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EXHIBIT 4.1
______________________________
ALZA CORPORATION
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURES
DUE JULY 28, 2020
____________________________
INDENTURE
Dated as of July 28, 2000
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
TRUSTEE
____________________________________
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.................................................................................. 1
Section 1.2 Other Definitions............................................................................ 7
Section 1.3 Trust Indenture Act Provisions............................................................... 8
Section 1.4 Rules of Construction........................................................................ 8
ARTICLE 2
THE SECURITIES
Section 2.1 Form and Dating.............................................................................. 9
Section 2.2 Execution and Authentication................................................................. 10
Section 2.3 Registrar, Paying Agent and Conversion Agent................................................. 11
Section 2.4 Paying Agent to Hold Money In Trust.......................................................... 11
Section 2.5 Securityholder Lists......................................................................... 12
Section 2.6 Transfer and Exchange........................................................................ 12
Section 2.7 Replacement Securities....................................................................... 13
Section 2.8 Outstanding Securities....................................................................... 14
Section 2.9 Treasury Securities.......................................................................... 14
Section 2.10 Temporary Securities......................................................................... 14
Section 2.11 Cancellation................................................................................. 15
Section 2.12 Additional Transfer and Exchange Requirements................................................ 15
ARTICLE 3
REDEMPTION AND PURCHASES
Section 3.1 Right to Redeem; Notice to Trustee........................................................... 20
Section 3.2 Selection of Securities to Be Redeemed....................................................... 20
Section 3.3 Notice of Redemption......................................................................... 21
Section 3.4 Effect of Notice of Redemption............................................................... 22
Section 3.5 Deposit of Redemption Price.................................................................. 22
Section 3.6 Securities Redeemed in Part.................................................................. 23
Section 3.7 Conversion Arrangement on Call for Redemption................................................ 23
Section 3.8 Purchase of Securities at Option of the Holder Upon Change in Control........................ 23
Section 3.9 Effect of Change in Control Purchase Notice.................................................. 26
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Section 3.10 Deposit of Change in Control Purchase Price.................................................. 27
Section 3.11 Securities Purchased In Part................................................................. 27
Section 3.12 Compliance With Securities Laws Upon Purchase of Securities.................................. 28
Section 3.13 Repayment to the Company..................................................................... 28
ARTICLE 4
CONVERSION
Section 4.1 Conversion Privilege......................................................................... 28
Section 4.2 Conversion Procedure......................................................................... 29
Section 4.3 Fractional Shares............................................................................ 30
Section 4.4 Taxes on Conversion.......................................................................... 30
Section 4.5 Company to Provide Stock..................................................................... 30
Section 4.6 Adjustment of Conversion Rate................................................................ 31
Section 4.7 No Adjustment................................................................................ 36
Section 4.8 Adjustment for Tax Purposes.................................................................. 36
Section 4.9 Notice of Adjustment......................................................................... 37
Section 4.10 Notice of Certain Transactions............................................................... 37
Section 4.11 Effect of Reclassification, Consolidation, Merger or Sale on Conversion Privilege............ 37
Section 4.12 Trustee's Disclaimer......................................................................... 38
Section 4.13 Voluntary Increase........................................................................... 38
ARTICLE 5
SUBORDINATION
Section 5.1 Securities Subordinated to Senior Indebtedness............................................... 39
Section 5.2 Securities Subordinated to Prior Payment of All Senior Indebtedness on Dissolution,
Liquidation, Reorganization, Etc., of the Company............................................ 39
Section 5.3 Holders to Be Subrogated to Right of Holders of Senior Indebtedness.......................... 41
Section 5.4 Obligations of the Company Unconditional..................................................... 41
Section 5.5 Company Not to Make Payment With Respect to Securities in Certain Circumstances.............. 41
Section 5.6 Notice to Trustee............................................................................ 43
Section 5.7 Application by Trustee of Money Deposited With It............................................ 43
Section 5.8 Subordination Rights Not Impaired by Acts or Omissions of Company or Holders of
Senior Indebtedness.......................................................................... 44
Section 5.9 Trustee to Effectuate Subordination.......................................................... 44
Section 5.10 Right of Trustee to Hold Senior Indebtedness................................................. 44
Section 5.11 Article 5 Not to Prevent Events of Default................................................... 44
Section 5.12 No Fiduciary Duty Created to Holders of Senior Indebtedness.................................. 44
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Section 5.13 Article Applicable to Paying Agents.......................................................... 44
Section 5.14 Certain Conversions and Repurchases Deemed Payment........................................... 45
ARTICLE 6
COVENANTS
Section 6.1 Payment of Securities........................................................................ 45
Section 6.2 SEC Reports; Rule 144A Information........................................................... 46
Section 6.3 Compliance Certificates...................................................................... 46
Section 6.4 Further Instruments and Acts................................................................. 47
Section 6.5 Maintenance of Corporate Existence........................................................... 47
ARTICLE 7
SUCCESSOR CORPORATION
Section 7.1 When Company May Merge, Etc.................................................................. 47
Section 7.2 Successor Corporation Substituted; Exercise of Rights........................................ 48
ARTICLE 8
DEFAULT AND REMEDIES
Section 8.1 Events of Default............................................................................ 48
Section 8.2 Acceleration................................................................................. 50
Section 8.3 Other Remedies............................................................................... 50
Section 8.4 Waiver of Defaults and Events of Default..................................................... 51
Section 8.5 Control by Majority.......................................................................... 51
Section 8.6 Limitations on Suits......................................................................... 51
Section 8.7 Rights of Holders to Receive Payment and to Convert.......................................... 52
Section 8.8 Collection Suit by Trustee................................................................... 52
Section 8.9 Trustee May File Proofs of Claim............................................................. 52
Section 8.10 Priorities................................................................................... 53
Section 8.11 Undertaking for Costs........................................................................ 54
Section 8.12 Waiver of Usury, Stay or Extension Laws...................................................... 54
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
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Section 9.5 Notice of Default or Events of Default....................................................... 56
Section 9.6 Reports by Trustee to Holders................................................................ 57
Section 9.7 Compensation and Indemnity................................................................... 57
Section 9.8 Replacement of Trustee....................................................................... 58
Section 9.9 Successor Trustee by Merger, Etc............................................................. 59
Section 9.10 Eligibility; Disqualification................................................................ 59
Section 9.11 Preferential Collection of Claims Against Company............................................ 59
Section 9.12 Investment of Funds.......................................................................... 59
ARTICLE 10
DISCHARGE OF INDENTURE
Section 10.1 Discharge of Liability on Securities......................................................... 60
Section 10.2 Repayment to the Company..................................................................... 60
ARTICLE 11
AMENDMENTS, 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.......................................................... 63
Section 11.4 Revocation and Effect of Consents............................................................ 63
Section 11.5 Notation on or Exchange of Securities........................................................ 63
Section 11.6 Trustee to Sign Supplemental Indentures...................................................... 63
Section 11.7 Effect of Supplemental Indentures............................................................ 63
ARTICLE 12
MISCELLANEOUS
Section 12.1 Trust Indenture Act Controls................................................................. 64
Section 12.2 Notices...................................................................................... 64
Section 12.3 Communications by Holders With Other Holders................................................. 65
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 and Conversion Agent............................... 66
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........................................................................ 67
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Section 12.13 Separability................................................................................. 67
Section 12.14 Table of Contents, Headings, etc............................................................. 67
ARTICLE 13
REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER
Section 13.1 General...................................................................................... 67
Section 13.2 Company's Right to Elect Manner of Payment of Repurchase Price............................... 69
Section 13.3 Repurchase with Cash......................................................................... 69
Section 13.4 Payment by Issuance of Common Stock.......................................................... 70
Section 13.5 Notice of Election........................................................................... 71
Section 13.6 Covenants of the Company..................................................................... 73
Section 13.7 Procedure upon Repurchase.................................................................... 73
Section 13.8 Taxes........................................................................................ 73
Section 13.9 Effect of Repurchase Notice.................................................................. 74
Section 13.10 Deposit of Repurchase Price.................................................................. 75
Section 13.11 Securities Repurchased in Part............................................................... 75
Section 13.12 Compliance with Securities Laws Upon Purchase of Securities.................................. 75
Section 13.13 Repayment to the Company..................................................................... 75
ARTICLE 14
SPECIAL TAX EVENT CONVERSION
Section 14.1 Optional Conversion to Interest Bearing Securities Upon Tax Event............................ 76
Section 14.2 Payment of Interest; Interest Rights Preserved............................................... 76
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CROSS REFERENCE TABLE/1/
Trust Indenture Act Indenture
Section Section
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310(a)(1)................................................................ 9.10
(a)(2)................................................................... 9.10
(a)(3)................................................................... N.A.
(a)(4)................................................................... N.A.
(b).................................................................. 9.8; 9.10
(c)...................................................................... N.A.
311(a)................................................................... 9.11
(b)...................................................................... 9.11
(c)...................................................................... N.A.
312(a)................................................................... 2.5
(b)...................................................................... 12.3
(c)...................................................................... 12.3
313(a)................................................................... 9.6
(b)(1)................................................................... N.A.
(b)(2)................................................................... 9.6
(c)...................................................................... 12.2
(d)...................................................................... 9.6
314(a).......................................................... 6.2; 6.3; 12.2
(b)...................................................................... N.A.
(c)(1)................................................................... 12.4
(c)(2)................................................................... 12.4
(c)(3)................................................................... N.A.
(d)...................................................................... N.A.
(e)................................................................. 9.5; 12.5
(f)...................................................................... N.A.
315(a)................................................................... 9.1
(b)...................................................................... 12.2
(c)...................................................................... 9.1
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/1/ Note: This Cross Reference Table shall not, for any purpose, be deemed
to be part of the Indenture.
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(d)...................................................................... 9.1
(e)...................................................................... 8.11
316(a)(last sentence).................................................... 2.8
(a)(1)(A)................................................................ 8.5
(a)(1)(B)................................................................ 8.4
(a)(2)................................................................... N.A.
(b)...................................................................... 8.7
317(a)(1)................................................................ 8.8
(a)(2)................................................................... 8.9
(b)...................................................................... 2.4
318(a)................................................................... 12.1
N.A. means Not Applicable.
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THIS INDENTURE, dated July 28, 2000 is between ALZA Corporation, a
Delaware corporation (the "Company"), and Chase Manhattan Bank and Trust
Company, National Association, as Trustee (the "Trustee").
In consideration of the premises and the purchase of the Securities by
the Holders thereof, 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
Zero Coupon Convertible Subordinated Debentures Due July 28, 2020.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
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"Additional Interest" shall have the meaning set forth in the
Registration Rights Agreement.
"Affiliate" means, with respect to any specified person, 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.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial ownership interests in a Global Security, the rules and
procedures of the Depositary that are applicable to such transfer or exchange.
"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.
"Capital Stock" or "capital stock" of any person means any and all
shares, interests, partnership interests, participations, rights or other
equivalents (however designated) of such person's equity interest (however
designated).
"Capitalized Lease Obligation" means any obligation under a lease of
(or other agreement conveying the right to use) any property (whether real,
personal or mixed) that is
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required to be classified and accounted for as a capital lease obligation under
GAAP, and the amount of such obligation at any date shall be the capitalized
amount thereof at such date, determined in accordance with GAAP.
"Cash" or "cash" means such coin or currency of the United States as
at anytime of payment is legal tender for the payment of public and private
debts.
"Certificated Security" means a Security that is in substantially the
form attached hereto as Exhibit A and that does not include the information or
---------
the schedule called for by footnotes 1, 3 and 4 thereof.
"Common Stock" means the common stock of the Company, $.01 par value,
as it exists on the date of this Indenture and any shares of any class or
classes of capital stock of the Company 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, however, that if at any time there shall be more than
-------- -------
one such resulting class, the shares of each such class then so issuable on
conversion of Securities shall be substantially in the proportion which the
total number of shares of such class resulting from all such reclassifications
bears to the total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means the
successor.
"Company Order" means a written request or order signed in the name of
the Company by its Chief Executive Officer or a Vice President, and by its Chief
Financial Officer, Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at the date of the execution of this Indenture is located at 101
California Street, Suite 2725, San Francisco, CA 94111, or at any other time at
such other address as the Trustee may designate from time to time by notice to
the Company.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company against fluctuations in currency values.
"Default" or "default" means, when used with respect to the
Securities, any event which is or, after notice or passage of time or both,
would be an Event of Default.
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"Exchange Act" means the Securities Exchange Act of 1934.
"Final Maturity Date" means July 28, 2020.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States of America, which are applicable from time to
time and are consistently applied.
"Global Security" means a permanent Global Security that is in
substantially the form attached hereto as Exhibit A and that includes the
---------
information and schedule called for by footnotes 1, 3 and 4 thereof and which is
deposited with the Depositary or the Securities Custodian and registered in the
name of the Depositary or its nominee.
"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"Indebtedness" means, with respect to any person, without duplication,
(a) all liabilities of such person for borrowed money or for the deferred
purchase price of property or services, excluding any trade accounts payable and
other current liabilities incurred in the ordinary course of business; (b) all
obligations of such person evidenced by bonds, notes, debentures, or other
similar instruments; (c) all Capitalized Lease Obligations of such person; (d)
all guarantees by such person of Indebtedness of the types referred to in this
definition; (e) all obligations of such person under or in respect of Currency
Agreements and Interest Rate Protection Obligations of such person; and (f) any
amendment, supplement, modification, deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (a) through (e) above.
"Indenture" means this Indenture as amended or supplemented from time
to time pursuant to the terms of this Indenture.
"Initial Issuance Date" means July 28, 2000.
"Interest Rate Protection Agreement" means any arrangement between the
Company and any other person whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a floating or a fixed rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or a floating rate of interest on the same notional amount and shall
include, without limitation, interest rate swaps, caps, floors, collars and
similar agreements.
3
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"Interest Rate Protection Obligations" means the obligations of the
Company pursuant to an Interest Rate Protection Agreement.
"Issue Date" of any Security means the date on which the Security was
originally issued or deemed issued as set forth on the face of the Security.
"Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is sold
as set forth on the face of the Security.
"Officer" means the Chief Executive Officer, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers;
provided, however, that for purposes of Sections 4.11 and 6.3, "Officers'
Certificate" means a certificate signed by the principal executive officer,
principal financial officer or principal accounting officer of the Company and
by one other Officer.
"Opinion of Counsel" means a written opinion from legal counsel. The
counsel may be an employee of or counsel to the Company or the Trustee.
"Original Issue Discount" of any Security means the difference between
the Issue Price and the Principal Amount of the Security as set forth on the
face of the Security.
"Person" or "person" means any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, or any other entity or organization, including a government or political
subdivision or instrumentality thereof.
"Principal Amount" of a Security means the Principal Amount at
maturity as set forth on the face of the Security.
"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.
"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 July 24, 2000, among the Company, Credit Suisse First
Boston Corporation, Chase Securities Inc. and Morgan Stanley & Co. Incorporated.
4
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"Restricted Certificated Security" means a Certificated Security which
is a Transfer Restricted Security.
"Restricted Global Security" means a Global Security that is a
Transfer Restricted Security.
"Rights" means "Rights" as such term is defined in the Rights Plan.
"Rights Plan" means that certain Rights Agreement, dated as of
December 17, 1999, between the Company and BankBoston, N.A. as rights agent.
"Rule 144" means Rule 144 under the Securities Act or any successor to
such Rule.
"Rule 144A" means Rule 144A under the Securities Act or any successor
to such Rule.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities" means any of the Company's Zero Coupon Convertible
Subordinated Debentures Due July 28, 2020, as amended or supplemented from time
to time, that are issued under this Indenture.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the Trustee, as custodian with respect to
the Securities in global form, or any successor thereto.
"Senior Indebtedness" means the principal of and premium, if any,
interest and other amounts payable on or in respect of any Indebtedness of the
Company, whether outstanding on the date of this Indenture or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to, or shall be junior in right of payment to,
or shall be pari passu in right of payment with, the Securities.
Notwithstanding the foregoing,"Senior Indebtedness" shall not include (a)
Indebtedness evidenced by the Securities, and (b) Indebtedness of the Company to
a Subsidiary of the Company.
"Stated Maturity", when used with respect to any Security, means the
date specified in such Security as the fixed date on which an amount equal to
the Principal Amount of such Security is due and payable.
5
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"Subsidiary" means, with respect to any person, (i) a corporation a
majority of whose outstanding Voting Stock is at the time of determination
thereof, directly or indirectly, owned by such person, by one or more
Subsidiaries of such person or by such person and one or more of its
Subsidiaries and (ii) any other person (other than a corporation), including,
without limitation, a joint venture, in which such person, one or more
Subsidiaries of such person or such person and one or more of its Subsidiaries,
directly or indirectly, at the date of determination thereof, owns at least a
majority of the ownership interests entitled to vote in the election of
directors, managers or trustees thereof (or other persons performing similar
functions). For purposes of this definition, any directors' qualifying shares
or investments by foreign nationals mandated by applicable law shall be
disregarded in determining the ownership of a Subsidiary.
"Tax Event" means that the Company shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after July 28, 2000, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein or (b) any amendment to, or change in, an interpretation or application
of such laws or regulations by any legislative body, court, governmental agency
or regulatory authority, in each case, which amendment or change is enacted,
promulgated, issued or announced or which interpretation is issued or announced
or which action is taken, on or after July 28, 2000, there is more than an
insubstantial risk that interest (including Original Issue Discount) payable on
the Securities either (i) would not be deductible on a current accrual basis or
(ii) would not be deductible under any other method, in either case, in whole or
in part, by the Company (by reason of deferral, disallowance or otherwise) for
United States Federal income tax purposes.
"TIA" means the Trust Indenture Act of 1939, as in effect on the date
of this Indenture, 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.
"Trading Day" means a day during which trading in securities generally
occurs on the NYSE or, if the Common Stock is not listed on the NYSE, on The
Nasdaq Stock Market, or if the Common Stock is not quoted on The Nasdaq Stock
Market, on the principal other national or regional securities exchange on which
the Common Stock is then listed or, if the Common Stock is not listed on a
national or regional securities exchange, on the principal other market on which
the Common Stock is then traded.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture, and
thereafter means the successor.
6
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"Trust Officer" means, with respect to the Trustee, any officer
assigned to the Corporate Trust Office, including any vice president, assistant
vice president, assistant treasurer, assistant secretary or any other officer of
the Trustee customarily performing functions similar to those performed by any
of the above-designated officers and having direct responsibility for the
administration of this Indenture, and also, with respect to a particular matter,
any other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Unrestricted Certificated Security" means a Certificated Security
which is not a Transfer Restricted Security.
"Unrestricted Global Security" means a Global Security which is not a
Transfer Restricted Security.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof under ordinary circumstances have the power to vote in
the election of the board of directors, managers or trustees of any person (or
other persons performing similar functions), irrespective of whether or not, at
the time, Capital Stock of any other class or classes shall have, or might have,
voting power by reason of the happening of any contingency.
Section 1.2 Other Definitions.
-----------------
Term Defined in Section
"Agent Members" 2.1(b)
"Bankruptcy Law" 8.1
"Change in Control" 3.8(a)
"Change in Control Purchase Date" 3.8(a)
"Change in Control Purchase Notice" 3.8(c)
"Change in Control Purchase Price" 3.8(a)
"closing price" 4.6(e)
"Company Notice" 13.5
"Company Notice Date" 13.3
"Conversion Agent" 2.3
"Conversion Date" 4.2
"Conversion Rate" 4.6
"current market price" 4.6
"Custodian" 8.1
"DTC" 2.1(a)
"Default Notice" 5.5
"Depositary" 2.1
"Determination Date" 4.6
7
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"Distribution Date" 4.6
"Event of Default" 8.1
"Expiration Date" 4.6
"Expiration Time" 4.6
"Legal Holiday" 12.7
"Market Price" 13.4
"New Rights Plan" 4.6
"NYSE" 4.6
"Paying Agent" 2.3
"Purchase Agreement" 2.1(a)
"Purchased Shares" 4.6
"QIB" 2.1(a)
"Registrar" 2.3
"Repurchase Date" 13.1
"Repurchase Notice" 13.1
"Repurchase Price" 13.1
"Restated Principal Amount" 14.1
"Sale Price" 13.4
"Subordinated Security Obligations" 5.2(a)
"Tax Event Date" 14.1
"Transfer Certificate" 2.12
"Transfer Restricted Security" 2.12
"Triggering Distribution" 4.6
"Unissued Shares" 3.8
Section 1.3 Trust Indenture Act Provisions.
------------------------------
Whenever this Indenture refers to a provision of the TIA, that
provision is incorporated by reference in and made a part of this Indenture. The
Indenture shall also include those provisions of the TIA required to be included
herein by the provisions of the Trust Indenture Reform Act of 1990. The
following TIA terms used in this Indenture have the following meanings:
"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; and
8
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"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 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 GAAP;
(3) words in the singular include the plural, and words in the plural
include the singular;
(4) provisions apply to successive events and transactions;
(5) the term "merger" includes a statutory share exchange and the term
"merged" has a correlating meaning;
(6) the masculine gender includes the feminine and the neuter;
(7) references to agreements and other instruments include subsequent
amendments thereto; and
(8) "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.
ARTICLE 2
THE SECURITIES
Section 2.1 Form and Dating.
---------------
The Securities and the Trustee's certificate of authentication shall
be substantially in the respective forms set forth in Exhibit A, which Exhibit A
--------- ---------
is incorporated in and made part of this Indenture. The Securities may have
notations, legends or endorsements required, if any,
9
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by law, stock exchange rule or usage. Each Security shall be dated the date of
its authentication. The Securities are being offered and sold by the Company
pursuant to a Purchase Agreement, dated July 24, 2000 (the "Purchase
Agreement"), among the Company, Credit Suisse First Boston Corporation, Chase
Securities Inc. and Morgan Stanley & Co. Incorporated, in transactions exempt
from, or not subject to, the registration requirements of the Securities Act.
(a) Restricted Global Securities. All of the Securities are initially
----------------------------
being offered and sold to qualified institutional buyers as defined in Rule 144A
(collectively, "QIBs" or individually a "QIB") in reliance on Rule 144A under
the Securities Act and shall be issued initially in the form of one or more
Restricted Global Securities, which shall be deposited on behalf of the
purchasers of the Securities represented thereby with the Trustee, at its
Corporate Trust Office, as Securities Custodian for the depositary, The
Depository Trust Company ("DTC") (such depositary, or any successor thereto,
being hereinafter referred to as the "Depositary"), and registered in the name
of its nominee, Cede & Co., duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate Principal Amount of the
Restricted Global Security may from time to time be increased or decreased by
adjustments made on the records of the Securities Custodian as hereinafter
provided, subject in each case to compliance with the Applicable Procedures.
(b) Global Securities in General. Each Global Security shall
----------------------------
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, redemptions, purchases or
conversions of such Securities. Any endorsement of a Global Security to reflect
the amount of any increase or decrease in the Principal Amount of outstanding
Securities represented thereby shall be made by the Securities Custodian in
accordance with the standing instructions and procedures existing between the
Depositary and the Securities Custodian. Members of, or participants in, the
Depositary ("Agent Members") shall have no rights under this Indenture with
respect to any Global Security held on their behalf by the Depositary or under
the Global Security, and the Depositary (including, for this purpose, its
nominee) may be treated by the Company, the Trustee and any agent of the Company
or the Trustee as the absolute owner and Holder of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall (A)
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or (B) impair, as between the Depositary and its
Agent Members, the operation of customary practices governing the exercise of
the rights of a Holder of any Security.
(c) Certificated Securities. Certificated Securities shall be issued
-----------------------
only under the limited circumstances provided in Section 2.12(a)(1) hereof.
Section 2.2 Execution and Authentication.
----------------------------
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The Securities shall be executed on behalf of the Company by the
manual or facsimile signature of its Chief Executive Officer or one of its Vice
Presidents, and attested by the manual or facsimile signature of the Secretary
or an Assistant Secretary of the Company. Typographic and other minor errors or
defects in any such reproduction of any such facsimile signature shall not
affect the validity or enforceability of any Security which has been
authenticated and delivered by the Trustee.
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
$910,000,000 (plus up to an additional $180,000,000 aggregate Principal Amount
issuable upon exercise of the option described in the Purchase Agreement) upon
receipt of a Company Order or Orders. The Company Order shall specify the
Principal Amount of Securities to be authenticated, shall provide that all such
Securities upon initial issuance will be represented by a Restricted Global
Security and the date on which each original issue of Securities is to be
authenticated. The aggregate Principal Amount of Securities outstanding at any
time may not exceed $910,000,000, except as provided in the first sentence of
this paragraph and 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 shall have the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
The Securities shall be issuable only in registered form without
coupons and only in denominations of Principal Amount of $1,000 and any integral
multiple thereof.
Section 2.3 Registrar, Paying Agent and Conversion Agent.
--------------------------------------------
The Company shall maintain one or more offices or agencies where
Securities may be presented for registration of transfer or for exchange (each,
a "Registrar"), one or more offices or agencies where Securities may be
presented for payment (each, a "Paying Agent"), one or more offices or agencies
where Securities may be presented for conversion (each, a "Conversion Agent")
and one or more offices or agencies where notices and demands to or upon the
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Company in respect of the Securities and this Indenture may be served, which in
each case shall initially be the Corporate Trust Office. The Company will at all
times maintain a Paying Agent, Conversion Agent, Registrar and an office or
agency where notices and demands to or upon the Company in respect of the
Securities and this Indenture in the Borough of Manhattan, the City of New York,
which shall initially be an office or agency of the Trustee at 55 Water Street,
Room 234, North Building, New York, NY 10041. The Registrar shall keep a
register of the Securities and of their transfer and exchange.
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, Conversion Agent or
agent for service of notices and demands in any place required by this
Indenture, or fails to give the foregoing notice, the Trustee shall act as such.
The Company or any Subsidiary or any Affiliate of the Company may act as Paying
Agent (except for the purposes of Section 6.1 and Article 10).
The Company initially appoints the Trustee as Registrar, Paying Agent,
Conversion Agent and agent for service of notices and demands in connection with
the Securities.
Section 2.4 Paying Agent to Hold Money In Trust.
-----------------------------------
Prior to 11:00 a.m., New York City time, on each due date of payments
in respect of any Security, the Company shall deposit with a Paying Agent a sum
of money (in immediately available funds deposited on the due date) or Common
Stock sufficient to make such payments so becoming due. A Paying Agent shall
hold in trust for the benefit of Securityholders or the Trustee all money and
Common Stock held by the Paying Agent for the making of payments in respect of
the Securities, and shall notify the Trustee of any default by the Company (or
any other obligor on the Securities) in making any such payment. If the Company
or an Affiliate of the Company acts as Paying Agent, it shall, before 11:00
a.m., New York City time, on each due date of the making of payments in respect
of the Securities, segregate the money and Common Stock and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to pay
all money and Common Stock held by it to the Trustee, and the Trustee may at any
time during the continuance of any default, upon written request to a Paying
Agent, require such Paying Agent to forthwith pay to the Trustee all sums so
held intrust by such Paying Agent. Upon doing so, the Paying Agent (other than
the Company) shall have no further liability for the money or Common Stock.
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
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not the Registrar, the Company shall cause to be furnished to the Trustee at
least three Business Days prior to July 28 and January 28 of each year 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) Subject to compliance with any applicable additional requirements
contained in Section 2.12, when a Security is presented to a Registrar with a
request to register a transfer thereof or to exchange such Security for an equal
Principal Amount of Securities of other authorized denominations, the Registrar
shall register the transfer or make the exchange as requested; provided,
however, that every Security presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Holder thereof or its attorney duly authorized in writing. To permit
registration of transfers and exchanges, upon surrender of any Security for
registration of transfer or exchange at an office or agency maintained pursuant
to Section 2.3, the Company shall execute and the Trustee shall authenticate
Securities of a like aggregate Principal Amount at the Registrar's request. Any
exchange or transfer shall be without charge, except that the Company or the
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto, and provided
further that this sentence shall not apply to any exchange pursuant to Section
2.10, 2.12(a)(1), 3.6, 3.11, 4.2 (last paragraph), 11.5 or 13.11.
Neither the Company, any Registrar nor the Trustee shall be required
to exchange or register a transfer of (a) any Securities for a period beginning
15 Business Days prior to the mailing of any notice of redemption and ending on
the close of business on the day of mailing of such notice, (b) any Securities
or portions thereof selected or called for redemption (except, in the case of
redemption of a Security in part, the portion not to be redeemed) or (c) any
Securities or portions thereof in respect of which a Change in Control Purchase
Notice or Repurchase Notice has been delivered and not withdrawn by the Holder
thereof (except, in the case of the purchase of a Security in part, the portion
not to be purchased).
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Company, evidencing the same debt and entitled
to the same benefits under this Indenture, as the Securities surrendered upon
such transfer or exchange.
(b) Any Registrar appointed pursuant to Section 2.3 hereof shall
provide to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Securities upon transfer or
exchange of Securities.
Section 2.7 Replacement Securities.
----------------------
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If any mutilated Security is surrendered to the Company, a Registrar
or the Trustee, or the Company, a Registrar and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Security, and there
is delivered to the Company, the applicable Registrar and the Trustee such
security or indemnity as may be reasonably required by them, then, in the
absence of notice to the Company, such Registrar or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute,
and upon receipt of a Company Order the Trustee shall authenticate and deliver,
in exchange for any such mutilated Security or in lieu of any such destroyed,
lost or stolen Security, a new Security of like tenor and Principal Amount,
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 or
purchased by the Company upon a Change in Control pursuant to Article 3 or
purchased by the Company on a Repurchase Date pursuant to Article 13, the
Company in its discretion may, instead of issuing a new Security, pay, redeem or
purchase such Security, as the case may be.
Upon the issuance of any new Securities under this Section 2.7, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the reasonable fees and expenses of the Trustee
or the Registrar) in connection therewith.
Every new Security issued pursuant to this Section 2.7 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
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 (to the extent lawful)
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.
----------------------
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 Company receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser. If a Paying Agent (other
than the Company or an Affiliate of the Company) holds on a Redemption Date, a
Change in Control Purchase Date or on the Business Day following a Repurchase
Date or Stated Maturity, money or securities, if permitted hereunder, sufficient
to
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<PAGE>
pay the Securities (or portions thereof) payable on that date, then on and after
that date such Securities (or portions thereof, as the case may be) cease to be
outstanding and Original Issue Discount and interest, if any, on such Securities
shall cease to accrue; provided, that if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been made. 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. If a Security is converted in accordance with Article 4, then from and
after the time of conversion on the Conversion Date, such Security shall cease
to be outstanding and Original Issue Discount and interest, if any, shall cease
to accrue on such 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 has actual knowledge that such Securities 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 on 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 receipt of a Company Order, 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. If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for such purpose
pursuant to Section 2.3, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a like
Principal Amount of definitive Securities or authorized denominations. Until so
exchanged the temporary Securities shall in all respects be entitled to the same
benefits under this Indenture as definitive Securities.
Section 2.11 Cancellation.
------------
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<PAGE>
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 or its agent any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee and no one else shall
cancel, in accordance with its standard procedures, all Securities surrendered
for transfer, exchange, redemption, payment, purchase pursuant to Section 3.8 or
Article 13, conversion or cancellation and shall deliver the canceled Securities
to the Company. All Securities which are redeemed, purchased, converted or
otherwise acquired by the Company or any of its Subsidiaries or Affiliates prior
to the Final Maturity Date shall be delivered to the Trustee for cancellation
and the Company may not hold or resell such Securities or issue any new
Securities to replace any such Securities or any Securities that any Holder has
converted pursuant to Article 4. Without limitation to the foregoing, any
Securities acquired by any investment bankers or other purchasers pursuant to
Section 3.7 shall be surrendered to the Trustee for conversion and thereafter
canceled, and may not be reoffered, sold or otherwise transferred.
Section 2.12 Additional Transfer and Exchange Requirements.
---------------------------------------------
(a) Transfer and Exchange of Global Securities.
------------------------------------------
(1) Certificated Securities shall be issued in exchange for
interests in the Global Securities only if (x) the Depositary notifies the
Company that it is unwilling or unable to continue as depositary for the
Global Securities or if it at any time ceases to be a "clearing agency"
registered under the Exchange Act if so required by applicable law or
regulation and a successor depositary is not appointed by the Company
within 90 days, (y) an Event of Default has occurred and is continuing or
(z) the Company in its sole discretion elects not to have the Securities
represented by Global Securities. In any such case, the Company shall
execute, and the Trustee shall, upon receipt of a Company Order (which the
Company agrees to deliver promptly), authenticate and deliver Certificated
Securities in an aggregate Principal Amount equal to the Principal Amount
of such Global Securities in exchange therefor. Only Restricted
Certificated Securities shall be issued in exchange for beneficial
interests in Restricted Global Securities, and only Unrestricted
Certificated Securities shall be issued in exchange for beneficial
interests in Unrestricted Global Securities. Certificated Securities issued
in exchange for beneficial interests in Global Securities shall be
registered in such names and shall be in such authorized denominations as
the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall
deliver or cause to be delivered such Certificated Securities to the
persons in whose names such Securities are so registered. Such exchange
shall be effected in accordance with the Applicable Procedures.
(2) Notwithstanding any other provisions of this Indenture other
than the provisions set forth in Section 2.12(a)(1), a Global Security may
not be transferred as a whole except by the Depositary to a nominee of the
16
<PAGE>
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(b) Transfer and Exchange of Certificated Securities. When
------------------------------------------------
Certificated Securities are presented by a Holder to a Registrar with a request:
(1) to register the transfer of the Certificated Securities to a
person who will take delivery thereof in the form of Certificated
Securities only; or
(2) to exchange such Certificated Securities for an equal
Principal Amount of Certificated Securities of other authorized
denominations,
such Registrar shall register the transfer or make the exchange as
requested; provided, however, that the Certificated Securities presented or
surrendered for register of transfer or exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in accordance with the proviso to the first
paragraph of Section 2.6; and
(2) in the case of a Restricted Certificated Security, such
request shall be accompanied by the following additional information and
documents, as applicable:
(A) if such Restricted Certificated Security is being
delivered to the Registrar by a Holder for registration in the name of
such Holder, without transfer, or such Restricted Certificated
Security is being transferred to the Company or a Subsidiary of the
Company, a certification to that effect from such Holder (in
substantially the form set forth in the Transfer Certificate required
pursuant to Section 2.12(e)(1));
(B) if such Restricted Certificated Security is being
transferred to a person the Holder reasonably believes is a QIB in
accordance with Rule 144A or pursuant to an effective registration
statement under the Securities Act, a certification to that effect
from such Holder (in substantially the form set forth in the Transfer
Certificate); or
(C) if such Restricted Certificated Security is being
transferred (i) pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule 144, or
(ii) pursuant to an exemption from the registration requirements of
the Securities Act (other than pursuant to Rule 144A or Rule 144) and
as a result of which, in the case of a Security transferred pursuant
17
<PAGE>
to this clause (ii), such Security shall cease to be a "restricted
security" within the meaning of Rule 144, a certification to that
effect from the Holder (in substantially the form set forth in the
Transfer Certificate) and, if the Company or such Registrar so
requests, a customary opinion of counsel, certificates and other
information reasonably acceptable to the Company and such Registrar to
the effect that such transfer is in compliance with the Securities
Act.
(c) Transfer of a Beneficial Interest in a Restricted Global Security
-----------------------------------------------------------------
for a Beneficial Interest in an Unrestricted Global Security. Any person having
------------------------------------------------------------
a beneficial interest in a Restricted Global Security may upon request, subject
to the Applicable Procedures, transfer such beneficial interest to a person who
is required or permitted to take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Security. Upon receipt by the Trustee of
written instructions or such other form of instructions as is customary for the
Depositary, from the Depositary or its nominee on behalf of any person having a
beneficial interest in a Restricted Global Security and the following additional
information and documents in such form as is customary for the Depositary from
the Depositary or its nominee on behalf of the person having such beneficial
interest in the Restricted Global Security (all of which may be submitted by
facsimile or electronically):
(1) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certification to that effect from the transferor (in substantially the form
set forth in the Transfer Certificate); or
(2) if such beneficial interest is being transferred (i) pursuant
to an exemption from the registration requirements of the Securities Act in
accordance with Rule 144 or (ii) pursuant to an exemption from the
registration requirements of the Securities Act (other than pursuant to
Rule 144A or Rule 144) and as a result of which, in the case of a Security
transferred pursuant to this clause (ii), such Security shall cease to be a
"restricted security" within the meaning of Rule 144, a certification to
that effect from the transferor (in substantially the form set forth in the
Transfer Certificate) and, if the Company or the Trustee so requests, a
customary opinion of counsel, certificates and other information reasonably
acceptable to the Company and the Trustee to the effect that such transfer
is in compliance with the Securities Act,
the Trustee, as a Registrar and Securities Custodian, shall reduce or cause to
be reduced the aggregate Principal Amount of Restricted Global Security by the
appropriate Principal Amount and shall increase or cause to be increased the
aggregate Principal Amount of the Unrestricted Global Security by a like
Principal Amount. Such transfer shall otherwise be effected in accordance with
the Applicable Procedures. If no Unrestricted Global Security is then
outstanding, the Company shall execute and the Trustee shall, upon receipt of a
Company Order (which the Company agrees to deliver promptly), authenticate and
deliver an Unrestricted Global Security.
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(d) Transfers of Certificated Securities for Beneficial Interest in
---------------------------------------------------------------
Global Securities. In the event that Certificated Securities are issued in
-----------------
exchange for beneficial interests in Global Securities and, thereafter, the
events or conditions specified in Section 2.12(a)(1) which required such
exchange shall have ceased to exist, the Company shall mail notice to the
Trustee and to the Holders stating that Holders may exchange Certificated
Securities for interests in Global Securities by complying with the procedures
set forth in this Indenture and briefly describing such procedures and the
events or circumstances requiring that such notice be given. Thereafter, if
Certificated Securities are presented by a Holder to a Registrar with a request:
(1) to register the transfer of such Certificated Securities to
a person who will take delivery thereof in the form of a beneficial
interest in a Global Security, which request shall specify whether such
Global Security will be a Restricted Global Security or an Unrestricted
Global Security; or
(2) to exchange such Certificated Securities for an equal
Principal Amount of beneficial interests in a Global Security, which
beneficial interests will be owned by the Holder transferring such
Certificated Securities (provided that in the case of such an exchange,
Restricted Certificated Securities may be exchanged only for beneficial
interests in Restricted Global Securities and Unrestricted Certificated
Securities may be exchanged only for beneficial interests in Unrestricted
Global Securities),
the Registrar shall register the transfer or make the exchange as requested by
canceling such Certificated Security and causing, or directing the Securities
Custodian to cause, the aggregate Principal Amount of the applicable Global
Security to be increased accordingly and, if no such Global Security is then
outstanding, the Company shall issue and the Trustee shall authenticate and
deliver a new Global Security; provided, however, that the Certificated
Securities presented or surrendered for registration of transfer or exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in accordance with the proviso to the first sentence
of Section 2.6(a);
(2) in the case of a Restricted Certificated Security to be
transferred for a beneficial interest in an Unrestricted Global Security,
such request shall be accompanied by the following additional information
and documents, as applicable:
(A) if such Restricted Certificated Security is being
transferred pursuant to an effective registration statement under the
Securities Act, a certification to that effect from such Holder (in
substantially the form set forth in the Transfer Certificate); or
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<PAGE>
(B) if such Restricted Certificated Security is being
transferred pursuant to (i) an exemption from the registration
requirements of the Securities Act in accordance with Rule 144 or (ii)
pursuant to an exemption from the registration requirements of the
Securities Act (other than pursuant to Rule 144A or Rule144) and as a
result of which, in the case of a Security transferred pursuant to
this clause (ii), such Security shall cease to be a "restricted
security" within the meaning of Rule144, a certification to that
effect from such Holder (in substantially the form set forth in the
Transfer Certificate),and, if the Company or the Registrar so
requests, a customary opinion of counsel, certificates and other
information reasonably acceptable to the Company and the Trustee to
the effect that such transfer is in compliance with the Securities
Act;
(3) in the case of a Restricted Certificated Security to be
transferred or exchanged for a beneficial interest in a Restricted Global
Security, such request shall be accompanied by a certification from such
Holder (in substantially the form set forth in the Transfer Certificate) to
the effect that such Restricted Certificated Security is being transferred
to a person the Holder reasonably believes is a QIB (which, in the case of
an exchange, shall be such Holder) in accordance with Rule 144A; and
(4) in the case of an Unrestricted Certificated Security to be
transferred or exchanged for a beneficial interest in an Unrestricted
Global Security, such request need not be accompanied by any additional
information or documents.
(e) Legends.
-------
(1) Except as permitted by the following paragraphs (2) and (3),
each Global Security and Certificated Security (and all Securities issued
in exchange therefor or upon registration of transfer or replacement
thereof and any Common Stock issuable upon conversion thereof) shall bear a
legend in substantially the form called for by footnote 2 to Exhibit A
---------
hereto (each a "Transfer Restricted Security" for so long as such Security
or Common Stock issuable upon conversion thereof is required by this
Indenture to bear such legend). Each Transfer Restricted Security shall
have attached thereto a certificate (a "Transfer Certificate") in
substantially the form called for by footnote 5 to Exhibit A hereto.
---------
(2) Upon any sale or transfer of a Transfer Restricted Security
(x) pursuant to Rule 144, (y) pursuant to an effective registration
statement under the Securities Act or (z) pursuant to any other available
exemption (other than Rule 144A) from the registration requirements of the
Securities Act and as a result of which, in the case of a Security
transferred pursuant to this clause (z), such Security shall cease to be a
"restricted security" within the meaning of Rule 144:
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<PAGE>
(A) in the case of any Restricted Certificated Security,
any Registrar shall permit the Holder thereof to exchange such
Restricted Certificated Security for an Unrestricted Certificated
Security, or (under the circumstances described in Section2.12(d)) to
transfer such Restricted Certificated Security to a transferee who
shall take such Security in the form of a beneficial interest in an
Unrestricted Global Security, and in each case shall rescind any
restriction on the transfer of such Security; provided, however, that
the Holder of such Restricted Certificated Security shall, in
connection with such exchange or transfer, comply with the other
applicable provisions of this Section 2.12; and
(B) in the case of any beneficial interest in a Restricted
Global Security, the Trustee shall permit the beneficial owner thereof
to transfer such beneficial interest to a transferee who shall take
such interest in the form of a beneficial interest in an Unrestricted
Global Security and shall rescind any restriction on transfer of such
beneficial interest; provided, that such Unrestricted Global Security
shall continue to be subject to the provisions of Section 2.12(a)(2);
and provided, further, that the owner of such beneficial interest
shall, in connection with such transfer, comply with the other
applicable provisions of this Section 2.12.
(3) Upon the exchange, registration of transfer or replacement
of Securities not bearing the legend described in paragraph (1) above, the
Company shall execute and the Trustee shall authenticate and deliver
Securities that do not bear such legend and that do not have a Transfer
Certificate attached thereto.
(f) Transfers to the Company. Nothing in this Indenture or in the
------------------------
Securities shall prohibit the sale or other transfer of any Securities
(including beneficial interests in Global Securities) to the Company or any of
its Subsidiaries, which Securities shall thereupon be canceled in accordance
with the second to last sentence of Section 2.11.
ARTICLE 3
REDEMPTION AND PURCHASES
Section 3.1 Right to Redeem; Notice to Trustee.
----------------------------------
The Company, at its option, may redeem the Securities in accordance
with the provisions of paragraphs 5 and 6 of the Securities. If the Company
elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall
notify the Trustee in writing of the Redemption Date, the Principal Amount of
Securities to be redeemed and the Redemption Price.
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The Company shall give the notice to the Trustee provided for in this
Section 3.1 by a Company Order, in the case of any redemption of less than all
of the Securities, at least 30 days before the Redemption Date and, in the case
of any redemption of all of the Securities, on or prior to the date of notice of
redemption is mailed or caused to be mailed by the Company to the Holders of the
Securities pursuant to Section 3.3 (in each case, unless a shorter notice shall
be satisfactory to the Trustee).
Section 3.2 Selection of Securities to Be Redeemed.
--------------------------------------
If less than all of the Securities are to be redeemed, the Trustee
shall, at least 15 days but not more than 60 days prior to the Redemption Date,
select the Securities to be redeemed. The Trustee shall make the selection from
the Securities outstanding and not previously called for redemption, by lot,
prorata or by another method the Trustee considers fair and appropriate.
Securities in denominations of Principal Amounts of $1,000 may only be redeemed
in whole. The Trustee may select for redemption portions (equal to Principal
Amounts of $1,000 or any multiple thereof) of the Principal Amount 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.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed to
be the portion selected for redemption. Securities which have been converted
during a selection of Securities to be redeemed shall be treated by the Trustee
as outstanding for the purpose of such selection.
Section 3.3 Notice of Redemption.
--------------------
At least 15 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed a notice of redemption 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
(if less than all) and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Rate and any adjustments thereto;
(4) the name and address of each Paying Agent and Conversion
Agent;
(5) that Securities called for redemption must be presented and
surrendered to a Paying Agent to collect the Redemption Price;
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(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
other requirements in paragraph 8 of the Securities;
(8) that, unless the Company defaults in making the redemption
payment, Original Issue Discount on Securities called for redemption and
interest, if any, shall cease accruing on and after the Redemption Date;
(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 aggregate Principal Amount equal to the
unredeemed portion thereof will be issued; and
(10) the CUSIP number or numbers of the Securities.
If any of the Securities to be redeemed is in the form of a Global
Security, then the Company shall modify such notice to the extent necessary to
accord with the procedures of the Depositary applicable to redemptions.
At the Company's written request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
Section 3.4 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the Redemption Price stated
in the notice except for Securities that are converted in accordance with the
provisions of Article 4 and on and after the Redemption Date (unless the Company
shall default in the payment of such Securities at the Redemption Price)
Original Issue Discount and interest, if any, on the Securities or portion of
Securities so called for redemption shall cease to accrue and such Securities
shall cease after the close of business on the Business Day next preceding the
Redemption Date to be convertible into Common Stock and, except as provided in
Section 10.2, to be entitled to any benefit or security under this Indenture,
and the Holders thereof shall have no right in respect of such Securities except
the right to receive the Redemption Price thereof. Upon presentation and
surrender to a Paying Agent, such Securities shall be paid at the Redemption
Price stated in such notice.
Section 3.5 Deposit of Redemption Price.
---------------------------
23
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Prior to 11:00 a.m. New York City time, on the Redemption Date, the
Company shall deposit with a Paying Agent (or, if the Company acts as Paying
Agent, shall segregate and hold in trust) money sufficient to pay the Redemption
Price of all Securities to be redeemed on that date, other than Securities or
portions thereof called for redemption on that date which have been delivered by
the Company to the Trustee for cancellation or have been converted. The Paying
Agent shall promptly return to the Company any money, together with interest or
dividends, if any, thereon, not required for that purpose because of the
conversion of Securities pursuant to Article 4 or, if such money is then held by
the Company in trust and is not required for such purpose, it shall be
discharged from the trust.
Section 3.6 Securities Redeemed in Part.
---------------------------
Upon presentation and surrender of a Security that is redeemed in
part, the Company shall execute and the Trustee shall authenticate and deliver
to the Holder a new Security equal in Principal Amount to the unredeemed portion
of the Security surrendered.
Section 3.7 Conversion Arrangement on Call for Redemption.
---------------------------------------------
In connection with any redemption of Securities, the Company may
arrange for the purchase and conversion of any Securities called for redemption
by an agreement with one or more investment bankers or other purchasers to
purchase such Securities by paying to a Paying Agent (other than the Company or
any of its Affiliates) in trust for the Securityholders, on or before 11:00 A.M.
New York City time on the Redemption Date, an amount that, together with any
amounts deposited with such Paying Agent by the Company for the redemption of
such Securities, is not less than the Redemption Price of such Securities.
Notwithstanding anything to the contrary contained in this Article 3, the
obligation of the Company to pay the Redemption Price of such Securities,
including interest, if any, shall be deemed to be satisfied and discharged to
the extent such amount is so paid by such purchasers; provided, however, that
nothing in this Section 3.7 shall relieve the Company of its obligation to pay
the Redemption Price on Securities called for redemption. If such an agreement
is entered into, any Securities called for redemption and not surrendered for
conversion by the Holders thereof prior to the relevant Redemption Date may, at
the option of the Company upon written notice to the Trustee, 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 11:00 A.M. New York
City time on the Redemption Date, subject to payment of the above amount as
aforesaid. The Paying Agent shall hold and pay to the Holders whose Securities
are selected for redemption any such amount paid to it for purchase in the same
manner as it would money deposited with it by the Company for the redemption of
Securities. Without the Paying Agent'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 Paying Agent as set forth in this
Indenture, and the Company agrees to indemnify the Paying Agent from, and hold
it harmless against, any
24
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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
Paying Agent 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, in accordance with the
indemnity provisions applicable to the Trustee set forth in Section 9.7.
Section 3.8 Purchase of Securities at Option of the Holder Upon
---------------------------------------------------
Change in Control.
-----------------
(a) If at any time that Securities remain outstanding there shall
occur a Change in Control, Securities shall be purchased by the Company at the
option of the Holders thereof as of the date that is 35 Business Days after the
occurrence of the Change in Control (the "Change in Control Purchase Date") at a
purchase price equal to the Issue Price plus accrued Original Issue Discount
through the Change in Control Purchase Date (or, if the Company has exercised
its option provided for in Section 14.1, the Restated Principal Amount plus
accrued and unpaid interest through the Change in Control Purchase Date) (the
"Change in Control Purchase Price"), subject to satisfaction by or on behalf of
any Holder of the requirements set forth in subsection (c) of this Section 3.8.
A "Change in Control" shall be deemed to have occurred if any of the
following occurs after the Initial Issuance Date:
(1) any "person" or "group" (as such terms are defined below),
other than the Company or its Subsidiaries, is or becomes the "beneficial
owner" (as defined below), directly or indirectly, of shares of Voting
Stock of the Company representing more than 50% of the total voting power
of all outstanding classes of Voting Stock of the Company or has the power,
directly or indirectly, to elect a majority of the members of the Board of
Directors of the Company; or
(2) the Company consolidates with, or merges with or into,
another Person, other than a Subsidiary of the Company, or the Company
sells, assigns, conveys, transfers, leases or otherwise disposes of all or
substantially all of the assets of the Company to any Person other than a
Subsidiary of the Company, or any Person other than a Subsidiary of the
Company consolidates with, or merges with or into, the Company, in any such
event other than pursuant to a transaction in which the Persons that
"beneficially owned" (as defined below), directly or indirectly, shares of
Voting Stock of the Company immediately prior to such transaction
"beneficially own" (as defined below), in substantially the same
proportion, directly or indirectly, shares of Voting Stock of the Company
representing at least a majority of the total voting power of all
outstanding classes of Voting Stock of the surviving or transferee Person,
25
<PAGE>
unless, in each case under paragraph (1) or (2) above, at least 80% of the
consideration, other than cash payments for fractional shares, in the
transaction or transactions constituting the Change in Control, consists of
shares of Voting Stock of the Person that are, or upon issuance will be, traded
on a national securities exchange or approved for trading on an established
automated over-the-counter trading market in the United States; or
(3) there shall occur the liquidation or dissolution of the
Company.
For the purpose of the definition of "Change in Control," (i) "person" and
"group" have the meanings given such terms under Section 13(d) and 14(d) of the
Exchange Act or any successor provision to either of the foregoing, and the term
"group" includes any group acting for the purpose of acquiring, holding or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act (or any successor provision thereto), (ii) a "beneficial owner"
shall be determined in accordance with Rule 13d-3 under the Exchange Act, as in
effect on the date of this Indenture, except that the number of shares of Voting
Stock of the Company shall be deemed to include, in addition to all outstanding
shares of Voting Stock of the Company and Unissued Shares deemed to be held by
the "person" or "group" (as such terms are defined above) or other Person with
respect to which the Change in Control determination is being made, all Unissued
Shares deemed to be held by all other Persons, and (iii) the terms "beneficially
owned" and "beneficially own" shall have meanings correlative to that of
"beneficial owner". The term "Unissued Shares" means shares of Voting Stock not
outstanding that are subject to options, warrants, rights to purchase or
conversion privileges exercisable within 60 days of the date of determination of
a Change in Control.
(b) Within 15 Business Days after the occurrence of a Change in
Control, the Company shall mail a written notice of the Change in Control 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 Change in
Control Purchase Notice 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 Change in Control Purchase Notice
pursuant to this Section 3.8 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) briefly, the conversion rights of the Securities;
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<PAGE>
(6) the name and address of each Paying Agent and Conversion
Agent;
(7) the Conversion Rate and any adjustments thereto;
(8) that Securities as to which a Change in Control Purchase
Notice has been given may be converted into Common Stock pursuant to
Article 4 only to the extent that the Change in Control Purchase Notice has
been withdrawn in accordance with the terms of this Indenture;
(9) the procedures that the Holder must follow to exercise
rights under this Section 3.8;
(10) the procedures for withdrawing a Change in Control Purchase
Notice, including a form of notice of withdrawal; and
(11) that the Holder must satisfy the requirements set forth in
the Securities in order to convert the Securities.
If any of the Securities is in the form of a Global Security, then the
Company shall modify such notice to the extent necessary to accord with the
procedures of the Depositary applicable to the repurchase of Global Securities.
(c) A Holder may exercise its rights specified in subsection (a) of
this Section 3.8 upon delivery of a written notice (which shall be in
substantially the form included in Exhibit A hereto and which may be delivered
---------
by letter, overnight courier, hand delivery, facsimile transmission or in any
other written form and, in the case of Global Securities, may be delivered
electronically or by other means in accordance with the Depositary's customary
procedures) of the exercise of such rights (a "Change in Control Purchase
Notice") to any Paying Agent at any time prior to the close of business on the
Business Day next preceding the Change in Control Purchase Date.
The delivery of such Security to any Paying Agent (together with all
necessary endorsements) at the office of such Paying Agent shall be a condition
to the receipt by the Holder of the Change in Control Purchase Price therefor.
The Company shall purchase from the Holder thereof, pursuant to this
Section 3.8, a portion of a Security if the Principal Amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security pursuant to Sections 3.8 through 3.13
also apply to the purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to a Paying Agent the Change in Control Purchase Notice contemplated by this
subsection (c) shall
27
<PAGE>
have the right to withdraw such Change in Control Purchase Notice in whole or in
a portion thereof that is a Principal Amount of $1,000 or in an integral
multiple thereof at any time prior to the close of business on the Business Day
next preceding the Change in Control Purchase Date by delivery of a written
notice of withdrawal to the Paying Agent in accordance with Section 3.9.
A Paying Agent shall promptly notify the Company of the receipt by it
of any Change in Control Purchase Notice or written withdrawal thereof.
Anything herein to the contrary notwithstanding, in the case of Global
Securities, any Change in Control Purchase Notice may be delivered or withdrawn
and such Securities may be surrendered or delivered for purchase in accordance
with the applicable procedures of the Depositary as in effect from time to time.
Section 3.9 Effect of Change in Control Purchase Notice.
-------------------------------------------
Upon receipt by any Paying Agent of the Change in Control Purchase
Notice specified in Section 3.8(c), the Holder of the Security in respect of
which such Change in Control Purchase Notice was given shall (unless such Change
in Control Purchase Notice is withdrawn as specified below) thereafter be
entitled to receive the Change in Control Purchase Price with respect to such
Security. Such Change in Control Purchase Price shall be paid to such Holder
promptly following the later of (a) the Change in Control Purchase Date with
respect to such Security (provided the conditions in Section 3.8(c) have been
satisfied) and (b) the time of delivery of such Security to a Paying Agent by
the Holder thereof in the manner required by Section 3.8(c). Securities in
respect of which a Change in Control Purchase 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 Change in Control Purchase Notice unless such
Change in Control Purchase Notice has first been validly withdrawn. A Change in
Control Purchase Notice may be withdrawn by means of a written notice (which may
be delivered by letter, overnight courier, hand delivery, facsimile transmission
or in any other written form and, in the case of Global Securities, may be
delivered electronically or by other means in accordance with the Depositary's
customary procedures) of withdrawal delivered by the Holder to a Paying Agent at
any time prior to the close of business on the Business Day immediately
preceding the Change in Control Purchase Date, specifying the Principal Amount
of the Security or portion thereof (which must be a Principal Amount of $1,000
or an integral multiple of $1,000 in excess thereof) with respect to which such
notice of withdrawal is being submitted.
Section 3.10 Deposit of Change in Control Purchase Price.
-------------------------------------------
On or before 11:00 a.m. New York City time on the Change in Control
Purchase Date, the Company shall deposit with the Trustee or with a Paying Agent
(other than the Company or an Affiliate of the Company) an amount of money (in
immediately available funds if deposited on such Business Day) sufficient to pay
the aggregate Change in Control Purchase
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Price of all the Securities or portions thereof that are to be purchased as of
such Change in Control Purchase Date. The manner in which the deposit required
by this Section 3.10 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 a Paying Agent shall have immediately available funds on the Change
in Control Purchase Date.
If a Paying Agent holds, in accordance with the terms hereof, money
sufficient to pay the Change in Control Purchase Price of any Security for which
a Change in Control Purchase Notice has been tendered and not withdrawn in
accordance with this Indenture then, on the Change in Control Purchase Date,
such Security will cease to be outstanding and the rights of the Holder in
respect thereof shall terminate (other than the right to receive the Change in
Control Purchase Price as aforesaid).
Section 3.11 Securities Purchased In Part.
----------------------------
Any Security that is to be purchased only in part shall be surrendered
at the office of a Paying Agent and promptly after the Change in Control
Purchase Date 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 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 purchased.
Section 3.12 Compliance With Securities Laws Upon Purchase of
------------------------------------------------
Securities.
----------
In connection with any offer to purchase or purchase of Securities
under Section 3.8, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1
(or any successor to either such Rule), if applicable, under the Exchange Act,
(b) file the related Schedule TO (or any successor or similar schedule, form or
report) if required under the Exchange Act, and (c) otherwise comply with all
federal and state securities laws in connection with such offer, all so as to
permit the rights of the Holders and obligations of the Company under Sections
3.8 through 3.11 to be exercised in the time and in the manner specified
therein.
Section 3.13 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 3.10
exceeds the aggregate Change in Control Purchase Price together with interest,
if any, thereon of the Securities or portions thereof that the Company is
obligated to purchase, then promptly after the Change in Control Purchase Date
the Trustee or a Paying Agent, as the case may be, shall return any such excess
to the Company.
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ARTICLE 4
CONVERSION
Section 4.1 Conversion Privilege.
--------------------
A Holder of a Security may convert the Principal Amount of such
Security (or any portion thereof equal to a Principal Amount of $1,000 or any
integral multiple of a Principal Amount of $1,000 in excess thereof) into Common
Stock at any time prior to the close of business on the Final Maturity Date, at
the Conversion Rate then in effect; provided, however, 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 immediately preceding the
Redemption Date for such Security (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
Security is redeemed). The number of shares of Common Stock issuable upon
conversion of a Security per $1,000 of Principal Amount thereof (the "Conversion
Rate") shall be that set forth in paragraph 8 in the Securities, subject to
adjustment as herein set forth. 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 or Change in Control Purchase Notice exercising the option of such Holder
to require the Company to purchase such Security may be converted only if such
notice of exercise is withdrawn in accordance with the terms of this Indenture.
A Holder of Securities is not entitled to any rights of a holder of
Common Stock until such Holder has converted its Securities to Common Stock, and
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 (a) complete and manually sign
the conversion notice on the back of the Security and deliver such notice to a
Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish
appropriate endorsements and transfer documents if required by a Registrar or a
Conversion Agent, (d) pay any transfer or similar tax, if required, and (e) if
the Company has exercised its option provided for in Section 14.1, make the
payment, if any, required by the third paragraph of paragraph 8 on the reverse
side of the form of Security attached hereto as Exhibit A. The date on which the
---------
Holder satisfies all of those requirements is the "Conversion Date." As soon as
practicable after the Conversion Date, the Company shall deliver to the Holder
through a 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 4.3. Anything herein to the contrary notwithstanding,
in the case of
30
<PAGE>
Global Securities, conversion notices may be delivered and such Securities may
be surrendered for conversion in accordance with the Applicable Procedures of
the Depositary as in effect from time to time.
The person in whose name the Common Stock certificate is registered
shall be deemed to be a shareholder 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 Rate in effect on the date that such Security shall
have been surrendered for conversion, as if the stock transfer books of the
Company had not been closed. Upon conversion of a Security, such person shall no
longer be a Holder of such Security.
No payment or adjustment will be made for dividends on, or other
distributions with respect to, any Common Stock except as provided in this
Article 4. On conversion of a Security, that portion of accrued Original Issue
Discount (or interest, if the Company has exercised its option provided for in
Section 14.1) attributable to the period from the Issue Date (or, if the Company
has exercised the option provided for in Section 14.1, the later of (x) the date
of such exercise and (y) the date on which interest was last paid) of the
Security through the Conversion Date with respect to the converted Security
shall not be cancelled, extinguished or forfeited, but rather shall be deemed to
be paid in full to the Holder thereof through delivery of the Common Stock
(together with the cash payment, if any, in lieu of fractional shares) in
exchange for the Security being converted pursuant to the provisions hereof; and
the fair market value of such shares of Common Stock (together with any such
cash payment in lieu of fractional shares) shall be treated as issued, to the
extent thereof, first in exchange for Original Issue Discount (or interest, if
the Company has exercised its option provided for in Section 14.1) accrued
through the Conversion Date, and the balance, if any, of such fair market value
of such Common Stock (and any such cash payment) shall be treated as issued in
exchange for the Issue Price of the Security being converted pursuant to the
provisions hereof.
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.
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Section 4.3 Fractional Shares.
-----------------
The Company will not issue fractional shares of Common Stock upon
conversion of Securities. In lieu thereof, the Company will pay an amount in
cash based upon the closing price of the Common Stock on the Trading Day
immediately prior to the Conversion Date.
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
certificate 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
bylaw or regulation.
Section 4.5 Company to Provide Stock.
-------------------------
The Company shall, prior to issuance of any Securities under this
Article 4, 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 into shares of
Common Stock.
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 nonassessable 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 on
the Nasdaq National Market of The Nasdaq Stock Market or other over-the-counter
market or such other market on which the Common Stock is then listed or quoted.
Section 4.6 Adjustment of Conversion Rate.
-----------------------------
The Conversion Rate shall be adjusted from time to time by the Company
as follows:
(a) In case the Company shall (i) pay a dividend on its Common Stock
in shares of Common Stock, (ii) make a distribution on its Common Stock in
shares of Common
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Stock, (iii) subdivide its outstanding Common Stock into a greater number of
shares, or (iv) combine its outstanding Common Stock into a smaller number of
shares, the Conversion Rate in effect immediately prior thereto shall be
adjusted so that the Holder of any Security thereafter surrendered for
conversion shall be entitled to receive that number of shares of Common Stock
which it would have owned 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 or combination.
(b) In case the Company shall issue rights or warrants to all or
substantially all holders of its Common Stock entitling them (for a period
commencing no earlier than the record date described below and expiring not more
than 60 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
(or having a conversion price per share) less than the current market price per
share of Common Stock (as determined in accordance with subsection (e) of this
Section 4.6) on the record date for the determination of shareholders entitled
to receive such rights or warrants, no adjustment need be made to the Conversion
Rate if the Holders of the Securities are to participate in such issuance of
rights or warrants on a basis and with notice that the Board of Directors
determines in good faith to be fair and appropriate in light of the basis and
notice on which holders of Common Stock participate in such issuance of rights
and warrants; provided, that no Holder shall be required to convert such
--------
Holder's Securities. In the event that such determination is not made by the
Board of Directors, the Conversion Rate in effect immediately prior thereto
shall be adjusted so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to such record date
by a fraction of which the numerator shall be the number of shares of Common
Stock outstanding on such record date plus the number of additional shares of
Common Stock offered (or into which the convertible securities so offered are
convertible), and of which the denominator shall be the number of shares of
Common Stock outstanding on such record date plus the number of shares which the
aggregate offering price of the total number of shares of Common Stock so
offered (or the aggregate conversion price of the convertible securities so
offered, which shall be determined by multiplying the number of shares of Common
Stock issuable upon conversion of such convertible securities by the conversion
price per share of Common Stock pursuant to the terms of such convertible
securities) would purchase at the current market price per share (as defined in
subsection (e) of this Section 4.6) of Common Stock on such record date. Such
adjustment shall be made successively whenever any such rights or warrants are
issued, and shall become effective immediately after such record date. If at the
end of the period during which such rights or warrants are exercisable not all
rights or warrants shall have been exercised, the adjusted Conversion Rate shall
be immediately readjusted to what it would have been based upon 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).
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(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock any shares of capital stock (other than dividends or
distributions of Common Stock on Common Stock to which Section 4.6(a) applies),
evidences of indebtedness or other assets (including securities of any person
other than the Company, but excluding all-cash distributions to which 4.6(d)
applies or any rights or warrants referred to in 4.6(b)), then in each such case
(unless (i) the Company elects to reserve such shares of capital stock,
evidences of indebtedness or other assets for distribution to the Holders upon
the conversion of the Securities so that any Holder converting Securities after
the relevant record date will receive upon such conversion, in addition to the
shares of Common Stock to which such Holder is entitled, the amount and kind of
such shares of capital stock, evidences of indebtedness or other assets which
such Holder would have received had such Holder converted its Securities
immediately prior to the record date for the distribution of such shares of
capital stock, evidences of indebtedness or other assets, or (ii) the Holders of
the Securities are to participate in such distribution on a basis and with
notice that the Board of Directors determines in good faith to be fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in such distribution; provided, that no Holder shall be required to
--------
convert such Holder's Securities), the Conversion Rate shall be adjusted so that
the same shall equal the rate determined by multiplying the current Conversion
Rate by a fraction of which the numerator shall be the current market price per
share (as defined in subsection (e) of this Section 4.6) of the Common Stock on
such record date, and of which the denominator shall be the current market price
per share (as defined in subsection (e) of this Section 4.6) of the Common Stock
on the record date mentioned below less the fair market value on such record
date (as determined in good faith by the Board of Directors, whose determination
shall be conclusive evidence of such fair market value and which shall be
evidenced by an Officers' Certificate delivered to the Trustee) of the portion
of the capital stock, evidences of indebtedness or other non-cash assets so
distributed or of such rights or warrants applicable to one share of Common
Stock (determined on the basis of the number of shares of Common Stock
outstanding on the record date). Such adjustment shall be made successively
whenever any such distribution is made and shall become effective immediately
after the record date for the determination of shareholders entitled to receive
such distribution.
Each share of Common Stock issued upon conversion of Securities
pursuant to this Article 4 shall be entitled to receive the appropriate number
of Rights, and the certificates representing the Common Stock issued upon such
conversion shall bear such legends, in each case as provided by, and subject to
the terms (including Section 22.2 thereof) of, the Rights Plan as in effect at
the time of such conversion (whether or not such Rights have separated from the
Common Stock at the time of such conversion). In the event that the Company
implements any new stockholders' rights plan or amends, modifies or supplements
the Rights Plan or any such new stockholders' rights plan (the "New Rights
Plan"), such New Rights Plan shall provide that upon a conversion of the
Securities the Holders will receive, in addition to the Common Stock issuable
upon such conversion, the rights (whether or not such rights have separated from
the Common Stock at the time of conversion) issuable pursuant to the New Rights
Plan (it being
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agreed that the New Rights Plan may contain terms relating to such obligation
substantially to the effect of those set forth in Section 22.2 of the Rights
Plan).
Rights or warrants distributed by the Company to all holders of Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Trigger Event"): (i) are deemed to be transferred with such shares of Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 4.6(c) (and no adjustment to the Conversion Rate under
this Section 4.6(c) will be required) until the occurrence of the earliest
Trigger Event. If such right or warrant is subject to subsequent events, upon
the occurrence of which such right or warrant shall become exercisable to
purchase different securities, evidences of indebtedness or other assets or
entitle the holder to purchase a different number or amount of the foregoing or
to purchase any of the foregoing at a different purchase price, then the
occurrence of each such event shall be deemed to be the date of issuance and
record date with respect to a new right or warrant (and a termination or
expiration of the existing right or warrant without exercise by the holder
thereof). In addition, in the event of any distribution (or deemed distribution)
of rights or warrants, or any Trigger Event or other event (of the type
described in the preceding sentence) with respect thereto, that resulted in an
adjustment to the Conversion Rate under this Section 4.6(c), (1) in the case of
any such rights or warrants which shall all have been redeemed or repurchased
without exercise by any holders thereof, the Conversion Rate shall be readjusted
upon such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder of Common
Stock with respect to such rights or warrants (assuming such holder had retained
such rights or warrants), made to all holders of Common Stock as of the date of
such redemption or repurchase, and (2) in the case of such rights or warrants
all of which shall have expired or been terminated without exercise, the
Conversion Rate shall be readjusted as if such rights and warrants had never
been issued.
(d) (1) In case the Company shall, by dividend or otherwise, at any
time distribute (a "Triggering Distribution") to all or substantially all
holders of its Common Stock cash distributions in an aggregate amount that,
together with the aggregate amount of (A) any cash and the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive evidence thereof and which shall be evidenced by an Officers'
Certificate delivered to the Trustee) of any other consideration payable in
respect of any tender offer by the Company or a Subsidiary of the Company for
Common Stock consummated within the 12 months preceding the date of payment of
the Triggering Distribution and in respect of which no Conversion Rate
adjustment pursuant to this Section 4.6 has been made and (B) all other cash
distributions to all or substantially all holders of its Common Stock made
within the 12 months preceding the date of payment of the Triggering
Distribution and in respect of which no Conversion Rate adjustment pursuant to
this Section 4.6 has been made, exceeds an amount
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<PAGE>
equal to 12.5% of the product of the current market price per share of Common
Stock (as determined in accordance with subsection (e) of this Section 4.6) on
the Business Day (the "Determination Date") immediately preceding the day on
which such Triggering Distribution is declared by the Company multiplied by the
number of shares of Common Stock outstanding on the Determination Date
(excluding shares held in the treasury of the Company), the Conversion Rate
shall be increased so that the same shall equal the rate determined by
multiplying such Conversion Rate in effect immediately prior to the
Determination Date by a fraction of which the numerator shall be such current
market price per share of the Common Stock (as determined in accordance with
subsection (e) of this Section 4.6) on the Determination Date, and the
denominator shall be the current market price per share of the Common Stock (as
determined in accordance with subsection (e) of this Section 4.6) on the
Determination Date less the sum of the aggregate amount of cash and the
aggregate fair market value (determined as aforesaid) of any such other
consideration so distributed, paid or payable within such 12 months in respect
of which no adjustment to the Conversion Rate under this Section 4.6 has
previously been made (including, without limitation, the Triggering
Distribution) applicable to one share of Common Stock (determined on the basis
of the number of shares of Common Stock outstanding on the Determination Date),
such increase to become effective immediately prior to the opening of business
on the day following the date on which the Triggering Distribution is paid.
(2) In case any tender offer made by the Company or any of its
Subsidiaries for Common Stock shall expire and such tender offer (as amended
upon the expiration thereof) shall involve the payment of aggregate
consideration in an amount (determined as the sum of the aggregate amount of
cash consideration and the aggregate fair market value (as determined in good
faith by the Board of Directors, whose determination shall be conclusive
evidence thereof and which shall be evidenced by an Officers' Certificate
delivered to the Trustee thereof ) of any other consideration) that, together
with the aggregate amount of (A) any cash and the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive evidence thereof and which shall be evidenced by an Officers'
Certificate delivered to the Trustee) of any other consideration payable in
respect of any other tender offers by the Company or any Subsidiary of the
Company for Common Stock consummated within the 12 months preceding the date of
the Expiration Date (as defined below) and in respect of which no Conversion
Rate adjustment pursuant to this Section 4.6 has been made and (B) all cash
distributions to all or substantially all holders of its Common Stock made
within the 12 months preceding the Expiration Date and in respect of which no
Conversion Rate adjustment pursuant to this Section 4.6 has been made, exceeds
an amount equal to 12.5% of the product of the current market price per share of
Common Stock (as determined in accordance with subsection (e) of this Section
4.6) as of the last date (the "Expiration Date") tenders could have been made
pursuant to such tender offer (as it may be amended) (the last time at which
such tenders could have been made on the Expiration Date is hereinafter
sometimes called the "Expiration Time") multiplied by the number of shares of
Common Stock outstanding (including tendered shares but excluding any shares
held in the treasury of the Company) at the Expiration Time, then, immediately
prior to the opening of business on the day after the Expiration Date, the
Conver-
36
<PAGE>
sion Rate shall be increased so that the same shall equal the rate determined by
multiplying the Conversion Rate in effect immediately prior to close of business
on the Expiration Date by a fraction of which the numerator shall be the sum of
(x) the aggregate consideration (determined as aforesaid) payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender offer) of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares and excluding any
shares held in the treasury of the Company) at the Expiration Time and the
current market price per share of Common Stock (as determined in accordance with
subsection (e) of this Section 4.6) on the Trading Day next succeeding the
Expiration Date, and the denominator shall be the product of the number of
shares of Common Stock outstanding (including tendered shares but excluding any
shares held in the treasury of the Company) at the Expiration Time multiplied by
the current market price per share of the Common Stock (as determined in
accordance with subsection (e) of this Section 4.6) on the Trading Day next
succeeding the Expiration Date, such increase to become effective immediately
prior to the opening of business on the day following the Expiration Date. In
the event that the Company is obligated to purchase shares pursuant to any such
tender offer, but the Company is permanently prevented by applicable law from
effecting any or all such purchases or any or all such purchases are rescinded,
the Conversion Rate shall again be adjusted to be the Conversion Rate which
would have been in effect based upon the number of shares actually purchased. If
the application of this Section 4.6(d)(2) to any tender offer would result in a
decrease in the Conversion Rate, no adjustment shall be made for such tender
offer under this Section 4.6(d)(2).
(3) For purposes of this Section 4.6(d), the term "tender offer"
shall mean and include both tender offers and exchange offers, all references to
"purchases" of shares in tender offers (and all similar references) shall mean
and include both the purchase of shares in tender offers and the acquisition of
shares pursuant to exchange offers, and all references to "tendered shares" (and
all similar references) shall mean and include shares tendered in both tender
offers and exchange offers.
(e) For the purpose of any computation under subsections (b), (c) and
(d) of this Section 4.6, the current market price per share of Common Stock on
any date shall be deemed to be the average of the daily closing prices for the
30 consecutive Trading Days commencing 45 Trading Days before (i) the
Determination Date or the Expiration Date, as the case may be, with respect to
distributions or tender offers under subsection (d) of this Section 4.6 or (ii)
the record date with respect to distributions, issuances or other events
requiring such computation under subsection (b) or (c) of this Section 4.6. The
closing price for each day shall be the last reported sales price or, in case no
such reported sale takes place on such date, the average of the reported closing
bid and asked prices in either case on the New York Stock Exchange (the "NYSE")
or, if the Common Stock is not listed or admitted to trading on the NYSE, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading or, if not listed or admitted to trading on any national
securities exchange, the
37
<PAGE>
last reported sales price of the Common Stock as quoted on Nasdaq (the term
"Nasdaq" shall include, without limitation, the Nasdaq National Market) or, in
case no reported sales takes place, the average of the closing bid and asked
prices as quoted on Nasdaq or any comparable system or, if the Common Stock is
not quoted on Nasdaq or any comparable system, the closing sales price or, in
case no reported sale takes place, the average of the closing bid and asked
prices, as furnished by any two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Company for that
purpose. If no such prices are available, the current market price per share
shall be the fair value of a share of Common Stock as determined in good faith
by the Board of Directors (which shall be evidenced by an Officers' Certificate
delivered to the Trustee).
(f) In any case in which this Section 4.6 shall require that an
adjustment be made following a record date or a Determination Date or Expiration
Date, as the case may be, established for purposes of this 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
4.9) issuing to the Holder of any Security converted after such record date or
Determination Date or Expiration 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 Rate 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
prepared by the Company of the right to receive such shares. If any distribution
in respect of which an adjustment to the Conversion Rate is required to be made
as of the record date or Determination Date or Expiration Date therefor is not
thereafter made or paid by the Company for any reason, the Conversion Rate shall
be readjusted to the Conversion Rate which would then be in effect if such
record date had not been fixed or such effective date or Determination Date or
Expiration Date
Section 4.7 No Adjustment.
-------------
No adjustment in the Conversion Rate shall be required unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Rate 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
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
1/1000th of a share, as the case may be. No adjustment need be made for
issuances of Common Stock pursuant to a Company plan for reinvestment of
dividends or interest or 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 the right to receive cash, no adjustment need be made thereafter as to the
cash. Interest will not accrue on the cash.
Section 4.8 Adjustment for Tax Purposes.
---------------------------
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The Company shall be entitled to make such adjustments in the
Conversion Rate, in addition to those required by Section 4.6, as it in its
reasonable discretion shall determine to be advisable in order that any stock
dividends, subdivisions of shares, distributions of rights to purchase stock or
securities or distributions of securities convertible into or exchangeable for
stock hereafter made by the Company to its stockholders shall not be taxable.
Section 4.9 Notice of Adjustment.
--------------------
Whenever the Conversion Rate is adjusted, the Company shall promptly
mail to Securityholders a notice of the adjustment and file with the Trustee an
Officers' Certificate specifying the adjusted Conversion Rate, and briefly
stating the facts requiring the adjustment and the manner of computing it.
Section 4.10 Notice of Certain Transactions.
------------------------------
In the event that:
(1) the Company takes any action which would require an
adjustment in the Conversion Rate,
(2) the Company takes any action that requires a supplemental
indenture pursuant to Section 4.11, or
(3) there is a dissolution or liquidation of the Company,
the Company shall mail to Holders and file with the Trustee a notice stating the
proposed record or effective date, as the case may be. The Company shall mail
the notice at least fifteen days before such date. Failure to mail such notice
or any defect therein shall not affect the validity of any transaction referred
to in clause (1), (2) or (3) of this Section 4.10.
Section 4.11 Effect of Reclassification, Consolidation, Merger or
----------------------------------------------------
Sale on Conversion Privilege.
----------------------------
If any of the following shall occur, namely: (a) any reclassification
or change of shares of Common Stock issuable upon conversion of the Securities
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination); (b) any
consolidation or merger to which the Company is a party other than a merger in
which the Company is the continuing corporation and which does not result in any
reclassification of, or change (other than a change in 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 (c) any
sale or conveyance of all or substantially all of
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<PAGE>
the property and assets of the Company to any person, then the Company, or such
successor, purchasing or transferee 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 Rate which shall be as nearly equivalent as may be practicable to the
adjustments of the Conversion Rate provided for in this Article 4. If, in the
case of any such consolidation, merger, sale or conveyance, the stock or other
securities and property (including cash) receivable thereupon by a holder of
Common Stock include shares of stock or other securities and property of a
person other than the successor, purchasing or transferee corporation, as the
case may be, in such consolidation, merger, sale or conveyance, then such
supplemental indenture shall also be executed by such other person and shall
contain such additional provisions to protect the interests of the Holders of
the Securities as the Board of Directors shall reasonably consider necessary by
reason of the foregoing. The provisions of this Section 4.11 shall similarly
apply to successive reclassifications, changes, consolidations, mergers, sales
or conveyances.
In the event the Company shall execute a supplemental indenture
pursuant to this Section 4.11, the Company shall promptly file with the Trustee
(x) an Officers' Certificate briefly stating the reasons therefor, the kind or
amount of shares of stock or other 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 and (y) an Opinion of Counsel that
all conditions precedent have been complied with, and shall promptly mail notice
thereof to all Holders.
Section 4.12 Trustee's Disclaimer.
--------------------
The Trustee shall have 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, but may accept as conclusive evidence of that fact or the correctness
of any such adjustment, and shall be protected in relying upon, an Officers'
Certificate including the Officers' Certificate with respect thereto which the
Company is obligated to file with the Trustee pursuant to Section 4.9. The
Trustee makes no representation as to the validity or value of any securities or
assets issued upon conversion of Securities, and the Trustee shall not be
responsible for the Company's failure to comply with any provisions of this
Article 4.
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The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 4.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 4.11.
Section 4.13 Voluntary Increase.
------------------
The Company from time to time may increase the Conversion Rate 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 increase is irrevocable during the
period.
ARTICLE 5
SUBORDINATION
Section 5.1 Securities Subordinated to Senior Indebtedness.
----------------------------------------------
The Company covenants and agrees, and each Holder of Securities issued
hereunder by its acceptance thereof likewise covenants and agrees, that all
Securities shall be issued 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.
The payment of all amounts on account of all Securities issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and junior in right of payment to the prior payment in full, in
cash or other payment satisfactory to holders of Senior Indebtedness, of all
Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter created, assumed or guaranteed.
Section 5.2 Securities Subordinated to Prior Payment of All Senior
------------------------------------------------------
Indebtedness on Dissolution, Liquidation, Reorganization, Etc., of the Company.
------------------------------------------------------------------------------
Upon the 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, liquidation or reorganization of the Company (whether
voluntary or involuntary, or in bankruptcy, insolvency, reorganization,
liquidation, receivership proceedings, or upon an assignment for the benefit of
creditors, or any other marshaling of the assets and liabilities of the Company,
or in any similar proceedings), then in such event:
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(a) all Senior Indebtedness shall first be paid in full, in cash or
other payment satisfactory to holders of Senior Indebtedness, before any payment
is made with respect to Principal Amount, Issue Price, accrued Original Issue
Discount, accrued Additional Interest, if any, Restated Principal Amount,
Redemption Price, Repurchase Price, Change in Control Purchase Price and
interest, if any, on the Securities (collectively, the "Subordinated Security
Obligations");
(b) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than securities of
the Company as reorganized or readjusted, or securities of the Company or any
other person provided for by a plan of reorganization or readjustment, junior,
or the payment of which is otherwise subordinate, at least to the extent
provided in this Article 5, with respect to the Securities, to the payment of
all Senior Indebtedness) 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
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 have been issued, ratably according
to the aggregate amounts remaining unpaid on account of 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, in cash or other payment satisfactory to holders of Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the benefit of 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
securities of the Company as reorganized or readjusted, or securities of the
Company or any other person provided for by a plan of reorganization or
readjustment, junior, or the payment of which is otherwise subordinate, at least
to the extent provided for in this Article 5, with respect to the Securities, to
the payment of all Senior Indebtedness), shall be received by the Trustee or any
Paying Agent or the Holders before all Senior Indebtedness is paid in full, in
cash or other payment satisfactory to holders of Senior Indebtedness, 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, such Paying Agent or such Holders, as the case may be,
to, the holders of Senior Indebtedness remaining unpaid or unprovided for, 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 have been issued, ratably according to the aggregate amounts
remaining unpaid on account of 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
42
<PAGE>
in full, in cash or other payment satisfactory to holders of Senior
Indebtedness, after giving effect to any concurrent payment or distribution to
or for the benefit of the holders of such Senior Indebtedness.
The Company shall give prompt written 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 and the Holders shall be entitled to rely conclusively
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.
Section 5.3 Holders to Be Subrogated to Right of Holders of Senior
------------------------------------------------------
Indebtedness.
------------
Subject to the prior payment in full, in cash or other payment
satisfactory to holders of Senior Indebtedness, of all Senior Indebtedness then
due, the Holders shall be subrogated 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 Subordinated Security
Obligations 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 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, as among the Company, its
creditors other than the holders of Senior Indebtedness, and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay to the
Holders the Subordinated Security Obligations, as and when the same shall become
due and payable in accordance with the terms of the Securities and this
Indenture, or affect the relative rights of the Holders and other creditors of
the Company
43
<PAGE>
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, and the rights, if any, under this
Article 5 of the holders of Senior Indebtedness to receive assets, whether in
cash, property or securities, of the Company otherwise payable or deliverable to
the Trustee or such Holder upon the exercise of any such remedy.
Section 5.5 Company Not to Make Payment With Respect to Securities in
---------------------------------------------------------
Certain Circumstances.
---------------------
(a) Upon the happening of a default in payment (whether at maturity
or at a date fixed for prepayment or by acceleration or otherwise) of the
principal of, or premium, if any, or interest on any Senior Indebtedness, as
such default is defined under or in respect of such Senior Indebtedness or in
any agreement pursuant to which such Senior Indebtedness has been incurred,
then, unless and until the amount of such Senior Indebtedness then due shall
have been paid in full, in cash or other payment satisfactory to holders of
Senior Indebtedness, or such default shall have been cured or waived or shall
have ceased to exist, the Company shall not pay the Subordinated Security
Obligations.
(b) Upon the happening of an event of default with respect to any
Senior Indebtedness (other than under circumstances when the terms of subsection
(a) of this Section 5.5 are applicable), as such event of default is defined
under or in respect of such Senior Indebtedness or in any agreement pursuant to
which such Senior Indebtedness has been incurred, permitting the holders thereof
to accelerate the maturity thereof, and upon written notice thereof given to the
Company and the Trustee by any one or more holders of such Senior Indebtedness
or their representative or representatives or the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior
Indebtedness have been issued (a "Default Notice"), then, unless and until such
event of default shall have been cured or waived or shall have ceased to exist,
the Company shall not pay the Subordinated Security Obligations; provided,
however, that the foregoing provisions of this sentence shall not prevent the
making of any such payment (which is not otherwise prohibited by subsection (a)
of this Section 5.5) for more than 180 days after the Default Notice shall have
been given unless the Senior Indebtedness in respect of which such event of
default exists has been declared due and payable in its entirety, in which case
no such payment may be made until such acceleration has been waived, rescinded
or annulled, or such Senior Indebtedness shall have been paid in full in cash or
other payment satisfactory to holders of Senior Indebtedness. Notwithstanding
the foregoing, not more than one Default Notice shall be given with respect to
the same issue of Senior Indebtedness within a period of 360 consecutive days,
and no event of default which existed or was continuing on the date of any
Default Notice and was known to the holders of such issue of Senior Indebtedness
shall be made the basis for the giving of a subsequent Default Notice by the
holders of such issue of Senior Indebtedness.
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(c) In the event that, notwithstanding the foregoing provisions of
this Section 5.5, the Company shall pay the Subordinated Security Obligations
and such payment shall be 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), after the happening of a default
or event of default, as the case may be, under any Senior Indebtedness of the
type specified in subsections (a) and (b) of this Section 5.5, then, unless and
until the amount of such Senior Indebtedness then due shall have been paid in
full, in cash or other payment satisfactory to holders of Senior Indebtedness,
or such default or event of default, as the case may be, shall have been cured
or waived or shall have ceased to exist or any such acceleration referred to in
the proviso to subsection (b) of this Section 5.5 shall have been waived,
rescinded or annulled, such payment (subject, in each case, to the provisions of
Sections 5.6 and 5.7 and the proviso contained in subsection (b) of this Section
5.5) shall be held in trust for the benefit of, and shall be immediately paid
over to, the holders of Senior Indebtedness or their representative or
representatives or the trustee or trustees under any indenture under which any
instruments evidencing any of the Senior Indebtedness may have been issued
ratably according to the aggregate amounts remaining unpaid on account of 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, in cash or other payment satisfactory to holders of
Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the benefit of the holders of Senior Indebtedness.
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 or from the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness have been
issued; and, prior to the receipt of any such written notice, the Trustee shall
be entitled to assume conclusively that such facts do not exist.
The Trustee shall be entitled to rely conclusively on the delivery to
it of a written notice by a person representing himself or herself to be a
holder of Senior Indebtedness (or a representative of such holder or the trustee
under any indenture pursuant to which any instruments evidencing any of such
Senior Indebtedness have been issued) 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
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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, 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 Money Deposited With It.
-------------------------------------------------
Money deposited in trust with the Trustee or any Paying Agent pursuant
to Section 10.1 and not in violation of this Article 5 shall be for the sole
benefit of Holders and shall thereafter not be subject to the subordination
provisions of this Article 5. Otherwise, any deposit of money by the Company
with the Trustee or any Paying Agent (whether or not in trust) for the payment
of the Subordinated Security Obligations shall be subject to the provisions of
Sections 5.1, 5.2, 5.3 and 5.5; except that, if two Business Days prior to the
date on which by the terms of this Indenture any such money may become payable
for any purpose (including, without limitation, the payment of the Subordinated
Security Obligations) the Trustee shall not have received with respect to such
money the notice provided for in Section 5.6, then the Trustee or any Paying
Agent shall have full power and authority to receive such money and to apply
such money to the purpose for which it was received, and shall not be affected
by any notice to the contrary which may be received by it on 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
---------------------------------------------------------
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.
Section 5.9 Trustee to Effectuate Subordination.
-----------------------------------
Each Holder of a Security by its acceptance thereof authorizes and
directs the Trustee on its behalf to take such action as may be necessary or
appropriate to effectuate the
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subordination provided in this Article 5 and appoints the Trustee its attorney-
in-fact for any and all such purposes.
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
anytime 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 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 on account of the Subordinated Security
Obligations by reason of any provision in this Article 5 shall not be construed
as preventing the occurrence of a default or an Event of Default.
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.
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 Conversions and Repurchases Deemed Payment.
--------------------------------------------------
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For the purposes of this Article 5 only, (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article 4
or upon repurchase of Securities by the Company on a Repurchase Date in
accordance with Article 13 shall not be deemed to constitute a payment or
distribution on account of the Principal Amount, Issue Price, accrued Original
Issue Discount, accrued Additional Interest, if any, Restated Principal Amount,
Redemption Price, Repurchase Price, Change in Control Purchase Price or
interest, if any, on the Securities or on account of the purchase or other
acquisition of Securities, and (2) the payment, issuance or delivery of cash
(including cash paid for fractional shares upon conversion of a Security or
repurchase of a Security on a Repurchase Date), property or securities (other
than junior securities) upon conversion of a Security or repurchase of a
Security by the Company on a Repurchase Date shall be deemed to constitute
payment on account of the principal of such Security. For the purposes of this
Section, the term "junior securities" means (a) shares of any stock of any class
of the Company and (b) securities of the Company which are subordinated in right
of payment to all Senior 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.
ARTICLE 6
COVENANTS
Section 6.1 Payment of Securities.
---------------------
The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities or pursuant
to this Indenture. The Principal Amount, Restated Principal Amount, Issue Price
plus accrued Original Issue Discount, Redemption Price, Repurchase Price, Change
in Control Purchase Price and interest, if any, shall be considered paid on the
applicable date due if on such date (or, in the case of a Repurchase Price, on
the Business Day following the applicable Repurchase Date) the Trustee or the
Paying Agent holds, in accordance with this Indenture, money or securities, if
permitted hereunder, sufficient to pay all such amounts then due.
The Company shall, to the extent permitted by law, pay interest on
overdue amounts at the rate per annum set forth in paragraph 1 of the
Securities, compounded semiannually, which interest shall accrue from the date
such overdue amount was originally due to the date payment of such amount,
including interest thereon, has been made or duly provided for. All
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such interest on overdue amounts shall be in lieu of, and not in addition to,
the continued accrual of Original Issue Discount.
Section 6.2 SEC Reports; Rule 144A Information.
----------------------------------
The Company shall file with the Trustee, within 15 days after it files
such annual and quarterly reports, information, documents and other reports with
the SEC, copies of its annual report and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Company is required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act. In the event the
Company is at any time no longer subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, it shall continue to provide the
Trustee with reports containing substantially the same information as would have
been required to be filed with the SEC had the Company continued to have been
subject to such reporting requirements. In such event, such reports shall be
provided at the times the Company would have been required to provide reports
had it continued to have been subject to such reporting requirements. The
Company also shall comply with the other provisions of TIA Section 314(a).
If at any time while any of the Securities are "restricted securities"
within the meaning of Rule 144, the Company is no longer subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will prepare and will furnish to any Holder, any beneficial owner of Securities
and any prospective purchaser of Securities designated by a Holder or a
beneficial owner of Securities, promptly upon request, the information required
pursuant to Rule 144A(d)(4) (or any successor thereto) under the Securities Act
in connection with the offer, sale or transfer of Securities.
Section 6.3 Compliance Certificates.
-----------------------
The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company (beginning with the fiscal year ending
December 31, 2000), an Officers' Certificate as to the signers' knowledge of the
Company's compliance with all conditions and covenants on its part contained in
this Indenture and stating whether or not each signer knows of any default or
Event of Default. If such signer knows of such a default or Event of Default,
the Officers' Certificate shall describe the default or Event of Default and the
efforts to remedy the same. For the purposes of this Section 6.3, compliance
shall be determined without regard to any grace period or requirement of notice
provided pursuant to the terms of this Indenture.
Section 6.4 Further Instruments and Acts.
----------------------------
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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 6.5 Maintenance of Corporate Existence.
----------------------------------
Subject to 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, rights (charter and statutory) and franchises, and the existence,
rights (charter and statutory) and franchises of its Subsidiaries; provided,
however, that the Company will not be required to preserve any such right or
franchise or the existence of any Subsidiary if the Board of Directors
determines that the preservation thereof is no longer desirable in the conduct
of its business and that the loss thereof is not disadvantageous in any material
respect to the Holders of the outstanding Securities.
ARTICLE 7
SUCCESSOR CORPORATION
Section 7.1 When Company May Merge, Etc.
---------------------------
The Company shall not consolidate with or merge with or into any other
corporation, or sell, lease, convey, assign or otherwise transfer all or
substantially all of its property and assets to any other corporation unless:
(a) (i) if the resulting or surviving corporation or successor corporation is
other than the Company, such resulting or surviving corporation or successor
corporation is a corporation organized and existing under the laws of the United
States of America, any State thereof or the District of Columbia, and expressly
assumes, by supplemental indenture executed and delivered to the Trustee, in
form satisfactory to the Trustee, all obligations of the Company under the
Securities and the Indenture, including the due and punctual payment of the
Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Additional Interest, if any, Restated Principal Amount, Redemption Price,
Repurchase Price, Change in Control Purchase Price or interest, if any, on the
Securities, and the due and punctual performance and observance of all other
covenants, agreements and conditions contained in this Indenture and the
Securities to be performed or observed by the Company (including, without
limitation, the obligations of the Company under Article 4 hereof) or (ii) if
the Company is the resulting or surviving corporation but as a consequence of
the consolidation or merger 80% or more of the Voting Stock of the Company is
owned by a parent corporation organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia, such
parent corporation expressly assumes all of the obligations of the Company under
the Securities and this Indenture as described in clause (i) above; (b)
immediately after giving effect to such transaction, no default or Event of
Default shall have occurred and be continuing; and (c) the Company shall deliver
to the Trustee an Officers' Certificate and an
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Opinion of Counsel, each of which shall comply with Section 12.4 and shall state
that such transaction and any such supplemental indenture comply with this
Article 7 and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 7.2 Successor Corporation Substituted; Exercise of Rights.
-----------------------------------------------------
Upon any consolidation or merger, or any sale, lease, conveyance,
assignment or other transfer of all or substantially all of the property and
assets of the Company in accordance with Section 7.1, the successor corporation
(if other than the Company) formed by such consolidation or into which the
Company is merged or to which such sale, lease, conveyance, assignment or other
transfer 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 corporation had been named as the Company herein, and the
predecessor corporation (except in the case of a lease) shall be released from
all of its obligations under this Indenture and the Securities. In the case of
an assumption by a parent corporation, as described in Section 7.1(a)(ii), such
parent corporation 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 parent corporation had been named as the Company herein.
ARTICLE 8
DEFAULT AND REMEDIES
Section 8.1 Events of Default.
-----------------
An "Event of Default" shall occur if:
(1) after exercise of the Company's option pursuant to Section
14.1 hereof following a Tax Event, the Company defaults in the payment of
interest upon any Security when such interest becomes due and payable, and
such default continues for a period of 30 days;
(2) the Company defaults in the payment of the Principal Amount
(or, if the Securities have been converted to interest bearing securities
following a Tax Event pursuant to Article 14, the Restated Principal
Amount), Issue Price plus accrued Original Issue Discount, Redemption
Price, Repurchase Price, Change in Control Purchase Price or Additional
Interest on any Security when the same becomes due and payable at its
Stated Maturity, upon redemption, upon declaration, when due for purchase
by the Company or otherwise;
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(3) failure by the Company to deliver shares of Common Stock
(including cash in lieu of fractional shares) required to be delivered
following conversion of a Security in accordance with Article 4 of this
Indenture and continuance of such default for five Business Days after
receipt of notice by the Company of a Notice of Default; or
(4) the Company fails to comply with any of its covenants or
agreements in the Securities or this Indenture (other than those referred
to in clauses (1), (2) and (3) above and other than any such covenants or
agreements included in the Securities or this Indenture solely for the
benefit of other series of debt securities) and such failure continues for
90 days after receipt by the Company of a Notice of Default;
(5) default under any bond, debenture, note or other evidence of
indebtedness for money borrowed of the Company having an outstanding
principal amount in excess of $25,000,000, which default shall have
resulted in such indebtedness being accelerated, without such indebtedness
being discharged or such acceleration being rescinded or annulled within 30
days after receipt of notice thereof by the Company from the Trustee or the
Company and the Trustee from the Holders of not less than 25% in aggregate
Principal Amount of Securities then outstanding (unless such default has
been cured or waived);
(6) the Company 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 Bankruptcy Custodian
of it or for all or substantially all of its property; or
(D) makes a general assignment for the benefit of its
creditors; or
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary
case or proceeding;
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(B) appoints a Bankruptcy Custodian of the Company for all
or substantially all of the property of the Company; or
(C) orders the liquidation of the Company;
and in each case the order or decree remains unstayed and in effect for 90 days.
The term "Bankruptcy Law" means Title 11 of the United States Code (or
any successor thereto) or any similar federal or state law for the relief of
debtors. The term "Bankruptcy Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.
A default under clause (4) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
Principal Amount of the Securities then outstanding notify the Company and the
Trustee in writing, of the default, and the Company does not cure the default
within 90 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 any default under this Section 8.1 is
cured, it ceases.
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, a Paying Agent, any
Holder or any agent of any Holder.
Section 8.2 Acceleration.
------------
If an Event of Default (other than an Event of Default specified in
clause (6) or (7) of Section 8.1) occurs and is continuing, the Trustee may, by
notice to the Company, or the Holders of at least 25% in aggregate Principal
Amount of the Securities then outstanding may, by written notice to the Company
and the Trustee, declare all unpaid Issue Price plus accrued Original Issue
Discount (or, if the Company has exercised its option provided for in Section
14.1, Restated Principal Amount plus accrued and unpaid 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 clause (6) or
(7) of Section 8.1 occurs, all unpaid Issue Price plus accrued Original Issue
Discount (or, if the Company has exercised its option provided for in Section
14.1, Restated Principal Amount plus accrued and unpaid 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
Holder. The Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding, by written notice to the Trustee (and
without notice to any other Securityholder) may rescind an acceleration and its
consequences if the recission would not conflict with any judgement or decree
and if all existing Events of Default have been cured or waived except
nonpayment of the Issue Price plus accrued Original Issue
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Discount (or, if the Company has exercised its option provided for in Section
14.1, Restated Principal Amount plus accrued and unpaid interest) that have
become due solely as a result of acceleration. No such rescission shall affect
any subsequent default or impair any right consequent thereto.
Section 8.3 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may, but
shall not be obligated to, pursue any available remedy by proceeding at law or
inequity to collect the payment of the Issue Price plus accrued Original Issue
Discount (or, if the Company has exercised its option provided for in Section
14.1, Restated Principal Amount plus accrued and unpaid interest) on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if 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.
----------------------------------------
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 consequence, except (i) a default or Event of Default described
in Section 8.1(1) or (2); (ii) any default or Event of Default in respect of any
provision of this Indenture or the Securities which under Section 11.2 cannot be
modified or amended without the consent of the Holder of each Security affected;
or (iii) any default or Event of Default which constitutes a failure to convert
any Security in accordance with the terms of Article 4. When a default or Event
of Default is waived, it is cured and ceases. This Section 8.4 shall be in lieu
of Section 316(a)1(B) of the TIA and such Section 316(a)1(B) is hereby expressly
excluded from this Indenture, as permitted by the TIA.
Section 8.5 Control by Majority.
-------------------
The Holders of a majority in aggregate 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 or that the Trustee
determines in good faith is unduly prejudicial to the rights of other
Securityholders or would involve the Trustee in personal liability unless the
Trustee is offered indemnity satisfactory to it.
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This Section 8.5 shall be in lieu of Section 316(a)1(A) of the TIA and such
Section 316(a)1(A) is hereby expressly excluded from this Indenture, as
permitted by the TIA.
Section 8.6 Limitations on Suits.
--------------------
A Holder may not pursue any remedy with respect to this Indenture or
the Securities 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 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) the Trustee shall have not received during such 60-day
period a contrary direction from the Holders of a majority in Principal
Amount of the Securities then outstanding.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
Section 8.7 Rights of Holders to Receive Payment and to Convert.
---------------------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Security to receive payment of the Principal Amount (or if the
Securities have been converted to semiannual coupon debentures following a Tax
Event pursuant to Article 14, the Restated Principal Amount), Issue Price plus
accrued Original Issue Discount, Redemption Price, Repurchase Price, Change in
Control Purchase Price or interest, if any, on the Security, on or after the
respective due dates expressed in the Security and this Indenture, to convert
such Security in accordance with Article 4, and to bring suit for the
enforcement of any such payment on or after such respective dates or the right
to convert, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
Section 8.8 Collection Suit by Trustee.
--------------------------
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If an Event of Default described in Section 8.1(1) or 8.1(2) occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount owing with
respect to the Securities and the amounts provided for in Section 9.7.
Section 8.9 Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the Principal Amount, Issue
Price plus accrued Original Issue Discount, Restated Principal Amount,
Redemption Price, Repurchase Price, Change in Control Purchase Price, Additional
Interest, if any, or interest, if any, in respect of the Securities shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of any such amount) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of the Principal
Amount, Issue Price plus accrued Original Issue Discount, Restated Principal
Amount, Redemption Price, Repurchase Price, Change in Control Purchase Price,
Additional Interest, if any, or interest, if any, and to file such other papers
or documents as may be deemed necessary or advisable in order to have the claims
of the Trustee (including any claim for the reasonable compensation,
indemnification, expenses, disbursements and advances of the Trustee, its agents
and counsel or any other amounts due the Trustee under Section 9.7) and of the
Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, indemnification,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 9.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
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Section 8.10 Priorities.
----------
If the Trustee collects any money pursuant to this Article 8, it shall
payout the money in the following order:
FIRST: to the Trustee for amounts due under Section 9.7;
SECOND: to the holders of Senior Indebtedness to the extent required by
Article 5;
THIRD: to Holders for amounts due and unpaid on the Securities for
Principal Amount, Issue Price plus accrued Original Issue
Discount, Restated Principal Amount, Redemption Price, Repurchase
Price, Change in Control Purchase Price, Additional Interest, if
any, or interest, if any, ratably, without preference or priority
of any kind, according to the amounts due and payable on the
Securities; and
FOURTH: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 8.10.
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 Holders of more than 10% in
Principal Amount of the Securities then outstanding. This Section 8.11 shall be
in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby expressly
excluded from this Indenture, as permitted by the TIA.
Section 8.12 Waiver of Usury, Stay or Extension Laws.
---------------------------------------
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, which would
prohibit or forgive the Company from paying Principal Amount, Issue Price plus
accrued Original Issue Discount, Restated Principal Amount, Redemption Price,
Repurchase Price, Change in Control Purchase Price or Additional Interest, if
any, in
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respect of Securities, or any interest on such amounts, as contemplated herein,
or which may affect the covenants or the performance of this Indenture; and the
Company (to the extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.
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 its exercise as a prudent
person would exercise or use under the circumstances in the conduct of his or
her 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, duties 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 any certificates and opinions which by any
provision hereof are specifically required to be delivered to the Trustee
to determine whether or not they conform to the requirements of this
Indenture. This Section 9.1 shall be in lieu of Section 315(a) of the TIA
and such Section 315(a) is hereby expressly excluded from this Indenture,
as permitted by the TIA.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this paragraph (c) does not limit the effect of subsection
(b) of this Section 9.1;
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(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; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 8.5. Subparagraphs (c)(1), (2) and (3)
shall be in lieu of Sections 315(d)(1), 315(d)(2) and 315(d)(3) of the TIA
and such Sections 315(d)(1), 315(d)(2) and 315(d)(3) are hereby expressly
excluded from this Indenture, as permitted by the TIA.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to subsections (a), (b), (c) and (d) of this Section 9.1 and
shall extend to the Registrar, Paying Agent and employees and agents of the
Trustee.
(e) 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 intrust 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 its duties and responsibilities under the TIA:
(1) The Trustee may rely conclusively 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.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. 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.
(3) The Trustee may act through its agents and shall not be
responsible for the misconduct or negligence of any agent appointed with
due care.
(4) Subject to Section 7.1(c), the Trustee shall not be liable
for any action it takes or omits to take in good faith which it believes to
be authorized or within its rights or powers.
(5) The Trustee may consult with counsel selected by it and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any such action taken or suffered or omitted by it
hereunder in good faith and in accordance with the advice or Opinion of
Counsel.
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(6) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order
or direction of any of the Holders, pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may
be incurred therein or thereby.
(7) The permissive rights of the Trustee to do things enumerated
in this Indenture shall not be construed as a duty unless so specified
herein.
(8) No provisions 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.
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 must
comply with Sections 9.10 and 9.11.
Section 9.4 Trustee's Disclaimer.
--------------------
The Trustee makes no representation as to the validity, adequacy or
priority 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 any statement in the Indenture or 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 unless
such default or Event of Default has been cured or waived before the giving of
such notice. Except in the case of a default or an Event of Default described
in Section 8.1(1) or (2), the Trustee may withhold the notice if and so long as
a committee of its Trust Officers in good faith determines that withholding
notice is in the interests of Securityholders. The second sentence of this
Section 9.5 shall be in lieu of the proviso to Section 315(b) of the TIA and
such proviso is hereby expressly excluded from this Indenture, as permitted by
the TIA.
Section 9.6 Reports by Trustee to Holders.
-----------------------------
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If such report is required by TIA Section 313, within 60 days after
each May 1, beginning with the May 1 following the date of this Indenture, the
Trustee shall mail to each Securityholder a brief report dated as of such May 1
that complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b)(2) and (c).
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 any stock exchange or listed or
admitted to trading on any quotation system and any changes in the stock
exchanges or quotation systems on which the Securities are listed or admitted to
trading.
Section 9.7 Compensation and Indemnity.
--------------------------
The Company shall pay to the Trustee from time to time reasonable
compensation (as agreed to from time to time by the Company and the Trustee) for
its services (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, except any such expense, disbursement or
advance as may be attributable to its negligence or willful misconduct. Such
expenses may include the reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel.
The Company shall indemnify the Trustee (which for purposes of this
Section 9.7 shall include its officers, directors, employees and agents) for,
and hold it harmless against, any loss, liability or expense (including
reasonable legal fees and expenses) 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 reasonable costs and expenses of the Trustee and its counsel in defending
itself against any claim 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, although the failure of the Trustee to give such notice shall
not prejudice any of its indemnification rights hereunder unless the Company is
materially adversely affected by such delay. The Company need not pay for any
settlement without its written consent, which shall not be unreasonably
withheld.
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it resulting from its
gross negligence or bad faith.
To secure the Company's payment obligations in this Section 9.7, the
Trustee shall have a senior claim to which the Securities are hereby made
subordinate on all money or property held or collected by the Trustee, except
such money or property held in trust to pay the Principal Amount, Issue Price
plus accrued Original Issue Discount, Restated Principal Amount,
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Redemption Price, Repurchase Price, Change in Control Purchase Price, Additional
Interest, if any, or interest, if any, on the Securities. The obligations of the
Company under this Section 9.7 shall survive the discharge of this Indenture or
the resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (6) or (7) of Section 8.1 occurs, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
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, with the Company's written consent, appoint a
successor Trustee. 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;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly, by resolution of
its Board of Directors, appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company satisfactory in form and
substance to the retiring Trustee and the Company. Thereupon the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to the
Securityholders. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for in
Section 9.7.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate Principal Amount of the Securities at the
time outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
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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.
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 (by sale or
otherwise) 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.
Such successor Trustee shall promptly mail notice of its succession to the
Company and each Holder.
Section 9.10 Eligibility; Disqualification.
-----------------------------
The Trustee shall at all times satisfy the requirements of TIA
Sections 310(a)(1) and 310(b). The Trustee and its parent holding company shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. In determining whether the
Trustee has conflicting interests as defined in TIA Section 310(b)(1), the
provisions contained in the proviso to TIA Section 310(b)(1) shall be deemed
included herein.
Section 9.11 Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
Section 9.12 Investment of Funds.
-------------------
The Trustees shall not be required to invest any money held by it
hereunder except as expressly directed in writing by the Company; provided that
the Trustee shall only be required to invest in "permitted investments" which
mature on or by the date such funds are required for disbursement. "Permitted
investments," as used in this paragraph, shall include any of the following, if
and to the extent the same are at the time legal for the investment of moneys
proposed to be invested therein: (i) direct obligations of the United States or
any agency thereof for the payment of which the full faith and credit of the
United States is pledged, (ii) obligations fully and unconditionally guaranteed
as a full faith and credit obligation by the United States, or (iii) money
market funds that have been rated in the highest available rating category by
Standard & Poor's Rating Services or Moody's Investors Service, Inc. or their
respective successors (including money market funds for which the Trustee or any
of its affiliates is investment manager or advisor). The Trustee shall not be
responsible or liable for any loss
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resulting from any investment made at the direction of the Company. Except as in
accordance with this paragraph, the Trustee shall not be liable to the Company
for interest on funds held by it for the payment and discharge of Principal
Amount, Issue Price plus accrued Original Issue Discount, Restated Principal
Amount, Redemption Price, Repurchase Price, Change in Control Purchase Price,
Additional Interest, if any, or interest, if any, in respect of the Securities
to any Holder. Notwithstanding anything in this Section 9.12 (including, without
limitation, the ability of the Company to direct the investment of money held by
the Trustee hereunder), the right of any Holder of a Security to receive payment
of the full amount of the Principal Amount, Issue Price plus accrued Original
Issue Discount, Restated Principal Amount, Redemption Price, Repurchase Price,
Change in Control Purchase Price, Additional Interest, if any, or interest, if
any, in respect of the Securities on the date the same become due and payable is
absolute and unconditional and shall not be impaired or affected.
ARTICLE 10
DISCHARGE OF INDENTURE
Section 10.1 Discharge of Liability on Securities.
------------------------------------
When (i) the Company delivers to the Trustee or any Paying Agent all
outstanding Securities (other than Securities replaced pursuant to Section 2.7)
for cancellation or (ii) all outstanding Securities have become due and payable
and the Company deposits with the Trustee or any Paying Agent cash or, if
expressly permitted by the terms of the Securities, Common Stock sufficient to
pay all amounts due and owing on all outstanding Securities (other than
Securities replaced pursuant to Section 2.7), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 9.7, cease to be of further effect. The Trustee shall join
in the execution of a document prepared by the Company acknowledging
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and Opinion of Counsel and at the cost
and expense of the Company.
Section 10.2 Repayment to the Company.
------------------------
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for one year after
the date such money or securities become due and payable, together with interest
and dividends, if any, thereon, subject to applicable unclaimed property law.
After return to the Company, Holders entitled to the money or securities must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person and the Trustee and the Paying
Agent shall have no
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further liability to the Securityholders with respect to such money or
securities for that period commencing after the return thereof.
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:
(1) to comply with Sections 4.11 and 7.1;
(2) to cure any ambiguity, defect or inconsistency;
(3) to make any other change that does not adversely affect the
rights of any Securityholder in any material respect;
(4) to comply with the provisions of the TIA;
(5) to appoint a successor Trustee;
(6) to provide for any security or guarantees of the Securities;
(7) to add events of default in respect of the Securities; or
(8) to add covenants that would benefit the Securityholders or to
surrender rights of the Company under the Indenture.
Section 11.2 With Consent of Holders.
-----------------------
The Company and the Trustee may amend or supplement this Indenture or
the securities with the written consent of the Holders of at least a majority in
aggregate Principal Amount of the Securities then outstanding. The Holders of
at least a majority in aggregate Principal Amount of the Securities then
outstanding may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Securities without notice to any
Securityholder. However, notwithstanding the foregoing but subject to Section
11.4, without the written consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 8.4, may not:
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(1) reduce the percentage of the aggregate Principal Amount of
the outstanding Securities whose Holders must consent to an amendment,
supplement or waiver;
(2) make any change in the manner or rate of accrual or payment
(if applicable) of Original Issue Discount, reduce the rate of interest
referred to in paragraph 1 of the Securities, reduce the rate of interest
referred to in Section 14.1 upon the occurrence of a Tax Event, or extend
the time for payment of Original Issue Discount or interest, if any, on any
Security;
(3) reduce the Principal Amount, Restated Principal Amount, Issue
Price, Repurchase Price or Change in Control Purchase Price or extend the
Stated Maturity of any Security;
(4) change the definition of "Change in Control" or "Change in
Control Purchase Date" applicable to any Security or alter any of the other
Change in Control provisions or any of the redemption provisions in a
manner adverse to the Holder of any Security;
(5) alter the conversion or purchase provisions with respect to
any Security in a manner adverse to the Holder thereof;
(6) make any changes in Section 8.4 or in this Section 11.2,
except to increase any percentage in aggregate Principal Amount of
outstanding Securities required for any amendment, supplement or waiver;
(7) modify any of the subordination provisions in Article 5 of
this Indenture in a manner adverse to the Holders of the Securities;
(8) make any Security payable in money other than that stated in
the Security; or
(9) impair the right to institute suit for the enforcement of
payment with respect to, or conversion of, the Securities.
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 but it
shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 11.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the
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amendment. 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.
An amendment under this Section 11.2 or under Section 11.1 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 the TIA as in effect at the date of such amendment or
supplement.
Section 11.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment or other action by Holders 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,
waiver or action is not made on any Security. However, any such Holder or
subsequent Holder may revoke the consent, waiver or action as to its Security or
portion of a Security if the Trustee receives the notice of revocation before
the date the amendment, supplement or waiver or action becomes effective.
After an amendment, waiver or action becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (1)
through (9) 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.
Section 11.5 Notation on or Exchange of Securities.
-------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notification in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any such supplemental indenture may be
prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for outstanding Securities.
Section 11.6 Trustee to Sign Supplemental Indentures.
---------------------------------------
The Trustee shall sign any supplemental indenture authorized pursuant
to this Article 11 if the amendment contained therein does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign such
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supplemental indenture. In signing such supplemental indenture the Trustee shall
be entitled to receive, and (subject to Section 9.1) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.
Section 11.7 Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
ARTICLE 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, such imposed duties shall control.
Section 12.2 Notices.
-------
Any notice, request or communication shall be given in writing and
delivered in person or mailed by first-class mail, postage prepaid, addressed as
follows:
If to the Company:
ALZA Corporation
1900 Charleston Road, P.O. Box 7210
Mountain View, CA 94039-7210
Attention: General Counsel
If to the Trustee:
Chase Manhattan Bank and Trust Company, National Association
101 California Street, Suite 2725
San Francisco, CA 94111
Attention: Cecil D. Bobey
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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 notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
by first-class mail to it at its 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 Section 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 Section 312(c).
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 shall
include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
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(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 or
she has made such examination or investigation as is necessary to enable
him or her 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 an Officers' Certificate 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 10.1, the Trustee) may set a record date for purposes of determining the
identity of Holders 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 thirty (30) 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. Notwithstanding the
provisions of Section 11.4, if a record date is fixed, those persons who were
Holders of Securities at the close of business on 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 and Conversion
--------------------------------------------------------
Agent.
-----
The Trustee may make reasonable rules (not inconsistent with the terms
of this Indenture) for action by or at a meeting of Holders. Any Registrar,
Paying Agent or Conversion Agent may make reasonable rules for its functions.
Section 12.7 Legal Holidays.
--------------
A "Legal Holiday" is a Saturday, Sunday or a day on which state or
federally chartered banking institutions in New York, New York or in the city
where the Corporate Trust Office is located are not required to be open. If a
payment date is a Legal Holiday, payment may
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be made 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.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
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. Any such other indenture, loan or debt agreement
of the Company may not be used to interpret this Indenture.
Section 12.10 No Recourse Against Others.
--------------------------
All liability described in paragraph 20 of the Securities of any
director, officer, employee or shareholder, 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 provisions 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.
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ARTICLE 13
REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER
Section 13.1 General.
-------
Securities shall be purchased by the Company pursuant to paragraph 9
of the Securities as of July 28, 2003, July 28, 2008 and July 28, 2013 (each, a
"Repurchase Date"), at the repurchase price specified therein (each, a
"Repurchase Price"), at the option of the Holder thereof, upon:
(1) delivery to the Paying Agent, by the Holder of a written
notice of purchase (a "Repurchase Notice") at any time from the opening of
business on the date that is 20 Business Days prior to a Repurchase Date
until the close of business on such Repurchase Date stating:
(A) the certificate number of the Security which the
Holder will deliver to be purchased,
(B) the portion of the Principal Amount of the
Security which the Holder will deliver to be purchased, which portion
must be $1,000 or an integral multiple thereof,
(C) that such Security shall be purchased as of the
Repurchase Date pursuant to the terms and conditions specified in
paragraph 9 of the Securities and in this Indenture, and
(D) in the event the Company elects, pursuant to
Section 13.2, to pay the Repurchase Price to be paid as of such
Repurchase Date, in whole or in part, in shares of Common Stock but
such portion of the Repurchase Price shall ultimately be payable to
such Holder entirely in cash because any of the conditions to payment
of the Repurchase Price in Common Stock is not satisfied prior to the
close of business on such Repurchase Date, as set forth in Section
13.4, whether such Holder elects (i) to withdraw such Repurchase
Notice as to some or all of the Securities to which such Repurchase
Notice relates (stating the Principal Amount and certificate numbers
of the Securities as to which such withdrawal shall relate), or (ii)
to receive cash in respect of the entire Repurchase Price for all
Securities (or portions thereof) to which such Repurchase Notice
relates; and
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(2) delivery of such Security to the Paying Agent prior to, on
or after the Repurchase Date (together with all necessary endorsements) at
the offices of the Paying Agent, such delivery being a condition to receipt
by the Holder of the Repurchase Price therefor; provided, however, that
-------- -------
such Repurchase Price shall be so paid pursuant to this Article 13 only if
the Security so delivered to the Paying Agent shall conform in all respects
to the description thereof in the related Repurchase Notice.
If a Holder, in such Holder's Repurchase Notice and in any written
notice of withdrawal delivered by such Holder pursuant to the terms of Section
13.9, fails to indicate such Holder's choice with respect to the election set
forth in clause (D) of Section 13.1(1), such Holder shall be deemed to have
elected to receive cash in respect of the Repurchase Price for all Securities
subject to such Repurchase Notice in the circumstances set forth in such clause
(D).
The Company shall purchase from the Holder thereof, pursuant to this
Article 13, a portion of a Security if the Principal Amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security also apply to the purchase of such
portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions of
this Article 13 shall be consummated by the delivery of the consideration to be
received by the Holder promptly following the later of the Repurchase Date and
the time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Repurchase Notice contemplated by this Section 13.1
shall have the right to withdraw such Repurchase Notice at any time prior to the
close of business on the Repurchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 13.9.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Repurchase Notice or written notice of withdrawal thereof.
Section 13.2 Company's Right to Elect Manner of Payment of
---------------------------------------------
Repurchase Price.
----------------
The Securities to be purchased pursuant to Section 13.1 may be paid
for, at the election of the Company, in cash or Common Stock, or in any
combination of cash and Common Stock, subject to the conditions set forth in
Sections 13.3 and 13.4. The Company shall designate, in the Company Notice
delivered pursuant to Section 13.5, whether the Company will purchase the
Securities for cash or Common Stock, or, if a combination thereof, the
percentages of the Repurchase Price of Securities in respect of which it will
pay in cash or Common Stock; provided, that the Company will pay cash for
--------
fractional interests in Common Stock. For purposes of determining the existence
of potential fractional interests, all Securities subject to
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purchase by the Company held by a Holder shall be considered together (no matter
how many separate certificates are to be presented). Each Holder whose
Securities are purchased pursuant to this Article13 shall receive the same
percentage of cash or Common Stock in payment of the Repurchase Price for such
Securities, except (i) as provided in Section 13.4 with regard to the payment of
cash in lieu of fractional shares of Common Stock and (ii) in the event that the
Company is unable to purchase the Securities of a Holder or Holders for Common
Stock because any necessary qualifications or registrations of the Common Stock
under applicable state securities laws cannot be obtained, the Company may
purchase the Securities of such Holder or Holders for cash. The Company may not
change its election with respect to the consideration (or components or
percentages of components thereof) to be paid once the Company has given its
Company Notice to Securityholders except pursuant to this Section 13.2 or
pursuant to Section 13.4 in the event of a failure to satisfy, prior to the
close of business on the Repurchase Date, any condition to the payment of the
Repurchase Price, in whole or in part, in Common Stock.
At least three Business Days before the Company Notice Date, the
Company shall deliver an Officers' Certificate to the Trustee specifying:
(1) the manner of payment selected by the Company,
(2) the information required by Section 13.5,
(3) if the Company elects to pay the Repurchase Price, or a
specified percentage thereof, in Common Stock, that the conditions to such
manner of payment set forth in Section 13.4 have been or will be complied
with, and
(4) whether the Company desires the Trustee to give the
Company Notice required by Section 13.5.
Section 13.3 Repurchase with Cash.
--------------------
On each Repurchase Date, at the option of the Company, the Repurchase
Price of Securities in respect of which a Repurchase Notice pursuant to Section
13.1 has been given, or a specified percentage thereof, may be paid by the
Company with cash equal to the aggregate Repurchase Price of such Securities.
If the Company elects to purchase Securities with cash, the Company Notice, as
provided in Section 13.5, shall be sent to Holders (and to beneficial owners as
required by applicable law) not less than 20 Business Days prior to such
Repurchase Date (the "Company Notice Date").
Section 13.4 Payment by Issuance of Common Stock.
-----------------------------------
On each Repurchase Date, at the option of the Company, the Repurchase
Price of Securities in respect of which a Repurchase Notice pursuant to Section
13.1 has been given, or a
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specified percentage thereof, may be paid by the Company by the issuance of a
number of shares of Common Stock equal to the quotient obtained by dividing (i)
the amount of cash to which the Securityholders would have been entitled had the
Company elected to pay all or such specified percentage, as the case may be, of
the Repurchase Price of such Securities in cash by (ii) the Market Price of a
share of Common Stock, subject to the next succeeding paragraph.
The Company will not issue a fractional share of Common Stock in
payment of the Repurchase Price. Instead the Company will pay cash for the
current market value of the fractional share. The current market value of a
fraction of a share shall be determined by multiplying the Market Price by such
fraction and rounding the product to the nearest whole cent. It is understood
that if a Holder elects to have more than one Security purchased, the number of
shares of Common Stock shall be based on the aggregate amount of Securities to
be purchased.
If the Company elects to purchase the Securities by the issuance of
shares of Common Stock, the Company Notice, as provided in Section 13.5, shall
be sent to the Holders (and to beneficial owners as required by applicable law)
not later than the Company Notice Date.
The Company's right to exercise its election to purchase the
Securities pursuant to Article 13 through the issuance of shares of Common Stock
shall be conditioned upon:
(1) the Company's not having given its Company Notice of an
election to pay entirely in cash and its giving of timely Company Notice of
election to purchase all or a specified percentage of the Securities with
Common Stock as provided herein;
(2) the registration of the shares of Common Stock to be issued
in respect of the payment of the Repurchase Price under the Securities Act
or the Exchange Act, in each case, if required;
(3) any necessary qualification or registration under applicable
state securities laws or the availability of an exemption from such
qualification and registration; and
(4) the receipt by the Trustee of an Officers' Certificate and
an Opinion of Counsel each stating that (A) the terms of the issuance of
the Common Stock are in conformity with this Indenture and (B) the shares
of Common Stock to be issued by the Company in payment of the Repurchase
Price in respect of Securities have been duly authorized and, when issued
and delivered pursuant to the terms of this Indenture in payment of the
Repurchase Price in respect of the Securities, will be validly issued,
fully paid and non-assessable and, to the best of such counsel's knowledge,
free from preemptive rights, and, in the case of such Officers'
Certificate, stating that conditions (1), (2) and (3) above and the notice
provision set forth in the second succeeding sentence below
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have been satisfied and, in the case of such Opinion of Counsel, stating
that conditions (2) and (3) above have been satisfied.
Such Officers' Certificate shall also set forth the number of shares
of Common Stock to be issued for each $1,000 Principal Amount of Securities and
the Sale Price of a share of Common Stock on each Trading Day during the period
commencing on the first Trading Day of the period during which the Market Price
is calculated and ending on the applicable Repurchase Date. The Company may pay
the Repurchase Price (or any portion thereof) in Common Stock only if the Common
Stock is then listed on the NYSE or quoted on the Nasdaq National Market of The
Nasdaq Stock Market. If the foregoing conditions are not satisfied with respect
to a Holder or Holders prior to the close of business on the Repurchase Date and
the Company has elected to purchase the Securities pursuant to this Article 13
through the issuance of shares of Common Stock, the Company shall pay the entire
Repurchase Price of the Securities of such Holder or Holders in cash. Upon
determination of the actual number of shares of Common Stock to be issued
pursuant to this Article 13, the Company shall publish such number in a
newspaper of national circulation.
The "Market Price" means the average of the Sale Price of the Common
Stock for the five Trading Day period ending on (if the third Business Day prior
to the applicable Repurchase Date is a Trading Day, or if not, then on the last
Trading Day prior to) the third Business Day prior to the applicable Repurchase
Date, appropriately adjusted to take into account the occurrence, during the
period commencing on the first of such Trading Days during such five Trading Day
period and ending on such Repurchase Date, of any event described in Sections
4.6(a), 4.6(b) or 4.6(c); subject, however, to the conditions set forth in
Section 4.7.
The "Sale Price" of the Common Stock on any date means the closing per
share sale price (or, if no closing sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the average of the
average bid and average ask prices) on such date as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is traded or, if the Common Stock is not listed on a United States
national or regional securities exchange, as reported by The Nasdaq Stock
Market, or if the Common Stock is not quoted on The Nasdaq Stock Market, on the
principal other market on which the Common Stock is then traded.
Section 13.5 Notice of Election.
------------------
The Company's notice of election to purchase with cash or Common Stock
or any combination thereof shall be sent to the Holders (and to beneficial
owners as required by applicable law) in the manner provided in Section 12.2 at
the time specified in Section 13.3 or 13.4, as applicable (the "Company
Notice"). Such Company Notice shall state the manner of payment elected and
shall contain the following information:
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In the event the Company has elected to pay the Repurchase Price (or a
specified percentage thereof) with Common Stock, the Company Notice shall:
(1) state that each Holder will receive Common Stock with a
Market Price determined as of a specified date prior to the Repurchase Date
equal to such specified percentage of the Repurchase Price of the
Securities held by such Holder (except any cash amount to be paid in lieu
of fractional shares);
(2) set forth the method of calculating the Market Price of the
Common Stock; and
(3) state that because the Market Price of Common Stock will be
determined prior to the Repurchase Date, Holders will bear the market risk
with respect to the value of the Common Stock to be received from the date
such Market Price is determined to the Repurchase Date.
In any case, each Company Notice shall include a form of Repurchase
Notice to be completed by a Securityholder and shall state:
(A) the Repurchase Price and the Conversion Rate;
(B) the name and address of the Paying Agent and the
Conversion Agent;
(C) that Securities as to which a Repurchase Notice has
been given may be converted pursuant to Article 4 hereof only if the
applicable Repurchase Notice has been withdrawn in accordance with the
terms of this Indenture;
(D) that Securities must be surrendered to the Paying Agent
to collect payment;
(E) that the Repurchase Price for any security as to which
a Repurchase Notice has been given and not withdrawn will be paid
promptly following the later of the Repurchase Date and the time of
surrender of such Security as described in (D);
(F) the procedures the Holder must follow to exercise
rights under Article 13 and a brief description of those rights;
(G) briefly, the conversion rights of the Securities; and
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(H) the procedures for withdrawing a Repurchase Notice
(including, without limitation, for a conditional withdrawal pursuant
to the terms of Section 13.1(1)(D) or Section 13.9).
At the Company's request, the Trustee shall give such Company Notice
in the Company's name and at the Company's expense; provided, however, that, in
-------- -------
all cases, the text of such Company Notice shall be prepared by the Company.
Upon determination of the actual number of shares of Common Stock to
be issued for each $1,000 Principal Amount of Securities, the Company will
publish such determination in a newspaper of national circulation.
Section 13.6 Covenants of the Company.
------------------------
All shares of Common Stock delivered upon purchase of the Securities
shall be newly issued shares or treasury shares, shall be duly authorized,
validly issued, fully paid and nonassessable and shall be free from preemptive
rights and free of any lien or adverse claim.
The Company shall use its best efforts to list or cause to have quoted
any shares of Common Stock to be issued to purchase Securities on each national
securities exchange or over-the-counter or other domestic market on which the
Common Stock is then listed or quoted.
Section 13.7 Procedure upon Repurchase.
-------------------------
The Company shall deposit cash (in respect of a cash purchase under
Section 13.3 or for fractional interests, as applicable) or shares of Common
Stock, or a combination thereof, as applicable, at the time and in the manner as
provided in Section 13.10, sufficient to pay the aggregate Repurchase Price of
all Securities to be purchased on the applicable Repurchase Date pursuant to
this Article 13. As soon as practicable after the Repurchase Date, the Company
shall deliver to each Holder entitled to receive Common Stock through the Paying
Agent, a certificate for the number of full shares of Common Stock issuable in
payment of the Repurchase Price and cash in lieu of any fractional interests.
The person in whose name the certificate for Common Stock is registered shall be
treated as a holder of record of shares of Common Stock on the Business Day
following the Repurchase Date. Subject to Section 13.4, no payment or
adjustment will be made for dividends on the Common Stock the record date for
which occurred on or prior to the Repurchase Date.
Section 13.8 Taxes.
-----
If a Holder of a Security is paid in Common Stock, the Company shall
pay any documentary, stamp or similar issue or transfer tax due on such issue of
shares of Common Stock. However, the Holder shall pay any such tax which is due
because the Holder requests the
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shares of Common Stock to be issued in a name other than the Holder's name. The
Paying Agent may refuse to deliver the certificates representing the Common
Stock being issued in a name other than the Holder's name until the Paying Agent
receives a sum sufficient to pay any tax which will be due because the shares of
Common Stock are to be issued in a name other than the Holder's name. Nothing
herein shall preclude any income tax withholding required by law or regulations.
Section 13.9 Effect of Repurchase Notice.
---------------------------
Upon receipt by the Paying Agent of the Repurchase Notice, the Holder
of the Security in respect of which such Repurchase Notice was given shall
(unless such Repurchase Notice is withdrawn as specified in the following two
paragraphs) thereafter be entitled to receive solely the Repurchase Price with
respect to such Security. Such Repurchase Price shall be paid to such Holder,
subject to receipt of funds and/or securities by the Paying Agent, promptly
following the later of (x) the Repurchase Date with respect to such Security
(provided the conditions in Section 13.1 have been satisfied) and (y) the time
of delivery of such Security to the Paying Agent by the Holder thereof in the
manner required by Section 13.1. Securities in respect of which a Repurchase
Notice has been given by the Holder thereof may not be converted pursuant to
Article 4 hereof on or after the date of the delivery of such Repurchase Notice
unless such Repurchase Notice has first been validly withdrawn as specified in
the following two paragraphs.
A Repurchase Notice may be withdrawn by means of a written notice of
withdrawal delivered to the office of the Paying Agent in accordance with the
Repurchase Notice at any time prior to the close of business on the Repurchase
Date specifying:
(1) the certificate number of the Security in respect of
which such notice of withdrawal is being submitted,
(2) the Principal Amount of the Security with respect to
which such notice of withdrawal is being submitted; and
(3) the Principal Amount, if any, of such Security which
remains subject to the original Repurchase Notice and which has been or
will be delivered for purchase by the Company.
A written notice of withdrawal of a Repurchase Notice may be in the
form set forth in the preceding paragraph or may be in the form of (i) a
conditional withdrawal contained in a Repurchase Notice pursuant to the terms of
Section 13.1(1)(D) or (ii) a conditional withdrawal containing the information
set forth in Section 13.1(1)(D) and the preceding paragraph and contained in a
written notice of withdrawal delivered to the Paying Agent as set forth in the
preceding paragraph.
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There shall be no purchase of any Securities pursuant to Article 13
(other than through the issuance of Common Stock in payment of the Repurchase
Price, including cash in lieu of fractional shares) if there has occurred (prior
to, on or after, as the case may be, the giving, by the Holders of such
Securities, of the required Repurchase Notice) and is continuing an Event of
Default (other than a default in the payment of the Repurchase Price with
respect to such Securities). The Paying Agent will promptly return to the
respective Holders thereof any Securities (x) with respect to which a Repurchase
Notice has been withdrawn in compliance with this Indenture, or (y) held by it
during the continuance of an Event of Default (other than a default in the
payment of the Repurchase Price with respect to such Securities) in which case,
upon such return, the Repurchase Notice with respect thereto shall be deemed to
have been withdrawn.
Section 13.10 Deposit of Repurchase Price.
---------------------------
Prior to 11:00 a.m. (New York City time) on the Business Day following
the Repurchase Date the Company shall deposit with the Trustee or with the
Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of
them is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.4) an amount of money (in immediately available funds if
deposited on such Business Day) or Common Stock, if permitted hereunder,
sufficient to pay the aggregate Repurchase Price of all of the Securities or
portions thereof which are to be purchased as of the Repurchase Date.
Section 13.11 Securities Repurchased in Part.
------------------------------
Any Security which is to be purchased only in part shall be
surrendered at the office of the Paying Agent (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of transfer in
form reasonably satisfactory to the Company or the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing) and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security, without service charge, a new Security or Securities,
of any authorized denomination as requested by such Holder in aggregate
Principal Amount equal to, and in exchange for, the portion of the Principal
Amount of the Security so surrendered which is not purchased.
Section 13.12 Compliance with Securities Laws Upon Purchase of
------------------------------------------------
Securities.
----------
In connection with any offer to purchase or purchase of Securities
under Article 13 hereof (provided that such offer or purchase constitutes an
"issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein,
includes any successor provision thereto) under the Exchange Act at the time of
such offer or purchase), the Company shall (i) comply with Rule 13e-4 and Rule
14e-1under the Exchange Act, (ii) file the related Schedule TO (or any successor
schedule, form or report) under the Exchange Act, and (iii) otherwise comply
with all Federal
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and state securities laws so as to permit the rights and obligations under
Article 13 to be exercised in the time and in the manner specified in Article
13.
Section 13.13 Repayment to the Company.
------------------------
The Trustee and the Paying Agent shall return to the Company any cash
or shares of Common Stock that remain unclaimed as provided in paragraph 15 of
the Securities, together with interest or dividends, if any, thereon held by
them for the payment of the Repurchase Price; provided, however, that to the
-------- -------
extent that the aggregate amount of cash or shares of Common Stock deposited by
the Company pursuant to Section 13.10 exceeds the aggregate Repurchase Price of
the Securities or portions thereof which the Company is obligated to purchase as
of the Repurchase Date, then promptly after the Business Day following the
Repurchase Date the Trustee shall return any such excess to the Company together
with interest or dividends, if any, thereon.
ARTICLE 14
SPECIAL TAX EVENT CONVERSION
Section 14.1 Optional Conversion to Interest Bearing Securities Upon
-------------------------------------------------------
Tax Event.
---------
From and after (i) the date (the "Tax Event Date") of the occurrence
of a Tax Event and (ii) the date the Company exercises such option, whichever is
later (the "Option Exercise Date"), at the option of the Company, interest in
lieu of future Original Issue Discount shall accrue at the rate of 3.00% per
annum on a restated principal amount per $1,000 original Principal Amount (the
"Restated Principal Amount") equal to the Issue Price plus Original Issue
Discount accrued to the Option Exercise Date and shall be payable semiannually
on January 28 and July 28 of each year (each an "Interest Payment Date") to
holders of record at the close of business on January 13 or July 13 (each
a"Regular Record Date") immediately preceding such Interest Payment Date.
Interest will be computed on the basis of a 360-day year comprised of twelve 30-
day months and will accrue from the most recent date on which interest has been
paid or, if no interest has been paid, from the Option Exercise Date. Within 15
days of the occurrence of a Tax Event, the Company shall mail a written notice
of such Tax Event by first-class mail to the Trustee and within 15 days of its
exercise of such option the Company shall mail a written notice of the Option
Exercise Date by first-class mail to the Trustee and Holders of the Securities.
From and after the Option Exercise Date, (i) the Company shall be obligated to
pay at Stated Maturity, in lieu of the Principal Amount of a Security, the
Restated Principal Amount thereof and (ii) "Issue Price and accrued Original
Issue Discount," "Issue Price plus Original Issue Discount" or similar words, as
used herein, shall mean Restated Principal Amount plus accrued and unpaid
interest with respect to any Security. Securities authenticated and delivered
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after the Option Exercise Date may, and shall if required by the Trustee, bear a
notation in a form approved by the Trustee as to the conversion of the
Securities to interest bearing securities.
Section 14.2 Payment of Interest; Interest Rights Preserved.
----------------------------------------------
(a) Interest on any Security that is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the person
in whose name that Security is registered at the close of business on the
Regular Record Date for such interest at the office or agency of the Company
maintained for such purpose. Each installment of interest on any Security shall
be paid in same-day funds by transfer to an account maintained by the payee
located inside the United States. In the case of a Global Security, interest
payable on any Interest Payment Date will be paid to the Depositary, with
respect to that portion of such Global Security held for its account by Cede &
Co. for the purpose of permitting such party to credit the interest received by
it in respect of such Global Security to the accounts of the beneficial owners
thereof.
(b) Except as otherwise specified with respect to the Securities, any
interest on any Security that is payable, but is not punctually paid or duly
provided for, within 30 days following on any Interest Payment Date (herein
called "Defaulted Interest", which term shall include any accrued and unpaid
interest that has accrued on such defaulted amount in accordance with paragraph
1 of the Securities), shall forthwith cease to be payable to the registered
Holder thereof on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, as its election
in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the persons in whose names the Securities are registered at the
close of business on a Special Record Date (as defined below) for the
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment (which shall not be less than 25 days after such notice is
received by the Trustee), and at the same time the Company shall deposit
with the Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit on or prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date for
the payment of such Defaulted Interest ("Special Record Date") which shall
be not more than 15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify
the Company of such Special Record Date and, in the name and at the expense
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
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first-class postage prepaid, to each Holder of Securities at his address as
it appears on the list of Securityholders maintained pursuant to Section
2.5 not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been mailed as aforesaid, such Defaulted Interest shall be
paid to the persons in whose names the Securities are registered at the
close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section and Section 2.6,
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
Original Issue Discount and interest, if any, accrued and unpaid, and to accrue,
which were carried by such other Security.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
as of the date and year first above written.
ALZA CORPORATION
By: /s/ Matthew K. Fust
----------------------------
Name: Matthew K. Fust
Title: Senior Vice President
and Chief Financial
Officer
CHASE MANHATTAN BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION,
as Trustee
By: /s/ Cecil Bobey
-------------------------------
Name: Cecil Bobey
Title: Assistant Vice President
<PAGE>
EXHIBIT A
[FORM OF FACE OF SECURITY]
FOR PURPOSES OF SECTIONS 1273 AND 1275 OF THE INTERNAL REVENUE CODE,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT WITH RESPECT TO EACH $1,000 OF PRINCIPAL
AMOUNT OF THIS SECURITY IS $448.74, THE ISSUE DATE IS JULY 28, 2000, AND THE
YIELD TO MATURITY IS 3.0% PER ANNUM.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO 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 THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE 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.]/1/
[THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES
_________________________
/1/ These paragraphs should be included only if the Security is a Global
Security.
A-1
<PAGE>
LAWS. NEITHER THIS SECURITY, THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION
OF THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD UNDER RULE 144(k) (OR ANY SUCCESSOR PROVISION) UNDER THE
SECURITIES ACT WHICH IS APPLICABLE TO THIS SECURITY (THE "RESALE RESTRICTION
TERMINATION DATE"), ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR
SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (D)
PURSUANT TO AND IN COMPLIANCE WITH RULE 144 UNDER THE SECURITIES ACT, IF
AVAILABLE, OR (E) PURSUANT TO AND IN COMPLIANCE WITH ANOTHER AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (SUBJECT TO THE
CONDITION THAT, IF THIS SECURITY IS SOLD OR TRANSFERRED PURSUANT TO THIS CLAUSE
(E), THIS SECURITY MUST UPON SUCH SALE OR TRANSFER CEASE TO BE A "RESTRICTED
SECURITY" WITHIN THE MEANING OF RULE 144 (OR ANY SUCCESSOR PROVISION) UNDER THE
SECURITIES ACT), SUBJECT TO THE RIGHT OF THE COMPANY, ANY REGISTRAR FOR THIS
SECURITY AND THE TRUSTEE, PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSE (D) OR (E), TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH
OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE
OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE OR A REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A
REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED
TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE
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<PAGE>
HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH
REGISTRATION RIGHTS AGREEMENT.]/2/
__________________________
/2/ These paragraphs to be included only if the Security is a Transfer
Restricted Security.
A-3
<PAGE>
ALZA CORPORATION
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE DUE
JULY 28, 2020
No. R- CUSIP:02261W-AA-7
Issue Date: __________________ Original Issue Discount: $448.74
Issue Price: $551.26 (for each $1,000 Principal Amount)
(for each $1,000 Principal Amount)
ALZA Corporation, a Delaware corporation (the "Company"), which terms
shall include any successor corporation under the Indenture referred to on the
reverse hereof), promises to pay to _____________________________________, or
registered assigns, the Principal Amount of ___________ Dollars ($____________)
on July 28, 2020 [or such greater or lesser amount as is indicated on the
Schedule of Exchanges of Securities on the other side of this Security].3
This Security shall not bear interest except as specified on the other
side of this Security. Original Issue Discount will accrue as specified on the
other side of this Security. This Security is convertible as specified on the
other side of this Security. Additional provisions of this Security are set
forth on the other side of this Security.
[SIGNATURE PAGE FOLLOWS]
__________________________
/3/ This phrase should be included only if the Security is a Global
Security.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
ALZA CORPORATION
By:___________________________
Name:
Title:
Attest:
By:_________________________
Name:
Title:
Dated:
Trustee's Certificate of Authentication: This is one of the Securities referred
to in the within-mentioned Indenture.
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
as Trustee
By:_______________________
Authorized Signatory
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<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
ALZA CORPORATION
ZERO COUPON CONVERTIBLE SUBORDINATED DEBENTURE
DUE JULY 28, 2020
1. Interest
--------
This Security shall not bear interest, except as specified in this
paragraph or in paragraph 10 hereof. If the Principal Amount hereof or any
portion of such Principal Amount is not paid when due (whether upon acceleration
pursuant to Section 8.2 of the Indenture, upon the date set for payment of the
Redemption Price pursuant to paragraph 5 hereof, upon the date set for payment
of Change in Control Purchase Price pursuant to paragraph 7 hereof, upon the
date set for payment of the Repurchase Price pursuant to paragraph 9 or upon the
Stated Maturity of this Security) or if interest due hereon or any portion of
such interest is not paid when due in accordance with paragraph 10 hereof, then
in each such case the overdue amount shall, to the extent permitted by law, bear
interest at the rate of 4.00% per annum, compounded semi-annually, which
interest shall accrue from the date such overdue amount was originally due to
the date payment of such amount, including interest thereon, has been made or
duly provided for. All such interest shall be payable as set forth in the
Indenture. The accrual of such interest on overdue amounts shall be in lieu of,
and not in addition to, the continued accrual of Original Issue Discount.
Original Issue Discount (the difference between the Issue Price and
the Principal Amount of the Security), in the period during which a Security
remains outstanding, shall accrue at 3.00% per annum, on a semiannual bond
equivalent basis using a 360-day year composed of twelve 30-day months, from the
Issue Date of this Security.
2. Method of Payment
-----------------
Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of Redemption Prices, Repurchase Prices, Change in
Control Purchase Prices and at Stated Maturity to Holders who surrender
Securities to a Paying Agent to collect such payments in respect of the
Securities. The Company will pay cash amounts in money of the United States that
at the time of payment is legal tender for payment of public and private debts.
However, the Company may make such cash payments by check payable in such money
directly to the Holder.
A-6
<PAGE>
3. Paying Agent, Registrar and Conversion Agent
--------------------------------------------
Initially, Chase Manhattan Bank and Trust Company, National
Association (the "Trustee", which term shall include any successor trustee under
the Indenture hereinafter referred to) will act as Paying Agent, Registrar and
Conversion Agent. The Company may change and appoint any Paying Agent, Registrar
or Conversion Agent without notice to the Holder, except that the Company will
maintain at least one Paying Agent in the Borough of Manhattan, the City of New
York, which shall initially be an office or agency of the Trustee. The Company
or any of its Subsidiaries may, subject to certain limitations set forth in the
Indenture, act as Paying Agent, Registrar or Conversion Agent.
4. Indenture, Limitations. This Security is one of a duly authorized
----------------------
issue of Securities of the Company designated as its Zero Coupon Convertible
Subordinated Debentures Due July 28, 2020 (the "Securities"), issued under an
Indenture, dated as of July 28, 2000 (together with any supplemental indentures
thereto, the "Indenture"), between the Company and the Trustee. The terms of
this Security include those stated in the Indenture and those required by or
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended, as in effect on the date of the Indenture. This Security is subject to
all such terms, and the Holder of this Security is referred to the Indenture and
said Act for a statement of them.
The Securities are general unsecured obligations of the Company
limited to $910,000,000 aggregate Principal Amount, subject to Section 2.2 of
the Indenture. The Indenture does not limit other debt of the Company, secured
or unsecured, including Senior Indebtedness.
5. Optional Redemption
-------------------
No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the Redemption Prices set forth below, provided that the
Securities are not redeemable prior to July 28, 2003.
The table below shows Redemption Prices of a Security per $1,000
Principal Amount on the dates shown below and at Stated Maturity, which prices
reflect accrued Original Issue Discount calculated through each such date. The
Redemption Price of a Security redeemed between such dates shall include an
additional amount reflecting the additional Original Issue Discount accrued
since the next preceding date in the table.
(2)
(1) -------------------
-------------- Accrued Original (3)
Redemption Date Debenture ------------------- Redemption Price
------------------ -------------- Issue Discount
Issue Price ------------------- (1) + (2)
-------------- at 3.00% ----------------
-------------------
A-7
<PAGE>
July 28, 2003...... $551.26 $ 51.51 $ 602.77
July 28, 2004...... $551.26 $ 69.73 $ 620.99
July 28, 2005...... $551.26 $ 88.50 $ 639.76
July 28, 2006...... $551.26 $107.84 $ 659.10
July 28, 2007...... $551.26 $127.76 $ 679.02
July 28, 2008...... $551.26 $148.28 $ 699.54
July 28, 2009...... $551.26 $169.43 $ 720.69
July 28, 2010...... $551.26 $191.21 $ 742.47
July 28, 2011...... $551.26 $213.65 $ 764.91
July 28, 2012...... $551.26 $236.77 $ 788.03
July 28, 2013...... $551.26 $260.59 $ 811.85
July 28, 2014...... $551.26 $285.13 $ 836.39
July 28, 2015...... $551.26 $310.40 $ 861.67
July 28, 2016...... $551.26 $336.45 $ 887.71
July 28, 2017...... $551.26 $363.28 $ 914.54
July 28, 2018...... $551.26 $390.92 $ 942.18
July 28, 2019...... $551.26 $419.40 $ 970.66
At Stated Maturity $551.26 $448.74 $1,000.00
If converted to an interest bearing security following the occurrence
of a Tax Event, the Redemption Price of the Security will be the Restated
Principal Amount plus accrued and unpaid interest from the date of such
conversion through the Redemption Date; but in no event will this Security be
redeemable before July 28, 2003.
6. Notice of Redemption
--------------------
Notice of redemption will be mailed by first-class mail at least 15
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. Securities in denominations
larger than $1,000 Principal Amount 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, Original
Issue Discount and interest, if any, ceases to accrue on Securities or portions
thereof called for redemption.
7. Purchase of Securities at Option of Holder Upon a Change in Control
-------------------------------------------------------------------
At the option of the Holder and subject to the terms and conditions of
the Indenture, the Company shall become obligated to purchase all or any part
specified by the Holder (so long as the Principal Amount of such part is $1,000
or an integral multiple of $1,000
A-8
<PAGE>
in excess thereof) of the Securities held by such Holder on the date that is 35
Business Days after the occurrence of a Change in Control, at a Change in
Control Purchase Price equal to the Issue Price plus accrued Original Issue
Discount through the Change in Control Purchase Date. The Holder shall have the
right to withdraw any Change in Control Purchase Notice (in whole or in a
portion thereof that is $1,000 Principal Amount or an integral multiple of
$1,000 in excess thereof) at any time prior to the close of business on the
Business Day next preceding the Change in Control Purchase Date by delivering a
written notice of withdrawal to the Paying Agent in accordance with the terms of
the Indenture.
If prior to a Change in Control Purchase Date this Security has been
converted to an interest bearing security following the occurrence of a Tax
Event, the Change in Control Purchase Price shall be equal to the Restated
Principal Amount plus accrued and unpaid interest from the date of conversion to
the Change in Control Purchase Date.
8. Conversion
----------
A Holder of a Security may convert the Security into shares of Common
Stock at any time prior to the close of business on July 28, 2020; provided,
however, that if the Security is called for redemption, the conversion right
will terminate at the close of business on the Business Day immediately
preceding the Redemption Date for such Security or such earlier date as the
Holder presents such Security for redemption (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 Security is redeemed). A Security in respect of which a Holder has
delivered a Repurchase Notice or Change in Control Purchase Notice exercising
the option of such Holder to require the Company to purchase such Security may
be converted only if such notice of exercise is withdrawn in accordance with the
terms of the Indenture.
The initial Conversion Rate is 7.0135 shares of Common Stock per
$1,000 Principal Amount, subject to adjustment in certain events described in
the Indenture. The Company will deliver cash or a check in lieu of any
fractional share of Common Stock.
In the event the Company exercises its option pursuant to Section 14.1
of the Indenture to have interest in lieu of Original Issue Discount accrue on
the Security following a Tax Event, the Holder will be entitled on conversion to
receive the same number of shares of Common Stock such Holder would have
received if the Company had not exercised such option. If the Company exercises
such option, Securities surrendered for conversion during the period from the
close of business on any Regular Record Date next preceding any Interest Payment
Date to the opening of business of such Interest Payment Date (except Securities
to be redeemed on a date during the period from the close of business on such
Regular Record Date until the open of business on the first Business Day after
such Interest Payment Date, or if such Interest Payment Date is not a Business
Day, until the open of business on the second Business Day after such
A-9
<PAGE>
Interest Payment Date) must be accompanied by payment from the Holder of an
amount equal to the interest thereon that the registered Holder is to receive
from the Company on such Interest Payment Date. Except where Securities
surrendered for conversion must be accompanied by payment as described above, no
interest on converted Securities will be payable by the Company on any Interest
Payment Date subsequent to the date of conversion.
A Holder may convert a portion of a Security if the Principal Amount
of such portion is $1,000 or an integral multiple of $1,000. No payment or
adjustment will be made for dividends on the Common Stock except as provided in
the Indenture. On conversion of a Security, that portion of accrued Original
Issue Discount (or interest if the Company has exercised its option provided for
in paragraph 10 hereof) attributable to the period from the Issue Date (or, if
the Company has exercised the option referred to in paragraph 10 hereof, the
later of (x) the date of such exercise and (y) the date on which interest was
last paid) through the Conversion Date with respect to the converted Security
shall not be canceled, extinguished or forfeited, but rather shall be deemed to
be paid in full to the Holder thereof through the delivery of the Common Stock
(together with the cash payment, if any, in lieu of fractional shares) in
exchange for the Security being converted pursuant to the terms hereof; and the
fair market value of such shares of Common Stock (together with any such cash
payment in lieu of fractional shares) shall be treated as issued, to the extent
thereof, first in exchange for Original Issue Discount (or interest, if the
Company has exercised its option provided for in paragraph 10 hereof) accrued
through the Conversion Date, and the balance, if any, of such fair market value
of such Common Stock (and any such cash payment) shall be treated as issued in
exchange for the Issue Price of the Security being converted pursuant to the
provisions hereof.
No fractional shares will be issued upon conversion; in lieu thereof,
an amount will be paid in cash based upon the closing price (as defined in the
Indenture) of the Common Stock on the Trading Day immediately prior to the
Conversion Date.
To convert a Security, a Holder must (a) complete and manually sign
the Conversion Notice set forth below and deliver such notice to a Conversion
Agent, (b) surrender the Security to a Conversion Agent, (c) furnish appropriate
endorsements and transfer documents if required by a Registrar or a Conversion
Agent, and (d) pay any transfer or similar tax, if required.
9. Repurchase By the Company at the Option of the Holder. Subject to the
-----------------------------------------------------
terms and conditions of the Indenture, the Company shall become obligated to
purchase, at the option of the Holder, the Securities held by such Holder on the
following Repurchase Dates and at the following Repurchase Prices per $1,000
Principal Amount, upon delivery of a Repurchase Notice containing the
information set forth in the Indenture, at any time from the opening of business
on the date that is 20 Business Days prior to such Repurchase Date until the
close of business on such Repurchase Date and upon delivery of the Securities to
the Paying Agent by the Holder as set forth in the Indenture.
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<PAGE>
Repurchase Date Repurchase Price
------------------- --------------------
July 28, 2003 $602.77
July 28, 2008 $699.54
July 28, 2013 $811.85
The Repurchase Price (equal to the Issue Price plus accrued Original
Issue Discount through the Repurchase Date) may be paid, at the option of the
Company, in cash or by the issuance and delivery of shares of Common Stock of
the Company, or in any combination thereof.
If prior to a Repurchase Date this Security has been converted to an
interest bearing security following the occurrence of a Tax Event, the
Repurchase Price will be equal to the Restated Principal Amount plus accrued and
unpaid interest from the date of conversion through the Repurchase Date.
Holders have the right to withdraw any Repurchase Notice by delivering
to the Paying Agent a written notice of withdrawal in accordance with the
provisions of the Indenture.
If cash (and/or securities if permitted under the Indenture)
sufficient to pay the Repurchase Price of all Securities or portions thereof to
be purchased as of the Repurchase Date, is deposited with the Paying Agent on
the Business Day following the Repurchase Date, Original Issue Discount ceases
to accrue on such Securities (or portions thereof) immediately after such
Repurchase Date, and the Holder thereof shall have no other rights as such
(other than the right to receive the Repurchase Price upon surrender of such
Security).
10. Tax Event
---------
From and after (i) the date (the "Tax Event Date") of the occurrence
of a Tax Event and (ii) the date the Company exercises such option, whichever is
later (the "Option Exercise Date"), at the option of the Company, interest in
lieu of future Original Issue Discount shall accrue at the rate of 3.00% per
annum on a Principal Amount per Security (the "Restated Principal Amount") equal
to the Issue Price plus Original Issue Discount accrued through the Option
Exercise Date and shall be payable semiannually on January 28 and July 28 of
each year (each an "Interest Payment Date") to holders of record at the close of
business on January 13 or July 13 (each a "Regular Record Date") immediately
preceding such Interest Payment Date. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months and will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the Option Exercise Date.
A-11
<PAGE>
Interest on any Security that is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the person in
whose name that Security is registered at the close of business on the Regular
Record Date for such interest at the office or agency of the Company maintained
for such purpose. Each installment of interest on any Security shall be paid in
same-day funds by transfer to an account maintained by the payee located inside
the United States.
Except as otherwise specified with respect to the Securities, any
Defaulted Interest on any Security shall forthwith cease to be payable to the
registered Holder thereof on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company
as provided for in Section 14.2(b) of the Indenture.
11. Conversion Arrangement on Call for Redemption
---------------------------------------------
Any Securities called for redemption, unless surrendered for
conversion before the close of business on the Redemption Date, may be deemed to
be purchased from the Holders of such Securities at an amount not less than the
Redemption Price, by one or more investment bankers or other purchasers who may
agree with the Company to purchase such Securities from the Holders, to convert
them into Common Stock of the Company and to make payment for such Securities to
the Paying Agent in trust for such Holders.
12. Subordination
-------------
The indebtedness evidenced by the Securities 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, in cash or other
payment satisfactory to the holders of Senior Indebtedness, of the Company. Any
Holder by accepting this Security 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.
13. Denominations, Transfer, Exchange
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 of Principal Amount and integral multiples of $1,000. A Holder may
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any
A-12
<PAGE>
taxes or other governmental charges that may be imposed in relation thereto by
law or permitted by the Indenture.
14. Persons Deemed Owners
---------------------
The Holder of a Security may be treated as the owner of it for all
purposes.
15. Unclaimed Money
---------------
The Trustee and the Paying Agent shall return to the Company upon
written request for the payment of any amount with respect to Securities that
remains unclaimed for one year, subject to applicable unclaimed property law.
After that, Holders entitled to money or securities must look to the Company for
payment as general creditors, unless an applicable abandoned property law
designates another person.
16. Amendment, Supplement and Waiver
--------------------------------
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the consent of the Holders of at least a majority
in Principal Amount of the Securities then outstanding, and an existing default
or Event of Default and its consequence or compliance with any provision of the
Indenture or the Securities may be waived in a particular instance with the
consent of the Holders of a majority in Principal Amount of the Securities then
outstanding. Without the consent of or notice to any Holder, the Company and the
Trustee may amend or supplement the Indenture or the Securities to, among other
things, cure any ambiguity, defect or inconsistency or make any other change
that does not adversely affect the rights of any Holder.
17. Successor Corporation
---------------------
When a successor corporation assumes all the obligations of its
predecessor under the Securities and the Indenture in accordance with the terms
and conditions of the Indenture, the predecessor corporation will (except in
certain circumstances specified in the Indenture) be released from those
obligations.
18. Defaults and Remedies
---------------------
Under the Indenture, Events of Default include (i) if the Securities
have been converted to interest bearing securities following a Tax Event,
default in the payment of interest which default continues for a period of 30
days; (ii) default in payment of the Principal Amount (or, if the Securities
have been converted to interest bearing securities following a Tax Event, the
Restated Principal Amount), Issue Price plus accrued Original Issue Discount,
Redemption Price, Repurchase Price, Change in Control Purchase Price or
Additional Interest, as the case may be,
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<PAGE>
in respect of the Securities when the same becomes due and payable; (iii)
failure to deliver shares of Common Stock following conversion of a Security and
continuance of such default for five days; (iv) failure by the Company to comply
with other agreements in the Indenture or the Securities, subject to notice and
lapse of time; (v) default under any bond, debenture, note or other evidence of
indebtedness for money borrowed of the Company having an aggregate outstanding
principal amount of in excess of $25,000,000, which default shall have resulted
in such indebtedness being accelerated, without such indebtedness being
discharged or such acceleration having been rescinded or annulled, subject to
notice and passage of time; and (vi) certain events of bankruptcy, insolvency or
reorganization of the Company. If an Event of Default (other than as a result of
certain events of bankruptcy, insolvency or reorganization of the Company)
occurs and is continuing, the Trustee or the Holders of at least 25% in
Principal Amount of the Securities then outstanding may declare the Securities
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 of the Company, the
Securities 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.
19. Trustee Dealings With the Company
---------------------------------
Chase Manhattan Bank and Trust Company, National Association, 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.
20. No Recourse Against Others
--------------------------
A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture nor for any claim based on, in respect of or by
reason of such obligations or their creation. The Holder of this Security by
accepting this Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Security.
21. Authentication
--------------
This Security shall not be valid until the Trustee or an
authenticating agent manually signs the certificate of authentication on the
other side of this Security.
22. Abbreviations and Definitions
-----------------------------
Customary abbreviations may be used in the name of the Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (=
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<PAGE>
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 terms defined in the Indenture and used in this Security but not
specifically defined herein are defined in the Indenture and are used herein as
so defined.
23. Indenture to Control; Governing Law
-----------------------------------
In the case of any conflict between the provisions of this Security
and the Indenture, the provisions of the Indenture shall control. This Security
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to conflicts of laws principles.
The Company will furnish to any Holder, upon written request and
without charge, a copy of the Indenture. Requests may be made to: ALZA
Corporation, 1900 Charleston Road, P.O. Box 7210, Mountain View, CA 94039-7210,
Attention: Corporate and Investor Relations.
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<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
________________________________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him or her.
Your Signature:________________________________________________
(Sign exactly as your name appears on the other
side of this Security)
Date:__________________
* Signature guaranteed by:______________________________________________________
By:_____________________________________________________________________________
* The signature must be guaranteed by an institution which is a member of one
of the following recognized signature guaranty programs: (i) the
Securities Transfer Agent Medallion Program (STAMP); (ii) the New York
Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion
Program (SEMP); or (iv) such other guaranty program acceptable to the
Trustee.
A-16
<PAGE>
CONVERSION NOTICE
To convert this Security into Common Stock of the Company, check the
box: [ ]
To convert only part of this Security, state the Principal Amount to
be converted (must be $1,000 or a multiple of $1,000):
$ ___________________________________________
If you want the stock certificate made out in another person's name,
fill in the form below:
________________________________________________________________________________
(Insert other person's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Your Signature:________________________________________________
(Sign exactly as your name appears on the other
side of this Security)
Date:______________________
* Signature guaranteed by:______________________________________________________
By:_____________________________________________________________________________
* The signature must be guaranteed by an institution which is a member of one
of the following recognized signature guaranty programs: (i) the Securities
Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange
Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP);
or (iv) such other guaranty program acceptable to the Trustee.
A-17
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased, in whole or in
part, by the Company pursuant to Section 3.8 of the Indenture, check the
following box: [ ]
If you want to have only part of this Security purchased by the
Company pursuant to Section 3.8 of the Indenture, state the Principal Amount you
want to be purchased (must be $1,000 or a multiple of $1,000): $__________
Your Signature:__________________________________________________
(Sign exactly as your name appears on the other
side of this Security)
Date:____________________
* Signature guaranteed by:______________________________________________________
By:_____________________________________________________________________________
* The signature must be guaranteed by an institution which is a member of one
of the following recognized signature guaranty programs: (i) the Securities
Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange
Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP);
or (iv) such other guaranty program acceptable to the Trustee.
A-18
<PAGE>
SCHEDULE OF EXCHANGES OF SECURITIES/4/
The following exchanges, redemptions, repurchases or conversions of a
part of this Global Security have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Exchange Amount of decrease Amount of increase in Principal Amount of this Signature of authorized
------------------ in Principal Amount Principal Amount of Global Security following officer of Trustee or
of this Global this Global Security such decrease or increase Securities Custodian
Security ----------------------- ----------------------------- --------------------------
---------------------
</TABLE>
_________________________
/4/ This schedule should be included only if the Security is a Global
Security.
A-19
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF TRANSFER RESTRICTED SECURITIES/5/
Re: Zero Coupon Convertible Subordinated Debentures Due July 28, 2020 (the
"Securities") of ALZA Corporation.
This certificate relates to $_____________ principal amount at maturity of
Securities owned in (check applicable box)
[_] book-entry or [_] definitive form by ______________ (the "Transferor").
The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with
transfer restrictions relating to the Securities as provided in Section
2.12 of the Indenture, dated as of July 28, 2000, between ALZA Corporation
and Chase Manhattan Bank and Trust Company, National Association (the
"Indenture"), and the transfer of such Security is being made pursuant to
an effective registration statement under the Securities Act of 1933 (the
"Securities Act") (check applicable box) or the transfer or exchange, as
the case may be, of such Security does not require registration under the
Securities Act because (check applicable box):
[_] Such Security is being transferred pursuant to an effective
registration statement under the Securities Act.
[_] Such Security is being acquired for the Transferor's own account,
without transfer.
[_] Such Security is being transferred to the Company or a Subsidiary (as
defined in the Indenture) of the Company.
[_] Such Security is being transferred to a person the Transferor
reasonably believes is a "qualified institutional buyer" (as defined in
Rule 144A or any successor provision thereto ("Rule 144A") under the
Securities Act) that is purchasing for its own account or for the account
of a "qualified institutional buyer", in each case to whom notice has been
_________________________
/5/ This schedule should only be included if this Security is a Transfer
Restricted Security.
A-20
<PAGE>
given that the transfer is being made in reliance on such Rule 144A, and in
each case in reliance on Rule 144A.
[ ] Such Security is being transferred pursuant to and in compliance with
an exemption from the registration requirements under the Securities Act in
accordance with Rule 144 (or any successor thereto) ("Rule 144") under the
Securities Act.
[ ] Such Security is being transferred pursuant to and in compliance with
an exemption from the registration requirements of the Securities Act
(other than an exemption referred to above) and as a result of which such
Security will, upon such transfer, cease to be a "restricted security"
within the meaning of Rule 144 under the Securities Act.
The Transferor acknowledges and agrees that, if the transferee will
hold any such Securities in the form of beneficial interests in a Global
Security which is a "restricted security" within the meaning of Rule 144
under the Securities Act, then such transfer can only be made pursuant to
Rule 144A under the Securities Act and such transferee must be a "qualified
institutional buyer" (as defined in Rule 144A).
(Insert Name of Transferor)By:_________________________
Date:_________________
A-21
