, or
(z) the date such Payment Blockage Period shall have been terminated by written
notice to the Company or the Trustee from the Senior Agent, after which, in case
of clause (x), (y) or (z), as the case may be, the Company shall resume making
any and all required payments. Notwithstanding any other provision of this
Agreement, only one Payment Blockage Period may be commenced within any
consecutive 365-day period, and no event of default
38
<PAGE>
with respect to any Designated Senior Indebtedness which existed or was
continuing on the date of the commencement of any Payment Blockage Period with
respect to such Designated Senior Indebtedness shall be, or can be made, the
basis for the commencement of a second Payment Blockage Period whether or not
within a period of 365 consecutive days unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days. In no
event will a Payment Blockage Period extend beyond 179 days.
In the event that, notwithstanding the foregoing provisions of this Section
5.5, any Payment of the Securities shall be made by or on behalf of the Company
and received by the Trustee, any Holder or any Paying Agent (or, if the Company
is acting as its own Paying Agent, money for any such payment shall be
segregated and held in trust), which payment was prohibited by this Section 5.5,
then, unless and until the amount of Designated Senior Indebtedness then due, as
to which a default shall have occurred, shall have been paid in full, or such
default shall have been cured or waived, such payment (subject, in each case, to
the provisions of Sections 5.6 and 5.7) shall be held in trust for the benefit
of, and shall be immediately paid over to, the holders of Designated Senior
Indebtedness or their Representative or Representatives, ratably according to
the aggregate amounts remaining unpaid on account of the principal of and
interest on the Designated Senior Indebtedness held or represented by each, for
application to the payment of all Designated Senior Indebtedness remaining
unpaid to the extent necessary to pay all Designated Senior Indebtedness in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of Designated Senior
Indebtedness. The Company shall give prompt written notice to the Trustee of any
default under any Designated Senior Indebtedness or under any agreement pursuant
to which Designated Senior Indebtedness may have been issued.
Section 5.6. Notice to Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article 5 or any other provision of this Indenture, the Trustee shall not at any
time be charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee, unless and until the
Trustee shall have received written notice thereof from the Company or from the
holder or holders of Senior Indebtedness or from their Representative or
Representatives; and, prior to the receipt of any such notice, the Trustee,
subject to the provisions of Sections 9.1 and 9.2, shall be entitled to assume
conclusively that no such facts exist.
The Trustee shall be entitled to conclusively rely on the delivery to it of
a written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a Representative of such holder) to establish that such notice
has been given by a holder of Senior Indebtedness or a Representative of any
such holder. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article 5, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and any other facts pertinent to the rights of
each Person under this Article 5,
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and if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to receive
such payment.
Section 5.7. Application by Trustee of Monies Deposited with It.
--------------------------------------------------
Money or U.S. Government Obligations deposited in trust with the Trustee
pursuant to Sections 6.3 and 10.1 and not in violation of this Article 5 shall
be for the sole benefit of Securityholders and shall thereafter not be subject
to the subordination provisions of this Article 5. Otherwise, any deposit of
monies by the Company with the Trustee or any Paying Agent (whether or not in
trust) for the payment of the principal of or interest on any Securities shall
be subject to the provisions of Sections 5.1, 5.2, 5.3 and 5.5; except that, if
at least three Business Days prior to the date on which by the terms of this
Indenture any such monies may become payable for any purpose (including, without
limitation, the payment of either the principal of or interest on any Security),
a Trust Officer of the Trustee shall not have received with respect to such
monies the notice provided for in Section 5.6, then the Trustee or any Paying
Agent shall have full power and authority to receive such monies and to apply
such monies to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by it within three
Business Days prior to or after such date. This Section 5.7 shall be construed
solely for the benefit of the Trustee and the Paying Agent and shall not
otherwise affect the rights that holders of Senior Indebtedness may have to
recover any such payments from the Holders in accordance with the provisions of
this Article 5.
Section 5.8. Subordination Rights Not Impaired by Acts or Omissions of the
-------------------------------------------------------------
Company or Holders of Senior Indebtedness.
-----------------------------------------
No right of any present or future holders of any Senior Indebtedness to
enforce subordination, as herein provided, shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with. The holders of any Senior Indebtedness may extend,
renew, modify or amend the terms of such Senior Indebtedness or any security
therefor and release, sell or exchange such security and otherwise deal freely
with the Company, all without affecting the liabilities and obligations of the
parties to this Indenture or the Holders. No amendment of this Article 5 or any
defined terms used herein or any other Sections referred to in this Article 5
which adversely affects the rights hereunder of holders of Senior Indebtedness,
shall be effective unless the holders of such Senior Indebtedness (required
pursuant to the terms of such Senior Indebtedness to give such consent) have
consented thereto.
Section 5.9. Trustee To Effectuate Subordination.
-----------------------------------
Each Holder of a Security by his acceptance thereof authorizes and directs
the Trustee in his behalf to take such action as may be necessary or appropriate
to acknowledge and effectuate the subordination provided in this Article 5 and
appoints the Trustee his attorney-in-fact for any and all such purposes.
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Section 5.10. Right of Trustee To Hold Senior Indebtedness.
--------------------------------------------
The Trustee, in its individual capacity, shall be entitled to all of the
rights set forth in this Article 5 in respect of any Senior Indebtedness at any
time held by it to the same extent as any other holder of Senior Indebtedness,
and nothing in this Indenture shall be construed to deprive the Trustee of any
of its rights as such holder. Nothing in this Article 5 shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 9.7.
Section 5.11. Article 5 Not To Prevent Events of Default.
------------------------------------------
The failure to make a Payment of the Securities by reason of any provision
in this Article 5 shall not be construed as preventing the occurrence of an
Event of Default under Section 8.1.
Section 5.12. No Fiduciary Duty Created to Holders of Senior Indebtedness.
-----------------------------------------------------------
Notwithstanding any other provision in this Article 5, the Trustee shall
not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness by
virtue of the provisions of this Article 5 or otherwise. With respect to the
holders of Senior Indebtedness, the Trustee undertakes to perform or to observe
only such of its covenants or obligations as are specifically set forth in this
Article 5 and no implied covenants or obligations with respect to holders of
Senior Indebtedness shall be read into this Indenture against the Trustee.
Section 5.13. Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article 5 shall in such case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully for all intents and purposes as if such Paying Agent were named
in this Article 5 in addition to or in place of the Trustee; provided, however,
that Sections 5.6, 5.10 and 5.12 shall not apply to the Company if it acts as
Paying Agent.
Section 5.14. Certain Conversion Deemed Payment.
---------------------------------
For the purposes of this Article only, (1) the issuance and delivery of
junior securities upon conversion of Securities in accordance with Article 4
shall not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest on Securities or on account of the purchase
or other acquisition of Securities, and (2) the payment, issuance or delivery of
cash, property or securities (other than junior securities) upon conversion of a
Security shall be deemed to constitute payment on account of principal of such
Security. For the purposes of this Section, the term "junior securities" means
(a) shares of any stock of any class of the Company and (b) securities of the
Company which are subordinated in right of payment to all Senior Indebtedness
which may be outstanding at the time of issuance or delivery of such securities
to substantially the same extent as, or to a greater extent than, the Securities
are so subordinated as provided in this Article. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is intended to or
shall impair, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, the right, which is absolute and
unconditional, of the Holder of any Security to convert such Security in
accordance with Article 4.
41
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ARTICLE 6.
COVENANTS
Section 6.1. Payment of Securities.
---------------------
The Company covenants and agrees that it will duly and punctually pay or
cause to be paid the principal amount at maturity, Redemption Price, Repurchase
Price and interest, in respect of each of the Securities at the places, at the
respective times and in the manner provided herein and in the Securities. Each
installment of interest on the Securities may be paid by mailing checks for the
interest payable to or upon the written order of the Holders of Securities
entitled thereto as they shall appear on the registry books of the Company;
provided that with respect to any Holder of Securities with an aggregate
principal amount equal to or in excess of $5 million, at the request of such
Holder in writing the Company shall pay interest on such Holder's Securities by
wire transfer in immediately available funds.
Section 6.2. SEC Reports; 144A Information.
-----------------------------
The Company shall file all reports and other information and documents
which it is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, and within 15 days after it files them with the SEC, the Company
shall file copies of all such reports, information and other documents with the
Trustee. The Company will cause any quarterly and annual reports which it mails
to its stockholders to be mailed to the Holders of the Securities.
In the event the Company is at any time no longer subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will
prepare, for the first three quarters of each fiscal year, quarterly financial
statements substantially equivalent to the financial statements required to be
included in a report on Form 10-Q under the Exchange Act. The Company will also
prepare, on an annual basis, complete audited consolidated financial statements
including, but not limited to, a balance sheet, a statement of income and
retained earnings, a statement of cash flows and all appropriate notes. All such
financial statements will be prepared in accordance with generally accepted
accounting principles consistently applied, except for changes with which the
Company's independent accountants concur, and except that quarterly statements
may be subject to year-end adjustments. The Company will cause a copy of such
financial statements to be filed with the Trustee and mailed to the Holders of
the Securities within 60 days after the close for each of the first three
quarters of each fiscal year and within 105 days after the close of each fiscal
year. The Company will also comply with the other provisions of TIA 314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
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 beneficial owner of a Security,
the Company will promptly furnish
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or cause to be furnished Rule 144A Information (as defined below) to such
Holder, to such beneficial owner or to a prospective purchaser designated by
such Securityholder or beneficial owner, as the case may be, in order to permit
compliance by such Securityholder or beneficial owner with Rule 144A under the
Securities Act in connection with the resale of such Security by such
Securityholder or beneficial owner; provided, however, the Company shall not be
required to furnish such information in connection with any request made on or
after the date which is two years from the later of (i) the date such Security
(or any predecessor Security) was acquired from the Company or (ii) the date
such Security (or any predecessor Security) was last acquired from an
"affiliate" of the Company within the meaning of Rule 144 under the Securities
Act. "Rule 144A Information" shall be such information as is specified pursuant
to Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto).
Section 6.3. Liquidation.
-----------
Subject to the provisions of Article 5, insofar as they may be applicable
hereto, the Board of Directors or the stockholders of the Company may not adopt
a plan of liquidation which plan provides for, contemplates, or the effectuation
of which is preceded by (a) the sale, lease, conveyance or other disposition of
all or substantially all of the assets of the Company otherwise than
substantially as an entirety (Article 7 being the Article which governs any such
sale, lease, conveyance or other disposition substantially as an entirety), and
(b) the distribution of all or substantially all of the proceeds of such sale,
lease, conveyance or other disposition and of the remaining assets of the
Company to the holders of the capital stock of the Company, unless the Company
shall in connection with the adoption of such plan make provision for, or agree
that prior to making any liquidating distributions to the holders of capital
stock of the Company it will make provision for, the satisfaction of the
Company's obligations hereunder and under the Securities as to the payment of
principal and interest. The Company shall be deemed to have made provision for
such payments only if (1) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations maturing as to principal and
interest in such amounts and at such times as are sufficient, without
consideration of any reinvestment of such interest, to pay the principal of and
interest on the Securities then outstanding to maturity and to pay all other
sums payable by it hereunder, or (2) there is an express assumption of the due
and punctual payment of the Company's obligations hereunder and under the
Securities and the performance and observance of all covenants and conditions to
be performed by the Company hereunder, by the execution and delivery of a
supplemental indenture in form reasonably satisfactory to the Trustee by a
person who acquires, or will acquire (otherwise than pursuant to a lease) a
portion of the assets of the Company, and which person will have Consolidated
Net Worth (immediately after the acquisition) equal to not less than the
Consolidated Net Worth of the Company (immediately preceding such acquisition),
and which is a corporation organized under the laws of the United States, any
State thereof or the District of Columbia; provided, however, that the Company
shall not make any liquidating distribution to the holders of capital stock of
the Company described in the first sentence of this Section 6.3 until after the
Company shall have certified to the Trustee with an Officers' Certificate at
least five days prior to the making of any liquidating distribution that it has
complied with the provisions of this Section 6.3.
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Section 6.4. Compliance Certificates.
-----------------------
The Company shall deliver to the Trustee within 105 days after the end of
each fiscal year of the Company, an Officers' Certificate as to the signer's
knowledge of the Company's compliance with all conditions and covenants on its
part contained in this Indenture and stating whether or not the signer knows of
any default or Event of Default. If such signer knows of such a default or Event
of Default, the Certificate shall describe the default or Event of Default and
the efforts to remedy the same. For the purposes of this Section 6.4, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture. The Certificate need not
comply with Section 12.4.
Section 6.5. Notice of Defaults.
------------------
The Company will give notice to the Trustee, promptly, and in any event
within five days, upon becoming aware thereof, of the existence of any Event of
Default or an event which, with notice or the lapse of time or both would
constitute an Event of Default hereunder.
Section 6.6. Payment Of Taxes And Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (1) all material taxes, assessments and
governmental charges levied or imposed upon the Company, directly or by reason
of its ownership of any Subsidiary or upon the income, profits or property of
the Company; and (2) all material lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a lien upon the property of the
Company; provided, however, that the Company shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which adequate provision has been made.
Section 6.7. Corporate Existence.
-------------------
Subject to Section 6.3 and Article 7, the Company will do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and rights (charter and statutory); provided, however, that
the Company shall not be required to preserve any right if the Company shall
determine that the preservation is no longer desirable in the conduct of the
Company's business and that the loss thereof is not, and will not be, adverse in
any material respect to the Holders.
Section 6.8. Maintenance of Properties.
-------------------------
Subject to Section 6.3, the Company will cause all material properties
owned, leased or licensed in the conduct of its business to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof and thereto, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times
while any Securities are outstanding; provided, however, that nothing in this
Section 6.8 shall prevent the Company from doing otherwise
44
<PAGE>
if, in the judgment of the Company, the same is desirable in the conduct of the
Company's business and is not, and will not be, adverse in any material respect
to the Holders.
Section 6.9. Further Instruments and Acts.
----------------------------
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.
Section 6.10. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in The City of New York an office or agency where
Securities may be presented or surrendered for payment or repurchase, where
Securities may be surrendered for registration of transfer or exchange 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 agent of the Trustee in The City of
New York shall be such office or agency of the Company, unless the Company shall
designate and maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may 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 designation; 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 City of New
York for such purposes. The Company will give prompt written notice to the
Trustee of any such designation or rescission and any change in the location of
any such office or agency.
Section 6.11. Resale of Certain Securities; Reporting Issuer.
----------------------------------------------
During the period beginning on the last date of original issuance of the
Securities and ending on the date that is two years from such date, the Company
will not, and will use all reasonable efforts not to permit any of its
"affiliates" (as defined under Rule 144 under the Securities Act or any
successor provision thereto) to, resell (x) any Securities which constitute
"restricted securities" under Rule 144 or (y) any securities into which the
Securities have been converted under this Indenture which constitute "restricted
securities" under Rule 144, that in either case have been reacquired by any of
them, except pursuant to an effective registration statement under the
Securities Act. The Trustee shall have no responsibility in respect of the
Company's performance of its agreement in the preceding sentence.
Section 6.12. Registration Rights.
-------------------
(a) The Company agrees that the Holders (and any Person that has a
beneficial interest in a Security) from time to time of Registrable Securities
(as such term is defined in the Registration
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Rights Agreement) are entitled to the benefits of the Registration Rights
Agreement. Pursuant to the Registration Rights Agreement, the Company has agreed
for the benefit of the Holders from time to time of Registrable Securities, at
the Company's expense, (i) to file within 90 days after the first date of
original issuance of the Securities, a registration statement (the "Registration
Statement") with the Commission with respect to resales of the Restricted
Securities, (ii) to use all reasonable efforts to cause such Registration
Statement to be declared effective by the Commission not later than 180 days
after the first date of original issuance of the Securities, and (iii) to use
all reasonable efforts to maintain such Registration Statement continuously
effective under the Securities Act subject to and in accordance with the terms
of the Registration Rights Agreement.
Additional interest (the "Additional Interest") with respect to the
Securities shall be assessed if a Registration Default (as defined in the
Registration Rights Agreement) occurs. Additional Interest shall accrue on the
Securities over and above the interest set forth in the title of the Securities
from and including the date on which any such Registration Default shall occur,
to but excluding the date on which such Registration Default has been cured (in
the manner described in the Registration Rights Agreement), at a rate of 0.50%
per annum.
(b) Any amounts of Additional Interest due pursuant to clause (a) of this
Section 6.12 shall be payable in cash on the regular interest Payment Dates. The
amount of Additional Interest shall be determined by multiplying the applicable
Additional Interest rate by the principal amount of the Securities, multiplied
by a fraction, the numerator of such period (determined on the basis of a 360-
day year comprised of twelve 30-day months), and the denominator of which is
360.
Whenever in this Indenture there is mentioned, in any context, the payment
of the principal of, premium, if any, or interest on, or in respect of, any
Security, such mention shall be deemed to include mention of the payment of
Additional Interest provided for in this Section to the extent that, in such
context, Additional Interest are, were or would be payable in respect thereof
pursuant to the provisions of this Section 6.12 and express mention of the
payment of Additional Interest (if applicable) in any provisions hereof shall
not be construed as excluding Additional Interest in those provisions hereof
where such express mention is not made.
Section 6.13. Additional Interest.
-------------------
If Additional Interest is payable pursuant to the Registration Rights
Agreement, the Company shall deliver to the Trustee a certificate to that effect
stating (i) the amount of such Additional Interest that is payable and (ii) the
date on which such interest is payable. Unless and until a Trust Officer
receives at the Corporate Trust Office such a certificate, the Trustee may
assume without inquiry that no such interest is payable. If the Company has
paid Additional Interest directly to the Persons entitled to it, the Company
shall deliver to the Trustee a certificate setting forth the particulars of such
payment.
Section 6.14. Stay, Extension and Usury Laws.
------------------------------
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the
46
<PAGE>
covenants or the performance of this Indenture; and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE 7.
SUCCESSOR CORPORATION
Section 7.1. When Company May Merge, Etc.
---------------------------
The Company shall not consolidate with or merge into any other Person, or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and shall not permit any Person (other than a Subsidiary wholly-
owned by the Company) to consolidate with or merge into the Company or convey,
transfer or lease its properties and assets substantially as an entirety to the
Company, unless:
(a) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Company is merged or the Person which acquires by conveyance or transfer, or
which leases, the properties and assets of the Company substantially as an
entirety shall be a corporation, partnership or trust, shall be organized and
validly existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an indenture
supplemental thereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
(and premium, if any) and interest on all the Securities and the performance or
observance of every covenant of this Indenture on the part of the Company to be
performed or observed and shall have provided for conversion rights in
accordance with Section 4.12;
(b) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing; and
(c) the Company has delivered to the Trustee an 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 and
that all conditions precedent herein provided for relating to such transaction
have been complied with.
Section 7.2. Successor Corporation Substituted.
---------------------------------
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially
47
<PAGE>
as an entirety in accordance with Section 7.1, the successor Person formed by
such consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE 8.
DEFAULT AND REMEDIES
Section 8.1. Events of Default.
-----------------
An "Event of Default" occurs if:
(1) the Company defaults in the payment of any interest upon any of the
Securities when due and payable and the default continues for a period of 30
days whether or not such payment is prevented by Article 5;
(2) the Company defaults in the payment of the principal of and premium,
if any, on any of the Securities when due, including on a redemption date,
whether or not such payment is prevented by Article 5;
(3) the Company fails to pay when due the principal of or interest on
indebtedness for money borrowed by the Company or its subsidiaries in excess of
$20.0 million, or the acceleration of that indebtedness that is not withdrawn
within 15 days after the date of written notice to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in principal
amount of the outstanding Securities;
(4) a default by the Company in the performance, or breach, of any of the
Company's other covenants in this Indenture which are not remedied by the end of
a period of 60 days after written notice to the Trustee or to the Company and
the Trustee by the Holders of at least 25% in principal amount of the
outstanding Securities;
(5) the Company or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
A. commences a voluntary case or proceeding;
B. consents to the entry of an order for relief against it in an
involuntary case or proceeding;
C. consents to the appointment of a Custodian of it or for all or
substantially all of its assets; or
D. makes a general assignment for the benefit of its creditors; or
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(6) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
A. is for relief against the Company or any Significant Subsidiary
in an involuntary case or proceeding;
B. appoints a Custodian of the Company or any Significant Subsidiary
or for all or substantially all of the assets of any of them; or
C. orders the liquidation of the Company or any Significant
Subsidiary;
and in each case the order or decree remains unstayed and in effect
for 60 days.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or state law for the relief of debtors. For purposes of this Section 8.1, the
term "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
A default under clause (4) is not an Event of Default until the Trustee
notifies the Company or the Holders of at least 25% in principal amount of the
Securities then outstanding notify the Company and the Trustee, of the default,
and the Company does not cure the default within 60 days after receipt of such
notice. The notice given pursuant to this Section 8.1 must specify the default,
demand that it be remedied and state that the notice is a "Notice of Default."
When a default is cured, it ceases.
Subject to the provisions of Sections 9.1 and 9.2, the Trustee shall not be
charged with knowledge of any Event of Default unless written notice thereof
shall have been given to a Trust Officer at the Corporate Trust Office of the
Trustee by the Company, the Paying Agent, any Holder or an agent of any Holder.
Within 90 days after a default, the Trustee must give to the registered Holders
of Securities notice of all uncured defaults known to it. The Trustee will be
protected in withholding the notice if it in good faith determines that the
withholding of the notice is in the best interests of the registered Holders,
except for a default under clause (2) of this Section 8.1.
Section 8.2. Acceleration.
-------------
If an Event of Default (other than an Event of Default specified in Section
8.1(5) or (6)) occurs and is continuing, the Trustee may, by notice to the
Company, or the Holders of at least 25% in principal amount of the Securities
then outstanding may, by notice to the Company and the Trustee, and the Trustee
shall, upon the request of such Holders, declare all unpaid principal of and
accrued interest to the date of acceleration on the Securities then outstanding
(if not then due and payable) to be due and payable upon any such declaration,
and the same shall become and be immediately due and payable. If an Event of
Default specified in Section 8.1(5) or (6) occurs, all unpaid principal of and
accrued interest on the Securities then outstanding shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Securityholder.
The Holders of a majority in principal amount of the Securities then
outstanding by notice to the Trustee may rescind an acceleration and its
consequences if (i) all existing Events of Default,
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other than the nonpayment of the principal of and accrued interest on the
Securities which has become due solely by such declaration of acceleration, have
been cured or waived; (ii) the Company has paid or deposited with the Trustee a
sum sufficient to pay (a) all overdue interest on the Securities, (b) the
principal of any Security which has become due otherwise then by such
declaration of acceleration, and (c) to the extent the payment of such interest
is lawful, interest on overdue installments of interest and overdue principal,
which has become due otherwise than by such declaration of acceleration; (iii)
the rescission would not conflict with any judgment or decree of a court of
competent jurisdiction; and (iv) all payments due to the Trustee and any
predecessor Trustee under Section 9.7 have been made. No such rescission shall
affect any subsequent default or impair any right consequent thereon. Anything
herein contained to the contrary notwithstanding, in the event of any
acceleration pursuant to this Section 8.2, the Company shall not be obligated to
pay any premium which it would have had to pay if it had then elected to redeem
the Securities pursuant to paragraph 5 of the Securities, except in the case of
any Event of Default occurring by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding payment of the premium which it would have had to pay if it had then
elected to redeem the Securities pursuant to paragraph 5 of the form of Security
attached hereto as Exhibit A, in which case an equivalent premium shall also
---------
become and be immediately due and payable to the extent permitted by law.
Section 8.3. Other Remedies.
--------------
In case of an Event of Default hereunder, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either by suit in equity or by action at
law or by proceeding in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in aid
of the exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Section 8.4. Waiver of Defaults and Events of Default.
----------------------------------------
Subject to Section 8.7, the Holders of a majority in principal amount of
the Securities then outstanding by notice to the Trustee may waive an existing
default or Event of Default and its consequences, except a default in the
payment of the principal of (or premium, if any) or interest on any Security as
specified in clauses (1) and (2) of Section 8.1, or a default in respect of a
covenant or provision hereof which cannot be modified or amended pursuant to
Section 11.2 without the consent of the Holder of each Security affected
thereby. When a default or Event of Default is waived, it is cured and ceases.
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Section 8.5. Control by Majority.
-------------------
The Holders of a majority in principal amount of the Securities then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture; provided that the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.
Section 8.6. Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to this Indenture
or the Securities (except actions for payment of overdue principal or interest
or for the conversion of the Securities pursuant to Article 4) unless:
(1) the Holder gives to the Trustee written notice of a continuing Event
of Default;
(2) the Holders of at least 25% in principal amount of the then
outstanding Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee indemnity reasonably
satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Securities then outstanding.
A Securityholder may not use any provision of this Indenture to prejudice
the rights of another Securityholder or to obtain a preference or priority over
such other Securityholder, or to enforce any rights under this Indenture other
than in the manner herein provided and for the equal and ratable benefit of all
the Securityholders.
Section 8.7. Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture (but subject to
Article 5), the right of any Holder of a Security to receive payment of
principal of (and premium, if any) and interest on the Security, on or after the
respective dates on which such payments are due as expressed in the Security, or
to convert the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, is absolute and unconditional and
shall not be impaired or affected without the consent of the Holder.
Section 8.8. Collection Suit by Trustee.
---------------------------
If an Event of Default in the payment of principal or interest specified in
Section 8.1(1) or (2) occurs and is continuing, the Trustee may recover judgment
in its own name and as trustee of an
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express trust against the Company or another obligor on the Securities for the
whole amount of principal and accrued interest remaining unpaid, together with
interest on overdue principal and, to the extent that payment of such interest
is lawful, interest on overdue installments of interest, in each case at the
rate per annum borne by the Securities and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 8.9. Trustee May File Proofs of Claim.
--------------------------------
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel) and the Securityholders
allowed in any judicial proceedings relative to the Company (or any other
obligor on the Securities), its creditors or its property and shall be entitled
and empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceeding is hereby authorized by each Securityholder 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 Securityholders, to pay to the
Trustee any amount due to 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 9.7, and to the extent that such payment
of the reasonable compensation, expenses, disbursements and advances in any such
proceedings shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
monies, securities and other property which the Securityholders may be entitled
to receive in such proceedings, whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or the Trustee to
authorize or accept or adopt on behalf of any Securityholder 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 Securityholder in any such proceeding.
Section 8.10. Priorities.
----------
Subject to Article 5, if the Trustee collects any money pursuant to this
Article 8, it shall pay out the money in the following order:
First, to the Trustee for amounts due under Section 9.7;
Second, to Securityholders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and
Third, to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 8.10.
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Section 8.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 8.11
does not apply to a suit made by the Trustee, a suit by a Holder pursuant to
Section 8.7, or a suit by any Holder, or group of Holders, of more than 10% in
principal amount of the Securities then outstanding.
Section 8.12. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Securityholder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Securityholder, then and in every such case, subject to
any determination in such proceeding, the Company, the Trustee and the
Securityholders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Securityholders shall continue as though no such proceeding had been
instituted.
Section 8.13. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
2.7, no right or remedy herein conferred upon or reserved to the Trustee or to
the Securityholders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law, be cumulative
and in addition to every other right and remedy given hereunder or now or
hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 8.14. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Securityholder to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Securityholders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Securityholders, as
the case may be.
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ARTICLE 9.
TRUSTEE
Section 9.1. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as are specifically set
forth in this Indenture and no others and no implied covenants or obligations
shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. The Trustee, however, 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).
(c) The Trustee may not be relieved, and no provision of this Indenture
shall be construed to relieve the Trustee, from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section 9.1;
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action it takes or
omits to take in good faith in accordance with a direction received by it
pursuant to Section 8.5; and
(4) no provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity reasonably satisfactory to it against any
loss, liability, expense or fee.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 9.1.
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(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
Section 9.2. Rights of Trustee.
-----------------
Subject to Section 9.1:
(a) The Trustee may conclusively rely on any document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document.
(b) 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, it may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to Section 12.4(b).
The Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Certificate or Opinion.
(c) The Trustee may act through its agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes in good faith to be authorized or within
its rights or powers.
(e) The Trustee may consult with counsel of its selection and the advice
or opinion of such counsel as to matters of law shall be full and complete
authorization and protection in respect of any action taken, omitted or suffered
by it hereunder in good faith and in accordance with the advice or opinion of
such counsel.
(f) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a written Company request or Officers' Certificate and
any resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution.
(g) 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.
(h) The Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Indenture.
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(i) The Trustee shall not be deemed to have notice of any Default or Event
of Default unless a Trust Officer of the Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such a default is received
by the Trustee at the Corporate Trust Office of the Trustee, and such notice
references the Securities and this Indenture.
(j) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
(k) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of Officers of
the Company authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
Section 9.3. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or an Affiliate of
the Company with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee is subject to
Sections 9.10 and 9.11.
Section 9.4. Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Securities, it shall not be accountable for the Company's use
of the proceeds from the Securities, and it shall not be responsible for the
recitals contained herein or any statement in the Securities other than its
certificate of authentication.
Section 9.5. Notice of Default or Events of Default.
--------------------------------------
If a default or an Event of Default occurs and is continuing and if it is
actually known to the Trustee, the Trustee shall mail to each Securityholder
notice of the default or Event of Default within 90 days after it occurs.
Except in the case of a default or an Event of Default in payment of the
principal of or interest on any Security, the Trustee may withhold the notice if
and so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interest of Securityholders.
Section 9.6. Reports by Trustee to Holders.
-----------------------------
If such report is required by TIA 313, within 60 days after each June 30,
beginning with the June 30 following the date of this Indenture, the Trustee
shall mail to each Securityholder a brief report dated as of such June 30 that
complies with TIA 313(a). The Trustee also shall comply with TIA 313(b)(2) and
(c).
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A copy of each report at the time of its mailing to Securityholders shall
be mailed to the Company and filed with the SEC and each stock exchange, if any,
on which the Securities are listed. The Company shall notify the Trustee
whenever the Securities become listed on or delisted from any stock exchange and
any changes in the stock exchanges on which the Securities are listed.
Section 9.7. Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time such compensation
for its services hereunder as the Company and the Trustee shall from time to
time agree in writing (which compensation shall not be limited by any provision
of law in regard to the compensation of a trustee of an express trust). The
Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it. Such expenses may
include the reasonable compensation, disbursements and expenses of Trustee's
agents and counsel.
The Company shall indemnify the Trustee or any predecessor Trustee and
their agents for, and hold them harmless against, any loss, liability or expense
incurred by it in connection with its duties under this Indenture or any action
or failure to act as authorized or within the discretion or rights or powers
conferred upon the Trustee hereunder, including the costs and expenses of
defending itself against any claim (whether asserted by the Company, or any
Holder or any other Person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Trustee shall notify
the Company promptly of any claim asserted against the Trustee for which it may
seek indemnity. The Trustee shall have the option of undertaking the defense of
such claims at the Company's expense and may have separate counsel. The
reasonable fees and expenses of such counsel shall be paid by the Company. The
Company need not pay for any settlement without its written consent, which
consent shall not be unreasonably withheld or delayed.
The Company need not reimburse the Trustee for any expense or indemnify it
against any loss or liability incurred by it through its own negligent action,
negligent failure to act or willful misconduct.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 8.1(5) or (6) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 9.7 shall survive the termination of this
Indenture.
Section 9.8. Replacement of Trustee.
----------------------
The Trustee may resign by so notifying the Company; provided, however, no
such resignation shall be effective until a successor Trustee has accepted its
appointment pursuant to this Section 9.8. The Holders of a majority in
principal amount of the Securities then outstanding may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee with the Company's
written consent. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 9.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
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(3) a receiver or other public officer takes charge of the Trustee or its
property; or
(4) the Trustee becomes incapable of acting as trustee.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee (at the Company's
expense), the Company or the Holders of 10% in principal amount of the
Securities then outstanding may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 9.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the
retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee and be released from its obligations (exclusive of any
liabilities Trustee may have incurred while acting as Trustee) hereunder, 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. A successor Trustee shall mail notice of its succession
to each Securityholder.
Notwithstanding replacement of the Trustee pursuant to this Section 9.8,
the Company's obligations under Section 9.7 shall continue for the benefit of
the retiring Trustee.
Section 9.9. Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust assets (including the administration
of this Indenture) to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee;
provided such transferee corporation shall qualify and be eligible under Section
9.10.
Section 9.10. Eligibility; Disqualification.
-----------------------------
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust process, having (together with any Person
directly or indirectly controlling the Trustee) a combined capital and surplus
of at least $25,000,000, subject to supervision or examination by federal or
state authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 9.10, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 9.10, it shall resign immediately in the
manner and with the effect specified above in this Article 9.
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Section 9.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA 311(a), excluding any creditor
relationship listed in TIA 311(b). A trustee who has resigned or been removed
shall be subject to TIA 311(a) to the Government Obligations in accordance with
Section 10.1; provided, however, that if the Company has made any payment of the
principal of or premium, if any, or interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive any such payment from the money or
U.S. Government Obligations held by the Trustee or the Paying Agent.
ARTICLE 10.
SATISFACTION AND DISCHARGE OF INDENTURE
Section 10.1. Termination of Company's Obligations.
------------------------------------
The Company may terminate all of its obligations under the Securities and
this Indenture (except those obligations referred to in the immediately
succeeding paragraph) if all Securities previously authenticated and delivered
(other than destroyed, lost or stolen Securities which have been replaced or
paid or Securities for whose payment money has theretofore been held in trust
and thereafter repaid to the Company, as provided in Section 10.3) have been
delivered to the Trustee for cancellation and the Company has paid all sums
payable by it hereunder, or if the Company irrevocably deposits in trust with
the Trustee money or U.S. Government Obligations maturing as to principal and
interest in such amounts and at such times as are sufficient, without
consideration of any reinvestment of such interest, to pay the principal of and
premium, if any, and interest on the Securities then outstanding to maturity or
to the date fixed for redemption and to pay all other sums payable by it
hereunder. The Company may make an irrevocable deposit pursuant to this Section
10.1 only if at such time it is not prohibited from doing so under the
provisions of Article 5 and the Company shall have delivered to the Trustee and
any such Paying Agent an Officers' Certificate and Opinion of Counsel to that
effect and that all other conditions to such deposit have been complied with.
The Company's obligations in paragraphs 8 and 12 of the Securities, in
Sections 6.1, 6.2, 9.7, 9.8 and 10.4, and in Articles 2 and 4 shall survive
until the Securities are no longer outstanding. Thereafter, the Company's
obligations in such paragraph 12 and in Section 9.7 shall survive.
After such irrevocable deposit, the Trustee upon request shall acknowledge
in writing the discharge of the Company's obligations under the Securities and
this Indenture, except for those surviving obligations specified above.
"U.S. Government Obligations" means direct non-callable obligations of, or
non-callable obligations guaranteed by, the United States of America for the
payment of which guarantee or obligation the full faith and credit of the United
States is pledged.
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Section 10.2. Application of Trust Money.
--------------------------
The Trustee or the Paying Agent shall hold in trust, for the benefit of the
Holders, money or U.S. Government Obligations deposited with it pursuant to
Section 10.1, and shall apply the deposited money and the money from U.S.
Government Obligations in accordance with this Indenture to the payment of the
principal of, premium, if any, and interest on the Securities. Money and U.S.
Government Obligations so held in trust and deposited in compliance with Section
10.1 and Article 5 shall not be subject to the subordination provisions of
Article 5.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 10.1 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Securities.
Section 10.3. Repayment to Company.
--------------------
Subject to Section 10.1, the Trustee and the Paying Agent shall promptly
pay to the Company upon request any excess money or U.S. Government Obligations
held by them at any time.
The Trustee and the Paying Agent shall pay, subject to applicable
escheatment laws, to the Company upon request any money held by them for the
payment of principal, premium, if any, or interest that remains unclaimed for
two years after a right to such money has matured; provided, however, that the
Trustee or such Paying Agent, before being required to make any such payment,
may at the expense of the Company cause to be published once in a newspaper of
general circulation in The City of New York or mail to each Holder entitled to
such money notice that such money remains unclaimed and that after a date
specified therein, which shall be at least 30 days from the date of such
publication or mailing, any unclaimed balance of such money then remaining will
be repaid to the Company. After that, Holders entitled to money must look to
the Company for payment unless an abandoned property law designates another
person.
Section 10.4. Reinstatement.
-------------
If the Trustee or the Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 10.1 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 10.1 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with Section 10.1; provided, however,
that if the Company has made any payment of the principal of or premium or
interest on any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive any such payment from the money or U.S. Government Obligations held by
the Trustee or the Paying Agent.
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ARTICLE 11.
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 11.1. Without Consent of Holders.
--------------------------
The Company and the Trustee may amend or supplement this Indenture or the
Securities without notice to or consent of any Securityholder:
(a) to comply with Sections 4.12, 6.3 and 7.1;
(b) to cure any ambiguity, omission, defect or inconsistency, or to make
any other change that does not adversely affect the rights of any
Securityholder;
(c) to make provisions with respect to the conversion right of the Holders
pursuant to Section 4.6;
(d) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Securities; or
(e) to comply with the provisions of the TIA or with any requirement of
the SEC arising solely as a result of the qualification of this Indenture under
the TIA.
Section 11.2. With Consent of Holders.
-----------------------
The Company and the Trustee may amend or supplement this Indenture or the
Securities without notice to any Securityholder but with the written consent of
the Holders of a majority in aggregate principal amount of the Securities then
outstanding. The Holders of a majority in aggregate principal amount of the
Securities then outstanding may waive compliance by the Company with restrictive
provisions of this Indenture other than as set forth in this Section 11.2 below;
and waive any past default under this Indenture and its consequences, except a
default in the payment of the principal of or any premium or interest on any
Security or in respect of a provision which under this Indenture cannot be
modified or amended without the consent of the Holder of each outstanding
Security affected.
Subject to Section 11.4, without the written consent of each Securityholder
affected, however, an amendment, supplement or waiver, including a waiver
pursuant to Section 8.4, may not:
(a) change the stated maturity date of the principal of, or any
installment of interest on, any Security;
(b) reduce the principal amount of, or the rate of interest on, or any
premium payable on, any Security, whether upon acceleration, redemption or
otherwise;
(c) change the currency for payment of principal of, or premium or
interest (including Additional Interest) on any Security;
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<PAGE>
(d) impair the right to institute suit for the enforcement of any payment
of principal of, or premium or interest on any Security when due;
(e) adversely affect the conversion rights provided in Article 4;
(f) modify the provisions of Article 5 with respect to the subordination
of the Securities in a manner adverse to the Holders of the Securities;
(g) modify the provisions of this Indenture requiring the Company to make
an offer to repurchase Securities upon a Change in Control in a manner adverse
to the Holders of the Securities;
(h) reduce the percentage of principal amount of the outstanding
Securities necessary to modify or amend this Indenture or to consent to any
waiver provided for in this Indenture;
(i) waive a default in the payment of the principal of or premium or
interest (including Additional Interest) on any Security; or
(j) make any changes in Section 8.4, 8.7 or this sentence.
It shall not be necessary for the consent of the Holders under this Section
11.2 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
An amendment under this Section 11.2 may not make any change that adversely
affects the rights under Article 5 of any holder of an issue of Senior
Indebtedness unless the holders of that issue, pursuant to its terms, consent to
the change.
Section 11.3. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture or the Securities shall
comply with TIA as in effect at the date of such amendment or supplement.
Section 11.4. Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to his Security or portion of a Security if the Trustee receives the notice
of revocation before the date the amendment, supplement or waiver becomes
effective.
After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (a)
through (j) of Section 11.2. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security.
62
<PAGE>
SECTION 11.5. Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Security shall issue and the
Trustee shall authenticate a new Security that reflects the changed terms.
SECTION 11.6. Trustee To Sign Amendments, Etc.; Notices.
------------------------------------------
The Trustee shall sign any amendment or supplement authorized pursuant to
this Article 11 if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may but need not sign it. In signing or refusing to sign such amendment
or supplement, the Trustee shall be entitled to receive and, subject to Section
9.1, shall be fully protected in relying upon, an Opinion of Counsel stating
that such amendment or supplement is authorized or permitted by this Indenture.
The Company may not sign an amendment or supplement until the Board of Directors
approves it.
After an amendment, supplement or waiver under this Article II becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amendment, supplement or waiver.
ARTICLE 12.
MISCELLANEOUS
SECTION 12.1. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by any of Sections 310 to 317, inclusive, of the TIA through
operation of Section 318(c) thereof, upon qualification of this Indenture
thereunder such imposed duties shall control.
SECTION 12.2. Notices.
-------
Any notice or communication shall be given in writing and delivered by
facsimile (with original to follow), in person, by overnight delivery or mailed
by first class mail, postage prepaid, addressed as follows:
63
<PAGE>
If to the Company:
Terayon Communication Systems, Inc.
2952 Bunker Hill Lane
Santa Clara, California 95054
Telecopier: (408) 727-6205
Attention: General Counsel
with a copy to:
Cooley Godward LLP
One Maritime Plaza, 20/th/ Floor
San Francisco, CA 94111
Telecopier: (415) 951-3699
Attention: Karyn S. Tucker
If to the Trustee:
State Street Bank and Trust Company of California, N.A.
633 West 5/th/ Street, 12/th/ Floor
Los Angeles, CA 90071
Telecopier: (213) 362-7357
Attention: Corporate Trust Administration
Such notices or communications shall be effective when received.
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notice or communications.
Any notice or communication mailed to a Securityholder shall be mailed by
first class mail to him at his address shown on the register kept by the
Registrar.
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 to a Securityholder is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.3. Communications by Holders with Other Holders.
--------------------------------------------
Securityholders may communicate pursuant to TIA 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other person shall
have the protection of TIA 312(c).
64
<PAGE>
SECTION 12.4. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
(a) 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 at the
request of the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the signers,
all conditions precedent (including any covenants compliance with which
constitutes a condition precedent), if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent (including any covenants compliance with which
constitutes a condition precedent) have been complied with.
(b) Each Officers' Certificate and Opinion of Counsel with respect to
compliance with a condition or covenant provided for in this Indenture (other
than annual certificates provided pursuant to Section 6.4) shall include:
(1) a statement that the person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether or not, in the opinion of such person, such
condition or covenant has been complied with; provided, however, that with
respect to matters of fact an Opinion of Counsel may rely on Officers'
Certificates or certificates of public officials.
SECTION 12.5. Record Date for Vote or Consent of Securityholders.
--------------------------------------------------
The Company (or, in the event deposits have been made pursuant to Section
6.3 or 10.1, the Trustee) may set a record date for purposes of determining the
identity of Securityholders entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture, which record date shall be
the later of 10 days prior to the first solicitation of such vote or consent or
the date of the most recent list of Securityholders furnished to the Trustee
pursuant to Section 2.5 prior to such solicitation. If a record date is fixed,
those persons who were Holders of Securities at such record date (or their duly
designated proxies), and only those persons, shall be entitled to take such
action by vote or consent or to revoke any vote or consent previously given,
whether or not such persons continue to be Holders after such record date.
SECTION 12.6. Rules by Trustee, Paying Agent, Registrar.
-----------------------------------------
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or the Paying Agent may make reasonable rules for its
functions.
65
<PAGE>
SECTION 12.7. Legal Holidays.
--------------
A "Legal Holiday" is a Saturday, or a Sunday or a day on which state or
federally chartered banking institutions in New York (or, if the Trustee is not
located in New York, the state where the Trust Office of the Trustee is located)
are not required to be open. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
SECTION 12.8. Governing Law.
-------------
The laws of the State of New York shall govern this Indenture and the
Securities without regard to principles of conflicts of law.
SECTION 12.9. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or a Subsidiary. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
SECTION 12.10. No Recourse Against Others.
--------------------------
All liability described in paragraph 17 of the Securities of any director,
officer, employee or stockholder, as such, of the Company is waived and
released.
SECTION 12.11. Successors.
----------
All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.
SECTION 12.12. Multiple Counterparts.
---------------------
The parties may sign multiple counterparts of this Indenture. Each signed
counterpart shall be deemed an original, but all of them together represent the
same agreement.
SECTION 12.13. Separability.
------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.14. Table of Contents, Headings, Etc.
--------------------------------
The table of contents, cross-reference sheet and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
66
<PAGE>
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of
the 26th day of July, 2000.
TERAYON COMMUNICATION SYSTEMS, INC.
By: /s/ Zaki Rakib
----------------------------------
Name: Zaki Rakib
Title: Chief Executive Officer and
Secretary
STATE STREET BANK AND TRUST COMPANY
OF CALIFORNIA, N.A.
as Trustee
By: /s/ Scott Emmons
----------------------------------
Name: Scott Emmons
Title: Vice President
S-1
<PAGE>
EXHIBIT A
---------
FORM OF SECURITY
GLOBAL NOTE LEGEND:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO TERAYON
COMMUNICATION SYSTEMS, INC. (THE "COMPANY") OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFER IN WHOLE, BUT NOT IN
PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE
AND TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
A-1
<PAGE>
RESTRICTED SECURITIES LEGEND:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD,
PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR THERETO) UNDER THE SECURITIES ACT
WHICH IS APPLICABLE TO THIS SECURITY OR (Y) BY ANY HOLDER THAT WAS AN
"AFFILIATE" (WITHIN THE MEANING OF RULE 144 UNDER THE SECURITIES ACT) OF THE
COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER,
IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (3) IN AN OFFSHORE TRANSACTION (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT, (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER OR
(2) NOT A U.S. PERSON AND IS OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR
AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE THE HOLDER HEREOF WILL NOT,
DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS
SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY EXCEPT AS
PERMITTED BY THE SECURITIES ACT.
A-2
<PAGE>
[FORM OF FACE OF SECURITY]
TERAYON COMMUNICATION SYSTEMS, INC.
Number ______ CUSIP No. 880775AA9
---------
5% Convertible Subordinated Note Due 2007
Terayon Communication Systems, Inc., a Delaware corporation (the
"Company"), promises to pay to Cede & Co. or registered assigns, the principal
sum of _____________ Dollars ($_________) on August 1, 2007 and to pay interest
on the principal amount of this Note beginning the most recent date to which
interest has been paid or, if no interest has been paid, beginning July 26, 2000
at the rate of 5% per annum.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
This Note is convertible at such times and as specified on the other side
of this Note. Additional provisions of this Note are set forth on the other side
of this Note.
A-3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this 5% Convertible Subordinated
Note due 2007 to be signed by its duly authorized officers.
Dated:____________ TERAYON COMMUNICATION SYSTEMS, INC.
By: ________________________________
Name: Zaki Rakib
Title: Chief Executive Officer
By: ________________________________
Name: Ray Fritz
Title: Chief Financial Officer
Trustee's Certificate of
Authentication:
Dated:___________________
This is one of the Securities
referred to in the within mentioned
Indenture.
STATE STREET BANK AND TRUST
COMPANY OF CALIFORNIA, N.A., as Trustee
By: _____________________________________
Authorized Signatory
A-4
<PAGE>
FORM OF REVERSE SIDE OF SECURITY
Terayon Communication Systems, Inc.
5% Convertible Subordinated Note Due 2007
1. Interest.
--------
Terayon Communication Systems, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at the
rate per annum shown above. The Company shall pay interest semi-annually on
February 1 and August 1 of each year, commencing February 1, 2001. Interest on
the Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from July 26, 2000. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
The Holder of this Note is entitled to the benefits of the Registration
Rights Agreement, dated July 26, 2000, among the Company, Deutsche Bank
Securities Inc. and Lehman Brothers, Inc.
2. Method of Payment.
-----------------
The Company will pay interest on this Note (except defaulted interest) to
the person who is the registered Holder of this Note at the close of business on
the January 15 and July 15 next preceding the interest payment date. The Holder
must surrender this Note to the Paying Agent to collect payment of principal.
The Company will pay principal and interest in money of the United States that
at the time of payment is legal tender for payment of public and private debts.
The Company, however, may pay principal and interest by its check payable in
such money. It may mail an interest check to the Holder's registered address.
3. Paying Agent, Registrar and Conversion Agent.
--------------------------------------------
Initially, State Street Bank and Trust Company of California, N.A. (the
"Trustee") will act as Paying Agent, Registrar and Conversion Agent. The Company
may change any Paying Agent, Registrar or Conversion Agent without notice to the
holder. The Company or any of its Subsidiaries may act as Paying Agent,
Registrar or Conversion Agent.
4. Indenture; Limitations.
----------------------
This Note is one of a duly authorized issue of Notes of the Company
designated as its 5% Convertible Subordinated Notes Due 2007 (the "Notes"),
issued under an Indenture dated as of July 26, 2000 (the "Indenture"), between
the Company and the Trustee. The terms of this Note include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb), as amended by the Trust
Indenture Reform Act of 1990, as in effect on the date hereof or, from and after
the date that the Indenture shall be qualified thereunder, as in effect on such
date. This Note is subject to all such terms, and the holder of this Note is
referred to the Indenture and said Act for a statement of them.
A-5
<PAGE>
The Notes are subordinated unsecured obligations of the Company limited to
up to $500,000,000 aggregate principal amount plus an additional principal
amount not exceeding $75,000,000 in the aggregate as may be issued upon the
exercise by the Initial Purchasers, in whole or in part, of the Purchase Option.
5. Provisional and Optional Redemption.
-----------------------------------
The Notes may be redeemed at the Company's option, in whole or in part, at
any time and from time to time on or after 90 days following the last day of
original issuance and prior to August 7, 2003 (a "Provisional Redemption"), at a
redemption price of $1,000 per $1,000 principal amount of Notes, plus accrued
and unpaid interest, if any, to the date of redemption (the "Provisional
Redemption Date") if (i) the trading price of the Company's Common Stock for 20
Trading Days (as defined in the Indenture) in a period of 30 consecutive Trading
Days ending on the Trading Day prior to the date of mailing of the provisional
notice of redemption exceeds 150% of the Conversion Price (as defined below) of
the Notes and (ii) a shelf registration statement covering resales of the Notes
and the Common Stock issuable upon conversion of the Notes is effective and
available for use and is expected to remain effective for the 30 days following
the provisional redemption date, unless registration is no longer required.
Upon any such Provisional Redemption, the Company shall make an additional
payment in cash (the "Make Whole Payment") to holders of the Notes called for
redemption, including those Notes converted into Common Stock between the date
of mailing of the provisional notice of redemption and the Provisional
Redemption Date, in an amount equal to $193.55 per $1,000 principal amount of
the Notes, less the amount of any interest actually paid on the Notes before the
date of redemption.
The Notes may be redeemed at the Company's option, in whole or in part, at
any time and from time to time on and after August 7, 2003. The redemption price
for the Notes, expressed as a percentage of the principal amount, is 102.857% if
the Notes are redeemed in the period beginning August 7, 2003 and ending July
31, 2004, and is as follows for the 12-month periods beginning August 1 as
follows:
------------------------------------------------------
Year Percentage
------------------------------------------------
2004 ................................ 102.143 %
2005 ................................ 101.429 %
2006 ................................ 100.714 %
-------------------------------------------------------
and 100% of the principal amount on and after August 1, 2007, together in the
case of any such redemption with accrued and unpaid interest to the date of
redemption, but any interest payment that is due and payable on or prior to such
date of redemption will be payable to the Holders of such Notes, or one or more
predecessor Notes, of record at the close of business on the relevant record
dates referred to on the face hereof, all as provided in the Indenture.
A-6
<PAGE>
6. Notice of Redemption.
--------------------
Notice of redemption will be mailed by first class mail at least 30 days
prior to the redemption date in the case of a Provisional Redemption, and at
least 20 days but not more than 60 days before the redemption date in the case
of an Optional Redemption, to each Holder of Notes to be redeemed at his
registered address. Notes in denominations larger than $1,000 may be redeemed in
part, but only in whole multiples of $1,000. On and after the redemption date,
subject to the deposit with the Paying Agent of funds sufficient to pay the
redemption price, interest ceases to accrue on Notes or portions of them called
for redemption.
7. Repurchase of Notes at Option of Holder upon a Change in Control.
----------------------------------------------------------------
If at any time that Notes remain outstanding there shall have occurred a
Change in Control (as defined in the Indenture), at the option of the Holder and
subject to the terms and conditions of the Indenture, the Company shall become
obligated to repurchase all or any part specified by the Holder (so long as the
principal amount of such part is $1,000 or an integral multiple thereof) of the
Notes held by such Holder on the Repurchase Date. The Holder shall have the
right to withdraw any Repurchase Notice by delivering a written notice of
withdrawal to the Paying Agent in accordance with the terms of the Indenture.
The Repurchase Price is payable in cash.
8. Conversion.
----------
At any time after 90 days following the latest date of original issuance of
the Notes and prior to the close of business on the business day immediately
preceding August 1, 2007, a Holder of a Note may convert such Note into shares
of Common Stock of the Company; provided, however, that if the Note is called
for redemption, the conversion right will terminate at the close of business on
the Business Day before the redemption date of such Note (unless the Company
shall default in making the redemption payment when due, in which case the
conversion right shall terminate at the close of business on the date such
default is cured and such Note is redeemed). The initial conversion price is
$84.01 per share, subject to adjustment under certain circumstances as described
in the Indenture (the "Conversion Price"). The number of shares issuable upon
conversion of a Note is determined by dividing the principal amount converted by
the Conversion Price in effect on the conversion date. Upon conversion, no
adjustment for interest or dividends will be made. No fractional shares will be
issued upon conversion; in lieu thereof, an amount will be paid in cash based
upon the current market price (as defined in the Indenture) of the Common Stock
on the last trading day prior to the date of conversion.
To convert a Note, a Holder must (a) complete and sign the conversion
notice set forth below and deliver such notice to the Conversion Agent, (b)
surrender the Note to the Conversion Agent, (c) furnish appropriate endorsements
and transfer documents if required by the Registrar or the Conversion Agent, (d)
pay any transfer or similar tax, if required and (e) if the Note is held in
book-entry form, complete and deliver to the Depositary appropriate instructions
pursuant to the Depositary's book-entry conversion programs. If a Holder
surrenders a Note for conversion between the record date for the payment of an
installment of interest and the next interest payment date, the Note must be
accompanied by payment of an amount equal to the interest payable on such
interest payment date on the principal amount of the Note or portion thereof
then converted; provided,
A-7
<PAGE>
however, that no such payment shall be required if such Note has been called for
redemption on a redemption date within the period between and including such
record date and such interest payment date, or if such Note is surrendered for
conversion on the interest payment date. A Holder may convert a portion of a
Note equal to $1,000 or any integral multiple thereof.
A Note in respect of which a Holder had delivered a Repurchase Notice
exercising the option of such Holder to require the Company to repurchase such
Note may be converted only if the notice of exercise is withdrawn as provided
above and in accordance with the terms of the Indenture.
9. Subordination.
-------------
The indebtedness evidenced by the Notes is, to the extent and in the manner
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness of the Company, as defined in
the Indenture. Any Holder by accepting this Note agrees to and shall be bound by
such subordination provisions and authorizes the Trustee to give them effect.
In addition to all other rights of Senior Indebtedness described in the
Indenture, the Senior Indebtedness shall continue to be Senior Indebtedness and
entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any terms of any instrument relating to the
Senior Indebtedness or any extension or renewal of the Senior Indebtedness.
10. Denominations, Transfer, Exchange.
---------------------------------
The Notes are in registered form without coupons in denominations of $1,000
and integral multiples thereof. A Holder may register the transfer of or
exchange Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes or other governmental charges that may be imposed
by law or permitted by the Indenture.
Global Note Insert:
The aggregate principal amount of the Note in global form represented
hereby may from time to time be reduced to reflect conversions or
redemptions of a part of this Note in global form or cancellations of a
part of this Note in global form, in each case, and in any such case, by
means of notations on the Global Note Transfer Schedule on the last page
hereof. Notwithstanding any provision of this Note to the contrary,
conversions or redemptions of a part of this Note in global form and
cancellations of a part of this Note in global form, may be effected
without the surrendering of this Note in global form, provided that
appropriate notations on the Schedule of Exchanges, Conversions,
Redemptions, Cancellations and Transfers are made by the Trustee, or the
Custodian at the direction of the Trustee, to reflect the appropriate
reduction or increase, as the case may be, in the aggregate principal
amount of this Note in a global form resulting therefrom or as a
consequence thereof.
A-8
<PAGE>
11. Persons Deemed Owners.
---------------------
The registered holder of a Note may be treated as the owner of it for all
purposes.
12. Unclaimed Money.
---------------
If money for the payment of principal, premium, if any, or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay, subject to
applicable escheatment laws, the money back to the Company at its request. After
that, Holders entitled to money must look to the Company for payment unless an
abandoned property law designates another person.
13. Amendment, Supplement, Waiver.
-----------------------------
Subject to certain exceptions, the Indenture or the Notes may be amended or
supplemented with the consent of the Holders of a majority in aggregate
principal amount of the Notes then outstanding and any past default or
compliance with any provision may be waived in a particular instance with the
consent of the Holders of a majority in aggregate principal amount of the Notes
then outstanding. Without the consent of or notice to any Holder, the Company
and the Trustee may amend or supplement the Indenture or the Notes to, among
other things, cure any ambiguity, omission, defect or inconsistency or make any
other change that does not adversely affect the rights of any Holder.
14. Successor Corporation.
---------------------
When a successor corporation assumes all the obligations of its predecessor
under the Notes and the Indenture, the predecessor corporation will be released
from those obligations.
15. Defaults and Remedies.
---------------------
An Event of Default is: default for 30 days in payment of interest on the
Notes; default in payment of principal on the Notes when due; failure by the
Company for 60 days after appropriate notice to it to comply with any of its
other agreements contained in the Indenture or the Notes; default by the Company
or any Subsidiary with respect to its obligation to pay principal of or interest
on indebtedness for borrowed money aggregating more than $20.0 million or the
acceleration of such indebtedness if not withdrawn within 15 days from the date
of such acceleration; and certain events of bankruptcy, insolvency or
reorganization of the Company or any of its Significant Subsidiaries. If an
Event of Default (other than as a result of certain events of bankruptcy,
insolvency or reorganization) occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the Notes then outstanding may
declare all unpaid principal of and accrued interest to the date of acceleration
on the Notes then outstanding to be due and payable immediately, all as and to
the extent provided in the Indenture. If an Event of Default occurs as a result
of certain events of bankruptcy, insolvency or reorganization, all unpaid
principal of and accrued interest on the Notes then outstanding shall become due
and payable immediately without any declaration or other act on the part of the
Trustee or any Holder, all as and to the extent provided in the Indenture.
Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in principal amount of the Notes then outstanding may
A-9
<PAGE>
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest) if it determines that withholding notice is in
their interests. The Company is required to file periodic reports with the
Trustee as to the absence of default.
16. Trustee Dealings with the Company.
---------------------------------
State Street Bank and Trust Company of California, N.A., the Trustee under
the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from, and perform services for the Company or an Affiliate of
the Company, and may otherwise deal with the Company or an Affiliate of the
Company, as if it were not the Trustee.
17. No Recourse Against Others.
--------------------------
A director, officer, employee or stockholder, as such, of the Company shall
not have any liability for any obligations of the Company under the Notes or the
Indenture or for any claim based on, in respect or by reason of, such
obligations or their creation. The Holder of this Note by accepting this Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of this Note.
18. Discharge Prior to Maturity.
---------------------------
If the Company deposits with the Trustee or the Paying Agent money or U.S.
Government Obligations sufficient to pay the principal of and interest on the
Notes to maturity as provided in the Indenture, the Company will be discharged
from the Indenture except for certain Sections thereof.
19. Authentication.
--------------
This Note shall not be valid until the Trustee or an authenticating agent
signs the certificate of authentication on the other side of this Note.
20. Abbreviations and Definitions.
-----------------------------
Customary abbreviations may be used in the name of a Holder or an assignee,
such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).
All capitalized terms used in this Note and not specifically defined herein
are defined in the Indenture and are used herein as so defined.
21. Indenture to Control.
--------------------
In the case of any conflict between the provisions of this Note and the
Indenture, the provisions of the Indenture shall control.
A-10
<PAGE>
The Company will furnish to any Holder, upon written request and without
charge, a copy of the Indenture. Requests may be made to: Terayon Communication
Systems, Inc., 2952 Bunker Hill Lane, Santa Clara, California 95054, Attention:
General Counsel.
A-11
<PAGE>
TRANSFER NOTICE
This Transfer Notice relates to $__________ principal amount of the 5 %
Convertible Subordinated Notes Due 2007 of Terayon Communication Systems, Inc.,
a Delaware corporation, held by ______________________________ (the
"Transferor").
(I) or (we) assign and transfer this Convertible Note to
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax I.D. no.)
and irrevocably appoint _______________________________ agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.
Your Signature:_________________________________________________________________
(Sign exactly as your name appears on the other side of this
Convertible Note)
Date:_________________________________________________________________________
Signature Guarantee/1/________________________________________________________
In connection with any transfer of any of the Notes evidenced by this
certificate occurring prior to the date that is three years after the later of
the date of original issuance of such Notes and the last date, if any, on which
such Notes were owned by the Company or any Affiliate of the Company, the
undersigned confirms that such Notes are being transferred:
CHECK ONE BOX BELOW
(1) [_] to Terayon Communication Systems, Inc.; or
(2) [_] pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
(3) [_] pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
(4) [_] pursuant to another available exemption from the registration
requirements of the Securities Act of 1933; or
____________________________
/1/ Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
A-12
<PAGE>
(5) [_] pursuant to an effective registration statement under the
Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Notes evidenced by this certificate in the name of
any person other than the registered holder thereof; provided,
however, that if box (2), (3) or (4) is checked, the Trustee may
require, prior to registering any such transfer of the Notes such
legal opinions, certifications and other information as the Company
has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the
exemption provided by Rule 144 under such Act.
Unless the box below is checked, the undersigned confirms that such
Note is not being transferred to an "affiliate" of the Company as
defined in Rule 144 under the Securities Act of 1933, as amended (an
"Affiliate"):
(6) [_] The transferee is an Affiliate of the Company.
_________________________________
Signature
_________________________________
Date
_________________________________
Signature Guarantee /1/
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
________________________
/1/ Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
A-13
<PAGE>
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A under the Securities Act of 1933, and is aware
that the sale to it is being made in reliance on Rule 144A and acknowledges that
it has received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:_________________________ _____________________________________________
[Signature of executive officeer of purchaser]
Name:________________________________________
Title:_______________________________________
A-14
<PAGE>
CONVERSION NOTICE
To Terayon Communication Systems, Inc.:
The undersigned owner of this Note hereby irrevocably exercises the option
to convert this Note, or the portion below designated, into Common Stock of
Terayon Communication Systems, Inc. in accordance with the terms of the
Indenture referred to in this Note, and directs that the shares issuable and
deliverable upon conversion, together with any check in payment for fractional
shares, be issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto.
Any holder of Notes, upon exercise of its conversion rights in accordance
with the terms of the Indenture and the Security, agrees to be bound by the
terms of the Registration Rights Agreement relating to the Common Stock issuable
upon conversion of the Notes.
[_] Convert whole [_] Convert in part
Amount of Note to be converted
($1,000 or integral multiples
thereof):
$____________________
_____________________________________
Signature (sign exactly as name appears
on the other side of this Note)
_____________________________________
Signature Guarantee:/1/
____________________________
/1/ Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
A-15
<PAGE>
If you want the stock certificate made out in another person's name,
complete the following for such person:
___________________________________
Name
___________________________________
Social Security or Taxpayer Identification Number
___________________________________
Street Address
___________________________________
City, State and Zip Code
A-16
<PAGE>
OPTION OF HOLDER TO ELECT REPURCHASE
If you want to elect to have this Note repurchased by the Company pursuant
to Section 3.9 of the Indenture, check the box:
[_]
If you want to elect to have only part of this Note repurchased by the
Company pursuant to Section 3.9 of the Indenture, state the principal amount
(which shall be $1,000 or a multiple thereof) to be repurchased:
$__________________
Dated:_______________________________ ________________________________________
Signature (sign exactly as name appears
on the other side of this Note)
_____________________________________
Signature Guarantee:/1/
___________________________
/1/ Signature must be guaranteed by a commercial bank, trust company or member
firm of the New York Stock Exchange.
A-17
<PAGE>
Schedule A to Exhibit A
Global Note Transfer Schedule
Changes to Principal Amount of Global Security
<TABLE>
<CAPTION>
=====================================================================================================================
Principal Amount of Securities by Remaining Principal Amount of this Authorized Signature
which this Global Security Is to Be Global Security of officer of Trustee or
Date Reduced and Reason for Reduction (following decrease) Note Custodian
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
====================================================================================================================
</TABLE>
Schedule to be maintained by Depositary in cooperation with Trustee.
18
