Exhibit 4.3
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LIGAND PHARMACEUTICALS INCORPORATED
and
J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
as Trustee
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INDENTURE
Dated as of November 26, 2002
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$135,000,000 Principal Amount
(Plus Over-Allotment Option)
6% CONVERTIBLE SUBORDINATED NOTES DUE 2007
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CROSS-REFERENCE TABLE*
TIA Indenture
SECTION SECTION
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310(a)(1)................................................ 7.10
(a)(2)............................................. 7.10
(a)(3)............................................. N.A.
(a)(4)............................................. N.A.
(b)................................................ 7.08; 7.10; 13.02
(c)................................................ N.A.
311(a)................................................... 7.11
(b)................................................ 7.11
(c)................................................ N.A.
312(a)................................................... 2.05
(b)................................................ 13.03
(c)................................................ 13.03
313(a)................................................... 7.06
(b)(1)............................................. N.A.
(b)(2)............................................. 7.06
(c)................................................ 7.06; 13.02
(d)................................................ 7.06
314(a)................................................... 4.03
(b)................................................ 12.05
(c)(1)............................................. 13.04
(c)(2)............................................. 13.04
(c)(3)............................................. N.A.
(d)................................................ 12.03
(e)................................................ 13.05
(f)................................................ N.A.
315(a)................................................... 7.01(B)
(b)................................................ 7.05; 13.02
(c)................................................ 7.01(A)
(d)................................................ 7.01(C)
(e)................................................ 6.11
316(a)(last sentence).................................... 2.09
(a)(1)(A).......................................... 6.05
(a)(1)(B).......................................... 6.04
(a)(2)............................................. N.A.
(b)................................................ 6.07
317(a)(1)................................................ 6.08
(a)(2)............................................. 6.09
(b)................................................ 2.04
318(a)................................................... 13.01
* N.A. MEANS NOT APPLICABLE.
NOTE: THIS CROSS REFERENCE TABLE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO
BE PART OF THE INDENTURE.
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TABLE OF CONTENTS
I. DEFINITIONS AND INCORPORATION BY REFERENCE
PAGE
1.01 Definitions.......................................................1
1.02 Other Definitions.................................................4
1.03 Incorporation by Reference of Trust Indenture Act.................5
1.04 Rules of Construction.............................................6
II. THE SECURITIES
2.01 Form and Dating...................................................6
2.02 Execution and Authentication......................................7
2.03 Registrar, Paying Agent and Conversion Agent......................8
2.04 Paying Agent To Hold Money in Trust...............................8
2.05 Securityholder Lists..............................................8
2.06 Transfer and Exchange.............................................8
2.07 Replacement Securities............................................9
2.08 Outstanding Securities............................................9
2.09 Securities Held by the Company or an Affiliate...................10
2.10 Temporary Securities.............................................10
2.11 Cancellation.....................................................10
2.12 Defaulted Interest...............................................10
2.13 CUSIP Numbers....................................................11
2.14 Deposit of Moneys................................................11
2.15 Book-Entry Provisions for Global Securities......................11
2.16 Special Transfer Provisions......................................12
2.17 Restrictive Legends..............................................14
III. REDEMPTION
3.01 Right of Redemption..............................................14
3.02 Notices to Trustee...............................................14
3.03 Selection of Securities to Be Redeemed...........................14
3.04 Notice of Redemption.............................................15
3.05 Effect of Notice of Redemption...................................16
3.06 Deposit of Redemption Price......................................16
3.07 Securities Redeemed in Part......................................16
3.08 Repurchase at Option of Holder upon a Change in Control..........16
3.09 Conversion Arrangement on Call for Redemption....................20
IV. COVENANTS
4.01 Payment of Securities............................................21
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4.02 Maintenance of Office or Agency..................................21
4.03 Reports..........................................................21
4.04 Compliance Certificate...........................................22
4.05 Stay, Extension and Usury Laws...................................22
4.06 Corporate Existence..............................................22
4.07 Notice of Default................................................23
V. SUCCESSORS
5.01 When Company May Merge, etc......................................23
5.02 Successor Substituted............................................23
VI. DEFAULTS AND REMEDIES
6.01 Events of Default................................................24
6.02 Acceleration.....................................................25
6.03 Other Remedies...................................................26
6.04 Waiver of Past Defaults..........................................26
6.05 Control by Majority..............................................26
6.06 Limitation on Suits..............................................26
6.07 Rights of Holders to Receive Payment.............................27
6.08 Collection Suit by Trustee.......................................27
6.09 Trustee May File Proofs of Claim.................................27
6.10 Priorities.......................................................28
6.11 Undertaking for Costs............................................28
VII. TRUSTEE
7.01 Duties of Trustee................................................28
7.02 Rights of Trustee................................................29
7.03 Individual Rights of Trustee.....................................31
7.04 Trustee's Disclaimer.............................................31
7.05 Notice of Defaults...............................................31
7.06 Reports by Trustee to Holders....................................31
7.07 Compensation and Indemnity.......................................31
7.08 Replacement of Trustee...........................................32
7.09 Successor Trustee by Merger, etc.................................33
7.10 Eligibility; Disqualification....................................33
7.11 Preferential Collection of Claims Against Company................33
VIII. DISCHARGE OF INDENTURE
8.01 Termination of the Obligations of the Company....................33
8.02 Application of Trust Money.......................................35
8.03 Repayment to Company.............................................35
8.04 Reinstatement....................................................35
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IX. AMENDMENTS
9.01 Without Consent of Holders.......................................35
9.02 With Consent of Holders..........................................36
9.03 Compliance with Trust Indenture Act..............................37
9.04 Revocation and Effect of Consents................................37
9.05 Notation on or Exchange of Securities............................37
9.06 Trustee Protected................................................38
X. CONVERSION
10.01 Conversion Privilege; Restrictive Legends........................38
10.02 Conversion Procedure.............................................38
10.03 Fractional Shares................................................39
10.04 Taxes on Conversion..............................................40
10.05 Company to Provide Stock.........................................40
10.06 Adjustment of Conversion Rate....................................40
10.07 No Adjustment....................................................46
10.08 Other Adjustments................................................46
10.09 Adjustments for Tax Purposes.....................................46
10.10 Notice of Adjustment.............................................47
10.11 Notice of Certain Transactions...................................47
10.12 Effect of Reclassifications, Consolidations,
Mergers, Binding Share Exchanges or
Sales on Conversion Privilege....................................47
10.13 Trustee's Disclaimer.............................................48
XI. SUBORDINATION
11.01 Agreement to Subordinate.........................................48
11.02 Certain Definitions..............................................49
11.03 Liquidation; Dissolution; Bankruptcy.............................49
11.04 Company Not To Make Payments with Respect to
Securities in Certain Circumstances..............................50
11.05 Acceleration of Securities.......................................51
11.06 When Distribution Must Be Paid Over..............................51
11.07 Notice by Company................................................51
11.08 Subrogation......................................................51
11.09 Relative Rights..................................................52
11.10 Subordination May Not Be Impaired by Company.....................52
11.11 Distribution or Notice to Representative.........................52
11.12 Rights of Trustee and Paying Agent...............................52
11.13 Officers' Certificate............................................53
11.14 Not to Prevent Events of Default.................................53
XII. SECURITY
12.01 Security.........................................................53
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12.02 Pledge Agreement.................................................54
12.03 Release of Pledged Securities....................................54
12.04 Disbursements From Pledge Account Upon
Conversion or Repurchase.........................................54
12.05 Opinions of Counsel..............................................54
12.06 Authorization of Actions to be Taken by
the Trustee Under the Pledge Agreement...........................54
XIII. MISCELLANEOUS
13.01 Trust Indenture Act Controls.....................................54
13.02 Notices..........................................................54
13.03 Communication by Holders with Other Holders......................54
13.04 Certificate and Opinion as to Conditions Precedent...............54
13.05 Statements Required in Certificate or Opinion....................54
13.06 Rules by Trustee and Agents......................................54
13.07 Legal Holidays...................................................54
13.08 No Recourse Against Others.......................................54
13.09 Duplicate Originals..............................................54
13.10 Governing Law....................................................54
13.11 No Adverse Interpretation of Other Agreements....................54
13.12 Successors.......................................................54
13.13 Separability.....................................................54
13.14 Table of Contents, Headings, etc.................................54
Exhibit A-Form of Global Security
Exhibit B-Form of Legends
Exhibit C-Form of Transfer Certificate - Registration Statement
Exhibit D-Form of Opinion of Counsel in Connection with Registration of
Securities
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INDENTURE, dated as of November 26, 2002 between LIGAND PHARMACEUTICALS
INCORPORATED, a Delaware corporation (the "Company"), and J.P. MORGAN TRUST
COMPANY, NATIONAL ASSOCIATION, as trustee (the "TRUSTEE").
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the Holders of the Company's 6% Convertible
Subordinated Notes due 2007 (the "SECURITIES").
I. DEFINITIONS AND INCORPORATION BY REFERENCE
1.01 DEFINITIONS.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
this purpose, "control" shall mean the power to direct the management and
policies of a person through the ownership of securities, by contract or
otherwise.
"AGENT" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"BOARD OF DIRECTORS" means the Board of Directors of the Company or any
committee thereof authorized to act for it hereunder.
"BOARD RESOLUTION" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by its Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of the Company and all
warrants or options to acquire such capital stock.
"COMMON STOCK" means the common stock, par value $.001 per share, of the
Company, or such other capital stock into which the Company's common stock is
reclassified or changed.
"COMPANY" means the party named as such above until a successor replaces it
pursuant to the applicable provision hereof and thereafter means the successor.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or order
signed on behalf of the Company by its Chairman of the Board, its Chief
Executive Officer, its President, its Chief Operating Officer, its Chief
Financial Officer, any Senior Vice President or any Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"CONTROL AGREEMENT" means the Control Agreement, dated as of November 26,
2002, by and among the Company, the Trustee and the Account Intermediary (as
defined in the Pledge Agreement).
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in SECTION 13.02 or such other address as the Trustee may give
notice of to the Company.
"DAILY MARKET PRICE" means the price of a share of Common Stock on the
relevant date, determined (a) on the basis of the last reported sale price
regular way of the Common Stock as reported on the Nasdaq National Market (the
"NNM"), or if the Common Stock is not then listed on the NNM, as reported on
such national securities exchange upon which the Common Stock is listed, or (b)
if there is no such reported sale on the day in question, on the basis of the
average of the closing bid and asked quotations regular way as so reported, or
(c) if the Common Stock is not listed on the NNM or on any national securities
exchange, on the basis of the average of the high bid and low asked quotations
regular way on the day in question in the over-the-counter market as reported by
the National Association of Securities Dealers Automated Quotation System, or if
not so quoted, as reported by National Quotation Bureau, Incorporated, or a
similar organization. If such price is not available, the daily market price per
share shall be the fair value of a share of Common Stock as determined by a
nationally recognized investment banking firm or a nationally recognized
appraisal firm selected by the Board of Directors of the Company (which shall be
evidenced by an Officers' Certificate delivered to the Trustee).
"DEFAULT" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"DEPOSITARY" means The Depository Trust Company, its nominees and
successors.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"HOLDER" or "SECURITYHOLDER" means a person in whose name a Security is
registered on the Registrar's books.
"INDENTURE" means this Indenture as amended or supplemented from time to
time.
"INITIAL PURCHASER" means UBS Warburg LLC.
"INTEREST" includes liquidated damages, unless the context otherwise
requires.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
given to secure Indebtedness, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction with respect to any such lien, pledge, charge or
security interest).
"LIQUIDATED DAMAGES" has the meaning ascribed to "Liquidated Damages
Amount" in the Registration Rights Agreement.
"MATURITY DATE" means November 16, 2007.
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"OFFICER" means the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer, any Senior
Vice President, any Vice President, the Treasurer or the Secretary of the
Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers or by an
Officer and an Assistant Treasurer or an Assistant Secretary of the Company.
"OPINION OF COUNSEL" means a written opinion from legal counsel who may be
an employee of or counsel for the Company, or other counsel reasonably
acceptable to the Trustee.
"PERMITTED PAYMENTS" shall mean payments on the Securities derived from the
Pledged Securities which are pledged for the benefit of the Holders of the
Securities in accordance with the terms and provisions of the Pledge Agreement.
"PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
"PLEDGE ACCOUNT" means an account established by the Trustee pursuant to
the terms of the Pledge Agreement for the deposit of the Pledged Securities
purchased by the Company with a portion of the proceeds from the sale of the
Securities.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of November 26,
2002, made by the Company in favor of the Trustee, governing the disbursement of
funds from the Pledge Account.
"PLEDGED SECURITIES" means the government securities to be purchased by the
Company and held in the Pledge Account as described in, and in accordance with,
the Pledge Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement dated as of November 21,
2002 between the Company and the Initial Purchaser.
"QIB" means a "qualified institutional buyer" within the meaning of Rule
144A under the Act.
"REDEMPTION PRICE" means, with respect to a Security to be redeemed by the
Company in accordance with ARTICLE III, the percentage of the outstanding
principal amount of such Security payable by the Company upon such redemption.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement
dated as of November 26, 2002 between the Company and the Initial Purchaser.
"REPURCHASE PRICE" means, with respect to a Security duly tendered for
purchase by the Company in accordance with SECTION 3.08, 100% of the outstanding
principal amount of such Security so tendered.
"RESPONSIBLE OFFICER" shall mean, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice
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president, assistant secretary, assistant treasurer, trust officer or any other
officer of the Trustee who customarily performs functions similar to those
performed by the Persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred because of such person's
knowledge of and familiarity with the particular subject and who shall have
direct responsibility for the administration of this Indenture.
"RESTRICTED SECURITY" means a Security that constitutes a "restricted
security" within the meaning of Rule 144(a)(3) under the Securities Act;
PROVIDED, HOWEVER, that the Trustee shall be entitled to request and
conclusively rely on an Opinion of Counsel with respect to whether any Security
constitutes a Restricted Security.
"RULE 144A" means Rule 144A under the Securities Act.
"RULE 144A GLOBAL SECURITY" means a permanent Global Security in registered
form representing the aggregate principal amount of Securities sold in reliance
on Rule 144A.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means the 6% Convertible Subordinated Notes due 2007 issued by
the Company pursuant to this Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITYHOLDER" has the meaning given to such term in the Registration
Rights Agreement.
"SIGNIFICANT SUBSIDIARY" with respect to any person means any subsidiary of
such person that constitutes a "significant subsidiary" within the meaning of
Rule 1-02 of Regulation S-X under the Securities Act.
"SUBSIDIARY" means (i) a corporation a majority of whose capital stock with
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by the Company, by one or more subsidiaries of the
Company or by the Company and one or more of its subsidiaries or (ii) any other
person (other than a corporation) in which the Company, one or more its
subsidiaries or the Company and one or more its subsidiaries, directly or
indirectly, at the date of determination thereof, have at least majority
ownership interest.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) as in effect on the date of this Indenture, except as provided in
SECTION 9.03.
"TRUSTEE" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions hereof and thereafter means the
successor.
1.02 OTHER DEFINITIONS.
TERM DEFINED IN SECTION
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"ADDITIONAL SECURITIES".............................. 2.01
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"BANKRUPTCY LAW"..................................... 6.01
"BUSINESS DAY"....................................... 13.07
"CHANGE IN CONTROL".................................. 3.08
"CHANGE IN CONTROL NOTICE"........................... 3.08
"COLLATERAL"......................................... 12.04
"COMMENCEMENT DATE".................................. 10.06
"CONVERSION AGENT"................................... 2.03
"CUSTODIAN".......................................... 6.01
"DETERMINATION DATE"................................. 10.06
"EVENT OF DEFAULT"................................... 6.01
"GLOBAL SECURITY".................................... 2.01
"INDEBTEDNESS"....................................... 11.02
"LEGAL HOLIDAY"...................................... 13.07
"NNM"................................................ 1.01
"PARTICIPANTS"....................................... 2.15
"PAYING AGENT"....................................... 2.03
"PAYMENT BLOCKAGE"................................... 11.04
"PAYMENT BLOCKAGE NOTICE"............................ 11.04
"PHYSICAL SECURITIES"................................ 2.01
"PLEDGED FINANCIAL ASSETS"........................... 12.04
"PRIVATE PLACEMENT LEGEND"........................... 2.17
"REGISTRAR".......................................... 2.03
"RELEASE AMOUNT"..................................... 12.04
"RELEASE DISTRIBUTION"............................... 12.04
"REMAINING SECURITIES"............................... 12.04
"REPRESENTATIVE"..................................... 11.02
"REPURCHASE DATE".................................... 3.08
"REPURCHASE RIGHT"................................... 3.08
"SENIOR INDEBTEDNESS"................................ 11.02
"U.S. GOVERNMENT OBLIGATIONS"........................ 8.01
"WRITTEN INDEPENDENT ACCOUNTANT REPORT".............. 12.04
1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"COMMISSION" means the SEC;
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Securityholder or a Holder;
"INDENTURE TO BE QUALIFIED" means this Indenture; "INDENTURE TRUSTEE"
or "INSTITUTIONAL TRUSTEE" means the Trustee; and
"OBLIGOR" on the indenture securities means the Company or any
successor.
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All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA and not
otherwise defined herein have the meanings so assigned to them.
1.04 RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles in effect
on the date hereof;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural and in the plural
include the singular;
(v) references to agreements and other instruments include subsequent
amendments thereto;
(vi) provisions apply to successive events and transactions; and
(vii) "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.
II. THE SECURITIES
2.01 FORM AND DATING.
The Securities and the Trustee's certificate of authentication shall be
substantially in the form set forth in EXHIBIT A, which is incorporated in and
forms a part of this Indenture. The Securities may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Security shall
be dated the date of its authentication.
The Securities are being offered and sold in reliance on Rule 144A under
the Securities Act and shall be issued initially in the form of one or more
Global Securities, substantially in the form set forth in EXHIBIT A (the "GLOBAL
SECURITY"), deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter provided
and bearing the legends set forth in EXHIBITS B-1 and B-2. The aggregate
principal amount of the Global Security may from time to time be increased or
decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary, as hereinafter provided; PROVIDED, that in no event shall the
aggregate principal amount of the Global Security or Securities exceed
$135,000,000, or $155,250,000 if the Initial Purchaser elects to purchase
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Additional Securities pursuant to the over-allotment option provided for in
SECTION 1 of the Purchase Agreement ("ADDITIONAL SECURITIES").
Securities issued in exchange for interests in a Global Security pursuant
to SECTION 2.15 may be issued in the form of permanent certificated Securities
in registered form in substantially the form set forth in EXHIBIT A (the
"PHYSICAL SECURITIES") and, if applicable, bearing any legends required by
SECTION 2.17.
2.02 EXECUTION AND AUTHENTICATION.
One Officer shall sign the Securities for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Security no longer holds that office
at the time the Security is authenticated, the Security shall nevertheless be
valid.
A Security shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Security has
been authenticated under this Indenture.
Upon a written order of the Company signed by one Officer of the Company,
the Trustee shall authenticate Securities for original issue in the aggregate
principal amount of $135,000,000 and such additional principal amount, if any,
as shall be determined pursuant to the next sentence of this SECTION 2.02. Upon
receipt by the Trustee of an Officers' Certificate stating that the Initial
Purchaser has elected to purchase from the Company a specified principal amount
of Additional Securities, not to exceed $20,250,000, pursuant to Section l of
the Purchase Agreement, the Trustee shall authenticate and deliver such
specified principal amount of Additional Securities to or upon the written order
of the Company signed as provided in the immediately preceding sentence. Such
Officers' Certificate must be received by the Trustee not later than the
proposed date for delivery of such Additional Securities. The aggregate
principal amount of Securities outstanding at any time may not exceed
$155,250,000 except as provided in SECTION 2.07.
Upon a written order of the Company signed by two Officers or by an Officer
and an Assistant Treasurer of the Company, the Trustee shall authenticate
Securities not bearing the Private Placement Legend to be issued to the
transferee when sold pursuant to an effective registration statement under the
Securities Act as set forth in SECTION 2.16(C).
The Trustee shall act as the initial authenticating agent. Thereafter, the
Trustee may appoint an authenticating agent acceptable to the Company to
authenticate Securities. An authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Agent. An
authenticating agent has the same rights as an Agent to deal with the Company
and its Affiliates.
The Securities shall be issuable only in registered form without interest
coupons and only in denominations of $1,000 principal amount and any positive
integral multiple thereof.
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2.03 REGISTRAR, PAYING AGENT AND CONVERSION AGENT.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("REGISTRAR"), an office
or agency where Securities may be presented for payment ("PAYING AGENT") and an
office or agency where Securities may be presented for conversion ("CONVERSION
AGENT"). The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may appoint or change one or more
co-registrars, one or more additional paying agents and one or more additional
conversion agents without notice and may act in any such capacity on its own
behalf. The term "REGISTRAR" includes any co-registrar; the term "PAYING AGENT"
includes any additional paying agent; and the term "CONVERSION AGENT" includes
any additional conversion agent.
The Company shall enter into an appropriate agency agreement with any Agent
not a party to this Indenture. The agreement shall implement the provisions of
this Indenture that relate to such Agent. The Company shall notify the Trustee
of the name and address of any Agent not a party to this Indenture. If the
Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the
Trustee shall act as such. The Company or any Affiliate of the Company may act
as Paying Agent.
The Company initially appoints the Trustee as Paying Agent, Registrar and
Conversion Agent.
2.04 PAYING AGENT TO HOLD MONEY IN TRUST.
Subject to SECTION 11.04, each Paying Agent shall hold in trust for the
benefit of the Securityholders or the Trustee all moneys held by the Paying
Agent for the payment of the Securities, and shall notify the Trustee of any
default by the Company in making any such payment. While any such default
continues, the Trustee may require a Paying Agent to pay all money held by it to
the Trustee. The Company at any time may require a Paying Agent to pay all money
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
shall have no further liability for the money. If the Company acts as Paying
Agent, it shall segregate and hold as a separate trust fund all money held by it
as Paying Agent.
2.05 SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee on or before each interest payment date and at such other times
as the Trustee may request in writing a list, in such form and as of such date
as the Trustee may reasonably require, of the names and addresses of
Securityholders.
2.06 TRANSFER AND EXCHANGE.
Subject to SECTIONS 2.15 and 2.16 hereof, where Securities are presented to
the Registrar with a request to register their transfer or to exchange them for
an equal principal amount of Securities of other authorized denominations, the
Registrar shall register the transfer or make the exchange if its requirements
for such transaction are met. To permit registrations of transfer and exchanges,
the Trustee shall authenticate Securities at the Registrar's request. The
Company or
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the Trustee, as the case may be, shall not be required (a) to issue,
authenticate, register the transfer of or exchange any Security during a period
beginning at the opening of business 15 days before the mailing of a notice of
redemption of the Securities selected for redemption under SECTION 3.04 and
ending at the close of business on the day of such mailing or (b) to register
the transfer of or exchange any Security so selected for redemption in whole or
in part, except the unredeemed portion of Securities being redeemed in part.
No service charge shall be made for any transfer, exchange or conversion of
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer, exchange or conversion of Securities, other than exchanges pursuant to
SECTIONS 2.10, 3.07, 3.08, 9.05 or 10.02 not involving any transfer.
2.07 REPLACEMENT SECURITIES.
If the Holder of a Security claims that the Security has been mutilated,
lost, destroyed or wrongfully taken, the Company shall issue and the Trustee
shall authenticate a replacement Security if the Trustee's requirements are met
and, in the case of a mutilated Security, such mutilated Security is surrendered
to the Trustee. In the case of lost, destroyed or wrongfully taken Securities,
if required by the Trustee, an indemnity bond must be provided by the Holder
that is sufficient in the judgment of the Trustee to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer if a Security is
replaced. The Company may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation to replacing a
Security and any other reasonable expenses (including the reasonable fees and
expenses of the Trustee) in connection therewith.
In case any such mutilated, lost, destroyed or wrongfully taken Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security when due.
Every replacement Security is an additional obligation of the Company only
as provided in SECTION 2.08.
2.08 OUTSTANDING SECURITIES.
Securities outstanding at any time are all the Securities authenticated by
the Trustee except for those converted, those cancelled by it, those delivered
to it for cancellation and those described in this SECTION 2.08 as not
outstanding. Except to the extent provided in SECTION 2.09, a Security does not
cease to be outstanding because the Company or one of its subsidiaries or
Affiliates holds the Security.
If a Security is replaced pursuant to SECTION 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it, or a court
holds, that the replaced Security is held by a protected purchaser, as that term
is defined in the New York Uniform Commercial Code.
If the Paying Agent (other than the Company or any Affiliate of the
Company) holds on a redemption date, Repurchase Date or maturity date money
sufficient to pay Securities payable on that date, then on and after that date,
such Securities shall be deemed to be no longer outstanding
9
and interest on them shall cease to accrue, and such Security shall be deemed
paid whether or not the Security is delivered to the Paying Agent. Thereafter,
all other rights of the Holders of such Securities shall terminate with respect
to such Securities, other than the right to receive the redemption price,
Repurchase Price or principal amount, as applicable.
If a Security is converted in accordance with ARTICLE X, then from and
after the time of conversion on the conversion date, such Security will cease to
be outstanding, and interest, if any, will cease to accrue on such Security.
2.09 SECURITIES HELD BY THE COMPANY OR AN AFFILIATE.
In determining whether the Holders of the required aggregate principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or any of its subsidiaries or an Affiliate shall
be considered as though not outstanding, except that for the purposes of
determining whether a Responsible Officer of the Trustee shall be protected in
relying on any such direction, waiver or consent, only Securities which the
Trustee knows are so owned shall be so disregarded.
2.10 TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Securities. Temporary Securities
shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.
2.11 CANCELLATION.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar, Paying Agent and Conversion Agent shall forward to
the Trustee any Securities surrendered to them for transfer, exchange, payment
or conversion. The Trustee shall cancel all Securities surrendered for transfer,
exchange, payment, conversion or cancellation in accordance with its customary
procedures. The Company may not issue new Securities to replace Securities that
it has paid or delivered to the Trustee for cancellation or that any
Securityholder has converted pursuant to ARTICLE X.
2.12 DEFAULTED INTEREST.
If and to the extent the Company defaults in a payment of interest on the
Securities, the Company shall pay the defaulted interest in any lawful manner
plus, to the extent not prohibited by applicable statute or case law, interest
payable on the defaulted interest at the rate provided in the Securities. The
Company may pay the defaulted interest to the persons who are Securityholders on
a subsequent special record date. The Company shall fix such record date and
payment date. At least 15 days before the record date, the Company shall mail to
Securityholders a notice that states the record date, payment date and amount of
interest to be paid.
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2.13 CUSIP NUMBERS.
The Company in issuing the Securities may use one or more "CUSIP" numbers,
and if so, the Trustee shall use the CUSIP numbers in notices of redemption or
exchange as a convenience to Holders; PROVIDED, HOWEVER, that no representation
is hereby deemed to be made by the Trustee as to the correctness or accuracy of
the CUSIP numbers printed in the notice or on the Securities, and that reliance
may be placed only on the other identification numbers printed on the
Securities. The Company shall promptly notify the Trustee of any change in the
CUSIP numbers.
2.14 DEPOSIT OF MONEYS.
Prior to 11:00 A.M., New York City time, on each interest payment date,
maturity date, redemption date and Repurchase Date, the Company shall have
deposited with a Paying Agent in immediately available funds money sufficient to
make cash payments, if any, due on such interest payment date, maturity date,
redemption date and Repurchase Date, as the case may be, in a timely manner
which permits the Paying Agent to remit payment to the Holders on such interest
payment date, maturity date, redemption date and Repurchase Date, as the case
may be.
2.15 BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES.
(A) The Global Securities initially shall (i) be registered in the name of
the Depositary or the nominee of such Depositary, (ii) be delivered to the
Trustee as custodian for such Depositary and (iii) bear legends as set forth in
SECTION 2.17.
Members of, or participants in, the Depositary ("PARTICIPANTS") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary, or the Trustee as its custodian, or under the Global
Security, and the Depositary may be treated by the Company, the Trustee and any
agent of the Company or the Trustee as the absolute owner of the Global Security
for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and
Participants, the operation of customary practices governing the exercise of the
rights of a Holder of any Security.
(B) Transfers of Global Securities shall be limited to transfers in whole,
but not in part, to the Depositary, its successors or their respective nominees.
In addition, Physical Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests in Global Securities if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for any Global Security and a successor Depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a written request from
the Depositary to issue Physical Securities.
(C) In connection with the transfer of a Global Security in its entirety to
beneficial owners pursuant to Section 2.15(B), such Global Security shall be
deemed to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall upon written instructions from the Company
authenticate and deliver, to each beneficial owner identified by
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the Depositary in exchange for its beneficial interest in such Global Security,
an equal aggregate principal amount of Physical Securities of authorized
denominations.
(D) Any Physical Security constituting a Restricted Security delivered in
exchange for an interest in a Global Security pursuant to SECTION 2.15(B) shall,
except as otherwise provided by SECTION 2.16, bear the Private Placement Legend
(as defined).
(E) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold interests
through Participants, to take any action which a Holder is entitled to take
under this Indenture or the Securities.
2.16 SPECIAL TRANSFER PROVISIONS.
(A) TRANSFERS TO QIBS. The following provisions shall apply with respect to
the registration of any proposed transfer of a Restricted Security to a QIB:
(i) the Registrar shall register the transfer of any Restricted
Security, whether or not such Security bears the Private Placement Legend,
if (x) the requested transfer is after the second anniversary of the issue
date for the Securities; PROVIDED, HOWEVER, that neither the Company nor
any of its Affiliates has held any beneficial interest in such Security, or
portion thereof, at any time on or prior to the second anniversary of the
issue date for the Securities or (y) such transfer is being made by a
proposed transferor who has checked the box provided for on the form of
Security stating, or has otherwise advised the Company and the Registrar in
writing, that the sale has been made in compliance with the provisions of
Rule 144A to a transferee who has signed the certification provided for on
the form of Security stating, or has otherwise advised the Company and the
Registrar in writing, that it is purchasing the Security for its own
account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the meaning of
Rule 144A, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
the Company as it has requested pursuant to Rule 144A or has determined not
to request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the exemption
from registration provided by Rule 144A; and
(ii) if the proposed transferor is a Participant seeking to transfer
an interest in one Global Security to a transferee who will hold such
interest in another Global Security, upon receipt by the Registrar of (x)
written instructions given in accordance with the Depositary's and the
Registrar's procedures and (y) the appropriate certificates and other
documents, if any, required by clause (y) of paragraph (i) above, the
Registrar shall register the transfer and reflect on its books and records
the date and (A) a decrease in the aggregate principal amount of the Global
Security through which the transferor held such interest in an amount equal
to the aggregate principal amount of the Securities to be transferred and
(B) an increase in the aggregate principal amount of the Global Security
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through which the transferee proposes to hold such interest, in an amount
equal to the aggregate principal amount of the Securities to be
transferred.
(B) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL SECURITIES.
Notwithstanding any other provisions of this Indenture, a Global 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.
(C) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or replacement of
Securities not bearing the Private Placement Legend, the Registrar or
co-Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar or co-Registrar shall deliver only
Securities that bear the Private Placement Legend unless (i) the requested
transfer is after the second anniversary of the issue date for the Securities
(PROVIDED, HOWEVER, that neither the Company nor any of its Affiliates has held
any beneficial interest in such Security, or portion thereof, at any time prior
to or on the second anniversary of the issue date), (ii) there is delivered to
the Trustee an Opinion of Counsel reasonably satisfactory to the Company to the
effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act or (iii) such Security has been sold pursuant to an effective registration
statement under the Securities Act and the Holder selling such Securities has
delivered to the Registrar or co-Registrar a notice in the form of EXHIBIT C
hereto. Upon the effectiveness of the Shelf Registration Statement (as defined
in the Registration Rights Agreement), the Company shall deliver to the Trustee
a notice of effectiveness, a Security or Securities, an authentication order in
accordance with SECTION 2.02 and an opinion of counsel in the form of EXHIBIT D
hereto and, if required by the Depositary, the Company shall deliver to the
Depositary a letter of representations in a form reasonably acceptable to the
Depositary.
(D) GENERAL. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as provided
in this Indenture.
The Registrar shall retain copies of all letters, notices and other written
communications received pursuant to SECTION 2.15 or this SECTION 2.16. The
Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
(E) TRANSFERS OF SECURITIES HELD BY AFFILIATES. Any certificate (i)
evidencing a Security that has been transferred to an Affiliate of the Company
within two years after the issue date for the Securities, as evidenced by a
notation on the Assignment Form for such transfer or in the representation
letter delivered in respect thereof or (ii) evidencing a Security that has been
acquired from an Affiliate (other than by an Affiliate) in a transaction or a
chain of transactions not involving any public offering, shall, until two years
after the last date on which the Company or any Affiliate of the Company was an
owner of such Security, in each case, bear the Private
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Placement Legend, unless otherwise agreed by the Company (with written notice
thereof to the Trustee).
2.17 RESTRICTIVE LEGENDS.
Each Global Security and Physical Security that constitutes a Restricted
Security shall bear the legend (the "PRIVATE PLACEMENT LEGEND") as set forth in
EXHIBIT B-1 on the face thereof until after the second anniversary of the later
of (i) the issue date for the Securities, and (ii) the last date on which the
Company or any Affiliate of the Company was the owner of such Security (or any
predecessor security) (or such shorter period of time as permitted by Rule
144(k) under the Securities Act or any successor provision thereunder) (or such
longer period of time as may be required under the Securities Act or applicable
state securities laws in the opinion of counsel for the Company, unless
otherwise agreed between the Company and the Holder thereof).
Each Global Security shall also bear the legend as set forth in EXHIBIT
B-2.
III. REDEMPTION
3.01 RIGHT OF REDEMPTION.
Redemption of the Securities, as permitted by any provision of this
Indenture, shall be made in accordance with PARAGRAPHS 6 and 7 of the
Securities, and in accordance with this ARTICLE III. The Company will not have
the right to redeem any Securities prior to November 22, 2005. On or after
November 22, 2005, the Company will have the right to redeem all or any part of
the Securities at the Redemption Prices specified in PARAGRAPH 6 therein under
the caption "Redemption Price," in each case including accrued and unpaid
interest, if any, to, but excluding, the redemption date.
3.02 NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to PARAGRAPH 6 of the
Securities, it shall notify the Trustee at least 15 days prior to the mailing of
the notice of redemption (unless a shorter notice period shall be satisfactory
to the Trustee) of the redemption date and the aggregate principal amount of
Securities to be redeemed.
3.03 SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed on a PRO RATA basis. The Trustee shall make
the selection from Securities outstanding not previously called for redemption.
The Trustee may select for redemption portions of the principal of Securities
that have denominations larger than $1,000 principal amount. Securities and
portions of them it selects shall be in amounts of $1,000 principal amount or
positive integral multiples of $1,000 principal amount. The Trustee shall
promptly notify the Company in writing of the Securities selected for redemption
and the principal amount thereof to be redeemed.
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The Registrar need not transfer or exchange any Securities selected for
redemption, except the unredeemed portion of the Securities redeemed in part.
Also, the Registrar need not transfer or exchange any Securities for a period of
15 days before selecting Securities to be redeemed.
3.04 NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail by first-class mail a notice of redemption to each Holder
whose Securities are to be redeemed.
The notice shall identify the Securities and the aggregate principal amount
thereof to be redeemed and shall state:
(i) the redemption date;
(ii) the Redemption Price plus the amount of accrued and unpaid
interest to be paid on the Securities called for redemption;
(iii) the then current conversion rate and conversion price;
(iv) the name and address of the Paying Agent and Conversion Agent;
(v) the date on which the right to convert the principal of the
Securities called for redemption will terminate and the place or places
where such Securities may be surrendered for conversion;
(vi) that Holders who want to convert Securities must satisfy the
requirements in ARTICLE X;
(vii) the paragraph of the Securities pursuant to which the Securities
are to be redeemed;
(viii) that Securities called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price;
(ix) that unless the Company shall default in the payment of the
Redemption Price interest on Securities called for redemption ceases to
accrue on and after the redemption date and that the Securities will cease
to be convertible after the close of business on the business day
immediately preceding the redemption date; and
(x) the CUSIP number or numbers, as the case may be, of the
Securities.
The date on which the right to convert the principal of the Securities
called for redemption will terminate shall be at the close of business on the
business day immediately preceding the redemption date.
15
At the Company's request, upon reasonable prior notice, the Trustee shall
give the notice of redemption in the Company's name and at the Company's
expense; PROVIDED that the form and content of such notice shall be prepared by
the Company.
3.05 EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date at the Redemption Price plus
accrued and unpaid interest to the date of redemption, and, on and after such
date (unless the Company shall default in the payment of the Redemption Price),
such Securities shall cease to bear interest. Upon surrender to the Paying
Agent, such Securities shall be paid at the Redemption Price plus accrued
interest to, but excluding, the redemption date, unless the redemption date is
an interest payment date, in which case the accrued interest will be paid in the
ordinary course.
3.06 DEPOSIT OF REDEMPTION PRICE.
On or before the redemption date, the Company shall deposit with the Paying
Agent money in funds immediately available on the redemption date sufficient to
pay the Redemption Price of and accrued interest on all Securities to be
redeemed on that date. The Paying Agent shall return to the Company, as soon as
practicable, any money not required for that purpose.
3.07 SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is redeemed in part, the Company shall
execute and the Trustee shall authenticate for the Holder a new Security or
Securities in an aggregate principal amount equal to the unredeemed portion of
the Security surrendered.
If any Security selected for partial redemption is converted in part, the
converted portion of such Security shall be deemed to be the portion selected
for redemption.
3.08 REPURCHASE AT OPTION OF HOLDER UPON A CHANGE IN CONTROL.
Upon any Change in Control (as defined below) with respect to the Company,
each Holder of Securities shall have the right (the "REPURCHASE RIGHT"), at the
Holder's option, subject to the rights of the holders of Senior Indebtedness
under ARTICLE XI of this Indenture, to require the Company to repurchase all of
such Holder's Securities, or a portion thereof which is $1,000 in principal
amount or any positive integral multiple thereof, on the date (the "REPURCHASE
DATE") that is 30 business days after the date of the Change in Control Notice
(as defined below) at the Repurchase Price set forth in PARAGRAPH 8 of the
Securities, plus accrued and unpaid interest, if any, to, but excluding, the
Repurchase Date, subject to the satisfaction by or on behalf of any Holder of
the notice requirement to exercise a Repurchase Right set forth in this SECTION
3.08.
Within 30 business days after the occurrence of a Change in Control of the
Company, the Company shall mail to all Holders of record of the Securities a
notice (the "CHANGE IN CONTROL NOTICE") of the occurrence of such Change in
Control and the Repurchase Right arising as a result thereof. The Company shall
deliver a copy of the Change in Control Notice to the Trustee and shall cause a
copy to be published at the expense of the Company in THE NEW YORK TIMES
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or THE WALL STREET JOURNAL or another newspaper of national circulation. To
exercise the Repurchase Right, a Holder of Securities must deliver on or before
the close of business on the third business day immediately preceding the
Repurchase Date written notice to the Company (or an agent designated by the
Company for such purpose), and the Trustee of the Holder's exercise of such
right together with the Securities with respect to which the right is being
exercised, duly endorsed for transfer.
Each Change in Control Notice shall state:
(i) the events causing the Change in Control;
(ii) the date of such Change in Control;
(iii) the Repurchase Date;
(iv) the date by which the Repurchase Right must be exercised;
(v) the Repurchase Price, plus the amount of accrued interest to be
paid on the Securities to be repurchased;
(vi) the name and address of the Paying Agent and the Conversion
Agent;
(vii) a description of the procedure which a Holder must follow to
exercise a Repurchase Right;
(viii) that, in order to exercise the Repurchase Right, the Securities
are to be surrendered for payment of the Repurchase Price;
(ix) that Holders will be entitled to withdraw their election if the
Company (if acting as its own Paying Agent), or the Paying Agent receives,
not later than the close of business on the business day immediately
preceding the Repurchase Date, or such longer period as may be required by
law, a letter or telegram, telex or facsimile transmission (receipt of
which is confirmed and promptly followed by a letter) setting forth the
name of the Holder, the principal amount of Securities the Holder delivered
for purchase and a statement that such Holder is withdrawing his election
to have such Securities repurchased, the certificate numbers of such
Securities being withdrawn, if applicable, and the principal amount, if
any, of the Securities that remain subject to a Change in Control Notice
and that Securities with respect to which a Change in Control purchase
notice is given by the Holder may be converted, if otherwise convertible,
only if the Change in Control purchase notice has been withdrawn in
accordance with the terms hereof;
(x) the then existing conversion rate, and any adjustment to the
conversion rate that will result from the Change in Control;
17
(xi) the place or places where such Securities may be surrendered for
conversion; and
(xii) the CUSIP number or numbers, as the case may be, of the
Securities.
No failure of the Company to give the foregoing notice shall limit any
Holder's right to exercise a Repurchase Right.
To exercise a Repurchase Right, a Holder shall deliver to the Company (if
it is acting as its own Paying Agent), or to a Paying Agent designated by the
Company for such purpose in the Change in Control Notice within the period set
forth in the second paragraph of this SECTION 3.08, (i) the Option of Holder To
Elect Purchase Notice on the back of the Securities with respect to which the
Repurchase Right is being exercised, or any other form of written notice
substantially similar to the Option of Holder To Elect Purchase Notice, in each
case, duly completed and signed, with appropriate signature guarantee, and (ii)
such Securities with respect to which the Repurchase Right is being exercised,
duly endorsed for transfer to the Company and the Holder of such Securities
shall be entitled to receive from the Company (if it is acting as its own Paying
Agent), or such Paying Agent a nontransferable receipt of deposit evidencing
such deposit.
In the event a Repurchase Right shall be exercised in accordance with the
terms hereof, the Company shall pay or cause to be paid the applicable
Repurchase Price (plus accrued and unpaid interest) with respect to the
Securities as to which the Repurchase Right shall have been exercised to the
Holder on the Repurchase Date.
On or prior to a Repurchase Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust in accordance with SECTION 2.04) an amount of
money (to be available on the Repurchase Date) sufficient to pay the Repurchase
Price (plus accrued and unpaid interest) of all of the Securities which are to
be repurchased on that date.
Both the Change in Control Notice and the notice of the Holder to exercise
a Repurchase Right having been duly given as specified in this SECTION 3.08, the
Securities so to be repurchased shall, on the Repurchase Date, become due and
payable at the Repurchase Price applicable thereto (plus accrued and unpaid
interest) and from and after such date (unless there shall be a default in the
payment of the Repurchase Price) such Securities shall cease to bear interest
and shall cease to be convertible. Upon surrender of any such Security for
repurchase in accordance with said notice, such Security shall be paid by the
Company at the Repurchase Price (plus accrued and unpaid interest).
If any Security shall not be paid upon surrender thereof for repurchase,
the principal shall, until paid, bear interest from the Repurchase Date at the
rate borne by such Security on the principal amount of such Security and shall
continue to be convertible.
Any Security which is to be submitted for repurchase only in part shall be
delivered pursuant to this SECTION 3.08 (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly
18
executed by the Holder thereof or its attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and make available
for delivery to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, of the same tenor and in aggregate principal amount equal to the portion
of such Security not submitted for repurchase.
Notwithstanding anything herein to the contrary, (i) if the option granted
to Securityholders to require the repurchase of the Securities upon the
occurrence of a Change in Control is determined to constitute a tender offer,
the Company will comply with all applicable tender offer rules under the
Exchange Act, including Rules 13e-4 and 14e-1, and file Schedule TO or any other
schedules required under the Exchange Act and (ii) the Company may not purchase
Securities at the option of Holders upon a Change in Control if there has
occurred and is continuing an Event of Default with respect to the Securities,
other than a Default in the payment of the Change in Control purchase price with
respect to the Securities.
To the extent that the aggregate amount of cash deposited by the Company
pursuant to this SECTION 3.08 exceeds the aggregate Repurchase Price (plus
accrued and unpaid interest, if any) of the Securities or portions thereof that
the Company is obligated to purchase, then promptly after receipt of payment of
the aggregate Repurchase Price, the Trustee or a Paying Agent, as the case may
be, shall return any such excess cash to the Company.
As used in this SECTION 3.08 of the Indenture and in the Securities:
A "CHANGE IN CONTROL" of the Company shall be deemed to have occurred at
such time as:
(i) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act), is or becomes the
"beneficial owner" (as such term is used in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% or more of the voting power of the
Company's Common Stock or other capital stock into which the Company's
Common Stock is reclassified or changed; or
(ii) at any time the following persons cease for any reason to
constitute a majority of the Company's board of directors:
(1) individuals who on the issue date of the convertible notes
constituted the Company's board of directors and
(2) any new directors whose election by the Company's board of
directors or whose nomination for election by the Company's
stockholders was approved by at least a majority of the directors then
still in office who were either directors on the issue date of the
convertible notes or whose election or nomination for election was
previously so approved; or
19
(iii) the sale, lease or transfer of all or substantially all of the
assets of the Company to any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act).
However, a Change in Control will not be deemed to have occurred if either:
(X) the last sale price of the Company's Common Stock for any five trading
days during the ten trading days immediately preceding the Change in
Control is at least equal to 105% of the conversion price in effect on
such trading day; or
(Y) in the case of a merger or consolidation, all of the consideration
(excluding cash payments for fractional shares and cash payments
pursuant to dissenters' appraisal rights) in the merger or
consolidation constituting the Change in Control consists of common
stock traded on a U.S. national securities exchange or quoted on the
NNM (or which will be so traded or quoted when issued or exchanged in
connection with such Change in Control) and as a result of such
transaction or transactions the Securities become convertible solely
into such common stock.
3.09 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of Securities, the Company may arrange,
in lieu of redemption, 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 all or a portion of such Securities by paying to the
Trustee in trust for the Holders whose Securities are to be so purchased, on or
before the close of business on the redemption date, an amount that, together
with any amounts deposited with the Trustee by the Company for redemption of
such Securities, is not less than the Redemption Price, together with interest,
if any, accrued to the redemption date, of such Securities. Notwithstanding
anything to the contrary contained in this ARTICLE III, the obligation of the
Company to pay the Redemption Price of such Securities, including all accrued
interest, if any, shall be deemed to be satisfied and discharged to the extent
such amount is so paid by such purchasers, but no such agreement shall relieve
the Company of its obligation to pay such Redemption Price and such accrued
interest, if any. If such an agreement is entered into, any Securities not duly
surrendered for conversion by the Holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such Holders and (notwithstanding anything to the contrary
contained in ARTICLE X) surrendered by such purchasers for conversion, all as of
immediately prior to the close of business on the redemption date, subject to
payment of the above amount as aforesaid. The Trustee shall hold and pay to the
Holders whose Securities are selected for redemption any such amount paid to it
for purchase and conversion in the same manner as it would moneys deposited with
it by the Company for the redemption of Securities. Without the Trustee's prior
written consent, no arrangement between the Company and such purchasers for the
purchase and conversion of any Securities shall increase or otherwise affect any
of the powers, duties, rights, immunities, responsibilities or obligations of
the Trustee as set forth in this Indenture, and the Company agrees to indemnify
the Trustee from, and hold it harmless against, any and all 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 (including reasonable counsel fees
and expenses) incurred by the Trustee in the
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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 except to the extent arising from its bad
faith, willful misconduct or negligence.
IV. COVENANTS
4.01 PAYMENT OF SECURITIES.
The Company shall pay all amounts due with respect to the Securities on the
dates and in the manner provided in the Securities. All such amounts shall be
considered paid on the date due if the Paying Agent holds (or, if the Company is
acting as Paying Agent, if the Company has segregated and holds in trust in
accordance with SECTION 2.04) on that date money sufficient to pay the amount
then due with respect to the Securities.
The Company shall pay interest on any overdue amount (including, to the
extent permitted by applicable law, overdue interest) at the rate borne by the
Securities.
4.02 MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-Registrar) where Securities may be surrendered
for registration of transfer or exchange or conversion and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency (other than a
change in the location of the office of the Trustee). If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the office of the Trustee at 4 New York
Plaza, 13th Floor, New York, New York 10004, Attention: Institutional Trust
Services, as an agency of the Company in accordance with SECTION 2.03.
4.03 REPORTS.
(A) The Company shall, upon request, provide to any Holder or beneficial
owner of Securities or prospective purchaser of Securities that so requests the
information required to be delivered pursuant to Rule 144A(d)(4) until such time
as the Securities and the underlying
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Common Stock have been registered by the Company for resale under the Securities
Act pursuant to the Registration Rights Agreement. In addition, the Company will
furnish such Rule 144A(d)(4) information if, at any time while the Securities or
the Common Stock issuable upon conversion of the Securities are restricted
securities within the meaning of the Securities Act, the Company is not subject
to the informational requirements of the Exchange Act.
(B) The Company will comply with the provisions of TIA ss. 314(a).
(C) The Company (at its own expense) will deliver to the Trustee within 15
days after the filing of the same with the Commission, copies of the quarterly
and annual reports and of the information, documents and other financial
reports, if any, which the Company may be required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act or which the Company
furnishes to its stockholders. 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 such quarterly and annual
reports and other financial reports, if any, which the Company furnishes to its
stockholders. Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on the Officers' Certificate).
4.04 COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee within 120 days after the end of
each fiscal year (beginning with the fiscal year ending on December 31, 2002) of
the Company an Officers' Certificate stating whether or not the signers know of
any Default or Event of Default by the Company in performing any of its
obligations under this Indenture or the Securities. If they do know of any such
Default or Event of Default, the certificate shall describe the Default or Event
of Default and its status.
4.05 STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (in each case, 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, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law has been enacted.
4.06 CORPORATE EXISTENCE.
Subject to ARTICLE V, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the corporate existence of each of its subsidiaries in accordance with the
respective organizational documents of each subsidiary and the rights (charter
and statutory), licenses and franchises of the Company and its
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subsidiaries; PROVIDED, HOWEVER, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate existence of any
subsidiary, if in the judgment of the Board of Directors (i) such preservation
or existence is not material to the conduct of business of the Company and (ii)
the loss of such right, license or franchise or the dissolution of such
subsidiary does not have a material adverse impact on the Holders.
4.07 NOTICE OF DEFAULT.
In the event that any Default or Event of Default shall occur, the Company
will give prompt written notice of such Default or Event of Default to the
Trustee.
V. SUCCESSORS
5.01 WHEN COMPANY MAY MERGE, ETC.
The Company shall not consolidate with or merge into, or transfer or lease
all or substantially all of its properties and assets to, another person unless
such other person is a corporation organized under the laws of the United
States, any State thereof or the District of Columbia or a corporation or
comparable legal entity organized under the laws of a foreign jurisdiction and
whose equity securities are listed on a national securities exchange in the
United States or authorized for quotation on the NNM prior to or upon giving
effect to the transaction (PROVIDED HOWEVER, that in the case of a transaction
where the surviving entity is organized under the laws of a foreign
jurisdiction, the Company may not consummate the transaction without first (i)
making provision for the satisfaction of its obligations to repurchase the
Securities following a change in control, if any, and (ii) obtaining an opinion
of tax counsel experienced in such matters to the effect that, under then
existing United States federal income tax laws, there would be no material
adverse tax consequences to Holders of the Securities resulting from such
transaction); such person assumes by supplemental indenture all the obligations
of the Company, under the Securities and this Indenture; and immediately after
giving effect to the transaction, no Default or Event of Default shall exist.
The Company shall deliver to the Trustee prior to the consummation of the
proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel, which may rely upon such Officers' Certificate as to the
absence of Defaults and Events of Default, stating that the proposed transaction
and such supplemental indenture will, upon consummation of the proposed
transaction, comply with this Indenture.
5.02 SUCCESSOR SUBSTITUTED.
Upon any consolidation or merger or transfer or lease of all or
substantially all of the assets of the Company in accordance with SECTION 5.01,
the successor person formed by such consolidation or into which the Company is
merged or to which such transfer or lease is made shall succeed to, and, except
in the case of a lease, be substituted for, and may exercise every right and
power of, and shall assume every duty and obligation of, the Company under this
Indenture with the same effect as if such successor had been named as the
Company herein. When the successor assumes all obligations of the Company
hereunder, except in the case of a lease, all obligations of the predecessor
shall terminate.
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VI. DEFAULTS AND REMEDIES
6.01 EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" occurs if:
(i) the Company defaults in the payment of interest or liquidated
damages on any Security when the same becomes due and payable and the
default continues for a period of 30 days, whether or not such payment
shall be prohibited by the provisions of ARTICLE XI hereof; provided that a
failure to make any of the first four scheduled interest payments on any
Security within three (3) business days after the applicable interest
payment dates will constitute an Event of Default with no additional grace
or cure period;
(ii) the Company defaults in the payment of the principal or
Repurchase Price or Redemption Price of any Security when the same becomes
due and payable, whether on the Maturity Date, upon redemption, on the
Repurchase Date or otherwise, whether or not such payment shall be
prohibited by the provisions of ARTICLE XI hereof;
(iii) the Company fails to comply with any of its other agreements in
the Securities or this Indenture and the default continues for the period
and after the notice specified below;
(iv) the Company or any of its Significant Subsidiaries defaults in
the payment at the final maturity thereof, after the expiration of any
applicable grace period, of principal of, or premium, if any, on
indebtedness for money borrowed in the aggregate principal amount then
outstanding of $15,000,000 or more, or the acceleration of indebtedness for
money borrowed in such aggregate principal amount so that it becomes due
and payable prior to the date on which it would otherwise become due and
payable and such acceleration is not rescinded or such default is not cured
within 30 business days after notice to the Company in accordance with this
Indenture;
(v) the Company or any of its Significant Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
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(vi) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding, or adjudicates the
Company or any Significant Subsidiary insolvent or bankrupt,
(B) appoints a Custodian of the Company or any of its Significant
Subsidiaries for all or substantially all of the property of the Company or
any such Significant Subsidiary, as the case may be, or
(C) orders the winding up or liquidation of the Company or any of its
Significant Subsidiaries,
and the order or decree remains unstayed and in effect for 90 consecutive
days; or
(vii) the Pledge Agreement or the Control Agreement shall cease to be
in full force and effect or enforceable in accordance with its terms.
The term "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar Federal
or State law for the relief of debtors. The term "CUSTODIAN" means any receiver,
trustee, assignee, liquidator or similar official under any Bankruptcy Law.
A default under CLAUSE (III) is not an Event of Default until the Trustee
or the Holders of at least 25% in aggregate principal amount of the Securities
then outstanding notify the Company and the Trustee of the default and the
default is not cured within 60 days after receipt of the notice. The notice must
specify the default, demand that it be remedied and state that the notice is a
"NOTICE OF DEFAULT". If the Holders of 25% in aggregate principal amount of the
outstanding Securities request the Trustee to give such notice on their behalf,
the Trustee shall do so. When a default is cured, it ceases.
6.02 ACCELERATION.
If an Event of Default (other than an Event of Default specified in SECTION
6.01(V) or (VI) with respect to the Company) as to which the Trustee has
received notice pursuant to the provisions of this Indenture occurs and is
continuing, the Trustee by notice to the Company or the Holders of at least 25%
in principal amount of the Securities then outstanding by notice to the Company
and the Trustee may declare the Securities to be due and payable. Upon such
declaration such principal and interest shall be due and payable immediately. If
an Event of Default specified in SECTION 6.01(V) or (VI) with respect to the
Company occurs, the principal of and accrued interest on all the Securities
shall IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholder. The
Holders of a majority in aggregate principal amount of the Securities then
outstanding by written notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any order or decree and
if all existing Events of Default have been cured or waived except nonpayment of
principal or interest that has become due solely because of the acceleration and
if all amounts due to the Trustee under SECTION 7.07 have been paid.
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6.03 OTHER REMEDIES.
Notwithstanding any other provision of this Indenture, if an Event of
Default occurs and is continuing, the Trustee may pursue any available remedy by
proceeding at law or in equity to collect the payment of amounts due with
respect to 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. All remedies are
cumulative.
6.04 WAIVER OF PAST DEFAULTS.
Subject to SECTIONS 6.07 and 9.02, the Holders of a majority in aggregate
principal amount of the Securities then outstanding by notice to the Trustee may
waive any past Default or Event of Default and its consequences. When a Default
or an Event of Default is waived, it is cured and ceases for every purpose of
this Indenture.
6.05 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, is unduly prejudicial to the rights
of other Securityholders or would involve the Trustee in personal liability;
PROVIDED that the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
6.06 LIMITATION ON SUITS.
Except as provided in SECTION 6.07, a Securityholder may pursue a remedy
with respect to this Indenture or the Securities only if:
(i) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(ii) the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding make a written request to the Trustee to pursue
the remedy;
(iii) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(iv) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of indemnity; and
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(v) during such 60-day period, the Holders of a majority in aggregate
principal amount of the Securities then outstanding do not give the Trustee
a direction inconsistent with the request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of all amounts due with respect to the Securities, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of the Holder.
Notwithstanding any other provision of this Indenture, the right of any
Holder to bring suit for the enforcement of the right to convert the Security
shall not be impaired or affected without the consent of the Holder.
6.08 COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in SECTION 6.01(I) or (II) 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 due with respect to
the Securities, including any unpaid and accrued interest.
6.09 TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee, any
predecessor Trustee and the Securityholders allowed in any judicial proceedings
relative to the Company or its creditors or properties.
The Trustee may 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
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee and, in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
SECTION 7.07.
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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6.10 PRIORITIES.
Subject to the provisions of the Pledge Account and ARTICLE XII of this
Indenture, if the Trustee collects any money pursuant to this ARTICLE VI, it
shall pay out the money in the following order:
First : to the Trustee for amounts due under SECTION 7.07;
Second : to holders of Senior Indebtedness to the extent required by
ARTICLE XI;
Third : to Securityholders for all amounts due and unpaid on the
Securities, without preference or priority of any kind, according
to the amounts due and payable on the Securities; and
Fourth : to the Company.
The Trustee, upon prior written notice to the Company may fix a record date
and payment date for any payment by it to Securityholders pursuant to this
SECTION 6.10.
6.11 UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit other than the Trustee 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 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to SECTION 6.07 or a suit by Holders of more than 10% in
aggregate principal amount of the outstanding Securities.
VII. TRUSTEE
7.01 DUTIES OF TRUSTEE.
(A) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
(B) Except during the continuance of an Event of Default:
(i) the Trustee need perform only those duties that are specifically
set forth in this Indenture and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
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(ii) in the absence of bad faith, willful misconduct or negligence on
its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(C) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(ii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to SECTION 6.05.
(D) Every provision of this Indenture that in any way relates to the
Trustee in any of its roles hereunder is subject to the provisions of this
SECTION 7.01.
(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 in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
7.02 RIGHTS OF TRUSTEE.
(A) Subject to SECTION 7.01, the Trustee may conclusively rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document; if, however, the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled during normal business hours to
examine the relevant books, records and premises of the Company, personally or
by agent or attorney upon reasonable prior notice.
(B) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate and/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 Officers' Certificate or Opinion of Counsel.
(C) Any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution.
(D) The Trustee may consult with counsel and the advice of such counsel or
any Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
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(E) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent or attorney appointed
with due care.
(F) 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 discretion,
rights or powers conferred upon it by this Indenture.
(G) Except with respect to SECTION 6.01, the Trustee shall have no duty to
inquire as to the performance of the Company with respect to the covenants
contained in ARTICLE IV. In addition, the Trustee shall not be deemed to have
knowledge of an Event of Default except (i) any Default or Event of Default
occurring pursuant to SECTIONS 6.01(I) and 6.01(II) or (ii) any Default or Event
of Default of which a Responsible Officer of the Trustee shall have received
written notification or obtained actual knowledge. Delivery of reports,
information and documents to the Trustee under ARTICLE IV (other than SECTIONS
4.04 and 4.07) is for informational purposes only and the Trustee's receipt of
the foregoing shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Company's compliance with any of its covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
(H) The Trustee shall be under no obligation to exercise any of the rights
or powers vested by this Indenture at the request or direction of any of the
Holders pursuant to this Indenture unless such Holders shall have offered to the
Trustee security or indemnity reasonably satisfactory to the Trustee against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction.
(I) The rights, privileges, protections, immunities and benefits given to
the Trustee, including without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and each agent, custodian and other Person employed to act hereunder.
(J) The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
(K) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the performance
of its duties hereunder or in the exercise of any of its rights or powers, if it
shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(L) No permissive power, right or remedy conferred upon the Trustee
hereunder shall be construed to impose a duty to exercise such power, right or
remedy.
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7.03 INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or any of its
Affiliates with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. The Trustee, however, must comply with
SECTIONS 7.10 and 7.11.
7.04 TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity, priority or
adequacy of this Indenture or the Securities; it shall not be accountable for
the Company's use of the proceeds from the Securities; and it shall not be
responsible for any statement in the Securities other than its certificate of
authentication.
7.05 NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing as to which the
Trustee has received notice pursuant to the provisions of this Indenture, the
Trustee shall mail to each Securityholder a notice of the Default or Event of
Default within 30 days after it occurs unless such Default or Event of Default
has been cured or waived. Except in the case of a Default or Event of Default in
payment of any amounts due with respect to any Security, the Trustee may
withhold the notice if and so long as it in good faith determines that
withholding the notice is in the interests of Securityholders.
7.06 REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with May 15, 2003, the Trustee
shall mail to each Securityholder if required by TIA ss. 313(a) a brief report
dated as of such May 15 that complies with TIA ss. 313(c). In such event, the
Trustee also shall comply with TIA ss. 313(b).
A copy of each report at the time of its mailing to Securityholders shall
be mailed to the Company and filed by the Trustee with the SEC and each stock
exchange, if any, on which the Securities are listed. The Company shall promptly
notify the Trustee when the Securities are listed on any stock exchange.
7.07 COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time such compensation
for its services as shall be agreed upon in writing. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred by it. Such expenses shall include the
reasonable compensation and out-of-pocket expenses of the Trustee's agents and
counsel.
The Company shall indemnify the Trustee against any and all loss,
liability, damage, claim or expense (including the reasonable fees and expenses
of counsel and taxes other than those based upon the income of the Trustee)
incurred by it in connection with the acceptance or administration of this trust
and the performance of its duties hereunder, including the reasonable
31
costs and expenses of defending itself against any claim (whether asserted by
the Company, any Holder or any other Person) or liability in connection with the
exercise or performance of any of its powers and duties hereunder. The Company
need not pay for any settlement made without its consent. The Trustee shall
notify the Company promptly of any claim for which it may seek indemnification.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through the Trustee's negligence or willful
misconduct.
To secure the Company's payment obligations in this SECTION 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay amounts due on
particular Securities.
The indemnity obligations of the Company with respect to the Trustee
provided for in this SECTION 7.07 shall survive any resignation or removal of
the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in SECTION 6.01(V) or (VI) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
7.08 REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this SECTION 7.08.
The Trustee may resign by so notifying the Company in writing 30 business
days prior to such resignation. The Holders of a majority in aggregate principal
amount of the Securities then outstanding may remove the Trustee by so notifying
the Trustee and the Company in writing and may appoint a successor Trustee with
the Company's consent. The Company may remove the Trustee if:
(i) the Trustee fails to comply with SECTION 7.10;
(ii) the Trustee is adjudged a bankrupt or an insolvent;
(iii) a receiver or other public officer takes charge of the Trustee
or its property; or
(iv) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee (at the Company's
expense), the Company or the Holders of at least 10% in aggregate principal
amount of the outstanding Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
32
If the Trustee fails to comply with SECTION 7.10, any Holder may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in SECTION 7.07.
7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates with, merges or converts into, or transfers by
sale or otherwise all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act shall be
the successor Trustee, if such successor corporation is otherwise eligible
hereunder.
7.10 ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition. The
Trustee shall comply with TIA ss. 310(b).
7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
VIII. DISCHARGE OF INDENTURE
8.01 TERMINATION OF THE OBLIGATIONS OF THE COMPANY.
The Company may terminate all of its obligations under this Indenture if
all Securities previously authenticated and delivered (other than mutilated,
destroyed, lost or stolen Securities which have been replaced or paid as
provided in SECTION 2.07) have been delivered to the Trustee for cancellation or
if:
(i) the Securities mature within one year or all of them are to be
called for redemption within one year under arrangements satisfactory to
the Trustee for giving the notice of redemption;
(ii) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations sufficient to pay the principal or
Redemption Price of and any unpaid and accrued interest on the Securities
to maturity or
33
redemption, as the case may be. Immediately after making the deposit,
the Company shall give notice of such event to the Securityholders;
(iii) the Company has paid or caused to be paid all sums then payable
by the Company to the Trustee hereunder as of the date of such deposit; and
(iv) the Company has delivered to the Trustee an opinion of counsel
and an Officers' Certificate stating that all conditions precedent provided
for herein relating to the satisfaction and discharge of this Indenture
have been complied with. The Company may make the deposit only during the
one-year period and only if ARTICLE XI permits it.
However, the Company's obligations in SECTIONS 2.02, 2.03, 2.04, 2.05, 2.06,
2.07, 2.08, 2.15, 2.16, 2.17, 4.01, 4.02, 7.07, 7.08 and 8.03, ARTICLE VIII and
ARTICLE X shall survive until the Securities are no longer outstanding.
Thereafter the obligations of the Company in SECTIONS 7.07 and 8.03 shall
survive.
After a deposit pursuant to this SECTION 8.01, the Trustee upon request
shall acknowledge in writing the discharge of the obligations of the Company
under the Securities and this Indenture, except for those surviving obligations
specified above.
In order to have money available on a payment date to pay the principal or
Redemption Price of and any unpaid and accrued interest on the Securities, the
U.S. Government Obligations shall be payable as to principal and any unpaid and
accrued interest on or before such payment date in such amounts as will provide
the necessary money.
"U.S. GOVERNMENT OBLIGATIONS" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof at any time prior
to the Stated Maturity of the Securities, and shall also include depository
receipts issued by a bank or trust company as custodian with respect to any such
U.S. Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation evidenced by such
depository receipt.
"STATED MATURITY" means, when used with respect to any Security or any
installment of interest thereon, the date specified in such Security as the
fixed date on which the principal of such Security or such installment of
interest is due and payable.
34
8.02 APPLICATION OF TRUST MONEY.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to SECTION 8.01. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of the principal or Redemption
Price of and any unpaid and accrued interest on the Securities. Money and
securities so held in trust are not subject to the subordination provisions of
ARTICLE XI.
8.03 REPAYMENT TO COMPANY.
The Trustee and the Paying Agent shall promptly notify the Company of, and
pay to the Company upon the request of the Company, any excess money or
securities held by them at any time. The Trustee and the Paying Agent shall pay
to the Company upon the written request of the Company any money held by them
for the payment of the principal or Redemption Price of and any unpaid and
accrued interest that remains unclaimed for two years; PROVIDED, HOWEVER, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may, at the expense and request of the Company, cause to be published
once in a newspaper of general circulation in the City of New York or cause to
be mailed to each Holder, notice stating that such money remains and that, after
a date specified therein, which shall not be less than 30 days from the date of
such publication or mailing, any unclaimed balance of such money then remaining
will be repaid to the Company. After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another person and all
liability of the Trustee and the Paying Agent shall cease.
8.04 REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with SECTIONS 8.01 and 8.02 by reason of
any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the obligations of the Company under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to SECTIONS 8.01 and 8.02 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government Obligations in
accordance with SECTIONS 8.01 and 8.02; PROVIDED, HOWEVER, that if the Company
has made any payment of amounts due with respect to any Securities because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive such payment from the money
or U.S. Government Obligations held by the Trustee or Paying Agent.
IX. AMENDMENTS
9.01 WITHOUT CONSENT OF HOLDERS.
The Company, with the consent of the Trustee, may amend or supplement this
Indenture or the Securities without notice to or the consent of any
Securityholder:
35
(i) to cure any ambiguity, inconsistency or other defect in this
Indenture;
(ii) to comply with SECTIONS 5.01 and 10.12;
(iii) to make any changes or modifications to this Indenture necessary
in connection with the registration of the Securities under the Securities
Act and the qualification of the Indenture under the TIA;
(iv) to secure the obligations of the Company in respect of the
Securities; or
(v) to add to the covenants of the Company described in this Indenture
for the benefit of Securityholders or to surrender any right or power
conferred upon the Company.
Notwithstanding the foregoing, no supplemental indenture pursuant to this
SECTION 9.01 may be entered into without the consent of the holders of a
majority in principal amount of the Securities if such supplemental indenture
would materially and adversely affect the interests of the Holders of the
Securities.
9.02 WITH CONSENT OF HOLDERS.
The Company, with the consent of the Trustee, may amend or supplement this
Indenture or the Securities without notice to any Securityholder but with the
written consent of the Holders of at least a majority in aggregate principal
amount of the outstanding Securities. Subject to SECTION 6.07, the Holders of a
majority in aggregate principal amount of the outstanding Securities may waive
compliance by the Company with any provision of this Indenture or the Securities
without notice to any other Securityholder. However, without the consent of each
Securityholder affected, an amendment, supplement or waiver, including a waiver
pursuant to SECTION 6.04, may not:
(i) reduce the amount of Securities whose Holders must consent to an
amendment, supplement or waiver;
(ii) reduce the rate of or change the time for payment of interest
(including any liquidated damages) on any Security;
(iii) reduce the principal, Redemption Price or Repurchase Price of or
change the stated maturity of any Security;
(iv) make any Security payable in money or securities other than as
stated in such Security;
(v) waive a default in the payment of any amount due with respect to
any Security; or
(vi) make any change that adversely affects the right to convert, or
receive payment with respect to, any Security or the right to institute
suit for the
36
enforcement of any payment with respect to, or conversion of, any
Security or the right to require the Company to repurchase any of the
Securities upon a Change in Control.
An amendment under this SECTION 9.02 may not make any change that adversely
affects the rights under ARTICLE XI of any holder of Senior Indebtedness unless
the holders of such Senior Indebtedness pursuant to its terms consent to the
change.
Promptly after an amendment under SECTION 9.01 or this SECTION 9.02 becomes
effective, the Company shall mail to Securityholders a notice briefly describing
the amendment. Any failure of the Company to mail such notice shall not in any
way impair or affect the validity of such amendment, supplement or waiver.
It shall not be necessary for the consent of the Holders under this SECTION
9.02 to approve the particular form of any proposed amendment or supplement, but
it shall be sufficient if such consent approves the substance thereof.
9.03 COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment, waiver or supplement to this Indenture or the Securities
shall comply with the TIA as then in effect.
9.04 REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Security or portion of a Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to its Security or portion of a Security if the Trustee receives the notice
of revocation before the date the amendment, supplement or waiver becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Securityholder.
After an amendment, supplement or waiver becomes effective with respect to
the Securities, it shall bind every Securityholder unless it makes a change
described in SECTION 9.02. In that case, the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and, provided that
notice of such amendment, supplement or waiver is reflected on a Security that
evidences the same debt as the consenting Holder's Security, every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security.
9.05 NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Security as directed and
prepared by the Company about the changed terms and return it to the Holder.
Alternatively, if the Company so determines, the Company in
37
exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms.
9.06 TRUSTEE PROTECTED.
The Trustee need not sign any amendment, supplement or waiver authorized
pursuant to this ARTICLE IX that adversely affects the Trustee's rights, duties,
liabilities or immunities. The Trustee shall be entitled to receive and
conclusively rely upon an Opinion of Counsel and an Officers' Certificate that
any supplemental indenture, amendment or waiver is permitted or authorized
pursuant to the Indenture.
X. CONVERSION
10.01 CONVERSION PRIVILEGE; RESTRICTIVE LEGENDS.
A Holder of a Security may convert such Security into Common Stock at any
time during the period stated in PARAGRAPH 9 of the Securities. The initial
conversion rate is stated in PARAGRAPH 9 of the Securities. The conversion rate
is subject to adjustment in accordance with SECTIONS 10.06 through 10.12.
A Holder may convert a portion of the principal of such Security if the
portion is $1,000 principal amount or a positive integral multiple of $1,000
principal amount. Provisions of this Indenture that apply to conversion of all
of a Security also apply to conversion of a portion of it.
Any shares issued upon conversion of a Security shall bear the Private
Placement Legend until after the second anniversary of the later of the issue
date for the Securities and the last date on which the Company or any Affiliate
of the Company was the owner of such shares or the Security (or any predecessor
security) from which such shares were converted (or such shorter period of time
as permitted by Rule 144(k) under the Securities Act or any successor provision
thereunder) (or such longer period of time as may be required under the
Securities Act or applicable state securities laws in the Opinion of Counsel for
the Company, unless otherwise agreed by the Company and the Holder thereof).
10.02 CONVERSION PROCEDURE.
To convert a Security, a Holder must satisfy the requirements in PARAGRAPH
9 of the Securities. The date on which the Holder satisfies all those
requirements is the conversion date. As soon as practicable following the
conversion date, the Company shall deliver to the Holder through the Conversion
Agent a certificate for the number of full shares of Common Stock issuable upon
the conversion and a check in lieu of any fractional share. The person in whose
name the certificate is registered shall be treated as a stockholder of record
on and after the conversion date.
Except as described below and in the Registration Rights Agreement with
respect to the Liquidated Damages Amount (as defined therein), no payment or
adjustment will be made for accrued interest on, or liquidated damages with
respect to, a converted Security or for dividends on any Common Stock issued on
or prior to conversion. If any Holder surrenders a Security for
38
conversion after the close of business on the record date for the payment of an
installment of interest and prior to the opening of business on the next
interest payment date, then, notwithstanding such conversion, the interest
payable on such interest payment date shall be paid to the Holder of such
Security on such record date; PROVIDED, HOWEVER, that such Security, when
surrendered for conversion, must be accompanied by payment to the Trustee on
behalf of the Company of an amount equal to the interest payable on such
interest payment date on the portion so converted; PROVIDED, FURTHER, HOWEVER,
that such payment to the Trustee described in the immediately preceding proviso
shall not be required in connection with any conversion of a Security called for
redemption pursuant to SECTION 3.04 hereof on a redemption date that is after a
record date for the payment of interest and on or before the day that is one
business day following the corresponding interest payment date.
If a Holder converts more than one Security at the same time, the number of
full shares issuable upon the conversion shall be based on the total principal
amount of the Securities converted.
Upon surrender of a Security that is converted in part the Trustee shall
authenticate for the Holder a new Security equal in principal amount to the
unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal Holiday in
a place where a Conversion Agent is located, the Security may be surrendered to
that Conversion Agent on the next succeeding day that is not a Legal Holiday.
10.03 FRACTIONAL SHARES.
The Company will not issue fractional shares of Common Stock upon
conversion of Securities and instead will deliver a check in an amount equal to
the value of such fraction computed on the basis of the last sale price regular
way of the Common Stock as reported on the NNM (or if not listed for trading
thereon, as reported on such national securities exchange or on the principal
automated quotation system on which the Common Stock is listed or admitted to
trading) at the close of business on the date of conversion or if there is no
such reported sale on the day in question, on the basis of the average of the
closing bid and asked quotations regular way as so reported on the NNM (or if
not listed for trading thereon, on the national securities exchange or on the
principal automated quotation system on which the Common Stock is listed or
admitted to trading) for such day. If on the date of conversion, the Common
Stock is not listed on the NNM or on any national securities exchange, the
amount shall be computed on the basis of the average of the high bid and low
asked quotations regular way on the day in question in the over-the-counter
market as reported by the National Association of Securities Dealers Automated
Quotation System, or if not so quoted, as reported by National Quotation Bureau,
Incorporated, or a similar organization. If on the date of conversion, the
Common Stock is not quoted by any such organization, the fair value of such
Common Stock on such day, as reasonably determined in good faith by the Board of
Directors shall be used.
39
10.04 TAXES ON CONVERSION.
If a Holder converts its Security, the Company shall pay any documentary,
stamp or similar issue or transfer tax due on the issue of shares of Common
Stock upon the conversion. However, the Holder shall pay any such tax which is
due because the shares are 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 by law or regulation.
10.05 COMPANY TO PROVIDE STOCK.
The Company shall reserve out of its authorized but unissued Common Stock
or Common Stock held in its treasury enough shares of Common Stock to permit the
conversion of all of the Securities.
All shares of Common Stock which may be issued upon conversion of the
Securities shall be validly issued, fully paid and non-assessable.
The Company will endeavor to comply with all securities laws regulating the
offer and delivery of shares of Common Stock upon conversion of Securities and
will endeavor to list such shares on each national securities exchange or
automated quotation system on which the Common Stock is listed.
10.06 ADJUSTMENT OF CONVERSION RATE.
The conversion rate shall be subject to adjustment from time to time as
follows:
(a) In case the Company shall (1) pay a dividend in shares of Common
Stock to all holders of Common Stock, (2) make a distribution in shares of
Common Stock to all holders of Common Stock, (3) subdivide the outstanding
shares of Common Stock into a greater number of shares of Common Stock or
(4) combine the outstanding shares of Common Stock into a smaller number of
shares of Common Stock, the conversion rate in effect immediately prior to
such action shall be adjusted so that the holder of any Security thereafter
surrendered for conversion shall be entitled to receive the number of
shares of Common Stock which he would have owned immediately following such
action had such Securities been converted immediately prior thereto. Any
adjustment made pursuant to this SECTION 10.06(A) shall become effective
immediately after the record date in the case of a dividend or distribution
and shall become effective immediately after the effective date in the case
of a subdivision or combination.
(b) In case the Company shall issue rights or warrants to all or
substantially all holders of Common Stock, as the case may be, entitling
them (for a period commencing no earlier than the record date for the
determination of Holders of Common Stock entitled to receive such rights or
warrants and expiring not more than 60 days after such record date) to
subscribe for or purchase shares
40
of Common Stock (or securities convertible into Common Stock), at a
price per share less than the then current market price (as determined
pursuant to SECTION 10.06(G) below) of Common Stock on such record date,
the conversion rate shall be increased 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 shares of Common Stock so offered for
subscription or purchase, and the denominator of which shall be the number
of shares of Common Stock outstanding at the close of business on such
record date plus the number of shares of Common Stock which the aggregate
of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such current market
price. Such adjustments shall become effective immediately after such
record date.
(c) In case the Company shall distribute to all or substantially all
holders of Common Stock shares of capital stock of the Company other than
Common Stock, evidences of indebtedness or other assets (other than cash
dividends out of current or retained earnings), or shall distribute to all
or substantially all holders of Common Stock rights or warrants to
subscribe for securities (other than those referred to in SECTION 10.06(B)
above), then in each such case the conversion rate shall be increased by
multiplying the conversion rate in effect immediately prior to the close of
business on the record date for the determination of shareholders entitled
to such distribution by a fraction of which the numerator shall be the
current market price of Common Stock (determined as provided in SUBSECTION
(G) below), on such date and the denominator shall be such current market
price less the fair market value (as determined by the Board of Directors
whose determination shall be conclusive and described in a Board
Resolution) on such date of the portion of the evidences of indebtedness,
shares of capital stock, cash and other assets to be distributed or of such
subscription rights or warrants applicable to one share of Common Stock,
such increase to become effective immediately prior to the opening of
business on the day following such record date. Notwithstanding the
foregoing, in the event that the Company shall distribute rights or
warrants (other than those referred to in SECTION 10.06(B) above)
("RIGHTS") PRO RATA to holders of Common Stock, the Company may, in lieu of
making any adjustment pursuant to this SECTION 10.06(C), make proper
provision so that each Holder of a Security who converts such Security (or
any portion thereof) after the record date for such distribution and prior
to the expiration or redemption of the Rights shall be entitled to receive
upon such conversion, in addition to the shares of Common Stock issuable
upon such conversion (the "CONVERSION SHARES"), a number of Rights to be
determined as follows: (i) if such conversion occurs on or prior to the
date for the distribution to the holders of Rights of separate certificates
evidencing such Rights (the "DISTRIBUTION DATE"), the same number of Rights
to which a holder of a number of shares of Common Stock equal to the number
of shares of Conversion Shares is entitled at the time of such conversion
in accordance with the terms and provisions of and applicable to the
Rights; and (ii) if such conversion occurs after the Distribution Date, the
same number of Rights to which a holder of the number
41
of shares of Common Stock into which the principal amount of the
Security so converted was convertible immediately prior to the Distribution
Date would have been entitled on the Distribution Date in accordance with
the terms and provisions of and applicable to the Rights.
In the event that the Company has a stockholders' rights plan in effect
("RIGHTS PLAN"), upon conversion of the Securities into Common Stock, the
Holders will receive, in addition to the Common Stock, the rights described
therein (whether or not the rights have separated from the Common Stock at the
time of conversion), subject to the limitations set forth in the Rights Plan. In
the event that the Company implements a Rights Plan after the date hereof, the
Company shall provide that the Holders will receive, in addition to the Common
Stock, the rights described therein upon conversion of the Securities (whether
or not the rights have separated from the Common Stock prior to the time of
conversion), subject to the limitations set forth in the Rights Plan. Any
distribution of rights or warrants pursuant to a Rights Plan complying with the
requirements set forth in the two preceding sentences of this paragraph shall
not constitute a distribution of rights or warrants pursuant to this SECTION
10.06(C).
(d) In case the Company shall, by dividend or otherwise, at any time
make a distribution (the "TRIGGERING DISTRIBUTION," and the amount of the
Triggering Distribution, together with the sum of (w) and (x) below, the
"COMBINED AMOUNT") to all or substantially all holders of its Common Stock
of cash (including any distributions of cash out of current or retained
earnings of the Company, but excluding any cash that is distributed as part
of a distribution requiring a conversion rate adjustment pursuant to
SUBSECTION (C) above or SUBSECTION (E) below) in an aggregate amount that,
together with the sum of (w) the aggregate amount of any cash and the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive thereof and described in a Board
Resolution), as of the expiration of the tender or exchange offer referred
to below, of any other consideration payable in respect of any tender or
exchange offer by the Company or a subsidiary of the Company for all or any
portion of the 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 has been made pursuant to this SECTION 10.06,
and (x) the aggregate amount of all other cash distributions to all or
substantially all holders of 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 has been made pursuant to this
SECTION 10.06, exceeds 10% of the product of the current market price per
share (as determined in accordance with SUBSECTION (G) of this SECTION
10.06) of the Common Stock on the close of business, New York City time, on
the business day (the "DISTRIBUTION DECLARATION DATE") immediately
preceding the day on which the Triggering Distribution is declared by the
Company and the number of shares of Common Stock outstanding on the
Distribution Declaration Date (excluding shares held in the treasury of the
Company), the conversion rate shall be adjusted by multiplying the
conversion rate in effect immediately prior to the effectiveness of the
conversion rate adjustment contemplated by this SUBSECTION (D) by a
fraction (y) the numerator of which shall be such current market price per
share of Common
42
Stock and (z) the denominator of which shall be (I) such current
market price per share of Common Stock less (II) the number obtained by
dividing the Combined Amount by such number of shares of Common Stock
outstanding. Such adjustment shall become effective immediately prior to
the opening of business on the day following the Distribution Declaration
Date.
(e) In case a tender offer or exchange offer made by the Company or
any of its subsidiaries for all or any portion of the Common Stock shall
expire and such tender offer or exchange offer (as amended upon the
expiration thereof) shall require the payment to stockholders (based on the
acceptance (up to any maximum specified in the terms of the tender offer or
exchange offer) of Purchased Shares (as defined below)) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and set forth in a Board
Resolution) that combined together with:
(1) the aggregate of the cash plus the fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and
set forth in a Board Resolution), as of the expiration of such tender
offer or exchange offer, of consideration payable in respect of any
other tender offers or exchange offers, by the Company or any of its
subsidiaries for all or any portion of the Common Stock expiring
within the 12 months preceding the expiration of such tender offer or
exchange offer and in respect of which no adjustment pursuant to this
SECTION 10.06 has been made, and
(2) the aggregate amount of any distributions to all or substantially all
holders of the Company's Common Stock made exclusively in cash within
the 12 months preceding the expiration of such tender offer or
exchange offer and in respect of which no adjustment pursuant to this
SECTION 10.06 has been made,
exceeds 10% of the product of the current market price per share (as
determined in accordance with subsection (g) of this SECTION 10.06) as
of the last time (the "EXPIRATION TIME") tenders or exchanges could
have been made pursuant to such tender offer or exchange offer (as it
may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares or exchanged shares) at the Expiration
Time,
then, and in each such case, immediately prior to the opening of
business on the day after the date of the Expiration Time, the conversion
rate shall be adjusted by multiplying the conversion rate in effect
immediately prior to the close of business on the date of the Expiration
Time by a fraction:
(i) the numerator of which shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any
43
maximum specified in the terms of the tender offer or exchange offer)
of all shares validly tendered or exchanged 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) at the Expiration Time and the current market price
of the Common Stock as of the Expiration Time; and
(ii) the denominator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the
Expiration Time multiplied by the current market price of the Common
Stock as of the Expiration Time.
Such adjustment (if any) shall become effective immediately prior to
the opening of business on the day following the Expiration Time. In the
event that the Company is obligated to purchase shares pursuant to any such
tender offer or exchange offer, but the Company is permanently prevented by
applicable law from effecting any such purchases or all such purchases are
rescinded, the conversion rate shall again be adjusted to be the conversion
rate which would then be in effect if such tender offer or exchange offer
had not been made. If the application of this SECTION 10.06(E) to any
tender offer or exchange offer would result in a decrease in the conversion
rate, no adjustment shall be made for such tender offer or exchange offer
under this SECTION 10.06(E).
(f) In addition to the foregoing adjustments in subsections (a), (b),
(c), (d) and (e) above, the Company, from time to time and to the extent
permitted by law, may increase the conversion rate by any amount for at
least 20 days or such longer period as may be required by law, if the Board
of Directors of the Company has made a determination, which determination
shall be conclusive, that such increase would be in the best interests of
the Company, provided that the effective conversion price is not less than
the par value of a share of Common Stock. The Company shall give notice to
the Trustee and cause notice of such increase to be mailed to each Holder
of Securities at such Holder's address as the same appears on the registry
books of the Registrar, at least 15 days prior to the date on which such
increase commences. Such conversion rate increase shall be irrevocable
during such period.
(g) For the purpose of any computation under subsections (a), (b),
(c), (d) and (e) above of this SECTION 10.06, the current market price per
share of Common Stock on the date fixed for determination of the
stockholders entitled to receive the issuance or distribution requiring
such computation (the "DETERMINATION DATE") shall be deemed to be the
average of the Daily Market Prices for the ten consecutive trading days
immediately preceding the Determination Date; PROVIDED, HOWEVER, that (i)
if the "ex" date for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the conversion
rate pursuant to subsection (a), (b), (c), (d) or (e)
44
above occurs on or after the tenth trading day prior to the
Determination Date and prior to the "ex" date for the issuance or
distribution requiring such computation, the Daily Market Price for each
trading day prior to the "ex" date for such other event shall be adjusted
by multiplying such Daily Market Price by the reciprocal of the fraction by
which the conversion rate is so required to be adjusted as a result of such
other event, (ii) if the "ex" date for any event (other than the issuance
or distribution requiring such computation) that requires an adjustment to
the conversion rate pursuant to subsection (a), (b), (c), (d) or (e) above
occurs on or after the "ex" date for the issuance or distribution requiring
such computation and on or prior to the Determination Date, the Daily
Market Price for each business day on and after the "ex" date for such
other event shall be adjusted by multiplying such Daily Market Price by the
same fraction by which the conversion rate is so required to be adjusted as
a result of such other event, and (iii) if the "ex" date for the issuance
or distribution requiring such computation is on or prior to the
Determination Date, after taking into account any adjustment required
pursuant to clause (i) or (ii) of this proviso, the Daily Market Price for
each trading day on and after the "ex" date shall be adjusted by adding
thereto the amount of any cash and the fair market value (as determined by
the Board of Directors in a manner consistent with any determination of
such value for the purposes of this SECTION 10.06, whose determination
shall be conclusive and described in a Resolution of the Board of
Directors) of the evidences of indebtedness, shares of capital stock or
other securities or assets being distributed (in the distribution requiring
such computation) applicable to one share of Common Stock as of the close
of business on the day before such "ex" date. For the purpose of any
computation under SUBSECTION (E) of this SECTION 10.06, the current market
price per share of Common Stock at the expiration time for the tender offer
requiring such computation shall be deemed to be the average of the Daily
Market Price for the ten consecutive trading days commencing on the
business day immediately following the expiration time of such tender offer
(the "COMMENCEMENT DATE"); PROVIDED, HOWEVER, that if the "ex" date for any
event (other than the tender offer requiring such computation) that
requires an adjustment to the conversion rate pursuant to subsection (a),
(b), (c), (d) or (e) above occurs on or after the expiration time for the
tender offer requiring such computation and prior to the day in question,
the Daily Market Price for each trading day on or after to the "ex" date
for such other event shall be adjusted by multiplying such Daily Market
Price by the same fraction by which the conversion rate is so required to
be adjusted as a result of such other event. For purposes of this
subsection, the term "ex" date, (i) when used with respect to any issuance
or distribution, means the first date on which the Common Stock trades
regular way on the relevant exchange or in the relevant market from which
the Daily Market Price was obtained without the right to receive such
issuance or distribution, (ii) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which the
Common Stock trades regular way on such exchange or in such market after
the time at which such subdivision or combination becomes effective, and
(iii) when used with respect to any tender offer means the first date on
which the Common Stock trades regular
45
way on such exchange or in such market after the expiration time of
such tender offer (as it may be amended or extended).
10.07 NO ADJUSTMENT.
No adjustment in the conversion rate shall be required until cumulative
adjustments amount to 1% or more of the conversion rate as last adjusted;
PROVIDED, HOWEVER, that any adjustments which by reason of this SECTION 10.07
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this ARTICLE X shall be made
to the nearest cent or to the nearest one-hundredth of a share, as the case may
be. No adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. No adjustment need be
made for a change in the par value of the Common Stock.
If any rights, options or warrants issued by the Company as described in
SECTION 10.06 are only exercisable upon the occurrence of certain triggering
events, then the conversion rate will not be adjusted as provided in SECTION
10.06 until the earliest of such triggering event occurs. Upon the expiration or
termination of any rights, options or warrants without the exercise of such
rights, options or warrants, the conversion rate then in effect shall be
adjusted immediately to the conversion rate which would have been in effect at
the time of such expiration or termination had such rights, options or warrants,
to the extent outstanding immediately prior to such expiration or termination,
never been issued.
No adjustment need be made for a transaction referred to in this ARTICLE X
if Securityholders are to participate in the transaction without conversion on a
basis and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction.
10.08 OTHER ADJUSTMENTS.
In the event that, as a result of an adjustment made pursuant to SECTION
10.06 hereof, the Holder of any Security thereafter surrendered for conversion
shall become entitled to receive any shares of Capital Stock other than shares
of Common Stock, thereafter the conversion rate of such other shares so
receivable upon conversion of any Security shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to Common Stock contained in this ARTICLE X.
10.09 ADJUSTMENTS FOR TAX PURPOSES.
The Company may make such increases in the conversion rate, in addition to
those required by SECTION 10.06 hereof, as it determines to be advisable in
order that any stock dividend, subdivision of shares, distribution or rights to
purchase stock or securities or distribution of securities convertible into or
exchangeable for stock made by the Company or to its stockholders will not be
taxable to the recipients thereof.
46
10.10 NOTICE OF ADJUSTMENT.
Whenever the conversion rate is adjusted, the Company shall promptly mail
to Holders at the addresses appearing on the Registrar's books a notice of the
adjustment and file with the Trustee an Officers' Certificate briefly stating
the facts requiring the adjustment and the manner of computing it. The
certificate shall be conclusive evidence of the correctness of such adjustment.
10.11 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 would require a supplemental
indenture pursuant to SECTION 10.12; or
(3) there is a dissolution or liquidation of the Company;
a Holder of a Security may wish to convert such Security into shares of Common
Stock prior to the record date for or the effective date of the transaction so
that he may receive the rights, warrants, securities or assets which a holder of
shares of Common Stock on that date may receive. Therefore, the Company shall
mail to Holders at the addresses appearing on the Registrar's books and the
Trustee a notice stating the proposed record or effective date, as the case may
be, of any transaction referred to in CLAUSE (1), (2) or (3) of this SECTION
10.11. The Company shall mail such notice at least 15 days before such date;
however, failure to mail such notice or any defect therein shall not affect the
validity of any transaction referred to in CLAUSE (1), (2) or (3) of this
SECTION 10.11.
10.12 EFFECT OF RECLASSIFICATIONS, CONSOLIDATIONS, MERGERS, BINDING SHARE
EXCHANGES OR SALES ON CONVERSION PRIVILEGE.
If any of the following shall occur, namely: (i) any reclassification or
change in the Common Stock issuable upon conversion of Securities (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), (ii) any
consolidation, merger or binding share exchange to which the Company is a party
other than a merger in which the Company is the continuing corporation and which
does not result in any reclassification of, or change (other than a change in
name, or par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination) in, the Common Stock,
or (iii) any sale or conveyance of all or substantially all of the property or
business of the Company as an entirety, then the Company or such successor or
purchasing corporation, as the case may be, shall, as a condition precedent to
such reclassification, change, consolidation, merger, binding share exchange,
sale or conveyance, execute and deliver to the Trustee a supplemental indenture
in form reasonably satisfactory to the Trustee providing that the Holder of each
Security then outstanding shall have the right to convert such Security into the
kind and amount of shares of stock and other securities and property (including
cash) receivable upon such reclassification, change, consolidation, merger,
47
binding share exchange, 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, binding share exchange,
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 X. The
foregoing, however, shall not in any way affect the right a Holder of a Security
may otherwise have, pursuant to CLAUSE (II) of the last sentence of SUBSECTION
(C) of SECTION 10.06 hereof, to receive Rights upon conversion of a Security.
If, in the case of any such consolidation, merger, binding share exchange, sale
or conveyance, the stock or other securities and property (including cash)
receivable thereupon by a holder of Common Stock includes shares of stock or
other securities and property of a corporation other than the successor or
purchasing corporation, as the case may be, in such consolidation, merger,
binding share exchange, sale or conveyance, then such supplemental indenture
shall also be executed by such other corporation and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors shall reasonably consider necessary by reason of the
foregoing. The provision of this SECTION 10.12 shall similarly apply to
successive consolidations, mergers, binding share exchanges, sales or
conveyances.
In the event the Company shall execute a supplemental indenture pursuant to
this SECTION 10.12, the Company shall promptly file with the Trustee an
Officers' Certificate briefly stating the reasons therefor, the kind or amount
of shares of stock or securities or property (including cash) receivable by
Holders of the Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, binding share exchange, sale or
conveyance and any adjustment to be made with respect thereto.
10.13 TRUSTEE'S DISCLAIMER.
The Trustee has no duty to determine when an adjustment under this ARTICLE
X should be made, how it should be made or what such adjustment should be, but
may accept as conclusive evidence of the correctness of any such adjustment, and
shall be protected in relying upon the Officers' Certificate with respect
thereto which the Company is obligated to file with the Trustee pursuant to
SECTION 10.10 hereof. 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 failure by the Company to comply with
any provisions of this ARTICLE X.
The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to SECTION 10.12, but may accept as conclusive evidence of the
correctness thereof, and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to SECTION 10.12 hereof.
XI. SUBORDINATION
11.01 AGREEMENT TO SUBORDINATE.
The Company agrees, and each Securityholder by accepting a Security agrees,
that the payment of all amounts due with respect to the Securities is
subordinated in right of payment
48
(except as set forth in this ARTICLE XI with respect to Permitted Payments), to
the extent and in the manner provided in this ARTICLE XI, to the prior payment
in full of all Senior Indebtedness and that the subordination is for the benefit
of the holders of Senior Indebtedness.
Money and securities held in trust pursuant to ARTICLE VIII are not subject
to the subordination provisions of this ARTICLE XI.
11.02 CERTAIN DEFINITIONS.
"INDEBTEDNESS" means, with respect to any person, the principal of, and
premium, if any, and interest on (a) all indebtedness of such person for
borrowed money (including all indebtedness evidenced by notes, bonds, debentures
or other securities sold by such person for money), (b) all obligations incurred
by such person in the acquisition (whether by way of purchase, merger,
consolidation or otherwise and whether by such person or another person) of any
business, real property or other assets (except inventory and related items
acquired in the ordinary course of the conduct of the acquiror's usual
business), (c) guarantees by such person of indebtedness described in clause (a)
or (b) of another person, (d) all renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any such indebtedness,
obligation or guarantee, (e) all reimbursement obligations of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person, (f) all capital lease obligations of such
person, (g) all net obligations of such person under interest rate swap,
currency exchange or similar agreements of such person and (h) all obligations
and other liabilities, contingent or otherwise, under any lease or related
document, including a purchase agreement, conditional sale or other title
retention agreement, in connection with the lease of real property or
improvements thereon (or any personal property included as part of any such
lease) which provides that such person is contractually obligated to purchase or
cause a third party to purchase the leased property or pay an agreed upon
residual value of the leased property, including such person's obligations under
such lease or related document to purchase or cause a third party to purchase
such leased property or pay an agreed upon residual value of the leased property
to the lessor.
"REPRESENTATIVE" means the indenture trustee or other trustee, agent or
representative for an issue of Senior Indebtedness.
"SENIOR INDEBTEDNESS" means all Indebtedness of the Company outstanding at
any time, except the Securities, Indebtedness that by its terms provides that it
shall not be "senior" in right of payment to the Securities or Indebtedness that
by its terms provides that it shall be "pari passu" or "junior" in right of
payment to the Securities. Senior Indebtedness does not include Indebtedness of
the Company to any of its subsidiaries.
11.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution of assets to creditors of the Company in a
liquidation, winding up or dissolution of the Company, or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:
(i) holders of Senior Indebtedness shall be entitled to receive
payment in full of the principal of and interest (including interest
accruing after the
49
commencement of any such proceeding) to the date of payment on the
Senior Indebtedness before Securityholders shall be entitled to receive any
payment from the Company of amounts due with respect to the Securities
(other than cash payments due upon conversion of Securities in lieu of
fractional shares and except for Permitted Payments); and
(ii) until the Senior Indebtedness is paid in full, any distribution
to which Securityholders would be entitled from the Company but for this
ARTICLE XI (except for Permitted Payments) shall be made to holders of
Senior Indebtedness, as their interests may appear, except the
Securityholders may receive securities that are subordinated to Senior
Indebtedness to at least the same extent as the Securities and payments
made pursuant to SECTIONS 8.01 and 8.02.
11.04 COMPANY NOT TO MAKE PAYMENTS WITH RESPECT TO SECURITIES IN CERTAIN
CIRCUMSTANCES.
No payment of amounts due may be made by the Company, directly or
indirectly, with respect to the Securities (including any repurchase pursuant to
the exercise of the Repurchase Right, but excluding cash payments due upon
conversion in lieu of fractional shares and except for Permitted Payments) or to
acquire any of the Securities at any time if a default in payment of the
principal of or premium, if any, or interest on Senior Indebtedness exists
beyond any applicable grace period, unless and until such default shall have
been cured or waived or shall have ceased to exist. During the continuance of
any default with respect to any Senior Indebtedness pursuant to which any Senior
Indebtedness has been issued (other than default in payment of the principal of
or premium, if any, or interest on any Senior Indebtedness), permitting the
holders thereof to accelerate the maturity thereof, no payment (except for
Permitted Payments) may be made by the Company, directly or indirectly, of any
amount due with respect to the Securities (a "PAYMENT BLOCKAGE") until the
earlier of (i) the date on which such default has been cured or waived, (ii) 180
days following receipt of written notice (a "PAYMENT BLOCKAGE NOTICE") to the
Company from any holder or holders thereof or its Representative or
Representatives or the trustee or trustees under any indenture under which any
instrument evidencing any such Senior Indebtedness may have been issued, that
such a default has occurred and is continuing, (iii) the date on which such
Senior Indebtedness is discharged or paid in full or (iv) the date of which the
imposition of such Payment Blockage shall have been terminated by written notice
to such trustee or the Company from such trustee or other representative
initiating such Payment Blockage. Notwithstanding the foregoing, no new Payment
Blockage period shall commence until a period of at least 365 consecutive days
shall have elapsed since the beginning of the prior Payment Blockage period. No
default (other than a default in payment) that existed or was continuing on the
date of delivery of any Payment Blockage Notice shall be the basis for any
subsequent Payment Blockage Notice, unless such default has been cured or waived
for a period of not less than 90 consecutive days. However, if the maturity of
such Senior Indebtedness is accelerated, no payment may be made by the Company
on the Securities until such Senior Indebtedness that has matured has been paid
or such acceleration has been cured or waived.
Regardless of anything to the contrary herein, nothing shall prevent (a)
any payment by the Trustee to the Securityholders of amounts deposited with it
pursuant to ARTICLE VIII or (b)
50
any payment by the Trustee or the Paying Agent as permitted by SECTION 11.12 and
ARTICLE XI. Nothing contained in this ARTICLE XI will limit the right of the
Trustee or the Securityholders to take any action to accelerate the maturity of
the Securities pursuant to SECTION 6.02 or to pursue any rights or remedies
hereunder.
11.05 ACCELERATION OF SECURITIES.
If payment of the Securities is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
11.06 WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Company shall make any payment to the Trustee with
respect to the Securities at a time when such payment is prohibited by SECTION
11.03 or 11.04, such payment shall be held by the Trustee, in trust for the
benefit of, and shall be paid forthwith over and delivered to, the holders of
Senior Indebtedness (PRO RATA as to each of such holders on the basis of the
respective amounts of Senior Indebtedness held by them) or their Representative
or the trustee under the indenture or other agreement (if any) pursuant to which
Senior Indebtedness may have been issued, as their respective interests may
appear, for application to the payment of all Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
If a distribution is made to Securityholders, that because of this ARTICLE
XI should not have been made to them, the Securityholders who receive the
distribution shall hold it in trust for holders of Senior Indebtedness and pay
it over to them as their interests may appear.
11.07 NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent in
writing of any facts known to the Company that would cause a payment of any
amount due with respect to the Securities to violate this ARTICLE XI, but
failure to give such notice shall not affect the subordination of the Securities
to the Senior Indebtedness provided in this ARTICLE XI.
11.08 SUBROGATION.
After all Senior Indebtedness is paid in full and until the Securities are
paid in full, Securityholders shall be subrogated (equally and ratably with all
other Indebtedness of the Company ranking PARI PASSU with the Securities) to the
rights of holders of Senior Indebtedness to receive distributions applicable to
Senior Indebtedness to the extent that distributions otherwise payable to the
Securityholders have been applied to the payment of Senior Indebtedness. A
distribution made under this ARTICLE XI to holders of Senior Indebtedness which
otherwise would have been made to Securityholders is not, as between the Company
and Securityholders, a payment by the Company on Senior Indebtedness.
51
11.09 RELATIVE RIGHTS.
This ARTICLE XI defines the relative rights of Securityholders and holders
of Senior Indebtedness. Nothing in this Indenture shall:
(i) impair, as between the Company, on the one hand, and
Securityholders, on the other hand, the obligation of the Company, which is
absolute and unconditional, to pay all amounts due with respect to the
Securities in accordance with their terms;
(ii) affect the relative rights of Securityholders and creditors of
the Company other than holders of Senior Indebtedness; or
(iii) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders of Senior Indebtedness to receive distributions otherwise
payable to Securityholders.
Upon any distribution of assets of the Company referred to in this ARTICLE
XI, the Trustee, subject to the provisions of SECTIONS 7.01 and 7.02, and the
Holders of the Securities shall be entitled to rely upon any order or decree by
any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution to the
Trustee or the Holders of the Securities, 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 XI. Nothing contained in this ARTICLE
XI or elsewhere in this Indenture or in any Security is intended to or shall
affect the obligation of the Company to make, or prevent the Company from
making, at any time except during the pendency of any dissolution, winding up,
liquidation or reorganization proceeding, and except during the continuance of
any default specified in SECTION 11.04 (not cured or waived), payments at any
time of all amounts due with respect to the Securities.
11.10 SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any holder of Senior Indebtedness to enforce the subordination
of the indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by the failure of the Company to comply with
this Indenture.
11.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given to their
Representatives.
11.12 RIGHTS OF TRUSTEE AND PAYING AGENT.
The Trustee or Paying Agent may continue to make payments on the Securities
until it receives written notice of facts that would cause a payment of amounts
due with respect to the
52
Securities to violate this ARTICLE XI. Only the Company or a Representative or a
holder of an issue of Senior Indebtedness that has no Representative may give
the notice.
The Trustee shall be entitled to conclusively rely on the delivery to it of
a written notice by a person representing himself to be a holder of Senior
Indebtedness (or a Representative on behalf of such holder) to establish that
such notice has been given by a holder of Senior Indebtedness or a
Representative on behalf 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 who is a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this ARTICLE XI, the Trustee may request
such person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such person, the extent to which
such person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such person under this ARTICLE XI, 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 or until such time as the Trustee shall be otherwise satisfied as to the
right of such person to receive such payment.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holder if it shall
mistakenly pay over or distribute to Securityholders or the Company or any other
person money or assets to which any holders of Senior Indebtedness shall be
entitled by virtue of this ARTICLE XI or otherwise.
11.13 OFFICERS' CERTIFICATE.
If there occurs an event referred to in SECTION 11.03 or 11.04, the Company
shall promptly give to the Trustee an Officers' Certificate (on which the
Trustee may conclusively rely) identifying all holders of Senior Indebtedness or
their Representatives and the principal amount of Senior Indebtedness then
outstanding held by each such holder and stating the reasons why such Officers'
Certificate is being delivered to the Trustee.
11.14 NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make any payment due with respect to the Securities by
reason of any provision of this ARTICLE XI shall not be construed as preventing
the occurrence of an Event of Default under SECTION 6.01.
XII. SECURITY
12.01 SECURITY.
On the Closing Date, the Company shall (i) enter into the Pledge Agreement
and the Control Agreement and comply with the terms and provisions thereof and
(ii) purchase the Pledged Securities to be pledged to the Trustee for the
benefit of the Holders in such amount as will be sufficient upon receipt of
scheduled interest and/or principal payments of such Pledged
53
Securities to provide for payment in full of the first four scheduled interest
payments due on the Securities. The Pledged Securities shall be pledged by the
Company to the Trustee for the benefit of the Holders and shall be held by the
Trustee in the Pledge Account pending disposition pursuant to the Pledge
Agreement.
12.02 PLEDGE AGREEMENT.
Each Holder, by its acceptance of a Security, consents and agrees to the
terms of the Pledge Agreement and the Control Agreement (including, without
limitation, the provisions providing for foreclosure and release of the Pledged
Securities) as the same may be in effect or may be amended from time to time in
accordance with its terms, and authorizes and directs the Trustee to enter into
the Pledge Agreement and the Control Agreement and to perform its respective
obligations and exercise its respective rights thereunder in accordance
therewith. The Company will do or cause to be done all such acts and things as
may be necessary or reasonably requested by the Trustee, or as may be required
by the provisions of the Pledge Agreement or the Control Agreement, to assure
and confirm to the Trustee the security interest in the Pledged Securities
contemplated hereby, by the Pledge Agreement or any part thereof or the Control
Agreement or any part thereof, as from time to time constituted, so as to render
the same available for the security and benefit of this Indenture and of the
Securities secured hereby, according to the intent and purposes herein and
therein expressed. The Company shall take, or shall cause to be taken, upon
request of the Trustee, any and all actions reasonably required to cause the
Pledge Agreement and the Control Agreement to create and maintain, as security
for the obligations of the Company under this Indenture and the Securities,
valid and enforceable first priority Liens in and on all the Pledged Securities,
in favor of the Trustee, superior to and prior to the rights of third Persons
and subject to no other Liens.
12.03 RELEASE OF PLEDGED SECURITIES.
The release of any Pledged Securities pursuant to the Pledge Agreement will
not be deemed to impair the security under this Indenture in contravention of
the provisions hereof if and to the extent the Pledged Securities are released
pursuant to this Indenture and the Pledge Agreement and the Control Agreement.
To the extent applicable, the Company shall cause TIA ss. 314(d) relating to the
release of property or securities from the Lien and security interest of the
Pledge Agreement and relating to the substitution therefor of any property or
securities to be subjected to the Lien and security interest of the Pledge
Agreement to be complied with. Any certificate or opinion required by TIA ss.
314(d) may be made by an Officer of the Company, except in cases where TIA ss.
314(d) requires that such certificate or opinion be made by an independent
Person, which Person shall be an independent engineer, appraiser or other expert
selected by the Company.
12.04 DISBURSEMENTS FROM PLEDGE ACCOUNT UPON CONVERSION OR REPURCHASE.
If, prior to the payment of the fourth scheduled interest payment due on
the Securities, any Security converted in accordance with this Indenture or any
Security repurchased by the Company, then, upon the written request of the
Company to the Trustee and satisfaction of the conditions precedent specified in
this SECTION 12.04, the Trustee shall promptly liquidate the Collateral (as
defined in the Pledge Agreement) to the extent (but only to the extent)
necessary to
54
generate an amount of cash proceeds equal to the Release Amount (as defined
below) and shall distribute to the Company (such distribution, a "RELEASE
DISTRIBUTION") such amount in immediately available funds. Upon each Release
Distribution, the Trustee shall release the security interest and continuing
lien in that portion of the Collateral, and proceeds derived therefrom,
distributed to the Company pursuant to such Release Distribution, and shall
execute such documents as the Company may reasonably request to evidence such
release. No Release Distribution or liquidation to facilitate a Release
Distribution shall occur unless all of the following shall have been satisfied:
(i) the Company has delivered to the Trustee an opinion of counsel to
the effect that (A) the Securities referred to in the above paragraph have
been duly converted or repurchased by the Company and (B) all conditions
precedent to the Release Distribution have been satisfied;
(ii) the Company has delivered to the Trustee an officers' certificate
that (A) identifies the Securities that have been so converted or so
repurchased, (B) affirms that such Securities have been duly converted or
repurchased, (C) states that all conditions precedent relating to the
Release Distribution have been satisfied and (D) states the Release Amount;
(iii) the Company has delivered to the Trustee a Written Independent
Accountant Report (as defined in the Pledge Agreement) stating that the
Collateral to be remaining after the proposed Release Distribution and
related liquidation of Collateral will be sufficient, upon receipt of the
scheduled interest and principal payments on the remaining Pledged
Financial Assets (as defined in the Pledge Agreement), to provide for
payment in full of the remaining first four scheduled interest payments on
the Remaining Securities when due;
(iv) no Event of Default (as defined in Section 13 of the Pledge
Agreement) has occurred and is continuing;
(v) no Event (as defined in the Registration Rights Agreement) has
occurred and is continuing; and
(vi) no Securities that have been repurchased by the Company have
subsequently been resold.
"RELEASE AMOUNT" means an amount equal to the net proceeds (after deducting
expenses related in any way to the related Release Distribution and liquidation
of Collateral) from the liquidation of that portion of the Collateral not
necessary to remain in the Pledge Account in order to provide, from the receipt
of the scheduled interest and principal payments on the remaining Pledged
Financial Assets, for payment in full of the remaining first four scheduled
interest payments on the Remaining Notes when due.
"REMAINING SECURITIES" means the Securities other than the Securities
specified in the officer's certificate referred to in this SECTION 12.04 as
having been converted or repurchased.
55
12.05 OPINIONS OF COUNSEL.
The Company shall cause TIA ss. 314(b), relating to opinions of counsel
regarding the Lien under the Pledge Agreement, to be complied with. The Trustee
may accept, to the extent permitted by SECTIONS 4.04 and 7.06 as conclusive
evidence of compliance with the foregoing provisions, the appropriate statements
contained in such instruments.
12.06 AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE PLEDGE
AGREEMENT.
The Trustee may, in its sole discretion and without the consent of the
Holders, on behalf of the Holders, take all reasonable actions in accordance
with the Pledge Agreement necessary or appropriate in order to (i) enforce any
of the terms of the Pledge Agreement or (ii) collect and receive any and all
amounts payable in respect of the obligations of the Company thereunder. The
Trustee shall have power to institute and to maintain such suits and proceedings
as the Trustee may reasonably deem expedient to preserve or protect its
interests and the interests of the Holders in the Pledged Securities (including
power to institute and maintain suits or proceedings to restrain the enforcement
of or compliance with any legislative or other governmental enactment, rule or
order that may be unconstitutional or otherwise invalid if the enforcement of,
or compliance with, such enactment, rule or order would impair the security
interest hereunder or be prejudicial to the interests of the Holders or of the
Trustee).
XIII. MISCELLANEOUS
13.01 TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision of the TIA shall control.
13.02 NOTICES.
Any notice or communication by the Company or the Trustee to one or both of
the others is duly given if in writing and delivered in person, mailed by
first-class mail or by express delivery to the other parties' addresses stated
in this SECTION 13.02. The Company or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication to a Securityholder shall be mailed to 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 is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Securityholders, it shall
mail a copy to the other and to the Trustee and each Agent at the same time.
56
All notices or communications shall be in writing.
The Company's address is:
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive
San Diego, California 92121-1117
Facsimile: (858) 550-1825
Attention: President & Chief Executive Officer
The Trustee's address is:
J.P. Morgan Trust Company, National Association
560 Mission Street, 13th Floor
San Francisco, California 94105
Facsimile: (415) 315-7585
Attention: Mitch Gardner
13.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
13.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(i) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Each signer of an Officers' Certificate or an Opinion of Counsel may (if so
stated) rely, effectively, upon an Opinion of Counsel as to legal matters and an
Officers' Certificate as to factual matters if such signer reasonably and in
good faith believes in the accuracy of the document relied upon.
13.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each Officers' Certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
57
(i) a statement that the person making such certificate or
opinion has read such covenant or condition;
(ii) 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;
(iii) 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
(iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
13.06 RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Securityholders. The Registrar, Paying Agent or Conversion Agent may make
reasonable rules and set reasonable requirements for their respective functions.
13.07 LEGAL HOLIDAYS.
A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the City of New York, in the State
of New York or in the city in which the Trustee administers its corporate trust
business. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue on that payment for the intervening
period.
A "BUSINESS DAY" is a day other than a Legal Holiday.
13.08 NO RECOURSE AGAINST OTHERS.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Security waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Securities.
13.09 DUPLICATE ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement. Delivery of an executed counterpart by facsimile shall be effective
as delivery of a manually executed counterpart thereof.
58
13.10 GOVERNING LAW.
The laws of the State of New York, without regard to principles of
conflicts of law, shall govern this Indenture and the Securities.
13.11 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any of its subsidiaries. Any such indenture, loan or
debt agreement may not be used to interpret this Indenture.
13.12 SUCCESSORS.
All agreements of the Company in this Indenture and the Securities shall
bind their respective successors. All agreements of the Trustee in this
Indenture shall bind its successors.
13.13 SEPARABILITY.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby
and a Holder shall have no claim therefor against any party hereto.
13.14 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof and shall in no way modify or
restrict any of the terms or provisions hereof.
59
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first above written.
LIGAND PHARMACEUTICALS INCORPORATED
By: /S/ DAVID E. ROBINSON
-------------------------------
Name:
------------------------
Title:
-----------------------
J.P. MORGAN TRUST COMPANY, N.A., as Trustee
By: /S/ MITCH GARDNER
-----------------------------
Name:
-------------------------
Title:
------------------------
EXHIBIT A
[Face of Security]
LIGAND PHARMACEUTICALS INCORPORATED
[Certificate No. _______]
[INSERT PRIVATE PLACEMENT LEGEND AND GLOBAL SECURITY LEGEND AS REQUIRED]
6% CONVERTIBLE SUBORDINATED NOTE DUE 2007
CUSIP NO. ____________
LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation (herein called
the "COMPANY"), for value received, hereby promises to pay to Cede & Co. or
registered assigns, the principal sum of One Hundred Thirty-Five Million Dollars
($135,000,000) on November 16, 2007 and to pay interest thereon, as provided on
the reverse hereof, until the principal and any unpaid and accrued interest is
paid or duly provided for. The right to payment of the principal and all other
amounts due with respect hereto is subordinated to the rights of Senior
Indebtedness as set forth in the Indenture referred to on the reverse side
hereof.
Interest Payment Dates: May 16 and November 16, with the first payment to
be made on May 16, 2003.
Record Dates: May 1 and November 1.
The provisions on the back of this certificate are incorporated as if set
forth on the face hereof.
IN WITNESS WHEREOF, LIGAND PHARMACEUTICALS INCORPORATED has caused this
instrument to be duly signed.
LIGAND PHARMACEUTICALS INCORPORATED
By:
--------------------------------
Name:
Title:
Dated: _______________
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:
-------------------------------------------------
Authorized Signatory
Dated: ________________
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[REVERSE OF SECURITY]
LIGAND PHARMACEUTICALS INCORPORATED
6% CONVERTIBLE SUBORDINATED NOTE DUE 2007
1. INTEREST. LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation
(the "COMPANY"), promises to pay interest on the principal amount of this
Security at the rate PER ANNUM shown above. The Company will pay interest
semi-annually on May 16 and November 16 of each year, with the first payment to
be made on May 16, 2003. Interest on the Securities will accrue on the principal
amount from the most recent date to which interest has been paid or provided for
or, if no interest has been paid, from November 26, 2002. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
The Holder of this Security is entitled to the benefits of the Pledge
Agreement, dated November 26, 2002, between the Company and the Trustee,
pursuant to which the Company has placed in the Pledge Account cash or Pledged
Financial Assets sufficient to provide for the payment of the first four
interest payments on this Security. The terms capitalized but undefined in this
paragraph have the meanings given to them in the Pledge Agreement.
2. MATURITY. The Notes will mature on November 16, 2007.
3. METHOD OF PAYMENT. The Company will pay interest on the Securities
(except defaulted interest) to the persons who are registered Holders of
Securities at the close of business on the record date set forth on the face of
this Security next preceding the applicable interest payment date. Holders must
surrender Securities to a Paying Agent to collect the principal, Redemption
Price or Repurchase Price of the Securities. The Company will pay all amounts
due with respect to the Securities in money of the United States that at the
time of payment is legal tender for payment of public and private debts. If this
Security is in global form, the Company will pay interest on the Securities by
wire transfer of immediately available funds to the account specified by the
Holder. With respect to securities held other than in global form, the Company
will make payments by wire transfer of immediately available funds to the
account specified by the Holders thereof or, if no such account is specified
with respect to a Holder, by mailing a check to the Holder's registered address.
4. PAYING AGENT, REGISTRAR, CONVERSION AGENT. Initially, J.P. Morgan Trust
Company, National Association, (the "TRUSTEE") will act as Paying Agent,
Registrar and Conversion Agent. The Company may change any Paying Agent,
Registrar or Conversion Agent without notice. The Company or any Affiliate of
the Company may act as Paying Agent.
5. INDENTURE. The Company issued the Securities under an Indenture dated as
of November 26, 2002 (the "INDENTURE") between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.
Code ss.ss. 77aaa-77bbbb) (the "ACT") as in effect on the date of the Indenture.
The Securities are subject to all such terms, and Securityholders are referred
to the Indenture and the Act for a statement of such terms. The Securities are
general
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unsecured senior subordinated obligations of the Company limited to $135,000,000
aggregate principal amount ($155,250,000 if the Initial Purchaser (as defined in
the Indenture) has elected to exercise its over-allotment option to purchase an
additional $20,250,000 of the Securities), except as otherwise provided in the
Indenture (except for Securities issued in substitution for destroyed,
mutilated, lost or stolen Securities). Terms used herein which are defined in
the Indenture have the meanings assigned to them in the Indenture.
6. OPTIONAL REDEMPTION. The Securities will be redeemable prior to maturity
at the option of the Company, in whole or in part, at any time on or after
November 22, 2005, at the following redemption prices (expressed as percentages
of the principal amount thereof), if redeemed during the periods commencing on
the dates set forth below, in each case together with accrued and unpaid
interest to, but excluding, the redemption date:
---------------------------- --------------------------
Redemption
Date Price
---------------------------- --------------------------
November 22, 2005 102.40%
---------------------------- --------------------------
November 16, 2006 and 101.20%
thereafter
---------------------------- --------------------------
7. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder of
Securities to be redeemed at its registered address. Securities in denominations
larger than $1,000 principal amount may be redeemed in part but only in positive
integral multiples of $1,000 principal amount. On and after the redemption date
interest ceases to accrue on Securities or portions of them called for
redemption.
8. REPURCHASE AT OPTION OF HOLDER. In the event of a Change in Control with
respect to the Company, then each Holder of the Securities shall have the right,
at the Holder's option, subject to the rights of the holders of Senior
Indebtedness under ARTICLE XI of the Indenture, to require the Company to
repurchase such Holder's Securities including any portion thereof which is
$1,000 in principal amount or any positive integral multiple thereof on a day
(the "REPURCHASE DATE") that is 30 business days after the date of the Change in
Control Notice, unless otherwise required by applicable law, at a price equal to
100% of the outstanding principal amount of such Security, plus accrued and
unpaid interest to, but excluding, the Repurchase Date.
Within 30 business days after the occurrence of the Change in Control, the
Company is obligated to give notice of the occurrence of such Change in Control
to each Holder. Such notice shall include, among other things, the date by which
Holder must notify the Company of such Holder's intention to exercise the
Repurchase Right and of the procedure which such Holder must follow to exercise
such right. To exercise the Repurchase Right, a Holder of Securities must
deliver on or before the close of business on the third business day immediately
preceding the Repurchase Date written notice to the Company (or an agent
designated by the Company for
A-4
such purpose) and the Trustee of the Holder's exercise of such right together
with the Securities with respect to which the right is being exercised, duly
endorsed for transfer in accordance with the provisions of the Indenture.
A "CHANGE IN CONTROL" of the Company shall be deemed to have occurred at
such time as:
(i) any "person" or "group" (as such terms are used for purposes
of Sections 13(d) and 14(d) of the Exchange Act), is or becomes the
"beneficial owner" (as such term is used in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 50% or more of the voting
power of the Company's Common Stock or other capital stock into which
our common stock is reclassified or changed; or
(ii) at any time the following persons cease for any reason to
constitute a majority of our board of directors:
(1) individuals who on the issue date of the convertible
notes constituted our board of directors and
(2) any new directors whose election by our board of
directors or whose nomination for election by our stockholders
was approved by at least a majority of the directors then still
in office who were either directors on the issue date of the
convertible notes or whose election or nomination for election
was previously so approved; or
(iii) the sale, lease or transfer of all or substantially all of
the assets of the Company to any "person" or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act).
However, a Change in Control will not be deemed to have occurred if either:
(X) the last sale price of the Company's Common Stock for any five trading
days during the ten trading days immediately preceding the Change in
Control is at least equal to 105% of the then effective conversion
price on the date of such trading day; or
(Y) in the case of a merger or consolidation, all of the consideration
(excluding cash payments for fractional shares and cash payments
pursuant to dissenters' appraisal rights) in the merger or
consolidation constituting the Change in Control consists of common
stock traded on a U.S. national securities exchange or quoted on the
NNM (or which will be so traded or quoted when issued or exchanged in
connection with such Change in Control) and as a result of such
transaction or transactions the Securities become convertible solely
into such common stock.
9. CONVERSION. A Holder may convert his or her Security into Common Stock
of the Company at any time prior to the close of business on November 16, 2007,
or, (x) if the Security is called for redemption by the Company, the Holder may
convert it at any time before the close of business on the business day
immediately preceding the date fixed for such redemption, or (y) if the Security
is to be repurchased by the Company pursuant to PARAGRAPH 8
A-5
hereof, the Holder may convert it at any time before the close of business on
the business day immediately preceding the Repurchase Date. The initial
conversion rate is 161.9905 shares of Common Stock per $1,000 principal amount
of Securities, or an effective initial conversion price of approximately $6.17
per share, subject to adjustment in the event of certain circumstances as
specified in the Indenture. The Company will deliver a check in lieu of any
fractional share. On conversion no payment or adjustment for any unpaid and
accrued interest, or liquidated damages with respect to, the Securities will be
made. If a Holder surrenders a Security for conversion between the record date
for the payment of interest and the next interest payment date, such Security,
when surrendered for conversion, must be accompanied by payment of an amount
equal to the interest thereon which the registered Holder on such record date is
to receive, unless the Securities have been called for redemption as described
in the Indenture.
To convert a Security, a Holder must (1) complete and sign the Conversion
Notice, with appropriate signature guarantee, on the back of the Security, (2)
surrender the Security to a Conversion Agent, (3) furnish appropriate
endorsements and transfer documents if required by the Registrar or Conversion
Agent, (4) pay the amount of interest, if any, the Holder may be paid as
provided in the last sentence of the above paragraph and (5) pay any transfer or
similar tax if required. A Holder may convert a portion of a Security if the
portion is $1,000 principal amount or a positive integral multiple of $1,000
principal amount.
Any shares issued upon conversion of a Security shall bear the Private
Placement Legend until after the second anniversary of the later of the issue
date for the Securities and the last date on which the Company or any Affiliate
of the Company was the owner of such shares or the Security (or any predecessor
security) from which such shares were converted (or such shorter period of time
as permitted by Rule 144(k) under the Securities Act or any successor provision
thereunder) (or such longer period of time as may be required under the
Securities Act or applicable state securities laws in the Opinion of Counsel for
the Company, unless otherwise agreed by the Company and the Holder thereof).
10. SUBORDINATION. The Securities are subordinated in right of payment, in
the manner and to the extent set forth in the Indenture, to the prior payment in
full of all Senior Indebtedness. Each Holder by accepting a Security agrees to
such subordination and authorizes the Trustee to give it effect.
11. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in registered
form without coupons in denominations of $1,000 principal amount and positive
integral multiples of $1,000 principal amount. The transfer of Securities may be
registered and Securities may be exchanged as provided in the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents. No service charge shall be made for any
such registration of transfer or exchange, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith. The Registrar need not exchange or register the transfer
of any Security selected for redemption in whole or in part, except the
unredeemed portion of Securities to be redeemed in part. Also, it need not
exchange or register the transfer of any Securities for a period of 15 days
before the mailing of a notice of redemption of the Securities selected to be
redeemed and in certain other circumstances provided in the Indenture.
A-6
12. PERSONS DEEMED OWNERS. The registered Holder of a Security may be
treated as the owner of such Security for all purposes.
13. MERGER OR CONSOLIDATION. The Company shall not consolidate with or
merge into, or transfer or lease all or substantially all of its properties and
assets to, another person unless such other person is a corporation organized
under the laws of the United States, any State thereof or the District of
Columbia or a corporation or comparable legal entity organized under the laws of
a foreign jurisdiction and whose equity securities are listed on a national
securities exchange in the United States or authorized for quotation on the NNM
prior to or upon giving effect to the transaction (PROVIDED HOWEVER, that in the
case of a transaction where the surviving entity is organized under the laws of
a foreign jurisdiction, the Company may not consummate the transaction without
first (i) making provision for the satisfaction of its obligations to repurchase
Securities following a Change in Control, if any, and (ii) obtaining an opinion
of tax counsel experienced in such matters to the effect that, under then
existing United States federal income tax laws, there would be no material
adverse tax consequences to holders of the Securities resulting from such
transaction); such person assumes by supplemental indenture all the obligations
of the Company, under the Securities and this Indenture; and immediately after
giving effect to the transaction, no Default or Event of Default shall exist.
14. AMENDMENTS, SUPPLEMENTS AND WAIVERS. 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 aggregate principal amount of the
Securities then outstanding, and any existing Default or Event of Default may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or the consent of
any Securityholder, the Indenture or the Securities may be amended or
supplemented to cure any ambiguity or inconsistency, to comply with SECTIONS
5.01 and 10.12 of the Indenture, to make any changes or modifications to the
Indenture necessary in connection with the registration of the Securities under
the Securities Act and the qualification of the Indenture under the TIA, to
secure the obligations of the Company in respect of the Securities, or to add to
covenants of the Company described in the Indenture for the benefit of
Securityholders or to surrender any right or power conferred upon the Company.
15. DEFAULTS AND REMEDIES. An Event of Default includes the occurrence of
any of the following: default in payment of principal at maturity, upon
redemption or exercise of a Repurchase Right or otherwise; default for 30 days
in payment of interest or other amounts due, provided that a failure to make any
of the first four scheduled interest payments on any Security within three (3)
business days after the applicable interest payment dates will constitute an
Event of Default with no additional grace or cure period; failure by the Company
for 60 days after notice to it to comply with any of its other agreements in the
Indenture or the Securities; certain payment defaults or the acceleration of
other Indebtedness of the Company and its subsidiaries; certain events of
bankruptcy or insolvency involving the Company or its Significant Subsidiaries;
the Pledge Agreement cease to be in full force and effect or enforceable in
accordance with its terms; and default by the Company or failure by the Company
to comply with the Pledge Agreement or the Control Agreement, with no additional
grace or cure period. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding may declare all the Securities to be due and payable
immediately, except as provided in the Indenture. If an Event of Default
A-7
specified in SECTION 6.01(V) or (VI) of the Indenture with respect to the
Company occurs, the principal of and accrued interest on all the Securities
shall IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Securityholder.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the Securities then
outstanding may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default or
Event of Default (except a Default or Event of Default in payment) if it
determines that withholding notice is in the interests of the Securityholders.
The Company must furnish an annual compliance certificate to the Trustee.
16. REGISTRATION RIGHTS. The Holders are entitled to registration rights as
set forth in the Registration Rights Agreement (as defined in the Indenture).
The Holders shall be entitled to receive liquidated damages in certain
circumstances, all as set forth in the Registration Rights Agreement.
17. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee under the Indenture, or
any banking institution serving as successor Trustee thereunder, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not Trustee.
18. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee or stockholder, as such, of the Company shall have any
liability for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
19. AUTHENTICATION. This Security shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
20. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entirety), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts to
Minors Act).
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO:
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive
San Diego, California 92121-1117
Facsimile: (858) 550-1825
Attention: President & Chief Executive Officer
A-8
[FORM OF ASSIGNMENT]
I or we assign to
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
- ----------------------------------------------
- -------------------------------------------------------------------------------
(please print or type name and address)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
the within Security and all rights thereunder, and hereby irrevocably
constitutes and appoints
- -------------------------------------------------------------------------------
Attorney to transfer the Security on the books of the Company with full power of
substitution in the premises.
Dated:
----------- --------------------------
NOTICE: The signature on this assignment must
correspond with the name as it appears upon the face of the
within Security in every particular without alteration or
enlargement or any change whatsoever and be guaranteed by a
guarantor institution participating in the Securities
Transfer Agents Medallion Program or in such other guarantee
program acceptable to the Trustee.
Signature Guarantee:
- -------------------------------------------------------------------------------
In connection with any transfer of this Security occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "SECURITIES ACT") covering resales of this Security (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) the Resale Restriction Termination Date, the undersigned
confirms that it has not utilized any general solicitation or general
advertising in connection with transfer:
A-9
[Check One]
(1) ____ to the Company or any subsidiary thereof; or
(2) ____ pursuant to and in compliance with Rule 144A under the Securities Act
of 1933, as amended; or
(3) ____ pursuant to the exemption from registration provided by Rule 144 under
the Securities Act of 1933, as amended; or
(4) ____ pursuant to an effective registration statement under the Securities
Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "AFFILIATE"):
_________The transferee is an Affiliate of the Company. (If the Security is
transferred to an Affiliate, the restrictive legend must remain on the Security
for two years following the date of the transfer).
Unless one of the items is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; PROVIDED, HOWEVER, that if item (3) or (4)
is checked, the Company or the Trustee may require, prior to registering any
such transfer of the Securities, in their sole discretion, such written legal
opinions, certifications and other information as the Trustee or the Company
have reasonably requested to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended.
If none of the foregoing items are checked, the Trustee or Registrar shall
not be obligated to register this Security in the name of any person other than
the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in SECTION 2.16 of the Indenture shall have
been satisfied.
Dated: Signed:
---------------- ------------------------------------------
(Sign exactly as name appears on the other
side of this Security)
Signature Guarantee:
----------------------------------------------------------
A-10
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
----------------- ------------------------------------------------
NOTICE: To be executed by an executive officer
A-11
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 in multiples 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.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)
- ------------------------------------------------------------------------------
Date:______________ Signature(s):
-----------------------------------------
-----------------------------------------
(Sign exactly as your name(s) appear(s) on
the other side of this Security)
Signature(s) guaranteed by:
--------------------------------------------------
(All signatures must be guaranteed by a guarantor
institution participating in the Securities
Transfer Agents Medallion Program or in such other
guarantee program acceptable to the Trustee.)
A-12
OPTION OF HOLDER TO ELECT PURCHASE NOTICE
Certificate No. of Security: ___________
If you want to elect to have this Security purchased by the Company
pursuant to SECTION 3.08 of the Indenture, check the box:_______
If you want to elect to have only part of this Security purchased by the
Company pursuant to SECTION 3.08 of the Indenture, state the principal amount:
$ ----------------------------------
(in an integral multiple of $1,000)
Date:__________________ Signature(s):
----------------------------------------
----------------------------------------
(Sign exactly as your name(s)
appear(s) on the other side of
this Security)
Signature(s) guaranteed by:
----------------------------------------
(All signatures must be guaranteed by a
guarantor institution participating
in the Securities Transfer Agents
Medallion Program or in such other
guarantee program acceptable to the
Trustee.)
A-13
SCHEDULE A
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITYa.
-----------------------------------------------------------
The following exchanges of a part of this Global Security for an interest
in another Global Security or for Securities in certificated form, have been
made:
Principal amount of
Amount of decrease Amount of increase in this Global Signature or
in Principal amount Principal amount of Security following authorized signatory
of this Global this Global Security such decrease of Trustee or Note
Date of Exchange Security (or increase) Custodian
- -------------------------------------------
a This is included in Global Notes only.
EXHIBIT B-1
FORM OF PRIVATE PLACEMENT LEGEND
THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE ACQUIRER:
(1) REPRESENTS THAT:
(A) IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A "QUALIFIED INSTITUTIONAL
BUYER" (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT
EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
(2) AGREES THAT IT WILL NOT DIRECTLY OR INDIRECTLY ENGAGE IN ANY HEDGING
TRANSACTIONS INVOLVING THIS SECURITY OR THE COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS SECURITY UNLESS IN COMPLIANCE WITH THE SECURITIES ACT, AND
(3) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN,
PRIOR TO THE DATE THAT IS THE LATER OF (X) TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER
THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH LATER
DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT ONLY:
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF;
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER
THE SECURITIES ACT AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF TRANSFER;
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT; OR
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE).
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (3)(C) ABOVE,
A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM
THE TRUSTEE) MUST BE DELIVERED TO THE TRUSTEE. PRIOR TO THE REGISTRATION OF ANY
TRANSFER IN ACCORDANCE
B-1-1
WITH (3)(D) ABOVE, THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE
DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY
REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING
MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.
NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
B-1-2
EXHIBIT B-2
FORM OF LEGEND FOR GLOBAL SECURITY
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
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 OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN
THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY 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) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), 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 DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF
OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE.
B-2-1
EXHIBIT C
FORM OF NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
LIGAND PHARMACEUTICALS INCORPORATED
10275 Science Center Drive
San Diego, California 92121
[Trustee]
[Address]
Attention:
Re: LIGAND PHARMACEUTICALS INCORPORATED (the "COMPANY") 6% Convertible
Subordinated Notes due 2007 (the "SECURITIES")
Ladies and Gentlemen:
Please be advised that _____________ has transferred $___________ aggregate
principal amount of the Securities or __ shares of the Common Stock, $.001 par
value per share, of the Company issuable on conversion of the Securities
("STOCK") pursuant to an effective Shelf Registration Statement on Form S-3
(File No. 333-________).
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933 as amended, have been satisfied with respect to the
transfer described above and that the above-named beneficial owner of the
Securities or Stock is named as a "SELLING SECURITY HOLDER" in the Prospectus
dated _________, or in amendments or supplements thereto, and that the aggregate
principal amount of the Securities, or number of shares of Stock transferred are
[a portion of] the Securities or Stock listed in such Prospectus, as amended or
supplemented, opposite such owner's name.
Very truly yours,
-------------------------
(Name)
C-1
EXHIBIT D
FORM OF OPINION OF COUNSEL IN CONNECTION WITH REGISTRATION OF SECURITIES
[Name]
[Address]
Re: LIGAND PHARMACEUTICALS INCORPORATED (the "COMPANY") 6% Convertible
Subordinated Notes due 2007 (the "SECURITIES")
Ladies and Gentlemen:
Reference is made to the Securities issued pursuant to a certain indenture
dated as of November 26, 2002 by and between the Company and J.P. Morgan Trust
Company, N.A., as trustee (the "TRUSTEE"). The Company issued $135,000,000
principal amount of Securities on November 26, 2002 (and an additional
$20,250,000 on [________], 2002 if the initial purchaser's over-allotment option
is exercised) in transactions exempt from registration under the Securities Act
of 1933, as amended (the "SECURITIES ACT"). The Company has filed with the
Securities and Exchange Commission (the "SEC") a registration statement on Form
S-3 (File No. 333-____) (the "REGISTRATION STATEMENT") relating to the
registration under the Securities Act of $______________ principal amount of the
Securities and the shares of Common Stock of the Company (the "SHARES") issuable
upon conversion of the Securities being registered. The Registration Statement
was declared effective by order of the SEC dated [_____________].
We have acted as counsel for the Company in connection with the issuance of
the Securities and the preparation and filing of the Registration Statement and
are familiar with the Securities, the Indenture, the Registration Statement, the
above-mentioned SEC order and such other documents as are necessary to render
this opinion.
Based on the foregoing, it is our opinion that (1) the Registration
Statement has become effective under the Securities Act and, to our knowledge,
no stop order suspending the effectiveness of the Registration Statement has
been issued, (2) assuming that the Securities covered by the Registration
Statement and the Shares issuable upon conversion of such Securities are sold by
a relevant Holder specified in the Registration Statement in a manner specified
in the Registration Statement, such sale of the Securities and Shares issuable
upon conversion of the Securities will have been duly registered under the
Securities Act and (3) the Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended.
Yours truly,
D-1