UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported):
May 14, 2007
CHEMED CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-8351 31-0791746
-------- ------ ----------
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification
incorporation) Number)
2600 Chemed Center, 255 East 5th Street, Cincinnati, OH 45202
- ------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(513) 762-6900
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 230.425)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under
Exchange Act (17 CFR 230.425)
[_] Pre-commencement communications pursuant to Rule 13e-4 (c) under
Exchange Act (17 CFR 230.425)
Page 1 of 5
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
PURCHASE AGREEMENT
On May 8, 2007 Chemed Corporation ("We") entered into a Purchase Agreement
with J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. (the "Initial
Purchasers") for our issuance and sale of $180 million in aggregate principal
amount of our 1.875% Senior Convertible Notes due 2014 (the "Notes"). On May 9,
2007, the Initial Purchasers exercised an over-allotment option to purchase an
additional $20 million in aggregate principal amount of Notes. On May 14, 2007 a
total of $200 million in aggregate principal amount of the Notes were sold to
the Initial Purchasers at a price of $1,000 per Note, less an initial purchaser
discount of $27.50 per Note. The Notes are to be resold by the Initial
Purchasers pursuant to Rule 144A of the Securities Act of 1933, as amended (the
"Securities Act").
The Purchase Agreement includes customary representations, warranties and
covenants. Under the terms of the Purchase Agreement, we have agreed to
indemnify the Initial Purchasers against certain liabilities.
This description of the Purchase Agreement is qualified by reference to its
filing as Exhibit 1.1, and incorporated herein by reference.
CONVERTIBLE NOTE HEDGE AND WARRANT TRANSACTIONS
On May 8, 2007 we entered into convertible note hedge transactions and
warrant transactions with JPMorgan Chase, National Association and Citibank,
N.A. (the "Counterparties"). These transactions included purchased call options
and sale of warrants. Our net cost for these transactions was approximately
$27.3 million.
The purchased call options cover approximately 2,477,000 shares of our
Capital Stock, par value $1 per share, which under most circumstances represents
the maximum number of shares of Capital Stock that underlie the Notes.
Concurrently with entering into the purchased call options, we entered into
warrant transactions with each of the Counterparties. Pursuant to the warrant
transactions, we sold to the Counterparties warrants to purchase in the
aggregate approximately 2,477,000 shares of Capital Stock. In most cases, the
warrants may not be exercised prior to the maturity of the Notes.
The purchased call options and sold warrants are separate contracts with
the Counterparties, are not part of the terms of the Notes and do not affect the
rights of holders under the Notes. A holder of the Notes will not have any
rights with respect to the purchased call options or the sold warrants. The
purchased call options are expected to reduce the potential dilution upon
conversion of the Notes if the market value per share of the Capital Stock at
the time of exercise is greater than approximately $80.73, which corresponds to
the initial conversion price of the Notes. The sold warrants have an exercise
price of $105.44 and are expected to result in some dilution should the price of
our Capital Stock exceed this exercise price.
This description of the convertible note hedge transaction documents and
warrant transaction documents are qualified by reference to the documents filed
as Exhibits 10.1, 10.2, 10.3 and 10.4, which are incorporated herein by
reference.
Page 2 of 5
INDENTURE
We issued the $200 million of Notes pursuant to an Indenture dated May 14,
2007 by and among us, as issuer, the subsidiary guarantors named therein, and
LaSalle National Bank National Association, as trustee (the "Indenture"). We
received approximately $194 million in net proceeds from the sale of the Notes
after paying initial purchaser discounts, legal and other expenses.
We will pay interest on the Notes on May 15 and November 15 of each year,
beginning on November 15, 2007. The Notes will mature on May 15, 2014. The Notes
are guaranteed on an unsecured senior basis by each of our subsidiaries that is
a borrower or a guarantor under any senior credit facility, as defined in the
Indenture.
The Notes are convertible, under certain circumstances, into Capital Stock
at a conversion rate of 12.3874 shares per $1,000 principal amount of Notes.
This conversion rate is equivalent to an initial conversion price of
approximately $80.73 per share. Prior to March 1, 2014, holders may convert
their Notes under certain circumstances. On and after March 1, 2014, the Notes
will be convertible at any time prior to the close of business on the business
day before the stated maturity date of the Notes. Upon conversion of a Note, if
the conversion value is $1,000 or less, holders will receive cash equal to the
lesser of $1,000 or the conversion value of the number of shares of Capital
Stock. If the conversion value exceeds $1,000, in addition to this, holders will
receive Capital Stock for the excess amount.
The Indenture contains customary terms and covenants that upon certain
events of default, including without limitation, failure to pay when due any
principal amount or a fundamental change or certain cross defaults in other
agreements or instruments, occurring and continuing, either the trustee or the
holders of 25% in aggregate principal amount of the Notes may declare the
principal of the Notes and any accrued and unpaid interest through the date of
such declaration immediately due and payable. In the case of certain events of
bankruptcy or insolvency relating to any significant subsidiary, or us the
principal amount of the Notes and accrued interest automatically becomes due and
payable.
This description of the Indenture is qualified in its entirety by
reference to Exhibit 4.1, incorporated herein by reference.
Page 3 of 5
REGISTRATION RIGHTS AGREEMENT
We, our subsidiary guarantors and the Initial Purchasers entered into a
Registration Rights Agreement (the "RRA") dated May 14, 2007. Pursuant to the
RRA, we and our subsidiary guarantors agreed for the benefit of the holders of
the Notes and the Capital Stock issuable upon conversion of the Notes that we
will, no later than the 120th day after May 14, 2007, file a shelf registration
statement covering resales of the Notes and the Capital Stock issuable upon
conversion pursuant to Rule 415 under the Securities Act. We will also cause the
shelf registration statement to be declared effective under the Securities Act
no later than the 180th day after May 14, 2007.
This description of the RRA is qualified by reference to the RRA filed
as Exhibit 10.5, incorporated herein by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The description of the Indenture in Item 1.01, above is incorporated
herein by reference.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
On May 8, 2007 in connection with the warrant transactions described in
Item 1.01, above, we sold to the Counterparties warrants for approximately
2,477,000 shares of Capital Stock. We sold these warrants in reliance on the
exemption from registration contained in Section 4(2) of the Securities Act.
The description of the warrant transaction documents in Item 1.01 above
is incorporated herein by reference.
ITEM 8.01 OTHER EVENTS.
On May 14, 2007, we issued a press release, filed herewith as Exhibit
99.1 and incorporated herein by reference.
Page 4 of 5
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
c) Exhibits
(1.1) Purchase Agreement dated May 8, 2007, by and among Chemed
Corporation, J.P. Morgan Securities Inc. and Citigroup Global Markets
Inc.
(4.1) Convertible Senior Note Indenture dated May 14, 2007 for the
1.875% Convertible Senior Notes due 2014 by and among Chemed
Corporation, the Subsidiary Guarantors and LaSalle Bank National
Association, as Trustee.
(10.1) Confirmation of Convertible Note Hedge, dated May 8, 2007,
between Chemed Corporation and JPMorgan Chase Bank, National
Association.
(10.2) Confirmation of Convertible Note Hedge, dated May 8, 2007,
between Chemed Corporation and Citibank, N.A.
(10.3) Confirmation of Convertible Note Warrant Transaction, dated May
8, 2007, between Chemed Corporation and JPMorgan Chase Bank, National
Association.
(10.4) Confirmation of Convertible Note Warrant Transaction, dated May
8, 2007, between Chemed Corporation and Citibank, N.A.
(10.5) Registration Rights Agreement, dated May 14, 2007, by and among
Chemed Corporation, J.P. Morgan Securities Inc. and Citigroup Global
Markets Inc.
(99.1) Registrant's press release dated May 14, 2007.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
CHEMED CORPORATION
Dated: MAY 17, 2007 By: /S/ ARTHUR V. TUCKER, JR.
-------------- --------------------------
Arthur V. Tucker, Jr.
Vice President and Controller
Page 5 of 5
EXHIBIT 1.1
$180,000,000
Chemed Corporation
1.875% Convertible Senior Notes due May 15, 2014
Purchase Agreement
May 8, 2007
J.P. Morgan Securities Inc.
277 Park Avenue
9th Floor
New York, NY 10172
Citigroup Global Markets Inc.
390 Greenwich Street
New York, New York 10013
As Representatives of the
several Initial Purchasers
listed in Schedule 1 hereto
Ladies and Gentlemen:
Chemed Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell to the several initial purchasers listed in Schedule 1 hereto
(the "Initial Purchasers"), for whom you are acting as representatives (the
"Representatives"), $180,000,000 principal amount of its 1.875% Convertible
Senior Notes due 2014 (the "Firm Securities"). The Securities (as defined below)
will be issued pursuant to an Indenture to be dated as of May 14, 2007 (the
"Indenture") among the Company, the guarantors listed in Schedule 2 hereto (the
"Guarantors") and LaSalle Bank, N.A., as trustee (the "Trustee"), and will be
guaranteed on an unsecured senior basis by each of the Guarantors (the
"Guarantees"). The Company also proposes to issue and sell to the Initial
Purchasers not more than an additional $20,000,000 principal amount of its
1.875% Convertible Senior Notes due 2014 (the "Additional Securities") if and to
the extent that the Initial Purchasers shall have determined to exercise the
right to purchase such 1.875% Convertible Senior Notes due 2014 granted to the
Initial Purchasers in Section 1 hereof. The Firm Securities and the Additional
Securities are hereinafter collectively referred to as the "Securities". The
Securities will be convertible into shares (the "Underlying Securities") of
capital stock of the Company, par value $1.00 per share (the "Capital Stock").
The Securities will be sold to the Initial Purchasers without being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in reliance upon an exemption therefrom. The Company and the Guarantors have
prepared a preliminary offering memorandum dated May 7, 2007 (the "Preliminary
Offering Memorandum") and will prepare an offering memorandum dated the date
hereof (the "Offering Memorandum") setting forth information concerning the
Company and the Securities. Copies of the Preliminary Offering Memorandum have
been, and copies of the Offering Memorandum will be, delivered by the Company to
the Initial Purchasers pursuant to the terms of this Agreement. The Company
hereby confirms that it has authorized the use of the Preliminary Offering
Memorandum, the other Time of Sale Information (as defined below) and the
Offering Memorandum in connection with the offering and resale of the Securities
by the Initial Purchasers in the manner contemplated by this Agreement.
References herein to the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum shall be deemed to refer to and include
any document incorporated by reference therein.
At or prior to the time when sales of the Securities were first made (the
"Time of Sale"), the following information shall have been prepared
(collectively with the pricing information set forth on Annex A hereto, the
"Time of Sale Information"): the Preliminary Offering Memorandum, as
supplemented and amended by the written communications listed on Annex A hereto.
Holders of the Securities (including the Initial Purchasers and their
direct and indirect transferees) will be entitled to the benefits of a
Registration Rights Agreement, to be dated the Closing Date (as defined below)
and substantially in the form attached hereto as Exhibit A (the "Registration
Rights Agreement"), pursuant to which the Company and the Guarantors will agree
to file one or more registration statements with the Securities and Exchange
Commission (the "Commission") providing for the registration under the
Securities Act of the Securities, the Underlying Securities and the Guarantees.
The Company hereby confirms its agreement with the several Initial
Purchasers concerning the purchase and resale of the Securities, as follows:
1. Purchase and Resale of the Securities. (a) The Company agrees to issue
and sell the Securities to the several Initial Purchasers as provided in this
Agreement, and each Initial Purchaser, on the basis of the representations,
warranties and agreements set forth herein and subject to the conditions set
forth herein, agrees, severally and not jointly, to purchase from the Company
the respective principal amount of Securities set forth opposite such Initial
Purchaser's name in Schedule 1 hereto at a price equal to 97.25% of the
principal amount thereof (the "Purchase Price") plus accrued interest, if any,
from May 14, 2007 to the Closing Date.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Initial Purchasers the Additional Securities, and the Initial Purchasers
shall have the right to purchase in whole, or from time to time in part, up to
$20,000,000 principal amount of Additional Securities at the Purchase Price plus
accrued interest, if any, from the Closing Date (as defined below) to the date
of payment and delivery. If you, on behalf of the Initial Purchasers, exercise
such option, you shall so notify the Company in writing, which notice shall
specify the principal amount of Additional Securities to be purchased by the
Initial Purchasers and the date on which such Additional Securities are to be
purchased. Such date may be the same as the Closing Date but not earlier than
the Closing Date nor later than ten business days after the date of such notice,
and in no case later than the 13-day period commencing on and including the
Closing Date.
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(b) The Company understands that the Initial Purchasers intend to offer the
Securities for resale on the terms set forth in the Time of Sale Information.
Each Initial Purchaser, severally and not jointly, represents, warrants and
agrees that:
(i) it is a qualified institutional buyer within the meaning of Rule
144A under the Securities Act (a "QIB") and an accredited investor within
the meaning of Rule 501(a) under the Securities Act;
(ii) it has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities by means of any form
of general solicitation or general advertising within the meaning of Rule
502(c) of Regulation D under the Securities Act ("Regulation D") or in any
manner involving a public offering within the meaning of Section 4(2) of
the Securities Act; and
(iii) it has not solicited offers for, or offered or sold, and will
not solicit offers for, or offer or sell, the Securities as part of their
initial offering except within the United States to persons whom it
reasonably believes to be QIBs in transactions pursuant to Rule 144A under
the Securities Act ("Rule 144A") and in connection with each such sale, it
has taken or will take reasonable steps to ensure that the purchaser of the
Securities is aware that such sale is being made in reliance on Rule 144A.
(c) Each Initial Purchaser acknowledges and agrees that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 6(f) and 6(g), counsel for the Company and counsel for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers, and compliance by the Initial Purchasers
with their agreements, contained in paragraph (b) above, and each Initial
Purchaser hereby consents to such reliance.
(d) The Company acknowledges and agrees that the Initial Purchasers may
offer and sell Securities to or through any affiliate of an Initial Purchaser
and that any such affiliate may offer and sell Securities purchased by it to or
through any Initial Purchaser.
(e) The Company and the Guarantors acknowledge and agree that the Initial
Purchasers are acting solely in the capacity of an arm's length contractual
counterparty to the Company and the Guarantors with respect to the offering of
Securities contemplated hereby (including in connection with determining the
terms of the offering) and not as financial advisors or fiduciaries to, or
agents of, the Company, the Guarantors or any other person. Additionally,
neither of the Representatives nor any of the other Initial Purchasers are
advising the Company, the Guarantors or any other person as to any legal, tax,
investment, accounting or regulatory matters in any jurisdiction. The Company
and the Guarantors shall consult with their own advisors concerning such matters
and shall be responsible for making their own independent investigation and
appraisal of the transactions contemplated hereby, and neither of the
Representatives nor any of the other Initial Purchasers shall have any
responsibility or liability to the Company or the Guarantors with respect
thereto. Any review by the Representatives or any Initial Purchaser of the
Company, the Guarantors and the transactions contemplated hereby or other
matters relating to such transactions will be performed solely for the benefit
of the Representatives or such Initial Purchaser, as the case may be, and shall
not be on behalf of the Company, the Guarantors or any other person.
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2. Payment and Delivery. (a) Payment for and delivery of the Firm
Securities will be made at the offices of Davis Polk & Wardwell, 450 Lexington
Avenue, New York, New York 10017 at 10:00 A.M., New York City time, on May 14,
2007, or at such other time or place on the same or such other date, not later
than the fifth business day thereafter, as the Representatives and the Company
may agree upon in writing. The time and date of such payment and delivery is
referred to herein as the "Closing Date".
Payment for and delivery of the Additional Securities will be made at the
offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017
at 10:00 A.M., New York City time, on the date specified in the notice described
in Section 1 or at such other time or place on the same or such other date, not
later than the 13-day period commencing on and including the Closing Date, as
the Representatives and the Company may agree upon in writing. The time and date
of such payment and delivery is referred to herein as the "Optional Closing
Date".
(b) Payment for the Firm Securities and Additional Securities shall be made
by wire transfer in immediately available funds to the account(s) specified by
the Company to the Representatives against delivery to the nominee of The
Depository Trust Company, for the account of the Initial Purchasers, of one or
more global notes representing the Firm Securities and the Additional Securities
(collectively, the "Global Note"), with any transfer taxes payable in connection
with the sale of the Securities duly paid by the Company. The Global Note will
be made available for inspection by the Representatives not later than 1:00
P.M., New York City time, on the business day prior to the Closing Date or the
Optional Closing Date, as the case may be.
3. Representations and Warranties of the Company and the Guarantors. The
Company and the Guarantors jointly and severally represent and warrant to each
Initial Purchaser that:
4
(a) Preliminary Offering Memorandum, Time of Sale Information and Offering
Memorandum. The Preliminary Offering Memorandum, as of its date, did not, the
Time of Sale Information, at the Time of Sale, did not, and at the Closing Date,
will not, and the Offering Memorandum, in the form first used by the Initial
Purchasers to confirm sales of the Securities and as of the Closing Date, will
not, contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Company and the Guarantors make no representation or warranty with respect to
any statements or omissions made in reliance upon and in conformity with
information relating to any Initial Purchaser furnished to the Company in
writing by such Initial Purchaser through the Representatives expressly for use
in the Preliminary Offering Memorandum, the Time of Sale Information or the
Offering Memorandum.
(b) Additional Written Communications. Other than the Preliminary Offering
Memorandum and the Offering Memorandum, the Company (including its agents and
representatives, other than the Initial Purchasers in their capacity as such)
has not made, used, prepared, authorized, approved or referred to and will not
prepare, make, use, authorize, approve or refer to any written communication
that constitutes an offer to sell or solicitation of an offer to buy the
Securities other than the documents listed on Annex A hereto, including a term
sheet substantially in the form of Annex B hereto, and other written
communications used in accordance with Section 4(c).
(c) Incorporated Documents. The documents incorporated by reference in each
of the Time of Sale Information and the Offering Memorandum, when filed with the
Commission, conformed or will conform, as the case may be, in all material
respects to the requirements of the Exchange Act and the rules and regulations
of the Commission thereunder, and did not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(d) Financial Statements. The financial statements and the related notes
thereto included or incorporated by reference in each of the Time of Sale
Information and the Offering Memorandum present fairly the financial position of
the Company and its subsidiaries as of the dates indicated and the results of
their operations and the changes in their cash flows for the periods specified;
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods covered thereby; and the other financial information included or
incorporated by reference in each of the Time of Sale Information and the
Offering Memorandum has been derived from the accounting records of the Company
and its subsidiaries and presents fairly the information shown thereby.
(e) No Material Adverse Change. Since the date of the most recent financial
statements of the Company included or incorporated by reference in each of the
Time of Sale Information and the Offering Memorandum (i) there has not been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries, or any dividend or distribution of any kind declared, set aside
for payment, paid or made by the Company on any class of capital stock, or any
material adverse change, or any development involving a prospective material
adverse change, in or affecting the business, properties, management, financial
position, results of operations or prospects of the Company and its subsidiaries
taken as a whole; (ii) neither the Company nor any of its subsidiaries has
entered into any transaction or agreement that is material to the Company and
its subsidiaries taken as a whole or incurred any liability or obligation,
direct or contingent, that is material to the Company and its subsidiaries taken
as a whole; and (iii) neither the Company nor any of its subsidiaries has
sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor disturbance or dispute or any action, order or decree of any court or
arbitrator or governmental or regulatory authority, except in the case of
clauses (i) through (iii) as otherwise disclosed in the Time of Sale
Information.
5
(f) Organization and Good Standing. The Company and each of its
subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each jurisdiction in
which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all power and
authority necessary to own or hold their respective properties and to conduct
the businesses in which they are engaged, except where the failure to be so
qualified, in good standing or have such power or authority would not,
individually or in the aggregate, have a material adverse effect on the
business, properties, management, financial position, results of operations or
prospects of the Company and its subsidiaries taken as a whole or on the
performance by the Company and the Guarantors of their respective obligations
under the Securities and the Guarantees (a "Material Adverse Effect"). The
subsidiaries listed in Schedule 3 to this Agreement are the only significant
subsidiaries of the Company.
(g) Capitalization. The Company has an authorized capitalization as set
forth in each of the Time of Sale Information and the Offering Memorandum under
the heading "Capitalization"; such authorized capital stock of the Company
conforms as to legal matters in all material respects to the description thereof
contained in the Time of Sale Information and the Offering Memorandum; there are
no outstanding options to purchase, or any rights or warrants to subscribe for,
or any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of Capital Stock, any shares of capital
stock of any subsidiary, or any such warrants, convertible securities or
obligations, except as set forth in the Time of Sale Information and the
Offering Memorandum and except for options granted under, or contracts or
commitments pursuant to, the Company's previous or currently existing stock
option and other similar officer, director or employee benefit plans; except for
this Agreement and the Registration Rights Agreement or stock purchase plans,
there are no contracts, commitments, agreements, arrangements, understandings or
undertakings of any kind to which the Company is a party, or by which it is
bound, granting to any person the right to require either the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company or requiring the Company to include such securities with the
Securities registered pursuant to any registration statement; the shares of
Capital Stock outstanding on the date hereof have been duly authorized and are
validly issued, fully paid and non-assessable; and all the outstanding shares of
capital stock or other equity interests of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and are owned directly or indirectly by the Company, free and clear of any lien,
charge, encumbrance, security interest, restriction on voting or transfer or any
other claim of any third party.
6
(h) Due Authorization. The Company and each of the Guarantors have full
right, power and authority to execute and deliver this Agreement, the
Securities, the Indenture (including each Guarantee set forth therein) and the
Registration Rights Agreement (collectively, the "Transaction Documents") and to
perform its obligations hereunder and thereunder; and all action required to be
taken for the due and proper authorization, execution and delivery of each of
the Transaction Documents and the consummation of the transactions contemplated
thereby has been duly and validly taken.
(i) The Indenture. The Indenture has been duly authorized by the Company
and each of the Guarantors and, when duly executed and delivered in accordance
with its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company and each of the Guarantors enforceable
against the Company and each of the Guarantors in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and other similar laws affecting
creditors' rights generally from time to time in effect and to general
principles of equity (collectively, the "Enforceability Exceptions"); and on the
Closing Date, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission applicable to
an indenture that is qualified thereunder.
(j) The Securities and the Guarantees. The Securities have been duly
authorized by the Company and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and paid for as provided herein, will be
duly and validly issued and outstanding and will constitute valid and legally
binding obligations of the Company enforceable against the Company in accordance
with their terms, subject to the Enforceability Exceptions, and will be entitled
to the benefits of the Indenture and the Guarantees have been duly authorized by
each of the Guarantors and, when the Securities have been duly executed,
authenticated, issued and delivered as provided in the Indenture and paid for as
provided herein, will be valid and legally binding obligations of each of the
Guarantors, enforceable against each of the Guarantors in accordance with their
terms, subject to the Enforceability Exceptions, and will be entitled to the
benefits of the Indenture.
(k) The Underlying Securities. Upon issuance and delivery of the Securities
in accordance with the Agreement and the Indenture, the Securities will be
convertible at the option of the holder thereof into shares of the Underlying
Securities in accordance the terms of the Securities; the Underlying Securities
reserved for issuance upon conversion of the Securities have been duly
authorized and reserved and, when issued upon conversion of the Securities in
accordance with the terms of the Securities, will be validly issued, fully paid
and non-assessable, and the issuance of the Underlying Securities will not be
subject to any preemptive or similar rights.
7
(l) Purchase and Registration Rights Agreements. This Agreement has been
duly authorized, executed and delivered by the Company and each of the
Guarantors; and the Registration Rights Agreement has been duly authorized by
the Company and each of the Guarantors on the Closing Date will be duly executed
and delivered by the Company and each of the Guarantors and, when duly executed
and delivered in accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company and each of the
Guarantors enforceable against the Company and each of the Guarantors in
accordance with its terms, subject to the Enforceability Exceptions, and except
that rights to indemnity and contribution thereunder may be limited by
applicable law and public policy.
(m) Descriptions of the Transaction Documents. Each Transaction Document
conforms in all material respects to the description thereof contained in each
of the Time of Sale Information and the Offering Memorandum.
(n) No Violation or Default. Neither the Company nor any of its
subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect.
(o) No Conflicts. The execution, delivery and performance by the Company
and each of the Guarantors of each of the Transaction Documents to which each is
a party, the issuance and sale of the Securities (including the issuance of the
Guarantees and the Underlying Securities upon conversion of the Securities) and
compliance by the Company and each of the Guarantors with the terms thereof and
the consummation of the transactions contemplated by the Transaction Documents
will not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any of its subsidiaries pursuant to, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, (ii) result in any violation of
the provisions of the charter or by-laws or similar organizational documents of
the Company or any of its subsidiaries or (iii) result in the violation of any
law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except, in the case of
clauses (i) and (iii) above, for any such conflict, breach, violation or default
that would not, individually or in the aggregate, have a Material Adverse
Effect.
8
(p) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of each of the Transaction Documents to which each is a party,
the issuance and sale of the Securities (including the issuance of the
Guarantees and the Underlying Securities upon conversion of the Securities) and
compliance by the Company and each of the Guarantors with the terms thereof and
the consummation of the transactions contemplated by the Transaction Documents,
except for such consents, approvals, authorizations, orders and registrations or
qualifications as may be required under applicable state securities laws in
connection with the purchase and resale of the Securities by the Initial
Purchasers and as may be required under applicable state securities laws and the
Securities Act in connection with the transactions contemplated by the
Registration Rights Agreement.
(q) Legal Proceedings. Except as described in each of the Time of Sale
Information and the Offering Memorandum, there are no legal, governmental or
regulatory investigations, actions, suits or proceedings pending to which the
Company or any of its subsidiaries is or may be a party or to which any property
of the Company or any of its subsidiaries is or may be the subject that,
individually or in the aggregate, if determined adversely to the Company or any
of its subsidiaries, could reasonably be expected to have a Material Adverse
Effect; and no such investigations, actions, suits or proceedings are threatened
or, to the knowledge of the Company and each of the Guarantors, contemplated by
any governmental or regulatory authority or by others.
(r) Independent Accountants. PricewaterhouseCoopers LLP, who have certified
certain financial statements of the Company and its subsidiaries are independent
public accountants with respect to the Company and its subsidiaries within the
applicable rules and regulations adopted by the Commission and the Public
Accounting Oversight Board (United States) and as required by the Securities
Act.
(s) Title to Real and Personal Property. The Company and its subsidiaries
have good and marketable title in fee simple to, or have valid rights to lease
or otherwise use, all items of real and personal property that are material to
the respective businesses of the Company and its subsidiaries, in each case free
and clear of all liens, encumbrances, claims and defects and imperfections of
title except those that (i) do not materially interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries or (ii)
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
9
(t) Title to Intellectual Property. The Company and its subsidiaries own or
possess adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective businesses;
and the conduct of their respective businesses will not conflict in any material
respect with any such rights of others, and the Company and its subsidiaries
have not received any notice of any claim of infringement of or conflict with
any such rights of others.
(u) No Undisclosed Relationships. No relationship, direct or indirect,
exists between or among the Company or any of its subsidiaries, on the one hand,
and the directors, officers, stockholders or other affiliates of the Company or
any of its subsidiaries, on the other, that would be required by the Securities
Act to be described in a registration statement to be filed with the Commission
and that is not so described in each of the Time of Sale Information and the
Offering Memorandum.
(v) Investment Company Act. Neither the Company nor any of its subsidiaries
is, and after giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in each of the Time of Sale
Information and the Offering Memorandum none of them will be, an "investment
company" or an entity "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, and the rules and regulations
of the Commission thereunder (collectively, the "Investment Company Act").
(w) Taxes. The Company and its subsidiaries have paid all material federal,
state, local and foreign taxes and filed all tax returns required to be paid or
filed through the date hereof; and except as otherwise disclosed in each of the
Time of Sale Information and the Offering Memorandum, there is no material tax
deficiency that has been, or could reasonably be expected to be, asserted
against the Company or any of its subsidiaries or any of their respective
properties or assets.
(x) Licenses and Permits. The Company and its subsidiaries possess all
licenses, certificates, permits and other authorizations issued by, and have
made all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses as described in each of the Time of Sale Information and
the Offering Memorandum, except where the failure to possess or make the same
would not, individually or in the aggregate, have a Material Adverse Effect; and
except as described in each of the Time of Sale Information and the Offering
Memorandum, neither the Company nor any of its subsidiaries has received notice
of any revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such license, certificate,
permit or authorization will not be renewed in the ordinary course.
10
(y) No Labor Disputes. No labor disturbance by or dispute with employees of
the Company or any of its subsidiaries exists or, to the knowledge of the
Company and each of the Guarantors, is contemplated or threatened and neither
the Company nor any Guarantor is aware of any existing or imminent labor
disturbance by, or dispute with, the employees of any of the Company's or any of
the Company's subsidiaries' principal suppliers, contractors or customers,
except as would not have a Material Adverse Effect.
(z) Compliance With Environmental Laws. (i) The Company and its
subsidiaries (x) are, and at all prior times were, in compliance with any and
all applicable federal, state, local and foreign laws, rules, regulations,
requirements, decisions and orders relating to the protection of human health or
safety, the environment, natural resources, hazardous or toxic substances or
wastes, pollutants or contaminants (collectively, "Environmental Laws"), (y)
have received and are in compliance with all permits, licenses, certificates or
other authorizations or approvals required of them under applicable
Environmental Laws to conduct their respective businesses, and (z) have not
received notice of any actual or potential liability under or relating to any
Environmental Laws, including for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes, pollutants or
contaminants, and have no knowledge of any event or condition that would
reasonably be expected to result in any such notice, and (ii) there are no costs
or liabilities associated with Environmental Laws of or relating to the Company
or its subsidiaries, except in the case of each of (i) and (ii) above, for any
such failure to comply, or failure to receive required permits, licenses or
approvals, or cost or liability, as would not, individually or in the aggregate,
have a Material Adverse Effect; and (iii) except as described in each of the
Time of Sale Information and the Offering Memorandum, (x) there are no
proceedings that are pending, or that are known to be contemplated, against the
Company or any of its subsidiaries under any Environmental Laws in which a
governmental entity is also a party, other than such proceedings regarding which
it is reasonably believed no monetary sanctions of $100,000 or more will be
imposed, (y) the Company and its subsidiaries are not aware of any issues
regarding compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws or concerning hazardous or toxic substances
or wastes, pollutants or contaminants, that could reasonably be expected to have
a material effect on the capital expenditures, earnings or competitive position
of the Company and its subsidiaries, and (z) none of the Company and its
subsidiaries anticipates material capital expenditures relating to any
Environmental Laws.
(aa) Compliance With ERISA. (i) Each employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), for which the Company or any member of its "Controlled
Group" (defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the "Code")) would have any liability (each, a "Plan") has
been maintained in compliance with its terms and the requirements of any
applicable statutes, orders, rules and regulations, including but not limited to
ERISA and the Code; (ii) no prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to
any Plan excluding transactions effected pursuant to a statutory or
administrative exemption; (iii) for each Plan that is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA, no "accumulated
funding deficiency" as defined in Section 412 of the Code, whether or not
waived, has occurred or is reasonably expected to occur; (iv) the fair market
value of the assets of each Plan exceeds the present value of all benefits
accrued under such Plan (determined based on those assumptions used to fund such
Plan); (v) no "reportable event" (within the meaning of Section 4043(c) of
ERISA) has occurred or is reasonably expected to occur; and (vi) neither the
Company nor any member of the Controlled Group has incurred, nor reasonably
expects to incur, any liability under Title IV of ERISA (other than
contributions to the Plan or premiums to the PBGC, in the ordinary course and
without default) in respect of a Plan (including a "multiemployer plan", within
the meaning of Section 4001(a)(3) of ERISA).
11
(bb) Disclosure Controls. The Company and its subsidiaries maintain an
effective system of "disclosure controls and procedures" (as defined in Rule
13a-15(e) of the Exchange Act) that is designed to ensure that information
required to be disclosed by the Company in reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission's rules and forms, including
controls and procedures designed to ensure that such information is accumulated
and communicated to the Company's management as appropriate to allow timely
decisions regarding required disclosure. The Company and its subsidiaries have
carried out evaluations of the effectiveness of their disclosure controls and
procedures as required by Rule 13a-15 of the Exchange Act.
(cc) Accounting Controls. The Company and its subsidiaries maintain systems
of "internal control over financial reporting" (as defined in Rule 13a-15(f) of
the Exchange Act) that comply with the requirements of the Exchange Act and have
been designed by, or under the supervision of, their respective principal
executive and principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. The
Company and its subsidiaries maintain internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Except as disclosed in each of the Time of Sale Information and the Offering
Memorandum, to the knowledge of the Company, there are no material weaknesses or
significant deficiencies in the Company's internal controls.
12
(dd) No Unlawful Payments. Neither the Company nor any of its subsidiaries
nor, to the knowledge of the Company and each of the Guarantors, any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company or any of its subsidiaries has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.
(ee) Insurance. The Company and its subsidiaries have insurance covering
their respective properties, operations, personnel and businesses, which
insurance is in amounts and insures against such losses and risks as are
adequate to protect the Company and its subsidiaries and their respective
businesses; and neither the Company nor any of its subsidiaries has any reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage at reasonable cost
from similar insurers as may be necessary to continue its business.
(ff) Compliance with Money Laundering Laws. The operations of the Company
and its subsidiaries are and have been conducted at all times in compliance in
all material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the "Money Laundering Laws") and no action, suit or proceeding by
or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened.
(gg) Compliance with OFAC. None of the Company, any of its subsidiaries or,
to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury ("OFAC"); and the Company will not directly or
indirectly use the proceeds of the offering of the Securities hereunder, or
lend, contribute or otherwise make available such proceeds to any subsidiary,
joint venture partner or other person or entity, for the purpose of financing
the activities of any person currently subject to any U.S. sanctions
administered by OFAC.
(hh) Solvency. On and immediately after the Closing Date, the Company
(after giving effect to the issuance of the Securities and the other
transactions related thereto as described in each of the Time of Sale
Information and the Offering Memorandum) will be Solvent. As used in this
paragraph, the term "Solvent" means, with respect to a particular date, that on
such date (i) the present fair market value (or present fair saleable value) of
the assets of the Company is not less than the total amount required to pay the
liabilities of the Company on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured; (ii) the
Company is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations and commitments as they mature and become
due in the normal course of business; (iii) assuming consummation of the
issuance of the Securities as contemplated by this Agreement, the Time of Sale
Information and the Offering Memorandum, the Company is not incurring debts or
liabilities beyond its ability to pay as such debts and liabilities mature; (iv)
the Company is not engaged in any business or transaction, and does not propose
to engage in any business or transaction, for which its property would
constitute unreasonably small capital after giving due consideration to the
prevailing practice in the industry in which the Company is engaged; and (v) the
Company is not a defendant in any civil action that would reasonably be expected
to result in a judgment that the Company is or would become unable to satisfy.
13
(ii) No Restrictions on Subsidiaries. No subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or is subject, from paying any dividends to
the Company, from making any other distribution on such subsidiary's capital
stock, from repaying to the Company any loans or advances to such subsidiary
from the Company or from transferring any of such subsidiary's properties or
assets to the Company or any other subsidiary of the Company.
(jj) No Broker's Fees. Neither the Company nor any of its subsidiaries is a
party to any contract, agreement or understanding with any person (other than
this Agreement) that would give rise to a valid claim against any of them or any
Initial Purchaser for a brokerage commission, finder's fee or like payment in
connection with the offering and sale of the Securities.
(kk) Rule 144A Eligibility. On the Closing Date, the Securities will not be
of the same class as securities listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in an automated
inter-dealer quotation system; and each of the Preliminary Offering Memorandum
and the Offering Memorandum, each as of its respective date, contains or will
contain all the information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective purchaser
pursuant to Rule 144A(d)(4) under the Securities Act.
(ll) No Integration. Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D) has, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act), that is or will be
integrated with the sale of the Securities in a manner that would require
registration of the Securities under the Securities Act.
(mm) No General Solicitation. None of the Company or any of its affiliates
or any other person acting on its or their behalf (other than the Initial
Purchasers, as to which no representation is made) has solicited offers for, or
offered or sold, the Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act.
14
(nn) Securities Law Exemptions. Assuming the accuracy of the
representations and warranties of the Initial Purchasers contained in Section
1(b) and their compliance with their agreements set forth therein, it is not
necessary, in connection with the issuance and sale of the Securities to the
Initial Purchasers and the offer, resale and delivery of the Securities by the
Initial Purchasers in the manner contemplated by this Agreement, the Time of
Sale Information and the Offering Memorandum, to register the Securities under
the Securities Act or to qualify the Indenture under the Trust Indenture Act.
(oo) No Stabilization. Neither the Company nor any of the Guarantors have
taken, directly or indirectly, any action designed to or that could reasonably
be expected to cause or result in any stabilization or manipulation of the price
of the Securities.
(pp) Margin Rules. Neither the issuance, sale and delivery of the
Securities nor the application of the proceeds thereof by the Company as
described in each of the Time of Sale Information and the Offering Memorandum
will violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System or any other regulation of such Board of Governors.
(qq) Forward-Looking Statements. No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in any of the Time of Sale Information or the Offering Memorandum
has been made or reaffirmed without a reasonable basis or has been disclosed
other than in good faith.
(rr) Statistical and Market Data. Nothing has come to the attention of the
Company that has caused the Company to believe that the statistical and
market-related data included or incorporated by reference in each of the Time of
Sale Information and the Offering Memorandum is not based on or derived from
sources that are reliable and accurate in all material respects.
(ss) Sarbanes-Oxley Act. There is and has been no failure on the part of
the Company or any of the Company's directors or officers, in their capacities
as such, to comply in all material respects with any provision of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith (the "Sarbanes-Oxley Act"), including Section 402 related
to loans and Sections 302 and 906 related to certifications.
4. Further Agreements of the Company and the Guarantors. The Company and
the Guarantors jointly and severally covenant and agree with each Initial
Purchaser that:
(a) Delivery of Copies. The Company will deliver to the Initial Purchasers
as many copies of the Preliminary Offering Memorandum, any other Time of Sale
Information and the Offering Memorandum (including all amendments and
supplements thereto) as the Representatives may reasonably request.
15
(b) Offering Memorandum, Amendments or Supplements. Before finalizing the
Offering Memorandum or making or distributing any amendment or supplement to any
of the Time of Sale Information or the Offering Memorandum or filing with the
Commission any document that will be incorporated by reference therein, the
Company will furnish to the Representatives and counsel for the Initial
Purchasers a copy of the proposed Offering Memorandum or such amendment or
supplement or document to be incorporated by reference therein for review, and
will not distribute any such proposed Offering Memorandum, amendment or
supplement or file any such document with the Commission to which the
Representatives reasonably object.
(c) Additional Written Communications. Before using, authorizing, approving
or referring to any written communication (as defined in the Securities Act)
that constitutes an offer to sell or a solicitation of an offer to buy the
Securities (an "Issuer Written Communication") (other than written
communications that are listed on Annex A hereto, the Preliminary Offering
Memorandum and the Offering Memorandum), the Company will furnish to the
Representatives and counsel for the Initial Purchasers a copy of such written
communication for review and will not use, authorize, approve or refer to any
such written communication to which the Representatives reasonably object.
(d) Notice to the Representatives. The Company will advise the
Representatives promptly, and confirm such advice in writing, (i) of the
issuance by any governmental or regulatory authority of any order preventing or
suspending the use of any of the Time of Sale Information or the Offering
Memorandum or the initiation or threatening of any proceeding for that purpose;
(ii) of the occurrence of any event at any time prior to the completion of the
initial offering of the Securities as a result of which any of the Time of Sale
Information or the Offering Memorandum as then amended or supplemented would
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing when such Time of Sale Information or the Offering
Memorandum is delivered to a purchaser, not misleading; and (iii) of the receipt
by the Company of any notice with respect to any suspension of the qualification
of the Securities for offer and sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and the Company will use its
commercially reasonable efforts to prevent the issuance of any such order
preventing or suspending the use of any of the Time of Sale Information or the
Offering Memorandum or suspending any such qualification of the Securities and,
if any such order is issued, will obtain as soon as possible the withdrawal
thereof.
(e) Ongoing Compliance of the Offering Memorandum and Time of Sale
Information. (1) If at any time prior to the completion of the initial offering
of the Securities (i) any event shall occur or condition shall exist as a result
of which the Offering Memorandum as then amended or supplemented would include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances existing when the Offering Memorandum is delivered to a purchaser,
not misleading or (ii) it is necessary to amend or supplement the Offering
Memorandum to comply with law, the Company will immediately notify the Initial
Purchasers thereof and forthwith prepare and, subject to paragraph (b) above,
furnish to the Initial Purchasers such amendments or supplements to the Offering
Memorandum (or any document to be filed with the Commission and incorporated by
reference therein) as may be necessary so that the statements in the Offering
Memorandum as so amended or supplemented (or including such document to be
incorporated by reference therein) will not, in the light of the circumstances
existing when the Offering Memorandum is delivered to a purchaser, be misleading
or so that the Offering Memorandum will comply with law and (2) if at any time
prior to the Closing Date (i) any event shall occur or condition shall exist as
a result of which any of the Time of Sale Information as then amended or
supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading or
(ii) it is necessary to amend or supplement any of the Time of Sale Information
to comply with law, the Company will immediately notify the Initial Purchasers
thereof and forthwith prepare and, subject to paragraph (b) above, furnish to
the Initial Purchasers such amendments or supplements to any of the Time of Sale
Information (or any document to be filed with the Commission and incorporated by
reference therein) as may be necessary so that the statements in any of the Time
of Sale Information as so amended or supplemented will not, in light of the
circumstances under which they were made, be misleading.
16
(f) Blue Sky Compliance. The Company will qualify the Securities for offer
and sale under the securities or Blue Sky laws of such jurisdictions as the
Representatives shall reasonably request and will continue such qualifications
in effect so long as required for the offering and resale of the Securities;
provided that the neither the Company nor any of the Guarantors shall be
required to (i) qualify as a foreign corporation or other entity or as a dealer
in securities in any such jurisdiction where it would not otherwise be required
to so qualify, (ii) file any general consent to service of process in any such
jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it
is not otherwise so subject.
(g) Clear Market. Without the prior written consent of the Representatives,
neither the Company nor any of the Guarantors will, during the period ending 90
days after the date of the Offering Memorandum, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Capital
Stock or any securities convertible into or exercisable or exchangeable for
Capital Stock, (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Capital Stock, (iii) file with the Commission a registration statement under
the Securities Act relating to any additional shares of its Capital Stock or
securities convertible into, or exchangeable for, any shares of its Capital
Stock, or publicly disclose the intention to effect any transaction described in
clause (i), (ii) or (iii), whether any such transaction described in clause (i)
or (ii) above is to be settled by delivery of Capital Stock or such other
securities, in cash or otherwise; provided that the foregoing shall not apply to
(A) the sale of the Securities under this Agreement or the issuance of the
Underlying Securities, (B) the grant by the Company of employee or director
stock options in the ordinary course of business, the issuance by the Company of
any shares of Capital Stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof, (C) the filing of any
registration statement in respect of the Securities and the Underlying
Securities and (D) the sale of up to 250,000 shares of Capital Stock by
individual officers and directors identified on Exhibit B-1 hereto; provided,
further, that the Company will notify the Representatives upon any issuance
pursuant to clause (C) above.
17
(h) Use of Proceeds. The Company will apply the net proceeds from the sale
of the Securities as described in each of the Time of Sale Information and the
Offering Memorandum under the heading "Use of Proceeds".
(i) Underlying Securities. The Company will reserve and keep available at
all times, free of pre-emptive rights, shares of Capital Stock for the purpose
of enabling the Company to satisfy all obligations to issue the Underlying
Securities upon conversion of the Securities. The Company will use its
commercially reasonable efforts to cause the Underlying Securities to be listed
on the New York Stock Exchange (the "Exchange").
(j) Supplying Information. While the Securities remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, the Company and each of the Guarantors will, during any period
in which the Company is not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, furnish to holders of the Securities, prospective
purchasers of the Securities designated by such holders and securities analysts,
in each case upon request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
(k) PORTAL and DTC. The Company will assist the Initial Purchasers in
arranging for the Securities to be designated Private Offerings, Resales and
Trading through Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National Association of Securities
Dealers, Inc. (the "NASD") relating to trading in the PORTAL Market and for the
Securities to be eligible for clearance and settlement through The Depository
Trust Company ("DTC").
(l) Indenture Qualification. Prior to any registration of the Securities
pursuant to the Registration Rights Agreement, or at such earlier time as may be
so required, the Company will use its commercially reasonable efforts to qualify
the Indenture under the Trust Indenture Act, and to enter into any necessary
supplemental indentures in connection therewith.
(m) No Resales by the Company. During the period from the Closing Date
until two years after the Closing Date or the Option Closing Date, if
applicable, the Company will not, and will not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the Securities
that have been acquired by any of them, except for Securities purchased by the
Company or any of its affiliates and resold in a transaction registered under
the Securities Act.
18
(n) No Integration. Neither the Company nor any of its affiliates (as
defined in Rule 501(b) of Regulation D) will, directly or through any agent,
sell, offer for sale, solicit offers to buy or otherwise negotiate in respect
of, any security (as defined in the Securities Act), that is or will be
integrated with the sale of the Securities in a manner that would require
registration of the Securities under the Securities Act.
(o) No General Solicitation. None of the Company or any of its affiliates
or any other person acting on its or their behalf (other than the Initial
Purchasers, as to which no covenant is given) will solicit offers for, or offer
or sell, the Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D or in any manner
involving a public offering within the meaning of Section 4(2) of the Securities
Act.
(p) No Stabilization. Neither the Company nor any of the Guarantors will
take, directly or indirectly, any action designed to or that could reasonably be
expected to cause or result in any stabilization or manipulation of the price of
the Securities and will not take any action prohibited by Regulation M under the
exchange Act in connection with the distribution of the Securities contemplated
hereby.
5. Certain Agreements of the Initial Purchasers. Each Initial Purchaser
hereby represents and agrees that it has not and will not use, authorize use of,
refer to, or participate in the planning for use of, any written communication
that constitutes an offer to sell or the solicitation of an offer to buy the
Securities other than (i) a written communication that contains no "issuer
information" (as defined in Rule 433(h)(2) under the Securities Act) that was
not included (including through incorporation by reference) in the Preliminary
Offering Memorandum, (ii) any written communication listed on Annex A or
prepared pursuant to Section 4(c) above, (iii) any written communication
prepared by such Initial Purchaser and approved by the Company in advance in
writing or (iv) any written communication relating to or that contains the terms
of the Securities and/or other information that was included (including through
incorporation by reference) in the Preliminary Offering Memorandum.
6. Conditions of Initial Purchasers' Obligations. The obligation of each
Initial Purchaser to purchase Securities on the Closing Date as provided herein
is subject to the performance by the Company and each of the Guarantors of their
respective covenants and other obligations hereunder and to the following
additional conditions:
(a) Representations and Warranties. The representations and warranties of
the Company and the Guarantors contained herein shall be true and correct on the
date hereof and on and as of the Closing Date; and the statements of the Company
and the Guarantors and their respective officers made in any certificates
delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date.
19
(b) No Downgrade. Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating accorded the
Securities or any other debt securities or preferred stock issued or guaranteed
by the Company or any of its subsidiaries by any "nationally recognized
statistical rating organization", as such term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act; and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, or has changed its outlook with respect to, its rating of the Securities
or of any other debt securities or preferred stock issued or guaranteed by the
Company or any of its subsidiaries (other than an announcement with positive
implications of a possible upgrading).
(c) No Material Adverse Change. No material change in the capital stock or
long-term debt of the Company and no event or condition of a type described in
Section 3(e) hereof shall have occurred or shall exist, which change, event or
condition is not described in each of the Time of Sale Information (excluding
any amendment or supplement thereto) and the Offering Memorandum (excluding any
amendment or supplement thereto) the effect of which in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the
offering, sale or delivery of the Securities on the terms and in the manner
contemplated by this Agreement, the Time of Sale Information and the Offering
Memorandum.
(d) Officer's Certificate. The Representatives shall have received on and
as of the Closing Date a certificate of an executive officer of the Company and
each of the Guarantors who has specific knowledge of the Company's or such
Guarantor's financial matters and is satisfactory to the Representatives (i)
confirming that such officer has carefully reviewed the Time of Sale Information
and the Offering Memorandum and, to the knowledge of such officer, the
representations set forth in Sections 3(a) and 3(b) hereof are true and correct,
(ii) confirming that the other representations and warranties of the Company and
the Guarantors in this Agreement are true and correct and that the Company and
the Guarantors have complied with all agreements and satisfied all conditions on
their part to be performed or satisfied hereunder at or prior to the Closing
Date and (iii) to the effect set forth in paragraphs (b) and (c) above.
(e) Comfort Letters. On the date of this Agreement and on the Closing Date,
PricewaterhouseCoopers LLP shall have furnished to the Representatives, at the
request of the Company, letters, dated the respective dates of delivery thereof
and addressed to the Initial Purchasers, in form and substance reasonably
satisfactory to the Representatives, containing statements and information of
the type customarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained or incorporated by reference in each of the Time of Sale Information
and the Offering Memorandum; provided that the letter delivered on the Closing
Date shall use a "cut-off" date no more than three business days prior to the
Closing Date.
20
(f) Opinion of Counsel for the Company. Cravath, Swaine & Moore LLP,
counsel for the Company, the General Counsel of the Company and Richards, Layton
& Finger, P.A., special Delaware counsel to the Company, shall have furnished to
the Representatives, at the request of the Company, their written opinion, dated
the Closing Date and addressed to the Initial Purchasers, in form and substance
reasonably satisfactory to the Representatives, to the effect set forth in Annex
C hereto.
(g) Opinion of Counsel for the Initial Purchasers. The Representatives
shall have received on and as of the Closing Date an opinion of Davis Polk &
Wardwell, counsel for the Initial Purchasers, with respect to such matters as
the Representatives may reasonably request, and such counsel shall have received
such documents and information as they may reasonably request to enable them to
pass upon such matters.
(h) No Legal Impediment to Issuance. No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued by
any federal, state or foreign governmental or regulatory authority that would,
as of the Closing Date, prevent the issuance or sale of the Securities or the
issuance of the Guarantees; and no injunction or order of any federal, state or
foreign court shall have been issued that would, as of the Closing Date, prevent
the issuance or sale of the Securities or the issuance of the Guarantees.
(i) Good Standing. The Representatives shall have received on and as of the
Closing Date satisfactory evidence of the good standing of the Company and its
subsidiaries in their respective jurisdictions of organization and their good
standing in such other jurisdictions as the Representatives may reasonably
request, in each case in writing or any standard form of telecommunication, from
the appropriate governmental authorities of such jurisdictions.
(j) Registration Rights Agreement. The Initial Purchasers shall have
received a counterpart of the Registration Rights Agreement that shall have been
executed and delivered by a duly authorized officer of the Company and each of
the Guarantors.
(k) PORTAL and DTC. The Securities shall have been approved by the NASD for
trading in the PORTAL Market and shall be eligible for clearance and settlement
through DTC.
(l) Lock-up Agreements. The "lock-up" agreements, each substantially in the
form of Exhibit B hereto, of the shareholders, officers and directors of the
Company identified on Exhibit B-1 relating to sales and certain other
dispositions of shares of Capital Stock or certain other securities, shall have
been delivered to the Representatives on or before the date hereof and shall be
in full force and effect on the Closing Date.
(m) Listing. An application for the listing of the Underlying Securities
shall have been submitted to the Exchange.
21
(n) Additional Documents. On or prior to the Closing Date, the Company and
the Guarantors shall have furnished to the Representatives such further
certificates and documents as the Representatives may reasonably request.
All opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
7. Indemnification and Contribution.
---------------------------------
(a) Indemnification of the Initial Purchasers. The Company and each of the
Guarantors jointly and severally agree to indemnify and hold harmless each
Initial Purchaser, its affiliates, directors and officers and each person, if
any, who controls such Initial Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation, legal
fees and other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are incurred), joint
or several, that arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Preliminary
Offering Memorandum, any of the other Time of Sale Information, any Issuer
Written Communication or the Offering Memorandum (or any amendment or supplement
thereto) or any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, in each case except
insofar as such losses, claims, damages or liabilities arise out of, or are
based upon, any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any information relating
to any Initial Purchaser furnished to the Company in writing by such Initial
Purchaser through the Representatives expressly for use therein.
(b) Indemnification of the Company. Each Initial Purchaser agrees,
severally and not jointly, to indemnify and hold harmless the Company, each of
the Guarantors, each of their respective directors and officers and each person,
if any, who controls the Company or any of the Guarantors within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the indemnity set forth in paragraph (a) above, but only with respect
to any losses, claims, damages or liabilities that arise out of, or are based
upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such
Initial Purchaser furnished to the Company in writing by such Initial Purchaser
through the Representatives expressly for use in the Preliminary Offering
Memorandum, any of the other Time of Sale Information or the Offering Memorandum
(or any amendment or supplement thereto), it being understood and agreed that
the only such information consists of the following: paragraphs 1, 3 (third and
fourth sentences only), 8, 9 (fifth and sixth sentences only), 11, 12 and 13 of
the section entitled "Plan of Distribution" in the Preliminary Offering
Memorandum and Offering Memorandum.
22
(c) Notice and Procedures. If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any person in respect of which indemnification may be sought
pursuant to either paragraph (a) or (b) above, such person (the "Indemnified
Person") shall promptly notify the person against whom such indemnification may
be sought (the "Indemnifying Person") in writing; provided that the failure to
notify the Indemnifying Person shall not relieve it from any liability that it
may have under this Section 7 except to the extent that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the Indemnifying
Person shall not relieve it from any liability that it may have to an
Indemnified Person otherwise than under this Section 7. If any such proceeding
shall be brought or asserted against an Indemnified Person and it shall have
notified the Indemnifying Person thereof, the Indemnifying Person shall retain
counsel reasonably satisfactory to the Indemnified Person (who shall not,
without the consent of the Indemnified Person, be counsel to the Indemnifying
Person) to represent the Indemnified Person and any others entitled to
indemnification pursuant to this Section 7 that the Indemnifying Person may
designate in such proceeding and shall pay the fees and expenses of such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary; (ii) the Indemnifying Person has failed within a reasonable time to
retain counsel reasonably satisfactory to the Indemnified Person; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person; or (iv) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall
not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for any Initial Purchaser, its affiliates, directors and officers
and any control persons of such Initial Purchaser shall be designated in writing
by the Representatives and any such separate firm for the Company, the
Guarantors, their respective directors and officers and any control persons of
the Company and the Guarantors shall be designated in writing by the Company.
The Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Indemnifying Person agrees to
indemnify each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnification could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an unconditional release
of such Indemnified Person, in form and substance reasonably satisfactory to
such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf of any
Indemnified Person.
23
(d) Contribution. If the indemnification provided for in paragraphs (a) and
(b) above is unavailable to an Indemnified Person or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors on the one hand and the
Initial Purchasers on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the Company and the
Guarantors on the one hand and the Initial Purchasers on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other shall be deemed to be in the same respective proportions
as the net proceeds (before deducting expenses) received by the Company from the
sale of the Securities and the total discounts and commissions received by the
Initial Purchasers in connection therewith, as provided in this Agreement, bear
to the aggregate offering price of the Securities. The relative fault of the
Company and the Guarantors on the one hand and the Initial Purchasers on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or any Guarantor or by the Initial Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) Limitation on Liability. The Company, the Guarantors and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable considerations
referred to in paragraph (d) above. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in
paragraph (d) above shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses incurred by such Indemnified Person in
connection with any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall an Initial Purchaser be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by such Initial Purchaser with respect to the offering of the
Securities exceeds the amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 7 are several in proportion to their respective
purchase obligations hereunder and not joint.
24
(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies that may otherwise be
available to any Indemnified Person at law or in equity.
8. Termination. This Agreement may be terminated in the absolute discretion
of the Representatives, by notice to the Company, if after the execution and
delivery of this Agreement and on or prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on the New York Stock
Exchange or the over-the-counter market; (ii) trading of any securities issued
or guaranteed by the Company or any of the Guarantors shall have been suspended
on any exchange or in any over-the-counter market; (iii) a general moratorium on
commercial banking activities shall have been declared by federal or New York
State authorities; or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis,
either within or outside the United States, that, in the judgment of the
Representatives, is material and adverse and makes it impracticable or
inadvisable to proceed with the offering, sale or delivery, of the Securities on
the terms and in the manner contemplated by this Agreement, the Time of Sale
Information and the Offering Memorandum.
9. Defaulting Initial Purchaser. (a) If, on the Closing Date, any Initial
Purchaser defaults on its obligation to purchase the Securities that it has
agreed to purchase hereunder, the non-defaulting Initial Purchasers may in their
discretion arrange for the purchase of such Securities by other persons
satisfactory to the Company on the terms contained in this Agreement. If, within
36 hours after any such default by any Initial Purchaser, the non-defaulting
Initial Purchasers do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of 36 hours within which to
procure other persons satisfactory to the non-defaulting Initial Purchasers to
purchase such Securities on such terms. If other persons become obligated or
agree to purchase the Securities of a defaulting Initial Purchaser, either the
non-defaulting Initial Purchasers or the Company may postpone the Closing Date
for up to five full business days in order to effect any changes that in the
opinion of counsel for the Company or counsel for the Initial Purchasers may be
necessary in the Time of Sale Information, the Offering Memorandum or in any
other document or arrangement, and the Company agrees to promptly prepare any
amendment or supplement to the Time of Sale Information or the Offering
Memorandum that effects any such changes. As used in this Agreement, the term
"Initial Purchaser" includes, for all purposes of this Agreement unless the
context otherwise requires, any person not listed in Schedule 1 hereto that,
pursuant to this Section 9, purchases Securities that a defaulting Initial
Purchaser agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
all the Securities, then the Company shall have the right to require each
non-defaulting Initial Purchaser to purchase the principal amount of Securities
that such Initial Purchaser agreed to purchase hereunder plus such Initial
Purchaser's pro rata share (based on the principal amount of Securities that
such Initial Purchaser agreed to purchase hereunder) of the Securities of such
defaulting Initial Purchaser or Initial Purchasers for which such arrangements
have not been made.
25
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Initial Purchaser or Initial Purchasers by the
non-defaulting Initial Purchasers and the Company as provided in paragraph (a)
above, the aggregate principal amount of such Securities that remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all the
Securities, or if the Company shall not exercise the right described in
paragraph (b) above, then this Agreement shall terminate without liability on
the part of the non-defaulting Initial Purchasers. Any termination of this
Agreement pursuant to this Section 9 shall be without liability on the part of
the Company or the Guarantors, except that the Company and each of the
Guarantors will continue to be liable for the payment of expenses as set forth
in Section 10 hereof and except that the provisions of Section 7 hereof shall
not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Initial Purchaser
of any liability it may have to the Company, the Guarantors or any
non-defaulting Initial Purchaser for damages caused by its default.
10. Payment of Expenses. (a) Whether or not the transactions contemplated
by this Agreement are consummated or this Agreement is terminated, the Company
and each of the Guarantors jointly and severally agree to pay or cause to be
paid all costs and expenses incident to the performance of their respective
obligations hereunder, including without limitation, (i) the costs incident to
the authorization, issuance, sale, preparation and delivery of the Securities
and any taxes payable in that connection; (ii) the costs incident to the
preparation and printing of the Preliminary Offering Memorandum, any other Time
of Sale Information and the Offering Memorandum (including any amendment or
supplement thereto) and the distribution thereof; (iii) the costs of reproducing
and distributing each of the Transaction Documents; (iv) the fees and expenses
of the Company's and the Guarantors' counsel and independent accountants; (v)
the fees and expenses incurred in connection with the registration or
qualification and determination of eligibility for investment of the Securities
under the laws of such jurisdictions as the Representatives may designate and
the preparation, printing and distribution of a Blue Sky Memorandum (including
the related fees and expenses of counsel for the Initial Purchasers); (vi) any
fees charged by rating agencies for rating the Securities; (vii) the fees and
expenses of the Trustee and any paying agent (including related fees and
expenses of any counsel to such parties); (viii) all expenses and application
fees incurred in connection with the application for the inclusion of the
Securities on the PORTAL Market and the approval of the Securities for
book-entry transfer by DTC; (ix) any fees or costs incident to listing the
Underlying Securities on the Exchange; and (x) all expenses incurred by the
Company in connection with any "road show" presentation to potential investors.
26
(b) If (i) this Agreement is terminated pursuant to Section 8, (ii) the
Company for any reason fails to tender the Securities for delivery to the
Initial Purchasers or (iii) the Initial Purchasers decline to purchase the
Securities for any reason permitted under this Agreement, the Company and each
of the Guarantors jointly and severally agree to reimburse the Initial
Purchasers for all out-of-pocket costs and expenses (including the fees and
expenses of their counsel) reasonably incurred by the Initial Purchasers in
connection with this Agreement and the offering contemplated hereby.
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and any controlling persons referred to herein, and the affiliates,
officers and directors of each Initial Purchaser referred to in Section 7
hereof. Nothing in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision contained herein. No purchaser of Securities
from any Initial Purchaser shall be deemed to be a successor merely by reason of
such purchase.
12. Survival. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company, the Guarantors and
the Initial Purchasers contained in this Agreement or made by or on behalf of
the Company or the Initial Purchasers pursuant to this Agreement or any
certificate delivered pursuant hereto shall survive the delivery of and payment
for the Securities and shall remain in full force and effect, regardless of any
termination of this Agreement or any investigation made by or on behalf of the
Company or the Initial Purchasers.
12. Certain Defined Terms. For purposes of this Agreement, (a) except where
otherwise expressly provided, the term "affiliate" has the meaning set forth in
Rule 405 under the Securities Act; (b) the term "business day" means any day
other than a day on which banks are permitted or required to be closed in New
York City; (c) the term "Exchange Act" means the Securities Exchange Act of
1934, as amended; (d) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act; and (e) the term "written communication" has the
meaning set forth in Rule 40-5 under the Securities Act; and (f) the term
"significant subsidiary" has the meaning set forth in Rule 1-02 of Regulation
S-X under the Exchange Act.
13. Miscellaneous. (a) Authority of the Representatives. Any action by the
Initial Purchasers hereunder may be taken by each of J.P. Morgan Securities Inc.
and Citigroup Global Markets Inc. on behalf of the Initial Purchasers, and any
such action taken shall be binding upon the Initial Purchasers.
(b) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted and
confirmed by any standard form of telecommunication. Notices to the Initial
Purchasers shall be given to the Representatives at J.P. Morgan Securities Inc.,
277 Park Avenue, New York, New York, 10172 (fax: (212)-622-8358); Attention:
Syndicate Desk, and Citigroup Global Markets Inc., 390 Greenwich Street, New
York, New York, 10013 (fax: (212) 816-7912); Attention: General Counsel. Notices
to the Company and the Guarantors shall be given to them at Chemed Corporation,
2600 Chemed Center, 255 East Fifth Street, Cincinnati, Ohio 45202, (fax:
(513)-287-6216); Attention: Naomi C. Dallob.
27
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may
include counterparts delivered by any standard form of telecommunication), each
of which shall be an original and all of which together shall constitute one and
the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this
Agreement, nor any consent or approval to any departure therefrom, shall in any
event be effective unless the same shall be in writing and signed by the parties
hereto.
(f) Headings. The headings herein are included for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
28
If the foregoing is in accordance with your understanding, please indicate
your acceptance of this Agreement by signing in the space provided below.
Very truly yours,
CHEMED CORPORATION
By /s/ David P. Williams
- --------------------------------------
Name: David P. Williams
Title: Chief Financial Officer and Vice President
THE GUARANTORS
COMFORT CARE HOLDINGS, CO.
JET RESOURCE, INC.
ROTO-ROOTER CORPORATION
ROTO-ROOTER SERVICES COMPANY
NUROTOCO OF MASSACHUSETTS, INC.
CONSOLIDATED HVAC, INC.
ROTO-ROOTER GROUP, INC.
R.R. UK, INC.
ROTO-ROOTER DEVELOPMENT COMPANY
VITAS HEALTHCARE CORPORATION
VITAS HEALTHCARE CORPORATION OF CALIFORNIA
VITAS HEALTHCARE CORPORATION OF CENTRAL FLORIDA
VITAS HEALTHCARE CORPORATION OF FLORIDA
VITAS HEALTHCARE CORPORATION OF ILLINOIS
VITAS HEALTHCARE CORPORATION OF OHIO
VITAS HEALTHCARE CORPORATION ATLANTIC
VITAS HEALTHCARE CORPORATION MIDWEST
VITAS HME SOLUTIONS, INC.
VITAS HOLDINGS CORPORATION
HOSPICE CARE INCORPORATED
VITAS HOSPICE SERVICES, L.L.C.
VITAS HEALTHCARE OF TEXAS, L.P.
VITAS HEALTHCARE CORPORATION OF GEORGIA
VITAS HEALTHCARE CORPORATION OF ARIZONA
VITAS CARE SOLUTIONS, INC.
By /s/ David P. Williams
- --------------------------------------
Name: David P. Williams
Title: Vice President
Accepted: May 8, 2007
For itself and on behalf of the
several Initial Purchasers listed
in Schedule 1 hereto.
J.P. MORGAN SECURITIES INC.
By /s/ Sudheer Tegulapalle
- --------------------------------------
Name: Sudheer Tegulapalle
Authorized Signatory
CITIGROUP GLOBAL MARKETS INC.
By /s/ Dung Nguyen
- --------------------------------------
Name: Dung Nguyen
Authorized Signatory
Schedule 1
Initial Purchaser Principal Amount
----------------- ----------------
J.P. Morgan Securities Inc. $90,000,000
Citigroup Global Markets Inc. $90,000,000
----------------
Total $180,000,000
Schedule 2
GUARANTORS
----------
COMFORT CARE HOLDINGS, CO.
JET RESOURCE, INC.
ROTO-ROOTER CORPORATION
ROTO-ROOTER SERVICES COMPANY
NUROTOCO OF MASSACHUSETTS, INC.
CONSOLIDATED HVAC, INC.
ROTO-ROOTER GROUP, INC.
R.R. UK, INC.
ROTO-ROOTER DEVELOPMENT COMPANY
VITAS HEALTHCARE CORPORATION
VITAS HEALTHCARE CORPORATION OF CALIFORNIA
VITAS HEALTHCARE CORPORATION OF CENTRAL FLORIDA
VITAS HEALTHCARE CORPORATION OF FLORIDA
VITAS HEALTHCARE CORPORATION OF ILLINOIS
VITAS HEALTHCARE CORPORATION OF OHIO
VITAS HEALTHCARE CORPORATION ATLANTIC
VITAS HEALTHCARE CORPORATION MIDWEST
VITAS HME SOLUTIONS, INC.
VITAS HOLDINGS CORPORATION
HOSPICE CARE INCORPORATED
VITAS HOSPICE SERVICES, L.L.C.
VITAS HEALTHCARE OF TEXAS, L.P.
VITAS HEALTHCARE CORPORATION OF GEORGIA
VITAS HEALTHCARE CORPORATION OF ARIZONA
VITAS CARE SOLUTIONS, INC.
Schedule 3
SUBSIDIARIES
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CCR OF OHIO INC.
COMFORT CARE HOLDINGS CO.
COMPLETE PLUMBING SERVICES, INC.
CONSOLIDATED HVAC, INC.
JET RESOURCE, INC.
NUROTOCO OF MASSACHUSETTS, INC.
NUROTOCO OF NEW JERSEY, INC.
R.R. UK, INC.
ROTO-ROOTER CORPORATION
ROTO-ROOTER DEVELOPMENT COMPANY
ROTO-ROOTER GROUP, INC. (f/k/a ROTO-ROOTER MANAGEMENT COMPANY)
ROTO-ROOTER SERVICES COMPANY
RR PLUMBING SERVICES CORPORATION
VITAS HEALTHCARE CORPORATION
VITAS HEALTHCARE CORPORATION OF ARIZONA
VITAS HEALTHCARE CORPORATION OF CALIFORNIA
VITAS HEALTHCARE CORPORATION OF CENTRAL FLORIDA
VITAS HEALTHCARE CORPORATION OF FLORIDA
VITAS HEALTHCARE CORPORATION OF GEORGIA
VITAS HEALTHCARE CORPORATION OF ILLINOIS
VITAS HEALTHCARE CORPORATION OF OHIO
VITAS HEALTHCARE CORPORATION ATLANTIC
VITAS HEALTHCARE CORPORATION MIDWEST
VITAS HEALTHCARE OF TEXAS, L.P.
VITAS HME SOLUTIONS, INC.
VITAS HOLDINGS CORPORATION
VITAS HOSPICE SERVICES, L.L.C.
ROTO-ROOTER CANADA, LTD.
VITAS HEALTHCARE CORPORATION OF NORTH FLORIDA, INC.
HOSPICE CARE INCORPORATED
ANNEX A
a. Additional Time of Sale Information
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1. Term sheet containing the terms of the securities, substantially in the form
of Annex B.
ANNEX B
Pricing Term Sheet
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ANNEXES C1-C5
Exhibit A
Exhibit B
[FORM OF LOCK-UP LETTER]
____________, 2007
J.P. Morgan Securities Inc.
277 Park Avenue
9th Floor
New York, NY 10172
Citigroup Global Markets Inc.
390 Greenwich Street
New York, New York 10013
Dear Ladies and Gentlemen:
The undersigned understands that J.P. Morgan Securities Inc. and Citigroup
Global Markets Inc. (the "Representatives") propose to enter into a Purchase
Agreement ("Purchase Agreement") with Chemed Corporation, a Delaware corporation
(the "Company"), providing for the offering (the "Offering") by the several
Initial Purchasers, including the Representatives (the "Initial Purchasers") of
% Convertible Senior Notes due 2014 (the "Securities"). The Securities will be
convertible into shares of capital stock of the company, par value $1.00 per
share (the "Capital Stock").
To induce the Initial Purchasers that may participate in the Offering to
continue their efforts in connection with the Offering, the undersigned hereby
agrees that, without the prior written consent of the Representatives on behalf
of the Initial Purchasers, it will not, during the period commencing on the date
hereof and ending 90 days after the date of the final offering memorandum
relating to the Offering (the "Offering Memorandum"), (1) offer, pledge, sell
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Capital
Stock or any securities convertible into or exercisable or exchangeable for
Capital Stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the Capital Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Capital Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (a) the sale of any
Securities to the Initial Purchasers pursuant to the Purchase Agreement or (b)
transfers of Capital Stock by gift, will or intestacy, including without
limitation transfers by gift, will or intestacy to family members of the
undersigned or to a settlement or trust established under the laws of any
country or (c) transfers or sales of Capital Stock pursuant to any contract,
instruction or plan, including a contract, instruction or plan complying with
Rule 10b5-1 of the Regulations of the Securities Exchange Act of 1934, as
amended, that has been entered into by the undersigned prior to the date of this
Letter Agreement or (d) the sale of any Capital Stock up to 15,625 shares
expressly permitted by Section 4(g) of the Purchase Agreement, provided that in
the event of any transfer pursuant to clause (b), the transferee shall enter
into a lock-up agreement substantially in the form of this Letter Agreement
covering the remainder of the 90-day period referred to herein. In addition, the
undersigned agrees that, without the prior written consent of the
Representatives on behalf of the Initial Purchasers, it will not, during the
period commencing on the date hereof and ending 90 days after the date of the
Offering Memorandum, make any demand for, or exercise any right with respect to,
the registration of any shares of Capital Stock or any security convertible into
or exercisable or exchangeable for Capital Stock. The undersigned also agrees
and consents to the entry of stop transfer instructions with the Company's
transfer agent and registrar against the transfer of the undersigned's shares of
Capital Stock except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Initial Purchasers are
relying upon this Letter Agreement in proceeding toward consummation of the
Offering. The undersigned further understands that this Letter Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Offering actually occurs depends on a number of factors,
including market conditions. Any offering will only be made pursuant to a
Purchase Agreement, the terms of which are subject to negotiation between the
Company and the Initial Purchasers.
[The remainder of this page was intentionally left blank.]
Delivery of an executed signature page to this letter by facsimile shall be
effective as delivery of a manually executed signature page of this letter.
Very truly yours,
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(Name)
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(Address)
EXHIBIT 4.1
EXECUTION COPY
CHEMED CORPORATION,
THE SUBSIDIARY GUARANTORS PARTIES HERETO,
AND
LASALLE BANK NATIONAL ASSOCIATION,
AS TRUSTEE
1.875% Convertible Senior Notes due 2014
INDENTURE
Dated as of May 14, 2007
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.....................................................1
Section 1.02. Other Definitions...............................................8
Section 1.03. Incorporation by Reference of Trust Indenture Act...............9
Section 1.04. Rules of Construction..........................................10
ARTICLE 2
THE SECURITIES
Section 2.01. Title; Amount and Issue of Securities; Principal and Interest..10
Section 2.02. Form of Securities.............................................12
Section 2.03. Legends........................................................13
Section 2.04. Execution and Authentication...................................17
Section 2.05. Registrar and Paying Agent.....................................18
Section 2.06. Paying Agent to Hold Money in Trust............................19
Section 2.07. Securityholder Lists...........................................19
Section 2.08. General Provisions Relating to Transfer and Exchange...........20
Section 2.09. Book-Entry Provisions for the Global Securities................21
Section 2.10. Special Transfer Provisions....................................22
Section 2.11. Mutilated, Destroyed, Lost or Stolen Securities................24
Section 2.12. Outstanding Securities.........................................25
Section 2.13. Temporary Securities...........................................25
Section 2.14. Cancellation...................................................26
Section 2.15. Payment of Interest; Defaulted Interest........................26
Section 2.16. Computation of Interest........................................28
Section 2.17. CUSIP and ISIN Numbers.........................................28
ARTICLE 3
COVENANTS
Section 3.01. Payment of Securities..........................................28
Section 3.02. Financial Statements...........................................28
Section 3.03. Maintenance of Office or Agency................................29
Section 3.04. Corporate Existence............................................30
Section 3.05. Intentionally Omitted..........................................30
Section 3.06. Compliance Certificate.........................................30
Section 3.07. Further Instruments and Acts...................................30
Section 3.08. Statement by Officers as to Default............................30
Section 3.09. Additional Interest............................................30
i
ARTICLE 4
SUCCESSOR COMPANY
Section 4.01. Consolidation, Merger and Sale of Assets.......................31
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.01. Events of Default..............................................31
Section 5.02. Acceleration...................................................34
Section 5.03. Other Remedies.................................................34
Section 5.04. Waiver of Past Defaults........................................34
Section 5.05. Control by Majority............................................35
Section 5.06. Limitation on Suits............................................35
Section 5.07. Rights of Holders to Receive Payment...........................36
Section 5.08. Collection Suit by Trustee.....................................36
Section 5.09. Trustee May File Proofs of Claim...............................36
Section 5.10. Priorities.....................................................36
Section 5.11. Restoration of Rights and Remedies.............................37
Section 5.12. Undertaking of Costs...........................................37
ARTICLE 6
TRUSTEE
Section 6.01. Duties of Trustee..............................................37
Section 6.02. Rights of Trustee..............................................39
Section 6.03. Individual Rights of Trustee...................................40
Section 6.04. Trustee's Disclaimer...........................................40
Section 6.05. Notice of Defaults.............................................40
Section 6.06. Reports by Trustee to Holders..................................41
Section 6.07. Compensation and Indemnity.....................................41
Section 6.08. Replacement of Trustee.........................................42
Section 6.09. Successor Trustee by Merger....................................43
Section 6.10. Eligibility; Disqualification..................................43
Section 6.11. Preferential Collection of Claims Against Company..............43
Section 6.12. Trustee's Application for Instruction from the Company.........43
ARTICLE 7
DISCHARGE OF INDENTURE
Section 7.01. Discharge of Liability on Securities...........................44
Section 7.02. Reinstatement..................................................45
Section 7.03. Officers' Certificate; Opinion of Counsel......................45
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ARTICLE 8
AMENDMENTS
Section 8.01. Without Consent of Holders.....................................46
Section 8.02. With Consent of Holders........................................47
Section 8.03. Compliance with Trust Indenture Act............................48
Section 8.04. Revocation and Effect of Consents and Waivers..................48
Section 8.05. Notation on or Exchange of Securities..........................48
Section 8.06. Trustee to Sign Amendments.....................................49
ARTICLE 9
SUBSIDIARY GUARANTEE
Section 9.01. Subsidiary Guarantee...........................................49
Section 9.02. Limitation on Liability; Termination, Release and Discharge
Upon Merger or Consolidation; Termination on Conversion.......51
Section 9.03. Right of Contribution..........................................53
Section 9.04. No Subrogation.................................................53
ARTICLE 10
PURCHASE AT OPTION OF HOLDER UPON A FUNDAMENTAL
CHANGE
Section 10.01. Purchase at the Option of the Holder Upon a Fundamental
Change........................................................54
Section 10.02. Further Conditions and Procedures for Purchase at the Option
of the Holder Upon a Fundamental Change.......................55
ARTICLE 11
CONVERSION
Section 11.01. Conversion of Securities.......................................59
Section 11.02. Adjustments to Conversion Rate.................................65
Section 11.03. Adjustment Upon Certain Fundamental Changes....................73
Section 11.04. Effect of Reclassification, Consolidation, Merger or Sale......75
Section 11.05. Responsibility of Trustee......................................77
Section 11.06. Notice to Holders Prior to Certain Actions.....................78
Section 11.07. Stockholder Rights Plan........................................78
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls...................................79
Section 12.02. Notices........................................................79
Section 12.03. Communication by Holders with other Holders....................80
Section 12.04. Certificate and Opinion as to Conditions Precedent.............81
Section 12.05. Statements Required in Certificate or Opinion..................81
iii
Section 12.06. When Securities Disregarded....................................81
Section 12.07. Rules by Trustee, Paying Agent and Registrar...................82
Section 12.08. Legal Holidays.................................................82
Section 12.09. Governing Law; Waiver of Jury Trial............................82
Section 12.10. No Recourse Against Others.....................................82
Section 12.11. Successors.....................................................82
Section 12.12. Multiple Originals.............................................83
Section 12.13. Qualification of Indenture.....................................83
Section 12.14. Table of Contents; Headings....................................83
Section 12.15. Severability Clause............................................83
EXHIBIT A Form of the Security
EXHIBIT B Form of Indenture Supplement to Add Subsidiary Guarantors
iv
INDENTURE dated as of May 14, 2007, among CHEMED CORPORATION, a Delaware
corporation (the "Company"), THE SUBSIDIARY GUARANTORS (Comfort Care Holdings,
Co., Jet Resource, Inc., Roto-Rooter Corporation, Roto-Rooter Services Company,
Nurotoco of Massachusetts, Inc., Consolidated HVAC, Inc., Roto-Rooter Group,
Inc., R.R. UK, Inc., Roto-Rooter Development Company, VITAS Healthcare
Corporation, VITAS Healthcare Corporation of California, VITAS Healthcare
Corporation of Central Florida, VITAS Healthcare Corporation of Florida, VITAS
Healthcare Corporation of Illinois, VITAS Healthcare Corporation of Ohio, VITAS
Healthcare Corporation Atlantic, VITAS Healthcare Corporation Midwest, VITAS HME
Solutions, Inc., VITAS Holdings Corporation, Hospice Care Incorporated, VITAS
Hospice Services, L.L.C., VITAS Healthcare of Texas, L.P., VITAS Healthcare
Corporation of Georgia, VITAS Healthcare Corporation of Arizona, and VITAS Care
Solutions, Inc.) and LASALLE BANK 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 1.875% Convertible
Senior Notes due 2014 (the "Securities") on the date hereof and the guarantees
thereof by the Subsidiary Guarantors.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Additional Interest" means all amounts, if any, payable pursuant to
Section 2 of the Registration Rights Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling, controlled by or under direct or indirect common control
with such specified Person. For the purposes of this definition, "control" when
used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided, however, that the existence of a management contract by the Company or
an Affiliate of the Company to manage another entity shall not be deemed to be
control.
"Bankruptcy Law" means Title 11 of the United States Code or any similar
federal or state law for the relief of debtors.
1
"Beneficial Owner" shall mean any person who is considered a beneficial
owner of a security in accordance with Rule 13d-3 promulgated by the SEC under
the Exchange Act.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Business Day" means, with respect to any Security, any day other than a
Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is
closed.
"Capital Markets Debt" means any debt of the Company for borrowed money
that (i) is in the form of, or represented by, bonds, notes, debentures or other
securities (other than promissory notes or similar evidences of debt under a
credit agreement) and (ii) has an aggregate principal amount outstanding of at
least $20.0 million.
"Capital Stock" means the capital stock, par value $1.00 per share, of the
Company existing on the Issue Date or any other shares of capital stock into
which such capital stock shall be reclassified or changed.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Chemed Corporation or its successors and assigns.
"Conversion Agent" means the office or agency appointed by the Company
where Securities may be presented for conversion. The Conversion Agent appointed
by the Company shall initially be the Trustee.
"Conversion Price" means, in respect of each $1,000 principal amount of
Securities, $1,000 divided by the Conversion Rate, as may be adjusted from time
to time as set forth herein.
"Conversion Rate" means, in respect of each $1,000 principal amount of
Securities, initially 12.3874 shares of Capital Stock, subject to adjustments as
set forth herein.
"Credit Facility Debt" means any debt of the Company for borrowed money
that (i) is incurred pursuant to a credit agreement, including pursuant to the
Senior Credit Facility, or other agreement providing for revolving credit loans,
term loans or other long-term debt entered into between the Company and any
lender or group of lenders and (ii) has an aggregate principal amount
outstanding or committed of at least $20.0 million.
2
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Definitive Securities" means certificated Securities that are not Global
Securities.
"DTC" means The Depository Trust Company, its nominees and their respective
successors and assigns, or such other depository institution hereinafter
appointed by the Company pursuant to the terms of this Indenture.
"Ex-Dividend Date" means the first date upon which a sale of the Capital
Stock does not automatically transfer the right to receive the relevant dividend
from the seller of the Capital Stock to its buyer.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Fair Market Value" means the amount that a willing buyer would pay a
willing seller in an arm's length transaction.
A "Fundamental Change" shall be deemed to have occurred at the time after
the Securities are originally issued that any of the following occurs:
(1) a "person" or "group" within the meaning of Section 13(d) of the
Exchange Act, other than the Company, any Subsidiary of the Company or
any employee benefit plan of the Company or any such Subsidiary, files
a Schedule TO or any other schedule, form or report under the Exchange
Act disclosing that such person or group has become the direct or
indirect Beneficial Owner of Capital Stock representing more than 50%
of the ordinary voting power of the Capital Stock;
(2) consummation of (A) any recapitalization, reclassification or change
of Capital Stock (other than changes resulting from a subdivision or
combination) as a result of which the Capital Stock would be converted
into, or exchanged for, stock, other securities, other property or
assets or (B) any consolidation with or merger of the Company with or
into another Person pursuant to which the Capital Stock would be
converted into cash, securities or other property or any conveyance,
transfer or lease of all or substantially all of the Company's
properties and assets to any Person other than a Subsidiary; provided,
however, that a transaction where the holders of more than 50% of all
classes of the Company's capital stock immediately prior to such
transaction own, directly or indirectly, more than 50% of all classes
of capital stock of the continuing or surviving corporation or
transferee or the parent thereof immediately after such event shall
not be a Fundamental Change;
3
(3) the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or
(4) the Capital Stock (or other capital stock into which the Securities
are then convertible) ceases to be listed on a national securities
exchange;
provided, however, that a Fundamental Change shall not be deemed to have
occurred if 100% of the consideration received or to be received by stockholders
of the Company, excluding cash payments for fractional shares, in connection
with the transaction or transactions constituting the Fundamental Change
consists of shares of capital stock traded on a national securities exchange or
which will be so traded or quoted when issued or exchanged in connection with a
Fundamental Change (such securities being referred to as "Publicly Traded
Securities") and as a result of such transaction or transactions the Securities
become convertible into such Publicly Traded Securities (excluding cash payments
for fractional shares) pursuant to the terms of this Indenture.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession as in effect from time to time.
"Global Securities" means certificated Securities in global form, without
interest coupons, substantially in the form of Exhibit A hereto and registered
in the name of DTC or a nominee of DTC.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered in the Securities Register.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Initial Purchasers" means J.P. Morgan Securities Inc. and Citigroup Global
Markets Inc., as initial purchasers under the Purchase Agreement.
4
"Issue Date" means May 14, 2007.
"Last Reported Sale Price" of the Capital Stock on any date means the
closing sale price per share (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and average asked prices) on that date as reported in
composite transactions for the principal U.S. securities exchange on which the
Capital Stock is traded or, if the Capital Stock is not listed for trading on a
U.S. national or regional securities exchange on the relevant date, the Last
Reported Sale Price will be the last quoted bid price for the Capital Stock in
the over-the-counter market on the relevant date as reported by the National
Quotation Bureau or similar organization.
If the Capital Stock is not listed for trading on a U.S. national or
regional securities exchange and not reported by the National Quotation Bureau
or similar organization on the relevant date, the Last Reported Sale Price shall
be the average of the mid-point of the last bid and ask prices for the Capital
Stock on the relevant date from each of at least three nationally recognized
independent investment banking firms selected by the Company for such purpose.
"Market Disruption Event" means (i) failure by the primary United States
national or regional securities exchange or market on which the Capital Stock is
listed or admitted to trading to open for trading during its regular trading
session or (ii) the occurrence or existence prior to 1:00 p.m., New York City
time, on any Trading Day for the Capital Stock for an aggregate one half hour
period of any suspension or limitation imposed on trading (by reason of
movements in price exceeding limits permitted by the stock exchange or
otherwise) in the Capital Stock or in any options, contracts or future contracts
relating to the Capital Stock.
"Observation Period" with respect to any Security means (i) for Securities
with a Conversion Date occurring prior to March 1, 2014, the 40 consecutive
trading-day period beginning on, and including, the second trading day after the
related conversion date; and (ii) for Securities with a Conversion Date
occurring on or after March 1, 2014, the 40 consecutive trading days beginning
on, and including, the 42nd Scheduled Trading Day immediately preceding May 15,
2014.
"Offering Memorandum" means the offering memorandum, dated May 8, 2007,
relating to the offering by the Company of the Securities.
"Officer" means the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the Treasurer or the
Secretary of the Company. The term Officer of any Subsidiary Guarantor has a
correlative meaning.
5
"Officers' Certificate" means a certificate signed by two Officers or
attorneys-in-fact or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company or the Subsidiary Guarantors, as applicable.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, government or any agency or political subdivision hereof or
any other entity.
"Publicly Traded Securities" has the meaning provided in the definition of
Fundamental Change in this Section 1.01.
"Purchase Agreement" means the Purchase Agreement dated as of May 8, 2007
among the Company, the Subsidiary Guarantors and the Initial Purchasers relating
to the initial purchase and sale of the Securities.
"QIB" means any "qualified institutional buyer" (as term is defined in Rule
144A).
"Record Date" means, in respect of a dividend or distribution to holders of
Capital Stock, the date fixed for determination of holders of Capital Stock
entitled to receive such dividend or distribution.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Issue Date among the Initial Purchasers, the Subsidiary
Guarantors and the Company.
"Regular Record Date" for the payment of interest on the Securities
(including Additional Interest, if any), means the May 1 (whether or not a
Business Day) next preceding an interest payment date on May 15 and the November
1 (whether or not a Business Day) next preceding an interest payment date on
November 15.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the United States Securities and Exchange Commission.
"Securities" has the meaning ascribed to it in the second introductory
paragraph of this Indenture.
6
"Securities Act" means the Securities Act of 1933 (15 U.S.C. ss.ss. 77a -
77aa), as amended, and the ruleS and regulations of the SEC promulgated
thereunder.
"Securities Custodian" means the custodian with respect to the Global
Security (as appointed by DTC), or any successor Person thereto and shall
initially be the Trustee.
"Securities Register" means the register of Securities, maintained by the
Registrar, pursuant to Section 2.05.
"Senior Credit Facility" means the Credit Agreement dated as of May 2,
2007, by and among, the Company, certain of its subsidiaries, the lenders
referred to therein, and JPMorgan Chase Bank, N.A., as Administrative Agent.
"Shelf Registration Statement" shall have the meaning contemplated by and
in accordance with the terms of the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the payment of principal of such
security is due and payable, but shall not include any contingent obligations to
repay or repurchase any such principal prior to the date originally scheduled
for the payment thereof.
"Stock Price" means, with respect to a Fundamental Change, the price per
share of Capital Stock paid in connection with such Fundamental Change, which
shall be equal to (i) if such Fundamental Change is a transaction set forth in
clause (2) of the definition thereof, and holders of Capital Stock receive only
cash in such transaction, the cash amount paid per share of Capital Stock and
(ii) in all other cases, the average of the Last Reported Sale Prices of the
Capital Stock over the 20 Trading Day period ending on the Trading Day preceding
the Effective Date.
"Subsidiary" of the Company 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 the
Company and one or more Subsidiaries of the Company or by one or more
Subsidiaries of the Company or (ii) any other Person (other than a corporation)
in which the Company, one or more Subsidiaries of the Company or the Company and
one or more Subsidiaries of the Company, directly or indirectly, at the date of
determination thereof, has greater than a 50% ownership interest.
7
"Subsidiary Guarantor" means each subsidiary of the Company which is a
guarantor under this Indenture; provided, however, that upon the release and
discharge of any Person from its Subsidiary Guarantee in accordance with this
Indenture, such Person shall cease to be a Subsidiary Guarantor.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 (15
U.S.C. ss.ss. 77aaa 77bbbb), as In effect on the date of this Indenture, except
as provided in Section 8.03.
"Trading Day" means, (i) for purposes of Section 11.01(a) and (b), a day
during which trading in the Capital Stock generally occurs on the principal U.S.
securities exchange or market on which the Capital Stock is listed or admitted
to trading and (ii) for all other purposes, a day on which (a) there is no
Market Disruption Event and (b) trading generally in the Capital Stock occurs on
the New York Stock Exchange or, if the Capital Stock is not then listed on the
New York Stock Exchange, on the principal other U.S. national or regional
securities exchange on which the Capital Stock is then listed or, if the Capital
Stock is not then listed on a U.S. national or regional securities exchange, in
the principal other market on which the Capital Stock is then traded, or if the
Capital Stock (or other security for which a daily VWAP must be determined) is
not so listed or quoted, "trading day" means a "Business Day".
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means, when used with respect to the Trustee, the officer
within the corporate trust department of the Trustee having direct
responsibility for the administration of this Indenture.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
Section 1.02. Other Definitions.
Term Defined in Section
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"Additional Shares" 11.03
"Adjustment Event" 11.02(m)
"Agent" 3.03
"Agent Members" 2.09
"Authenticating Agent" 2.04
"Certificate of Destruction" 2.14
"Company Notice" 10.02(a)
"Company Notice Date" 10.02(a)
8
Term Defined in Section
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"Company Order" 2.04
"Conversion Date" 11.01(b)
"Daily Settlement Amount" 11.01(c)
"Daily Conversion Value" 11.01(c)
"Daily VWAP" 11.01(c)
"Defaulted Interest" 2.15
"Determination Date" 11.02(m)
"Effective Date" 11.03(b)
"Event of Default" 5.01
"Fundamental Change Purchase Date" 10.01
"Fundamental Change Purchase Notice" 10.01(b)
"Fundamental Change Purchase Price" 10.01
"Global Security Legend" 2.03(a)(iv)
"Legal Holiday" 12.08
"Obligations" 9.01
"Paying Agent" 2.05
"Reorganization Event" 11.04(a)
"Reference Property" 11.04(a)
"Registrar" 2.05
"Restricted Securities" 2.03(a)
"Restricted Securities Legend" 2.03(a)
"Scheduled Trading Day" 11.01(c)
"Securities Register" 2.05
"Settlement Amount" 11.01(c)
"Special Interest Payment Date" 2.15(a)
"Special Record Date" 2.15(a)
"Spin-Off" 11.02(c)
"Successor Company" 4.01(a)
Section 1.03. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
9
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
Section 1.04. Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including without limitation;
(e) words in the singular include the plural and words in the plural
include the singular;
(f) the principal amount of any non-interest bearing or other discount
security at any date shall be the principal amount thereof that would be shown
on a balance sheet of the issuer dated such date prepared in accordance with
GAAP.
ARTICLE 2
THE SECURITIES
Section 2.01. Title; Amount and Issue of Securities; Principal and
Interest. (a) The Securities shall be known and designated as the "1.875%
Convertible Senior Notes due 2014" of the Company. The aggregate principal
amount of Securities which may be authenticated and delivered under this
Indenture is initially limited to $200.0 million, except for Securities
authenticated and delivered upon registration of, transfer of, or in exchange
for, or in lieu of other Securities pursuant to Section 2.03, Section 2.04,
Section 2.08 2.09, 2.10, 2.11, 2.13, 8.05, 10.02, or 11.01; provided that
additional Securities may be issued in an unlimited aggregate principal amount
from time to time thereafter as set forth pursuant to Section 2.04. The
Securities shall be issuable in denominations of $1,000 or multiples thereof.
(b) The Securities shall mature on May 15, 2014.
10
(c) Interest on the Securities shall accrue from and including the date
specified on the face of such Securities until the principal thereof is paid or
made available for payment. Interest shall be payable semi-annually in arrears
on May 15 and November 15 in each year, commencing November 15, 2007. If any
interest payment date falls on a day that is not a Business Day, such interest
payment date shall be postponed to the next succeeding Business Day and no
interest on such payment will accrue for the period from the interest payment
date to such next succeeding Business Day. If the Stated Maturity date or
earlier required repurchase date upon a Fundamental Change would fall on a day
that is not a Business Day, the required payment of interest, if any, and
principal (and Additional Interest, if any), will be made on the next succeeding
Business Day and no interest on such payment will accrue for the period from and
after the Stated Maturity date or earlier required repurchase date upon a
Fundamental Change to such next succeeding Business Day.
(d) A Holder of any Security after 5:00 p.m., New York City time, on a
Regular Record Date shall be entitled to receive interest (including any
Additional Interest), on such Security on the corresponding interest payment
date. Holders of Securities after 5:00 p.m., New York City time, on a Regular
Record Date will receive payment of interest (including any Additional Interest)
payable on the corresponding interest payment date notwithstanding the
conversion of such Securities at any time after the close of business on such
Regular Record Date. Securities surrendered for conversion during the period
after 5:00 p.m., New York City time, on any Regular Record Date to 9:00 a.m.,
New York City time, on the corresponding interest payment date must be
accompanied by payment of an amount equal to the interest (including any
Additional Interest) that the Holder is to receive on the Securities.
Notwithstanding the foregoing, no such payment of interest (including any
Additional Interest) need be made by any converting Holder (i) for conversions
with a Conversion Date on or after March 1, 2014, (ii) if the Company has
specified a Fundamental Change Purchase Date during such period, or (iii) to the
extent of any overdue interest (including any Additional Interest) existing at
the time of conversion of such Security. Except where Securities surrendered for
conversion must be accompanied by payment as described above, no interest or
Additional Interest on converted Securities will be payable by the Company on
any interest payment date subsequent to the date of conversion and delivery of
the cash and shares of Capital Stock, if applicable, pursuant to Article 11
hereunder, together with any cash payment for any fractional share, upon
conversion will be deemed to satisfy the Company's obligation to pay the
principal amount of the Securities and accrued and unpaid interest and
Additional Interest, if any, to, but not including, the related Conversion Date.
(e) Principal of and interest (including Additional Interest, if any) on,
Global Securities shall be payable to DTC in immediately available funds.
11
(f) Principal on Definitive Securities shall be payable at the office or
agency of the Company maintained for such purpose, initially the corporate trust
office of the Trustee at 135 South LaSalle Street, Suite 1560, Chicago, Illinois
60603, Attention: Corporate Debt Trust Services Division - Chemed Corporation
Notes due 2014. Interest (including Additional Interest, if any), on Definitive
Securities will be payable (i) to Holders having an aggregate principal amount
of $5,000,000 or less, by check mailed to the Holders of these Securities and
(ii) to Holders having an aggregate principal amount of more than $5,000,000,
either by check mailed to each Holder or, upon application by a Holder to the
Registrar not later than the relevant Regular Record Date, by wire transfer in
immediately available funds to that Holder's account within the United States,
which application shall remain in effect until the Holder notifies, in writing,
the Registrar to the contrary.
Section 2.02. Form of Securities.
(a) Except as otherwise provided pursuant to this Section 2.02, the
Securities are issuable in fully registered form without coupons in
substantially the form of Exhibit A hereto, with such applicable legends as are
provided for in Section 2.03. The Securities are not issuable in bearer form.
The terms and provisions contained in the form of Security shall constitute, and
are hereby expressly made, a part of this Indenture and to the extent
applicable, the Company, the Subsidiary Guarantors and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby. Any of the Securities may have such letters,
numbers or other marks of identification and such notations, legends and
endorsements as the Officers executing the same may approve (execution thereof
to be conclusive evidence of such approval) and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any securities exchange or automated quotation system on which the Securities
may be listed or designated for issuance, or to conform to usage.
(b) The Securities shall be issued initially in the form of one or more
permanent Global Securities, with the applicable legends as provided in Section
2.03. Each Global Security shall be duly executed by the Company and
authenticated and delivered by the Trustee, and shall be registered in the name
of DTC or its nominee and retained by the Trustee, as Securities Custodian, at
its corporate trust office, for credit to the accounts of the Agent Members
holding the Securities evidenced thereby. The aggregate principal amount of the
Global Securities may from time to time be increased or decreased by adjustments
made on the records of the Trustee, as Securities Custodian, and of DTC or its
nominee, as hereinafter provided.
12
Section 2.03. Legends.
(a) Restricted Securities Legends. Each Security issued hereunder shall,
upon issuance, bear the legend set forth in Section 2.03(a)(i), and each
certificate representing shares of the Capital Stock issued upon conversion of
any Security issued hereunder, shall, upon issuance, unless as otherwise set
forth below, bear the legend set forth in Section 2.03(a)(ii) (each such legend,
a "Restricted Securities Legend"), and such legend shall not be removed except
as provided in Section 2.03(a)(iii). Each Security that bears or is required to
bear the Restricted Securities Legend set forth in Section 2.03(a)(i) (together
with each certificate representing shares of the Capital Stock issued upon
conversion of such Security that bears or is required to bear the Restricted
Securities Legend set forth in Section 2.03(a)(ii), collectively, the
"Restricted Securities") shall be subject to the restrictions on transfer set
forth in this Section 2.03(a) (including the Restricted Securities Legend set
forth below), and the Holder of each such Restricted Security, by such Holder's
acceptance thereof, shall be deemed to have agreed to be bound by all such
restrictions on transfer.
As used in Section 2.03(a), the term "transfer" encompasses any sale,
pledge, transfer or other disposition whatsoever of any Restricted Security.
(i) Restricted Securities Legend for Securities.
Except as provided in Section 2.03(a)(iii), any certificate evidencing such
Security (and all Securities issued in exchange therefor or substitution
thereof, other than stock certificates representing shares of the Capital Stock,
if any, issued upon conversion thereof which shall bear the legend set forth in
Section 2.03(a)(ii), if applicable) shall bear a Restricted Securities Legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER AGREES (1) THAT IT WILL NOT WITHIN THE LATER OF (X) TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY AND (Y) THREE MONTHS AFTER IT CEASES TO
BE AN AFFILIATE (WITHIN THE MEANING OF RULE 144 ADOPTED UNDER THE SECURITIES
ACT) OF THE COMPANY, RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY
OR THE CAPITAL STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY, EXCEPT (A) TO
THE COMPANY; (B) UNDER A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE
(OR DESIGNATED) UNDER THE SECURITIES ACT; (C) TO A PERSON THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A ADOPTED
UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, ALL IN COMPLIANCE WITH
RULE 144A (IF AVAILABLE); OR (D) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (2) THAT IT WILL, PRIOR TO
ANY TRANSFER OF THIS SECURITY WITHIN THE LATER OF (X) TWO YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS SECURITY AND (Y) THREE MONTHS AFTER IT CEASES TO BE AN
AFFILIATE (WITHIN THE MEANING OF RULE 144 ADOPTED UNDER THE SECURITIES ACT) OF
THE COMPANY, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED PURSUANT TO THE INDENTURE 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.
AS USED HEREIN, THE TERM "UNITED STATES" HAS THE MEANING GIVEN TO IT BY
REGULATION S UNDER THE SECURITIES ACT."
13
(ii) Restricted Securities Legend for the Capital Stock Issued Upon
Conversion of the Securities.
Each stock certificate representing Capital Stock issued upon conversion of
Securities bearing a Restricted Securities Legend will, subject to the
availability of a Shelf Registration Statement and registration thereunder as
set forth in the Registration Rights Agreement, bear the following legend:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER AGREES (1) THAT IT WILL NOT WITHIN THE LATER OF (X) TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THE SECURITIES UPON THE CONVERSION OF WHICH THIS
SECURITY WAS ISSUED AND (Y) THREE MONTHS AFTER IT CEASES TO BE AN AFFILIATE
(WITHIN THE MEANING OF RULE 144 ADOPTED UNDER THE SECURITIES ACT) OF THE
COMPANY, RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY, EXCEPT (A)
TO THE COMPANY; (B) UNDER A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE (OR DESIGNATED) UNDER THE SECURITIES ACT; (C) TO A PERSON THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
ADOPTED UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, ALL IN COMPLIANCE WITH
RULE 144A (IF AVAILABLE); OR (D) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (2) IT WILL, PRIOR TO ANY
TRANSFER OF THIS SECURITY WITHIN THE LATER OF (X) TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THE SECURITIES UPON THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED
AND (Y) THREE MONTHS AFTER IT CEASES TO BE AN AFFILIATE (WITHIN THE MEANING OF
RULE 144 ADOPTED UNDER THE SECURITIES ACT) OF THE COMPANY, FURNISH TO THE
TRANSFER AGENT AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS MAY BE REQUIRED 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. AS USED HEREIN, THE TERM
"UNITED STATES" HAS THE MEANING GIVEN TO IT BY REGULATION S UNDER THE SECURITIES
ACT."
14
(iii) Removal of the Restricted Securities Legends.
The Restricted Securities Legend may be removed from any Security or any
Certificate representing shares of the Capital Stock issued upon conversion of
any Security if there is delivered to the Company such satisfactory evidence,
which may include an opinion of independent counsel, as may be reasonably
required by the Company, that neither such legend nor the restrictions on
transfer set forth therein are required to ensure that transfers of such
Security or shares of the Capital Stock issued upon conversion of Securities, as
the case may be, will not violate the registration requirements of the
Securities Act or the qualification requirements under any state securities
laws. Upon provision of such satisfactory evidence, at the written direction of
the Company, (i) in the case of a Security, the Trustee shall authenticate and
deliver in exchange for such Security another Security or Securities having an
equal aggregate principal amount that does not bear such legend or (ii) in the
case of a Certificate representing shares of the Capital Stock, the transfer
agent for the Capital Stock shall authenticate and deliver in exchange for the
Certificate or certificates representing such shares of Capital Stock bearing
such legend, one or more new Certificates representing a like aggregate number
of shares of Capital Stock that do not bear such legend. If the Restricted
Securities Legend has been removed from a Security or Certificates representing
shares of the Capital Stock issued upon conversion of any Security as provided
above, no other Security issued in exchange for all or any part of such
Security, or no other Certificates issued in exchange for such Capital Stock
shall bear such legend, unless the Company has reasonable cause to believe that
such other Security is a "restricted security" (or such shares of Capital Stock
are "restricted securities") within the meaning of Rule 144 and instructs the
Trustee or transfer agent in writing to cause a Restricted Securities Legend to
appear thereon.
15
Any Security (or Security issued in exchange or substitution therefor) as
to which the conditions for removal of the Restricted Securities Legend set
forth in Section 2.03(a)(i) as set forth therein have been satisfied may, upon
surrender of such Security for exchange to the Registrar in accordance with the
provisions of Section 2.08, be exchanged for a new Security or Securities, of
like tenor and aggregate principal amount, which shall not bear the Restricted
Securities Legend required by Section 2.03(a)(i).
Any Certificate representing shares of Capital Stock issued upon conversion
of any Security as to which the conditions for removal of the Restricted
Securities Legend set forth in Section 2.03(a)(ii) have been satisfied may, upon
surrender of the Certificates representing such shares of Capital Stock for
exchange in accordance with the procedures of the transfer agent for the Capital
Stock, be exchanged for a new Certificate or certificates representing a like
aggregate number of shares of Capital Stock, which shall not bear the Restricted
Securities Legend.
(iv) Global Security Legend
Each Global Security shall also bear the following legend (the "Global
Security Legend") on the face thereof:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, 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.
16
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC 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 THE INDENTURE
REFERRED TO IN THE TERMS OF SECURITIES ATTACHED HERETO."
(v) Legend for Definitive Securities
Definitive Securities, in addition to the legend set forth in Section
2.03(a)(ii), will also bear a legend substantially in the following form:
"THIS SECURITY WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A
GLOBAL SECURITY UNLESS THE HOLDER OF THIS SECURITY, SUBSEQUENT TO SUCH EXCHANGE,
WILL HOLD NO SECURITIES."
Section 2.04 . 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 Trustee
authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually authenticates the Security. The signature of the Trustee on a Security
shall be conclusive evidence that such Security has been duly and validly
authenticated and issued under this Indenture. A Security shall be dated the
date of its authentication.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities executed by the Company in an
unlimited aggregate principal amount to the Trustee for authentication, together
with a written order of the Company signed by two Officers or by an Officer and
either an Assistant Treasurer or an Assistant Secretary of the Company (the
"Company Order") for the authentication and delivery of such Securities, and the
Trustee in accordance with such Company Order shall authenticate and deliver
such Securities as in this Indenture provided and not otherwise. All Securities
issued on the Issue Date shall be identical in all respects with any such
Securities authenticated and delivered thereafter, other than issue dates, the
date from which interest accrues, appropriate CUSIP numbers or other identifying
notations and any changes relating thereto. Notwithstanding anything to the
contrary contained in this Indenture, subject to Section 2.12, all Securities
issued under this Indenture shall vote and consent together on all matters as
one class and no series of Securities will have the right to vote or consent as
a separate class on any matter.
17
The Trustee may appoint an agent (the "Authenticating Agent") reasonably
acceptable to the Company to authenticate the Securities. Initially, the Trustee
will act as the Authenticating Agent. Any such instrument shall be evidenced by
an instrument signed by a Trust Officer of the Trustee, a copy of which shall be
furnished to the Company. Unless limited by the terms of such appointment, any
such Authenticating Agent may authenticate Securities whenever the Trustee may
do so. Each reference in this Indenture to authentication by the Trustee
includes authentication by the Authenticating Agent. An Authenticating Agent has
the same rights as any Registrar, Paying Agent or agent for service of notices
and demands.
In case the Company or any Subsidiary Guarantor, pursuant to Article 4 or
Section 9.02, shall be consolidated or merged with or into any other Person or
shall convey, transfer, lease or otherwise dispose of its properties and assets
substantially as an entirety to any Person, and the successor Person resulting
from such consolidation, or surviving such merger, or into which the Company or
any Subsidiary Guarantor shall have been merged, or the Person which shall have
received a conveyance, transfer, lease or other disposition as aforesaid, shall
have executed an indenture supplemental hereto with the Trustee pursuant to
Article 4, any of the Securities authenticated or delivered prior to such
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Securities executed in the name of the successor Person with such changes
in phraseology and form as may be appropriate, but otherwise in substance of
like tenor as the Securities surrendered for such exchange and of like principal
amount; and the Trustee, upon Company Order of the successor Person, shall
authenticate and deliver Securities as specified in such order for the purpose
of such exchange. If Securities shall at any time be authenticated and delivered
in any new name of a successor Person pursuant to this Section 2.04 in exchange
or substitution for or upon registration of transfer of any Securities, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Securities at the time outstanding for
Securities authenticated and delivered in such new name.
Section 2.05. Registrar and Paying Agent. The Company shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Company shall cause each of
the Registrar and the Paying Agent to maintain an office or agency in Chicago,
Illinois. The Registrar shall keep a register of the Securities and of their
transfer and exchange (the "Securities Register"). The Company may have one or
more co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent and the term "Registrar" includes
any co-registrar.
18
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. 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 each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 6.07. The
Company or any of its domestically organized, wholly owned Subsidiaries may act
as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent
for the Securities. The Company may remove any Registrar or Paying Agent upon
written notice to such Registrar or Paying Agent and to the Trustee; provided,
however, that no such removal shall become effective until (i) acceptance of any
appointment by a successor as evidenced by an appropriate agreement entered into
by the Company and such successor Registrar or successor Paying Agent, as the
case may be, and delivered to the Trustee or (ii) notification to the Trustee
that the Trustee shall serve as Registrar or Paying Agent until the appointment
of a successor in accordance with clause (i) above. The Registrar or Paying
Agent may resign at any time upon written notice to the Company and the Trustee.
Section 2.06. Paying Agent to Hold Money in Trust. By no later than 11:00
a.m., New York City time, on the date on which any principal of or interest and
Additional Interest, if any, on any Security is due and payable, the Company
shall deposit with the Paying Agent a sum sufficient in immediately available
funds to pay such principal or interest (including any Additional Interest),
when due. The Company shall require each Paying Agent (other than the Trustee)
to agree in writing that such Paying Agent shall hold in trust for the benefit
of Securityholders or the Trustee all money held by such Paying Agent for the
payment of principal of or interest (including any Additional Interest), on the
Securities and shall notify the Trustee in writing of any Default by the Company
or any Subsidiary Guarantor in making any such payment. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent (other than the Trustee) to pay all money held by it to
the Trustee and to account for any funds disbursed by such Paying Agent. Upon
complying with this Section 2.06, the Paying Agent (if other than the Company or
a Subsidiary) shall have no further liability for the money delivered to the
Trustee. Upon any bankruptcy, reorganization or similar proceeding with respect
to the Company, the Trustee shall serve as Paying Agent for the Securities.
19
Section 2.07. 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 and shall otherwise comply with
TIA ss. 312(a). If the Trustee is not the Registrar, or to the extent otherwise
required under the TIA, the Company, on its own behalf and on behalf of each of
the Subsidiary Guarantors, shall furnish or cause the Registrar to furnish to
the Trustee, in writing at least five Business Days 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 and the Company shall otherwise comply with TIA
ss. 312(a).
Section 2.08. General Provisions Relating to Transfer and Exchange. The
Securities are issuable only in registered form. A Holder may transfer a
Security only by written application to the Registrar stating the name of the
proposed transferee and otherwise complying with the terms of this Indenture. No
such transfer shall be effected until, and such transferee shall succeed to the
rights of a Holder only upon, final acceptance and registration of the transfer
by the Registrar in the Securities Register. Furthermore, any Holder of a Global
Security shall, by acceptance of such Global Security, agree that transfers of
beneficial interests in such Global Security may be effected only through a
book-entry system maintained by the Holder of such Global Security (or its
agent) and that ownership of a beneficial interest in the Global Security shall
be required to be reflected in a book-entry.
When Securities are presented to the Registrar with a request to register
the transfer or to exchange them for an equal aggregate principal amount of
Securities of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met (including that such Securities are duly endorsed or
accompanied by a written instrument of transfer duly executed by the Holder
thereof or by an attorney who is authorized in writing to act on behalf of the
Holder). Subject to Section 2.04, to permit registrations of transfers and
exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's request. No service charge shall be made for any
registration of transfer or exchange of the Securities, but the Company may
require payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any such
transfer taxes or other similar governmental charge payable upon exchanges in
connection with which a Security is issued to a Person other than the Holder
submitting the Security for exchange).
Neither the Company nor the Registrar shall be required to exchange or
register a transfer of any Securities surrendered for conversion or, if a
portion of any Security is surrendered for conversion, the portion thereof
surrendered for conversion.
20
The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between Beneficial Owners of any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
Section 2.09. Book-Entry Provisions for the Global Securities. (a) The
Global Securities initially shall:
(i) be registered in the name of DTC (or a nominee thereof);
(ii) be delivered to the Trustee as Custodian for DTC;
(iii) bear the Restricted Securities Legend set forth in Section
2.03(a)(i); and
(iv) bear the Global Security Legend set forth in Section 2.03(a)(iv).
Members of, or participants in, DTC ("Agent Members") shall have no rights
under this Indenture with respect to any Global Security held on their behalf by
DTC, or the Trustee as its custodian, or under such Global Security, and DTC may
be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing contained herein shall
prevent the Company, the Trustee or any agent of the Company or Trustee from
giving effect to any written certification, proxy or other authorization
furnished by DTC or impair, as between DTC and the Agent Members, the operation
of customary practices governing the exercise of the rights of a Holder of any
Security.
(b) The Holder of a Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
(c) A Global Security may not be transferred, in whole or in part, to any
Person other than DTC (or a nominee thereof), and no such transfer to any such
other Person may be registered. Beneficial interests in a Global Security may be
transferred in accordance with the rules and procedures of DTC and the
provisions of Section 2.10.
21
(d) If at any time:
(i) DTC notifies the Company in writing that it is unwilling or unable
to continue to act as depositary for the Global Securities and a successor
depositary for the Global Securities is not appointed by the Company within
90 days of such notice;
(ii) DTC ceases to be registered as a "clearing agency" under the
Exchange Act and a successor depositary for the Global Securities is not
appointed by the Company within 90 days of such cessation;
(iii) the Company, at its option, notifies the Trustee in writing that
it elects to cause the issuance of the Definitive Securities under this
Indenture in exchange for all or any part of the Securities represented by
a Global Security or Global Securities, subject to the procedures of DTC;
or
(iv) an Event of Default has occurred and is continuing and the
Registrar has received a request from DTC for the issuance of Definitive
Securities in exchange for such Global Security or Global Securities;
DTC shall surrender such Global Security or Global Securities to the Trustee for
cancellation and the Company shall execute, and the Trustee, upon receipt of an
Officers' Certificate and Company Order for the authentication and delivery of
Securities, shall authenticate and deliver in exchange for such Global Security
or Global Securities, Definitive Securities in an aggregate principal amount
equal to the aggregate principal amount of such Global Security or Global
Securities. Such Definitive Securities shall be registered in such names as DTC
shall identify in writing as the Beneficial Owners of the Securities represented
by such Global Security or Global Securities (or any nominee thereof).
(e) Notwithstanding the foregoing, in connection with any transfer of
beneficial interests in a Global Security to the Beneficial Owners thereof
pursuant to Section 2.09(d), the Registrar shall reflect on its books and
records the date and a decrease in the principal amount of such Global Security
in an amount equal to the principal amount of the beneficial interests in such
Global Security to be transferred.
Section 2.10 . Special Transfer Provisions. Unless a Security is no longer
a Restricted Security, the following provisions shall apply to any sale, pledge
or other transfer of such Securities:
(a) Transfer of Securities to a QIB.
The following provisions shall apply with respect to the registration of
any proposed transfer of Securities to a QIB:
22
(i) If the Securities to be transferred consist of a beneficial
interest in the Global Securities, the transfer of such interest may be
effected only through the book-entry systems maintained by DTC.
(ii) If the Securities to be transferred consist of Definitive
Securities, the Registrar shall register the transfer if 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 a certification
stating or has otherwise advised the Company and the Registrar in writing
that:
(A) it is purchasing the Securities for its own account or an
account with respect to which it exercises sole investment discretion;
(B) it and any such account is a QIB within the meaning of Rule
144A;
(C) it is aware that the sale to it is being made in reliance on
Rule 144A;
(D) it 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
(E) it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration
provided by Rule 144A.
(b) General.
By its acceptance of any Security bearing the Restricted Securities Legend,
each Holder of such a Security acknowledges the restrictions on transfer of such
Security set forth in this Indenture and agrees that it will transfer such
Security only as provided in this Indenture. The Registrar shall not register a
transfer of any Security unless such transfer complies with the restrictions on
transfer of such Security set forth in this Indenture. The Registrar shall be
entitled to receive and rely on written instructions from the Company verifying
that such transfer complies with such restrictions on transfer. In connection
with any transfer of Securities, each Holder agrees by its acceptance of the
Securities to furnish the Registrar or the Company such certifications, legal
opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act;
provided that the Registrar shall not be required to determine (but may rely on
a determination made by the Company with respect to) the sufficiency of any such
certifications, legal opinions or other information.
23
The Registrar shall retain copies of all certifications, letters,
notices and other written communications received pursuant to Section 2.09
hereof or this Section 2.10. 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.
Section 2.11. Mutilated, Destroyed, Lost or Stolen Securities. If a
mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the UCC are met, such that the
Securityholder (a) satisfies the Company or the Trustee within a reasonable time
after such Securityholder has notice of such loss, destruction or wrongful
taking and the Registrar has not registered a transfer prior to receiving such
notification, (b) makes such request to the Company or Trustee prior to the
Security being acquired by a protected purchaser as defined in Section 8-303 of
the UCC and (c) satisfies any other reasonable requirements of the Trustee. Such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
and the Trustee to protect the Company, the Trustee, the Paying Agent and the
Registrar from any loss which any of them may suffer if a Security is replaced,
and, in the absence of notice to the Company, any Subsidiary Guarantor or the
Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon Company Order the Trustee shall authenticate and
make available for delivery, in exchange for any such mutilated Security or in
lieu of any such destroyed, lost or stolen Security, a new Security of like
tenor and principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
due and payable, the Company in its discretion may, instead of issuing a new
Security, pay such Security.
Upon the issuance of any new Security under this Section 2.11, the Company
may require the payment by the Holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Security issued pursuant to this Section 2.11 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, any Subsidiary Guarantor (if
applicable) and any other obligor upon the Securities, whether or not the
mutilated, destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all benefits of this Indenture equally and
ratably with any and all other Securities duly issued hereunder.
24
The provisions of this Section 2.11 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.12. Outstanding Securities. Securities outstanding at any time
are all Securities authenticated by the Trustee except for those cancelled by
it, those delivered to it for cancellation and those described in this Section
2.12 as not outstanding. A Security does not cease to be outstanding in the
event the Company or a Subsidiary of the Company holds the Security; provided,
however, that (i) for purposes of determining which Securities are outstanding
for consent or voting purposes hereunder, the provisions of Section 12.06 shall
apply and (ii) in determining whether the Trustee shall be protected in making a
determination whether the Holders of the requisite principal amount of
outstanding Securities are present at a meeting of Holders of Securities for
quorum purposes or have consented to or voted in favor of any request, demand,
authorization, direction, notice, consent, waiver, amendment or modification
hereunder, or relying upon any such quorum, consent or vote, only Securities
which a Trust Officer of the Trustee actually knows to be held by the Company or
an Affiliate of the Company shall not be considered outstanding.
If a Security is replaced or paid pursuant to Section 2.11, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, at Stated Maturity, money sufficient to pay all principal and
interest payable on that date with respect to the Securities (or portions
thereof) to be maturing, as the case may be, and the Paying Agent is not
prohibited from paying such money to the Securityholders on that date pursuant
to the terms of this Indenture, then on and after that date such Securities (or
portions thereof) cease to be outstanding and interest on them ceases to accrue.
Section 2.13. Temporary Securities. In the event that Definitive Securities
are to be issued under the terms of this Indenture, until such Definitive
Securities are ready for delivery, the Company may prepare and upon receipt of a
Company Order 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 upon receipt of a
Company Order the Trustee shall authenticate Definitive Securities. After the
preparation of Definitive Securities, the temporary Securities shall be
exchangeable for Definitive Securities upon surrender of the temporary
Securities at any office or agency maintained by the Company for that purpose
and such exchange shall be without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Company shall execute,
and the Trustee shall authenticate and make available for delivery in exchange
therefor, one or more Definitive Securities representing an equal principal
amount of Securities. Until so exchanged, the Holder of temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as a
Holder of Definitive Securities.
25
Section 2.14. Cancellation. The Company at any time may deliver Securities
to the Trustee for cancellation. The Registrar and the Paying Agent shall
forward to the Trustee any Securities surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and dispose of such Securities in accordance with its internal
policies and customary procedures including delivery of a certificate (a
"Certificate of Destruction") describing such Securities disposed (subject to
the record retention requirements of the Exchange Act) or deliver canceled
Securities to the Company pursuant to written direction by an Officer. The
Company may not issue new Securities to replace Securities it has paid for or
delivered to the Trustee for cancellation for any reason other than in
connection with a transfer or exchange.
At such time as all beneficial interests in a Global Security have either
been exchanged for Definitive Securities, transferred, redeemed, repurchased or
canceled, such Global Security shall be returned by DTC to the Trustee for
cancellation or retained and canceled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Security is exchanged for
Definitive Securities, transferred in exchange for an interest in another Global
Security, redeemed, repurchased or canceled, the principal amount of Securities
represented by such Global Security shall be reduced and an adjustment shall be
made on the books and records of the Trustee (if it is then the Securities
Custodian for such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
Section 2.15. Payment of Interest; Defaulted Interest. Interest (including
any Additional Interest) on any Security which is payable, and is punctually
paid or duly provided for, on any interest payment date shall be paid to the
Person in whose name such Security (or one or more predecessor Securities) is
registered at the close of business on the Regular Record Date for such payment
at the office or agency of the Company maintained for such purpose pursuant to
Section 2.05.
26
Any interest on any Security which is payable, but is not paid when the
same becomes due and payable and such nonpayment continues for a period of 30
days, shall forthwith cease to be payable to the Holder on the Regular Record
Date, and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Securities (such defaulted interest
and interest thereon herein collectively called "Defaulted Interest") shall be
paid by the Company, at its election in each case, as provided in clause (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Securities (or their respective predecessor
Securities) are registered at the close of business on a Special Record Date (as
defined below) for the payment of such Defaulted Interest, which shall be fixed
in the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and the date
(not less than 30 days after such notice) of the proposed payment (the "Special
Interest Payment Date"), and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a record date (the "Special Record Date") for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than 10
days prior to the Special Interest Payment Date and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date, and in the name
and at the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date and Special Interest Payment
Date therefor to be given in the manner provided for in Section 12.02, not less
than 10 days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date and Special Interest
Payment Date therefor having been so given, such Defaulted Interest shall be
paid on the Special Interest Payment Date to the Persons in whose names the
Securities (or their respective predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
27
Subject to the foregoing provisions of this Section 2.15, each Security
delivered under this Indenture upon registration of, transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest
(including any Additional Interest) accrued and unpaid, and to accrue, which
were carried by such other Security.
Section 2.16. Computation of Interest. Interest (including any Additional
Interest) on the Securities shall be computed on the basis of a 360-day year of
twelve 30-day months.
Section 2.17. CUSIP and ISIN Numbers. The Company in issuing the Securities
may use "CUSIP" and "ISIN" numbers (if then generally in use); provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities and that
reliance may be placed only on the other identification numbers printed on the
Securities, and shall not be affected by any defect in or omission of such CUSIP
or ISIN numbers. The Company shall promptly notify the Trustee in writing of any
change in the CUSIP and ISIN numbers.
ARTICLE 3
COVENANTS
Section 3.01. Payment of Securities. The Company shall promptly pay the
principal of and interest (including any Additional Interest) on the Securities
on the dates and in the manner provided in the Securities and in this Indenture.
Principal and interest (including any Additional Interest) shall be considered
paid on the date due if on such date the Trustee or the Paying Agent holds in
accordance with this Indenture immediately available funds sufficient to pay all
principal and interest (including any Additional Interest) then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Securityholders on that date pursuant to the terms of this
Indenture.
The Company shall pay interest on overdue principal at the rate specified
therefor in the Securities, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this Indenture, the
Company may, to the extent it is required to do so by law, deduct or withhold
income or other similar taxes imposed by the United States of America from
principal or interest (including any Additional Interest) payments hereunder.
Section 3.02. Financial Statements. In the event and for so long as the
Company is not subject to Section 13 or 15(d) of the Exchange Act, it shall file
with the Trustee and cause to be mailed to each Holder at such Holder's
registered address, upon the request of any Holder or beneficial owner of the
Securities or the Capital Stock issued upon conversion thereof, and make
available to such Holder or beneficial owner of such Securities or Capital Stock
in connection with any sale thereof and any prospective purchaser of Securities
or Capital Stock designated by such Holder or beneficial owner, the information
required pursuant to Rule 144A(d)(4) under the Securities Act and it will take
such further action as any Holder or beneficial owner of such Securities or
Capital Stock may reasonably request, all to the extent required from time to
time to enable such Holder or beneficial owner to sell its Securities or Capital
Stock without registration under the Securities Act within the limitation of the
exemption provided by Rule 144A, as such Rule may be amended from time to time.
28
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
Section 3.03. Maintenance of Office or Agency. The Company will maintain in
Chicago, Illinois, an office or agency where the Securities may be presented or
surrendered for payment, where, if applicable, the Securities may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The agency of the Trustee (the "Agent") currently located in Chicago, Illinois
shall be such office or agency of the Company, unless the Company shall
designate and maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Agent of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of Chicago, Illinois) where the Securities may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in Chicago, Illinois for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such other office or agency.
29
Section 3.04. Corporate Existence. Except as otherwise provided in Article
4 and Section 9.02(b), the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence.
Section 3.05. Intentionally Omitted.
Section 3.06. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate, one of the signers of which shall be the principal
executive officer, principal financial officer or principal accounting officer
of the Company, stating that in the course of the performance by the signers of
their duties as Officers of the Company they would normally have knowledge of
any Default or Event of Default and whether or not the signers know of any
Default or Event of Default that occurred during such period. If they do, the
certificate shall describe the Default or Event of Default, its status and the
action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with TIA ss. 314(a)(4).
Section 3.07. Further Instruments and Acts. Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.08. Statement by Officers as to Default. The Company shall
deliver to the Trustee, as soon as possible and in any event within 30 days
after the Company becomes aware of the occurrence of any Event of Default or an
event which, with notice or the lapse of time or both, would constitute an Event
of Default, an Officers' Certificate setting forth the details of such Event of
Default or Default, its status and the action which the Company proposes to take
with respect thereto.
Section 3.09. Additional Interest. If Additional Interest is payable by the
Company pursuant to the Registration Rights Agreement, the Company shall deliver
to the Trustee an Officers' Certificate to that effect stating (i) the amount of
such Additional Interest that is payable and (ii) the date on which such
Additional Interest is payable. Unless and until a Trust Officer of the Trustee
receives such a certificate, the Trustee may assume without inquiry that no
Additional Interest is payable. If the Company has paid Additional Interest
directly to the Persons entitled to it, the Company shall deliver to the Trustee
an Officers' Certificate setting forth the particulars of such payment.
30
ARTICLE 4
SUCCESSOR COMPANY
Section 4.01. Consolidation, Merger and Sale of Assets. The Company shall
not consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its properties and assets to, another Person, unless:
(a) the resulting, surviving or transferee Person, (the "Successor
Company") if not the Company shall be a Person organized and existing under the
laws of the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company) shall expressly assume,
by supplemental indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Securities, this Indenture and, to the extent that it is otherwise still
operative, the Registration Rights Agreement;
(b) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture, if any, comply with this
Indenture.
For purposes of this Section 4.01, the sale, lease, conveyance, assignment,
transfer, or other disposition of all or substantially all of the properties and
assets of one or more Subsidiaries of the Company, which properties and assets,
if held by the Company instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Company on a consolidated
basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Company.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture, but, in the
case of a lease of all or substantially all its assets, the Company will not be
released from the obligation to pay the principal of and interest (including any
Additional Interest) on the Securities.
ARTICLE 5
DEFAULTS AND REMEDIES
Section 5.01. Events of Default. Each of the following is an "Event of
Default":
31
(a) default in any payment of interest or Additional Interest (as required
by the Registration Rights Agreement) on any Security when the same becomes due
and payable, and such default continues for a period of 30 days;
(b) default in the payment of the principal of any Security when the same
becomes due and payable at its Stated Maturity, upon required repurchase, upon
declaration or otherwise;
(c) failure by the Company to comply with its obligation to convert the
Securities into cash or a combination of cash and Capital Stock, as applicable,
upon exercise of a Holder's conversion right and such failure continues for a
period of five days;
(d) failure by the Company to give a Fundamental Change notice to Holders
or notice to Holders required pursuant to Section 11.01(a)(iii), in each case
when due;
(e) failure by the Company to comply with any of its obligations under
Article 4 or Section 9.02;
(f) default in the performance of or a breach by the Company of any other
covenant or agreement in this Indenture or under the Securities (other than
those referred to in Section 5.01(a) through Section 5.01(e) above or Section
5.01(g) through Section 5.01(i) below) and such default continues for 90 days
after the notice specified below;
(g) default by the Company or any Subsidiary in the payment of the
principal or interest on any mortgage, agreement or other instrument under which
there may be outstanding, or by which there may be secured or evidenced any
indebtedness for money borrowed in excess of $20 million in the aggregate of the
Company and/or any such Subsidiary, whether such indebtedness now exists or
shall thereafter be created, resulting in such indebtedness becoming or being
declared due and payable;
(h) the Company or any Significant Subsidiary pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of judgment, decree or order for
relief against it in an involuntary case or proceeding;
(iii) consents to the appointment of a Custodian of it or for any
substantial part of its property;
32
(iv) makes a general assignment for the benefit of its creditors;
(v) consents to or acquiesces in the institution of a bankruptcy
or an insolvency proceeding against it;
(vi) takes any corporate action to authorize or effect any of the
foregoing; or
(vii) takes any comparable action under any foreign laws relating
to insolvency;
(i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(ii) appoints a Custodian of the Company for all or substantially
all of the Company's or any Significant Subsidiary's property; or
(iii) orders the winding up or liquidation of the Company or
Significant Subsidiary;
and, in each case, the order or decree or relief remains unstayed
and in effect for 90 days;
(j) there has been entered in a court of competent jurisdiction a final
judgment for the payment of $20.0 million or more (excluding any amounts covered
by insurance) rendered against the Company or any Significant Subsidiary, which
judgment is not discharged or stayed within 60 days after (i) the date on which
the right to appeal thereof has expired if no such appeal has commenced, or (ii)
the date on which all rights to appeal have been extinguished; or
(k) except as permitted by this Indenture, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect, or any Subsidiary Guarantor, or
any Person acting on its behalf, shall deny or disaffirm its obligation under
the Subsidiary Guarantee.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
33
Notwithstanding the foregoing, a Default under clause (f) of this Section
5.01 will not constitute an Event of Default until the Trustee or the Holders of
25% or more in principal amount of the outstanding Securities notify the Company
of the Default in writing and the Company does not cure such Default within the
time specified in clause (f) of this Section 5.01 after receipt of such notice.
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Default or Event of Default under clauses (d), (e), (g), (h), (i) or (j) of
this Section 5.01, which notice shall contain the status thereof and a
description of the action being taken or proposed to be taken by the Company in
respect thereof.
Section 5.02. Acceleration. If an Event of Default (other than an Event of
Default specified in Section 5.01(h) or 5.01(i) above) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of at least 25% in
outstanding principal amount of the outstanding Securities by notice to the
Company and the Trustee, may, and the Trustee at the request of such Holders
shall, declare the principal of and accrued and unpaid interest, if any, and
Additional Interest, if any, on all the Securities to be due and payable. Upon
such a declaration, such principal, premium, if any, and accrued and unpaid
interest and Additional Interest, if any, shall be due and payable immediately.
If an Event of Default specified in Section 5.01(h) or 5.01(i) above occurs and
is continuing, the principal of and accrued and unpaid interest, if any, and
Additional Interest, if any, on all the Securities outstanding shall be
immediately due and payable with no further action by the Trustee or the
Holders.
Section 5.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest (including any Additional Interest) on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 5.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the outstanding Securities by notice to the Trustee may (a)
waive, by their consent (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for,
Securities), an existing Default or Event of Default and its consequences except
(i) a Default or Event of Default in the payment of the principal of or interest
(including any Additional Interest) on a Security or (ii) a Default or Event of
Default in respect of a provision that under Section 8.02 cannot be amended
without the consent of each Securityholder affected and (b) rescind any such
acceleration with respect to the Securities and its consequences if (i)
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (ii) all existing Events of Default, other than the
nonpayment of the principal of and interest (including any Additional Interest)
on the Securities that have become due solely by such declaration of
acceleration, have been cured or waived. When a Default or Event of Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any consequent right.
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Section 5.05. Control by Majority. The Holders of a majority in principal
amount of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Sections 6.01 and 6.02, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction.
Section 5.06. Limitation on Suits. Subject to Section 5.07, a
Securityholder may not pursue any remedy with respect to this Indenture or the
Securities unless:
(a) such Holder has previously given to the Trustee notice stating that an
Event of Default is continuing;
(b) Holders of at least 25% in principal amount of the outstanding
Securities have requested that the Trustee pursue the remedy;
(c) such Holders have offered to the Trustee security or indemnity
reasonably satisfactory to it against any loss, liability or expense to be
incurred in compliance with such request;
(d) the Trustee has not complied with such request within 60 days after
receipt of the request and the offer of security or indemnity; and
(e) the Holders of a majority in principal amount of the outstanding
Securities have not given the Trustee a direction that, in the opinion of the
Trustee, is inconsistent with such request within such 60-day period.
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A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
Section 5.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture (including, without limitation, Section 5.06),
the right of any Holder to receive payment of principal of or interest
(including any Additional Interest) on the Securities held by such Holder, 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 such Holder.
Section 5.08. Collection Suit by Trustee. If an Event of Default specified
in clauses (a) or (b) of Section 5.01 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 then due and owing (together with interest on any
unpaid interest (including any Additional Interest) to the extent lawful) and
the amounts provided for in Section 6.07.
Section 5.09. 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 (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and the Securityholders allowed in any judicial
proceedings relative to the Company, its Subsidiaries or its or their respective
creditors or properties and, unless prohibited by law or applicable regulations,
may be entitled and empowered to participate as a member of any official
committee of creditors appointed in such matter, and may vote on behalf of the
Holders in any election of a trustee in bankruptcy or other Person performing
similar functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make 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 to the Trustee any amount due for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and its counsel,
and any other amounts due to the Trustee under Section 6.07.
Section 5.10. Priorities. If the Trustee collects any money or property
pursuant to this Article 5, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 6.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest (including any Additional Interest),
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Securities for principal and interest, respectively; and
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THIRD: to the Company.
The Trustee may fix a Record Date and payment date for any payment to
Securityholders pursuant to this Section 5.10. At least 15 days before such
Record Date, the Company shall mail to each Securityholder and the Trustee a
notice that states the Record Date, the payment date and amount to be paid.
Section 5.11. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted a proceeding to enforce any right or remedy under this
Indenture and the proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to the Holder, then, subject
to any determination in the proceeding, the Company, the Subsidiary Guarantors,
the Trustee, any Subsidiaries and the Holders will be restored severally and
respectively to their former positions hereunder and thereafter all rights and
remedies of the Company, any Subsidiary Guarantors, the Trustee, any
Subsidiaries and the Holders will continue as though no such proceeding had been
instituted.
Section 5.12. Undertaking of Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section 5.12 does not apply to a suit
by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section
5.07 or a suit by Holders of more than 10% in outstanding principal amount of
the Securities.
ARTICLE 6
TRUSTEE
Section 6.01. Duties of Trustee. If an Event of Default has occurred and is
continuing, the Trustee shall exercise the rights and powers vested in it by
this Indenture and use the same degree of care and skill in its exercise as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs; provided that if an Event of Default occurs and is
continuing, the Trustee will be under no obligation to exercise any of the
rights or powers under this Indenture at the request or direction of any of the
Holders unless such Holders have offered to the Trustee reasonable indemnity or
security against loss, liability or expense that might be incurred in compliance
with such request or direction.
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(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates,
opinions or orders furnished to the Trustee and conforming to the
requirements of this Indenture. However, in the case of any such
certificates, opinions or orders which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee
shall examine such 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) this paragraph does not limit the effect of paragraph (b) of
this Section 6.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer of the Trustee unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section 6.01.
(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.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
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(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section 6.01 and to the provisions of the TIA.
(i) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
Section 6.02. Rights of Trustee. Subject to Section 6.01:
(a) The Trustee may conclusively rely on any document (whether in its
original or facsimile form) reasonably 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. The Trustee shall receive and retain
financial reports and statements of the Company as provided herein, but shall
have no duty to review or analyze such reports or statements to determine
compliance under covenants or other obligations of the Company.
(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 an
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers, unless the Trustee's conduct constitutes willful misconduct or
negligence.
(e) The Trustee may consult with counsel of its selection, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
39
(f) The Trustee shall not be responsible or liable for special, indirect,
or consequential loss or damage of any kind whatsoever (including, but not
limited to, loss of profit) resulting from actions taken in good faith and which
the Trustee believes to be authorized or within its rights or powers, unless the
Trustee's conduct constitutes willful misconduct or negligence.
(g) 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.
(h) The Trustee may request that the Company deliver a certificate setting
forth the names of individuals and/or titles of officers authorized at such time
to take specified actions pursuant to this Indenture.
Section 6.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 6.10 and 6.11. In addition, the Trustee shall be permitted
to engage in transactions with the Company; provided, however, that if the
Trustee acquires any conflicting interest the Trustee must (i) eliminate such
conflict within 90 days of acquiring such conflicting interest, (ii) apply to
the SEC for permission to continue acting as Trustee or (iii) resign.
Section 6.04. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Securities, shall not be accountable for the Company's use of the
proceeds from the Securities, shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee and
shall not be responsible for any statement of the Company in this Indenture or
in any document issued in connection with the sale of the Securities or in the
Securities other than the Trustee's certificate of authentication.
Section 6.05. Notice of Defaults. If a Default or Event of Default occurs
and is continuing and if a Trust Officer of the Trustee has actual knowledge
thereof, the Trustee shall mail by first class mail to each Securityholder at
the address set forth in the Securities Register notice of the Default or Event
of Default within 90 days after it occurs. Except in the case of a Default or
Event of Default in payment of principal of or interest (including any
Additional Interest) on any Security, the Trustee may withhold the notice if and
so long as its Board of Directors, a committee of its Board of Directors or a
committee of its Trust Officers in good faith determines that withholding the
notice is in the interests of Securityholders.
40
Section 6.06. Reports by Trustee to Holders. As promptly as practicable
after each May 15 beginning with the May 15 following the date of this
Indenture, and in any event prior to July 1 in each year, the Trustee shall mail
to each Securityholder a brief report dated as of such May 15 that complies with
TIA ss. 313(a), if required by such TIA ss. 313(a). The Trustee also shall
comply with TIA ss. 313(b). The Trustee shall also transmit by mail all reports
required by TIA ss. 313(c).
Section 6.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time, pursuant to a side letter between the Company and the
Trustee, such compensation for its acceptance of this Indenture and services
hereunder as the Company and the Trustee shall from time to time agree. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. In addition to the compensation the Company shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it. Such expenses shall include the reasonable compensation
and out-of-pocket expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Company shall indemnify the Trustee
against any and all loss, liability, damages, claims or expense (including
reasonable attorneys' fees and expenses) incurred by it without negligence or
bad faith on its part in connection with the administration of this trust and
the performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture (including this Section 6.07) and of defending itself
against any claims (whether asserted by any Securityholder, the Company or
otherwise). The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee shall provide reasonable cooperation at the Company's
expense in the defense. The Trustee may have separate counsel and the Company
shall pay the fees and expenses of such counsel, provided that the Company shall
not be required to pay such fees and expenses if it assumes the Trustee's
defense, and, in the reasonable judgment of outside counsel to the Trustee,
there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own willful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section 6.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest (including any Additional Interest) on particular
Securities. Such lien shall survive the satisfaction and discharge of this
Indenture. The Trustee's right to receive payment of any amounts due under this
Section 6.07 shall not be subordinate to any other unsecured liability or debt
of the Company.
41
The Company's payment obligations pursuant to this Section 6.07 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in clauses (h) and Section 5.01 with
respect to the Company, the expenses are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 6.08. Replacement of Trustee. The Trustee may resign at any time by
so notifying the Company. The Holders of a majority in principal amount of the
Securities may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Company shall remove the Trustee if:
(a) the Trustee fails to comply with Section 6.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Trustee or its
property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the Holders of a
majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of the Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint 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 6.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
at least 10% in principal amount of the Securities may petition, at the
Company's expense, any court of competent jurisdiction for the appointment of a
successor Trustee.
42
If the Trustee fails to comply with Section 6.10, unless the Trustee's duty
to resign is stayed as provided in TIA ss. 310(b), any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section
6.08, the Company's obligations under Section 6.07 shall continue for the
benefit of the retiring Trustee.
Section 6.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; provided that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Securities in the name
of any predecessor Trustee shall only apply to its successor or successors by
merger, consolidation or conversion.
Section 6.10. Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA ss. 310(a). The Trustee shall have 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); provided, however, that there shall be excluded from the operation of
TIA ss. 310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met.
Section 6.11. 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.
Section 6.12. Trustee's Application for Instruction from the Company. Any
application by the Trustee for written instructions from the Company may, at the
option of the Trustee, set forth in writing any action proposed to be taken or
omitted by the Trustee under this Indenture and the date on and/or after which
such action shall be taken or such omission shall be effective. The Trustee
shall not be liable for any action taken by, or omission of, the Trustee in
accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than three Business
Days after the date any Officer of the Company actually receives such
application, unless any such Officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
43
ARTICLE 7
DISCHARGE OF INDENTURE
Section 7.01. Discharge of Liability on Securities. When (1) the Company
shall deliver to the Registrar for cancellation all Securities theretofore
authenticated (other than any Securities which have been destroyed, lost or
stolen and in lieu of or in substitution for which other Securities shall have
been authenticated and delivered) and not theretofore canceled, or (2) all the
Securities not theretofore canceled or delivered to the Registrar for
cancellation shall have (a) been deposited for conversion (after all related
Observation Periods have elapsed) and the Company shall deliver to the Holders
cash and shares of Capital Stock, as applicable, sufficient to pay all amounts
owing in respect of all Securities (other than any Securities which shall have
been mutilated, destroyed, lost or stolen and in lieu of or in substitution for
which other Securities shall have been authenticated and delivered) not
theretofore canceled or delivered to the Registrar for cancellation or (b)
become due and payable on the Stated Maturity, or Fundamental Change Purchase
Date, as applicable, and the Company shall deposit with the Trustee cash or
shares of Capital Stock, as applicable, sufficient to pay all amounts owing in
respect of all Securities (other than any Securities which shall have been
mutilated, destroyed, lost or stolen and in lieu of or in substitution for which
other Securities shall have been authenticated and delivered) not theretofore
canceled or delivered to the Registrar for cancellation, including the principal
amount and interest (including any Additional Interest) accrued and unpaid to
such Stated Maturity or Fundamental Change Purchase Date, as the case may be,
and if in either case (1) or (2) the Company shall also pay or cause to be paid
all other sums payable hereunder by the Company, then this Indenture with
respect to the Securities shall cease to be of further effect (except as to (i)
remaining rights of registration of transfer, substitution and exchange and
conversion of Securities; (ii) rights hereunder of Holders to receive payments
of the amounts then due, including interest (including any Additional Interest)
with respect to the Securities and the other rights, duties and obligations of
Holders, as beneficiaries hereof with respect to the amounts, if any, so
deposited with the Trustee; and (iii) the rights, obligations and immunities of
the Trustee, Authenticating Agent, Paying Agent, Conversion Agent and Registrar
under this Indenture with respect to the Securities), and the Trustee, on demand
of the Company accompanied by an Officers' Certificate and an Opinion of Counsel
as required by Section 7.03 and at the cost and expense of the Company, shall
execute proper instruments acknowledging satisfaction of and discharging this
Indenture with respect to the Securities; the Company, however, hereby agrees to
reimburse the Trustee, Authenticating Agent, Paying Agent, Conversion Agent and
Registrar for any costs or expenses thereafter reasonably and properly incurred
by the Trustee, Authenticating Agent, Paying Agent, Conversion Agent and
Registrar and to compensate the Trustee, Authenticating Agent, Paying Agent,
Conversion Agent and Registrar for any services thereafter reasonably and
properly rendered by the Trustee, Authenticating Agent, Paying Agent, Conversion
Agent and Registrar in connection with this Indenture with respect to the
Securities.
44
Section 7.02. Reinstatement. If the Trustee or the Paying Agent is unable
to apply any money to the Holders entitled thereto by reason of any order or
judgment of any court of governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture with respect to the Securities and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 7.01 until such
time as the Trustee or the Paying Agent is permitted to apply all such money in
accordance with this Indenture and the Securities to the Holders entitled
thereto; provided, however, that if the Company makes any payment of principal
amount of or interest (including any Additional Interest) on any Securities
following 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 held by the Trustee or Paying Agent.
Section 7.03. Officers' Certificate; Opinion of Counsel. Upon any
application or demand by the Company to the Trustee to take any action under
Section 7.01, the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Each certificate or Opinion of Counsel provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
pursuant to the previous paragraph shall include: (1) a statement that the
Person making such certificate or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statement or opinion contained in such certificate
or opinion is based; (3) a statement that, in the opinion of such Person, such
Person has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and (4) a statement as to whether or not, in the opinion
of such Person, such condition or covenant has been complied with.
45
ARTICLE 8
AMENDMENTS
Section 8.01. Without Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to comply with Article 4 and Section 9.02 in respect of the assumption
by a Successor Company of an obligation of the Company or a Subsidiary Guarantor
under this Indenture;
(c) to provide for uncertificated Securities in addition to or in place of
certificated Securities; provided, however, that the uncertificated Securities
are issued in registered form for purposes of Section 163(f) of the Code or in a
manner such that the uncertificated Securities are described in Section
163(f)(2)(B) of the Code;
(d) to add guarantees with respect to the Securities;
(e) to secure the Securities;
(f) to add to the covenants of the Company for the benefit of the Holders
or to surrender any right or power herein conferred upon the Company;
(g) to comply with any requirement of the SEC in connection with the
qualification of this Indenture under the TIA;
(h) to make any change that does not materially adversely affect the rights
of any Securityholder; or
(i) to conform the provisions of this Indenture to the "Description of
Notes" section of the Offering Memorandum.
After an amendment under this Section 8.01 becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section 8.01.
46
Section 8.02. With Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written or electronic consent of the
Holders of at least a majority in principal amount of the Securities then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Securities) and compliance
with the provisions of this Indenture may be waived with the written consent of
the Holders of at least a majority in principal amount of the Securities then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, Securities). However,
without the consent of each Securityholder affected, an amendment or waiver may
not:
(a) reduce the amount of Securities whose Holders must consent to an
amendment;
(b) reduce the rate of or extend the stated time for payment of interest,
including Additional Interest, on any Security;
(c) reduce the principal of or extend the Stated Maturity of any Security;
(d) make any change that adversely affects the conversion rights of any
Securities;
(e) reduce the Fundamental Change Purchase Price of any Security or amend
or modify in any manner adverse to the holders of the Securities the Company's
obligation to make such payments, whether through an amendment or waiver of
provisions in the covenants, definitions or otherwise;
(f) make any Security payable in money other than that stated in the
Security (it being understood that all references to cash in this Indenture and
the Securities are to U.S. legal tender) or, other than in accordance with the
provisions of this Indenture in effect on the Issue Date, eliminate any existing
Subsidiary Guarantee of the Securities;
(g) impair the right of any Holder to receive payment of principal of and
interest (including any Additional Interest) on such Holder's Securities on or
after the due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's Securities; or
(h) make any change to this Section 8.02 or Section 5.09.
47
It shall not be necessary for the consent of the Holders under this Section
8.02 to approve the particular form of any proposed amendment or waiver, but it
shall be sufficient if such consent approves the substance thereof. A consent to
any amendment or waiver under this Indenture by any Holder of the Securities
given in connection with a tender or exchange of such Holder's Securities will
not be rendered invalid by such tender or exchange.
After an amendment under this Section 8.02 becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section 8.02.
Section 8.03. Compliance with Trust Indenture Act. Every amendment to this
Indenture or the Securities shall comply with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents and Waivers. A consent to
an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective or otherwise in
accordance with any related solicitation documents. After an amendment or waiver
becomes effective, it shall bind every Securityholder. An amendment or waiver
shall become effective upon receipt by the Trustee of the requisite number of
written consents under Section 8.01 or 8.02, as applicable.
The Company may, but shall not be obligated to, fix a Record Date for the
purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a Record Date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall become valid or effective more than 120
days after such record date.
Section 8.05. Notation on or Exchange of Securities. If an amendment
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 regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
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Section 8.06. Trustee to Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 8 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Sections 6.01 and 6.02) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture and that such
amendment is the legal, valid and binding obligation of the Company and any
Subsidiary Guarantors, enforceable against them in accordance with its terms,
subject to customary exceptions, and complies with the provisions hereof
(including Section 8.03).
ARTICLE 9
SUBSIDIARY GUARANTEE
Section 9.01. Subsidiary Guarantee. Each Subsidiary Guarantor hereby fully
and unconditionally guarantees, on an unsubordinated basis, as primary obligor
and not merely as surety, jointly and severally with each other Subsidiary
Guarantor, to each Holder of the Securities and the Trustee the full and
punctual payment when due, whether at maturity, by acceleration or otherwise, of
the principal of and interest, including any Additional Interest, on the
Securities and all other obligations and liabilities of the Company under this
Indenture (including without limitation interest (including any Additional
Interest) accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Company or any Subsidiary Guarantor whether or not a claim for post-filing
or post-petition interest is allowed in such proceeding) (all the foregoing
being hereinafter collectively called the "Obligations"). Each Subsidiary
Guarantor further agrees (to the extent permitted by law) that the Obligations
may be extended or renewed, in whole or in part, without notice or further
assent from it, and that it will remain bound under this Article 9
notwithstanding any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of payment from
and protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. Each Subsidiary Guarantor waives notice of any Default
under the Securities or the Obligations. The obligations of each Subsidiary
Guarantor hereunder shall not be affected by (a) the failure of any Holder to
assert any claim or demand or to enforce any right or remedy against the Company
or any other Person under this Indenture, the Securities or any other agreement
or otherwise; (b) any extension or renewal of any thereof; (c) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Indenture, the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder to exercise any right or remedy against any other
Subsidiary Guarantor; or (f) any change in the ownership of the Company.
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Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein constitutes a Guarantee of payment when due (and not a Guarantee of
collection) and waives any right to require that any resort be had by any Holder
to any security held for payment of the Obligations.
The obligations of each Subsidiary Guarantor hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason (other
than payment of the Obligations in full), including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any
defense of setoff, counterclaim, recoupment or termination whatsoever or by
reason of the invalidity, illegality or unenforceability of the Obligations or
otherwise. Without limiting the generality of the foregoing, the obligations of
each Subsidiary Guarantor herein shall not be (to the extent permitted by law)
discharged or impaired or otherwise affected by the failure of any Holder to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any Default, failure or delay, willful or otherwise, in the performance of
the Obligations, or by any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of any Subsidiary Guarantor or would otherwise operate as a discharge of
such Subsidiary Guarantor as a matter of law or equity.
The Holders of the Securities are deemed to have consented to the release
of the guarantee of the Securities provided by a Subsidiary Guarantor, without
any action required on the part of the Trustee or any Holder of the Securities,
upon such Subsidiary Guarantor ceasing to guarantee the Senior Credit Facility
and any other Credit Facility Debt and Capital Markets Debt of the Company.
Accordingly, if the lenders under the Senior Credit Facility agree to release a
Subsidiary Guarantor from its guarantee of the Senior Credit Facility, the
obligations of such Subsidiary to guarantee the Securities will immediately
terminate, and if the Senior Credit Facility is repaid in full, the obligations
of the Company's Subsidiaries to guarantee the Securities will immediately
terminate, unless the Company's Subsidiaries guarantee any other Credit Facility
Debt or Capital Markets Debt of the Company. If any of the Company's
Subsidiaries guarantee any Credit Facility Debt or Capital Markets Debt of the
Company, then such Subsidiaries shall promptly guarantee the Securities by
entering into a supplemental indenture in the form attached hereto as Exhibit B.
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Each Subsidiary Guarantor agrees that its Subsidiary Guarantee herein shall
remain in full force and effect until payment in full of all the Obligations or
until such Subsidiary Guarantor is released from its Subsidiary Guarantee upon
the merger or the sale of all the Capital Stock or assets of the Subsidiary
Guarantor in compliance with Section 9.02. Each Subsidiary Guarantor further
agrees that its Subsidiary Guarantee herein shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
principal of or interest (including any Additional Interest), on any of the
Obligations is rescinded or must otherwise be restored by any Holder upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which any Holder has at law or in equity against any Subsidiary Guarantor by
virtue hereof, upon the failure of the Company to pay any of the Obligations
when and as the same shall become due, whether at maturity, by acceleration or
otherwise, each Subsidiary Guarantor hereby promises to and will, upon receipt
of written demand by the Trustee, forthwith pay, or cause to be paid, in cash,
to the Holders an amount equal to the sum of (i) the unpaid amount of such
Obligations then due and owing and (ii) accrued and unpaid interest (including
any Additional Interest) on such Obligations then due and owing (but only to the
extent not prohibited by law).
Each Subsidiary Guarantor further agrees that, as between such Subsidiary
Guarantor, on the one hand, and the Holders, on the other hand, (x) the maturity
of the Obligations guaranteed hereby may be accelerated as provided in this
Indenture for the purposes of its Subsidiary Guarantee herein, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the Obligations guaranteed hereby and (y) in the event of any such
declaration of acceleration of such Obligations, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Subsidiary
Guarantor for the purposes of this Subsidiary Guarantee.
Each Subsidiary Guarantor also agrees to pay any and all reasonable costs
and expenses (including reasonable attorneys' fees and expenses) incurred by the
Trustee in enforcing any rights under this Section 9.01.
Section 9.02. Limitation on Liability; Termination, Release and Discharge
Upon Merger or Consolidation; Termination on Conversion. (a) The obligations of
each Subsidiary Guarantor hereunder will be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Subsidiary Guarantor (including, without limitation, any guarantees under the
Senior Credit Facility) and after giving effect to any collections from or
payments made by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its Subsidiary
Guarantee or pursuant to its contribution obligations under this Indenture,
result in the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law and not otherwise being void or voidable under any similar
laws affecting the rights of creditors generally.
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(b) Each Subsidiary Guarantor may consolidate with or merge into or sell
its assets to the Company or another Subsidiary Guarantor without limitation.
Subject to Article 4, each Subsidiary Guarantor may (i) sell or otherwise
dispose (including by way of merger or consolidation), in one or more series of
related transactions, of a majority of the total voting power of the Capital
Stock or other interests of such Subsidiary Guarantor, or (ii) sell or otherwise
dispose all or substantially all of such Subsidiary Guarantor's assets; provided
that if the surviving Person of any such merger or consolidation is the Company
or an Affiliate of the Company, or any such sale is to the Company or an
Affiliate of the Company, such merger, consolidation or sale shall not be
permitted unless:
(A) the Person formed by or surviving any such consolidation or
merger or to whom such sale is made is a corporation, partnership,
trust or limited liability company organized existing under the laws
of the United States of America, any State thereof or the District of
Columbia and assumes all the obligations of such Subsidiary under the
Subsidiary Guarantee pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee in respect of the
Securities, this Indenture and the Subsidiary Guarantee,
(B) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(C) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel addressed to the Trustee with respect to the
foregoing matters.
Upon the sale or disposition of a Subsidiary Guarantor (by merger,
consolidation, the sale of its Capital Stock or the sale of all or substantially
all of its assets (other than by lease)), which sale or disposition is otherwise
in compliance with this Indenture, such Subsidiary Guarantor will be released
from all its obligations under this Indenture and its Subsidiary Guarantee will
terminate. Each Subsidiary Guarantee with respect to a Security will
automatically terminate immediately prior to such Security's conversion.
52
(c) Each Subsidiary Guarantor will be deemed released from all its
obligations under this Indenture, its Subsidiary Guarantee and the Registration
Rights Agreement and such Subsidiary Guarantee will terminate upon the discharge
of the Securities pursuant to the provisions of Article 7 hereof. At the request
of the Company, the Trustee shall execute and deliver any documents,
instructions or instruments evidencing the consent of the Holders to any release
in accordance with this Article 9.
Section 9.03. Right of Contribution. Each Subsidiary Guarantor hereby
agrees that to the extent that any Subsidiary Guarantor shall have paid more
than its proportionate share of any payment made on the obligations under the
Subsidiary Guarantees, such Subsidiary Guarantor shall be entitled to seek and
receive contribution from and against the Company or any other Subsidiary
Guarantor who has not paid its proportionate share of such payment. The
provisions of this Section 9.03 shall in no respect limit the obligations and
liabilities of each Subsidiary Guarantor to the Trustee and the Holders and each
Subsidiary Guarantor shall remain liable to the Trustee and the Holders for the
full amount guaranteed by such Subsidiary Guarantor hereunder.
Section 9.04. No Subrogation. Notwithstanding any payment or payments made
by each Subsidiary Guarantor hereunder, no Subsidiary Guarantor shall be
entitled to be subrogated to any of the rights of the Trustee or any Holder
against the Company or any other Subsidiary Guarantor or any collateral security
or guarantee or right of offset held by the Trustee or any Holder for the
payment of the Obligations, nor shall any Subsidiary Guarantor seek or be
entitled to seek any contribution or reimbursement from the Company or any other
Subsidiary Guarantor in respect of payments made by such Subsidiary Guarantor
hereunder, until all amounts owing to the Trustee and the Holders by the Company
on account of the Obligations are paid in full. If any amount shall be paid to
any Subsidiary Guarantor on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by such Subsidiary Guarantor in trust for the Trustee and the Holders,
segregated from other funds of such Subsidiary Guarantor, and shall, forthwith
upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by such Subsidiary Guarantor (duly indorsed by such
Subsidiary Guarantor to the Trustee, if required), to be applied against the
Obligations.
53
ARTICLE 10
PURCHASE AT OPTION OF HOLDER UPON A FUNDAMENTAL
CHANGE
Section 10.01. Purchase at the Option of the Holder Upon a Fundamental
Change. If a Fundamental Change occurs at any time, each Holder shall have the
right, at such Holder's option, to require the Company to purchase any or all of
the Holder's Securities, or any portion of the principal amount thereof, that is
equal to $1,000 or a multiple of $1,000 at a purchase price equal to 100% of the
principal amount of the Securities to be purchased plus accrued and unpaid
interest, including Additional Interest, to but excluding the Fundament Change
Purchase Date (the "Fundamental Change Purchase Price"); provided that, if the
Fundamental Change Purchase Date occurs after a Record Date and on or prior to
the corresponding interest payment date, the Company shall pay accrued and
unpaid interest plus Additional Interest, if any, to but excluding the
Fundamental Change Purchase Date to the record Holder on the Record Date
corresponding to such interest payment date and the Fundamental Change
repurchase price payable to the Holder who presents the Security for repurchase
will be 100% of the principal amount of such Security. The Fundamental Change
Purchase Date shall be a date specified by the Company no later than the 35th
calendar day following the date of the Fundamental Change notice (subject to
extension to comply with applicable law, as provided in Section 10.02(d)) (the
"Fundamental Change Purchase Date"). Any Securities purchased by the Company
shall be paid for in cash.
(a) Notice of Fundamental Change. The Company, or at its request (which
must be received by the Paying Agent at least three Business Days (or such
lesser period as agreed to by the Paying Agent) prior to the date the Paying
Agent is requested to give such notice as described below) the Paying Agent, in
the name of and at the expense of the Company, shall mail to all Holders and the
Trustee a Company Notice of the occurrence of a Fundamental Change and of the
purchase right arising as a result thereof, including the information required
by Section 10.02(a) hereof, on or before the 20th calendar day after the
occurrence of such Fundamental Change. The Company shall promptly furnish to the
Paying Agent a copy of such Company Notice.
(b) Exercise of Option. For a Security to be so purchased at the option of
the Holder, the Holder must deliver, on or before the Business Day immediately
preceding the Fundamental Change Purchase Date, subject to extension to comply
with applicable law, the Securities to be purchased, duly endorsed for transfer,
together with a written purchase notice (a "Fundamental Change Purchase Notice")
in the form entitled "Form of Fundamental Change Purchase Notice" on the reverse
side of the Securities duly completed, to the Paying Agent. The Fundamental
Change Purchase Notice shall state:
54
(i) if certificated, the certificate numbers of the Holder's
Securities to be delivered for purchase;
(ii) the portion of the principal amount of the Securities to be
purchased, which portion must be $1,000 or a multiple thereof; and
(iii) that such Securities shall be purchased as of the
Fundamental Change Purchase Date pursuant to the terms and conditions
specified in paragraph 3 of the Securities and in this Indenture.
(c) Procedures. The Company shall purchase from a Holder, pursuant to this
Section 10.01, Securities if the principal amount of such Securities is $1,000
or a multiple of $1,000 if so requested by such Holder.
Any purchase by the Company contemplated pursuant to the provisions of this
Section 10.01 shall be consummated by the delivery of the Fundamental Change
Purchase Price to be received by the Holder promptly following the later of the
Fundamental Change Purchase Date or the time of book-entry transfer or delivery
of the Securities.
The Company shall require each Paying Agent (other than the Trustee) to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all cash held by the Paying Agent for the payment of the
Fundamental Change Purchase Price and shall notify the Trustee of any Default by
the Company in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall segregate the cash held by it as Paying
Agent and hold it as a separate trust fund. The Company at any time may require
a Paying Agent to deliver all cash held by it to the Trustee and to account for
any funds disbursed by the Paying Agent. Upon doing so, the Paying Agent shall
have no further liability for the cash delivered to the Trustee.
Section 10.02. Further Conditions and Procedures for Purchase at the Option
of the Holder Upon a Fundamental Change.
(a) Notice of Fundamental Change. The Company shall send notices (each, a
"Company Notice") to the Holders (and to Beneficial Owners as required by
applicable law) at their addresses shown in the Securities Register maintained
by the Registrar, and delivered to the Trustee and Paying Agent, on or before
the 20th calendar day after the occurrence of the Fundamental Change (each such
date of delivery, a "Company Notice Date"). Each Company Notice shall include a
form of Fundamental Change Purchase Notice to be completed by a Holder and shall
state:
(i) the events causing the Fundamental Change;
55
(ii) the date of the Fundamental Change;
(iii) the last date on which a Holder may exercise its repurchase
rights under Section 10.01;
(iv) the Fundamental Change Purchase Price;
(v) the Fundamental Change Purchase Date;
(vi) the name and address of the Paying Agent and the Conversion
Agent, if applicable;
(vii) the applicable Conversion Rate and, if applicable, any
adjustments to the applicable Conversion Rate;
(viii) that the Securities with respect to which a Fundamental
Change Purchase Notice has been delivered by a Holder may be converted
only if the Holder withdraws the Fundamental Change Purchase Notice in
accordance with the terms of the Indenture; and
(ix) the procedures the Holder must follow under Section 10.01
and Section 10.02.
Simultaneously with providing such Company Notice, the Company will publish
a notice containing the information in such Company Notice in a newspaper of
general circulation in The City of New York or publish such information on its
then existing website or through such other public medium as it may use at the
time.
At the Company's request, made at least five Business Days prior to the
date upon which such notice is to be mailed, and at the Company's expense, the
Paying Agent shall give the Company Notice in the Company's name; provided,
however, that, in all cases, the text of the Company Notice shall be prepared by
the Company.
(b) Effect of Fundamental Change Purchase Notice; Withdrawal; Effect of
Event of Default. Upon receipt by the Company of the Fundamental Change Purchase
Notice specified in Section 10.01(b), the Holder of the Securities in respect of
which such Fundamental Change Purchase Notice was given shall (unless such
Fundamental Change Purchase Notice is withdrawn as specified in this Section
10.02(b)) thereafter be entitled to receive solely the Fundamental Change
Purchase Price with respect to such Securities. Such Fundamental Change Purchase
Price shall be paid by the Paying Agent to such Holder promptly following the
later of (x) the Fundamental Change Purchase Date with respect to such
Securities (provided the conditions in this Article 10 have been satisfied) and
(y) the time of delivery or book-entry transfer of such Securities to the Paying
Agent by the Holder thereof in the manner required by Section 10.01. Securities
in respect of which a Fundamental Change Purchase Notice has been given by the
Holder thereof may not be converted on or after the date of the delivery of such
Fundamental Change Purchase Notice unless such Fundamental Change Purchase
Notice has first been validly withdrawn as specified in this Section 10.02(b).
Notwithstanding anything herein to the contrary, any Holder delivering to the
Paying Agent the Fundamental Change Purchase Notice contemplated by Section
10.02(a), shall have the right (unless such Fundamental Change Purchase Notice
is withdrawn as specified below) at any time prior to the close of business on
the second Business Day prior to the Fundamental Change Purchase Date to
withdraw such Fundamental Change Purchase Notice (in whole or in part) by
delivery of a written notice of withdrawal to the Paying Agent in accordance
with this Section 10.02(b).
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The Paying Agent shall promptly notify the Company of the receipt by it of
any Fundamental Change Purchase Notice or written notice of withdrawal thereof.
On or before 11:00 a.m. (New York City time) on the Fundamental Change
Purchase Date, the Company shall deposit with the Paying Agent (or if the
Company or an Affiliate of the Company is acting as the Paying Agent, shall
segregate and hold in trust) cash sufficient to pay the aggregate Fundamental
Change Purchase Price of the Securities to be purchased pursuant to Section
10.01. If the Paying Agent holds, in accordance with the terms of this
Indenture, cash sufficient to pay the Fundamental Change Purchase Price of such
Securities on the Fundamental Change Purchase Date, then, on and after such
date, (i) the Securities shall cease to be outstanding and interest, including
any Additional Interest, if any, shall cease to accrue (whether or not
book-entry transfer of such Securities is made or whether or not the Security is
delivered to the Paying Agent); and (ii) all other rights of the Holder will
terminate (other than the right to receive the Fundamental Change Purchase Price
and previously accrued and unpaid interest (including any Additional Interest)
upon delivery or transfer of the Securities). Nothing herein shall preclude any
withholding tax required by law.
A Fundamental Change Purchase Notice may be withdrawn by means of a written
notice of withdrawal delivered to the office of the Paying Agent prior to the
close of business on the second Business Day prior to the Fundamental Change
Purchase Date. The notice of withdrawal shall state:
(i) the principal amount of the withdrawn Securities;
57
(ii) if Definitive Securities have been issued, the certificate
numbers of the withdrawn Securities, or if not certificated, the
written notice of withdrawal must comply with appropriate DTC
procedures; and
(iii) the principal amount, if any, of such Securities which
remains subject to the original Fundamental Change Purchase Notice.
There shall be no purchase of any Securities pursuant to Section 10.01, if
an Event of Default has occurred and is continuing (other than a Default that is
cured by the payment of the Fundamental Change Purchase Price). The Paying Agent
shall promptly return to the respective Holders thereof any Securities (x) with
respect to which a Fundamental Change Purchase Notice, has been withdrawn in
compliance with this Indenture, or (y) held by it during the continuance of an
Event of Default (other than a Default that is cured by the payment of the
Fundamental Change Purchase Price) in which case, upon such return, the
Fundamental Change Purchase Notice with respect thereto shall be deemed to have
been withdrawn.
(c) Securities Purchased in Part. Any Securities that are to be purchased
only in part shall be surrendered at the office of the Paying Agent (with, if
the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or such Holder's attorney duly authorized in
writing) and the Company shall execute and the Trustee or the Authenticating
Agent shall authenticate and deliver to the Holder of such Securities, without
service charge, a new Security or Securities, of any authorized denomination as
requested by such Holder in aggregate principal amount equal to, and in exchange
for, the portion of the principal amount of the Securities so surrendered which
is not purchased or redeemed.
(d) Covenant to Comply with Securities Laws Upon Purchase of Securities. In
connection with any offer to purchase Securities under Section 10.01, the
Company shall, to the extent applicable, (a) comply with Rules 13e-4 and 14e-1
(and any successor provisions thereto) under the Exchange Act, if applicable;
(b) file the related Schedule TO (or any successor schedule, form or report)
under the Exchange Act, if applicable; and (c) otherwise comply with all
applicable federal and state securities laws so as to permit the rights and
obligations under Section 10.01 to be exercised in the time and in the manner
specified in Section 10.01.
(e) Repayment to the Company. The Trustee and the Paying Agent shall return
to the Company any cash or property that remains unclaimed, as provided in
paragraph 7 of the Securities, together with interest that the Trustee or Paying
Agent, as the case may be, has expressly agreed in writing to pay, if any, that
is held by them for the payment of a Fundamental Change Purchase Price;
provided, however, that to the extent that the aggregate amount of cash or
property deposited by the Company pursuant to Section 10.01(b), as applicable,
exceeds the aggregate Fundamental Change Purchase Price of the Securities or
portions thereof which the Company is obligated to purchase as of the
Fundamental Change Purchase Date, then promptly on and after the Business Day
following the Fundamental Change Purchase Date, the Trustee and the Paying Agent
shall return any such excess to the Company together with interest that the
Trustee or Paying Agent, as the case may be, has expressly agreed in writing to
pay, if any.
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(f) Officers' Certificate. At least five Business Days before the Company
Notice Date, the Company shall deliver an Officers' Certificate to the Trustee
specifying whether the Company desires the Trustee to give the Company Notice
required by Section 10.02(a) herein.
ARTICLE 11
CONVERSION
Section 11.01. Conversion of Securities.
(a) Right to Convert. Subject to the procedures for conversion set forth in
this Article 11, a Holder may convert its Securities prior to the close of
business on the third Business Day immediately preceding Stated Maturity at the
Conversion Rate when any of the conditions specified below are met and during
the related specified period. Whenever the Securities shall become convertible
upon one or more of the conditions stated below, the Company or, at the
Company's request, the Trustee in the name and at the expense of the Company,
shall notify the Holders of the event triggering such convertibility in the
manner provided in Section 12.02, and the Company shall also publicly announce
such information by publication on the Company's website or through such other
public medium as it may use at such time. Any notice so given shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. Upon conversion, the Holder will not receive any separate
cash payment for accrued and unpaid interest and Additional Interest, if any,
unless such conversion occurs between a regular Record Date and the interest
payment date to which it relates.
(i) Conversion Upon Satisfaction of Sale Price Condition. A Holder may
surrender all or a portion of its Securities for conversion during any
fiscal quarter (and only during such fiscal quarter) commencing after June
30, 2007 if the Last Reported Sale Price of the Capital Stock for at least
20 Trading Days during the period of 30 consecutive Trading Days ending on
the last Trading Day of the preceding fiscal quarter is greater than or
equal to 130% of the Conversion Price in effect on such last Trading Day.
59
(ii) Conversion Upon Satisfaction of Trading Price Condition. Prior to
March 1, 2014, a Holder may surrender its Securities for conversion during
the five Business Day period after any 10 consecutive Trading Day period
(the "Measurement Period") in which the Trading Price per $1,000 principal
amount of Securities, as determined following a request by a Holder in
accordance with the procedures described herein, for each day of that
period was less than 98% of the product of the Last Reported Sale Price of
the Company's Capital Stock and the Conversion Rate. In connection with any
conversion upon satisfaction of the above trading price condition, the bid
solicitation agent (which shall be the Trustee) shall have no obligation to
determine the Trading Price of the Securities unless the Company has
requested such determination; and the Company shall have no obligation to
make such request unless a Holder of a Security provides the Company with
reasonable evidence that the Trading Price per $1,000 principal amount of
Securities would be less than 98% of the product of the Last Reported Sale
Price of the Company's Capital Stock and the Conversion Rate. At such time,
the Company shall instruct the bid solicitation agent to determine the
Trading Price of the Securities beginning on the next Trading Day and on
each successive Trading Day until the Trading Price per $1,000 principal
amount of Securities is greater than or equal to 98% of the product of the
Last Reported Sale Price of the Company's Capital Stock and Conversion
Rate.
"Trading Price" of the Securities on any date of determination means
the average of the secondary market bid quotations obtained by the bid
solicitation agent for $2 million principal amount of the Securities at
approximately 3:30 p.m., New York City time, on such determination date
from three independent nationally recognized securities dealers selected by
the Company; provided that, if three such bids cannot reasonably be
obtained by the bid solicitation agent but two such bids are obtained, then
the average of the two bids shall be used, and if only one such bid can
reasonably be obtained by the bid solicitation agent, that one bid shall be
used. If the bid solicitation agent cannot reasonably obtain at least one
bid for $2 million principal amount of the Securities from a nationally
recognized securities dealer on any day, then the trading price per $1,000
principal amount of Securities on such day will be deemed to be less than
98% of the product of the last reported sale price of the Capital Stock and
the Conversion Rate.
(iii) Conversion Upon Specified Corporate Transactions.
60
(A) If the Company (1) issues to all or substantially all holders of
Capital Stock rights entitling them to purchase, for a period expiring
within 45 days after the date of the distribution, shares of Capital Stock
at less than the average of the Last Reported Sale Prices of a share of
Capital Stock for the 10 consecutive trading-day period ending on the
Trading Day preceding the announcement of such issuance, or (2) distributes
to all or substantially all holders of the Capital Stock, the Company's
assets, debt securities or rights to purchase Securities of the Company,
which distribution has a per share value, as reasonably determined by the
Company's Board of Directors, exceeding 10% of the Last Reported Sale Price
of the Capital Stock on the day preceding the declaration date for such
distribution, then, in each case, the Company must notify the Holders, in
the manner provided in Section 12.02, at least 30 calendar days prior to
the Ex-Dividend Date for such distribution. Once the Company has given such
notice, Holders may surrender Securities for conversion at any time until
the earlier of 5:00 p.m., New York City time, on the Business Day
immediately prior to such Ex-Dividend Date or the Company's announcement
that such distribution will not take place.
(B) If the Company is party to a transaction described in clause (2)
or (4) of the definition of Fundamental Change (without giving effect to
the proviso set forth in the definition thereof relating to Publicly Traded
Securities), the Company must notify Holders, in the manner provided in
Section 12.02, at least 30 calendar days prior to the anticipated Effective
Date for such transaction. Once the Company has given such notice, Holders
may surrender Securities for conversion at any time until 45 calendar days
after the actual Effective Date of such transaction (or if such transaction
also constitutes a Fundamental Change, the related Fundamental Change
Purchase Date).
(C) If a Fundamental Change of the type described in clause (1) in the
definition thereof occurs, Holders may surrender all or a portion of their
Securities for conversion at any time beginning on the actual Effective
Date of such Fundamental Change until and including the date which is 30
calendar days after the actual effective date of such transaction or, if
later, until the purchase date corresponding to such Fundamental Change.
61
On or after March 1, 2014, Holders may convert each of their Securities at any
time prior to the close of business on the third Scheduled Trading Day
immediately preceding the maturity date regardless of the foregoing conditions.
(b) Conversion Procedures. The following procedures shall apply to convert
Securities:
(i) In respect of a Definitive Security, a Holder must (A)
complete and manually sign the conversion notice on the back of the
Security, or a facsimile of such conversion notice; (B) deliver such
conversion notice, which is irrevocable, and the Security to the
Conversion Agent; (C) if required, furnish appropriate endorsements
and transfer documents as may be required by the Conversion Agent and,
if required pursuant to Section 11.01(e) below, pay all transfer or
similar taxes; and (D) if required pursuant to Section 2.01(d) above,
pay funds equal to interest payable on the next interest payment date
to which such Holder is not entitled.
(ii) In respect of a beneficial interest in a Global Security, a
Beneficial Owner must comply with DTC's procedures for converting a
beneficial interest in a Global Security and, if required pursuant to
Section 2.01(d) above, pay funds equal to interest payable on the next
interest payment date to which such Beneficial Owner is not entitled,
and if required, pay all taxes or duties, if any.
The date a Holder complies with the foregoing requirements is the "Conversion
Date" hereunder.
If a Holder converts more than one Security at the same time, the cash and
number of shares of Capital Stock issuable upon the conversion, if any, shall be
based on the total principal amount of the Securities converted.
If a Holder has already delivered a Fundamental Change Purchase Notice in
accordance with a Fundamental Change, with respect to a Security, the Holder may
not surrender that Security for conversion until the Holder has validly
withdrawn the Fundamental Change Purchase Notice in accordance with this
Indenture. Upon surrender of a Security that is converted in part, the Company
shall execute, and the Trustee or the Authenticating Agent shall authenticate
and deliver to the Holder, a new Security in an authorized denomination equal in
principal amount to the unconverted portion of the Security surrendered.
(c) Payment Upon Conversion. Upon any conversion of any Security, the
Company will deliver to Holders in respect of each $1,000 principal amount of
Securities being converted a "Settlement Amount" equal to the sum of the Daily
Settlement Amounts for each of the 40 Trading Days during the Observation
Period.
62
"Daily Settlement Amount", for each of the 40 Trading Days during the
Observation Period, shall consist of:
(i) cash equal to the lesser of one-fortieth of $1,000 and the Daily
Conversion Value; and
(ii) to the extent the Daily Conversion Value exceeds one-fortieth of
$1,000, a number of shares of Capital Stock equal to, (A) the difference
between the Daily Conversion Value and one-fortieth of $1,000, divided by
(B) the Daily VWAP for such day.
"Daily Conversion Value" means, for each of the 40 consecutive Trading Days
during the Observation Period, one-fortieth of the product of (1) the applicable
Conversion Rate and (2) the Daily VWAP of the Capital Stock (or the
consideration into which the Capital Stock has been converted in connection with
transactions to which Section 11.04 is applicable) on such day.
"Daily VWAP" means, for each of the 40 consecutive Trading Days during the
Observation Period, the per share volume-weighted average price as displayed
under the heading "Bloomberg VWAP" on Bloomberg page "CHE.N (equity) AQR" (or
its equivalent successor if such page is not available) in respect of the period
from the scheduled open of trading until the scheduled close of trading of the
primary trading session on such Trading Day (or if such volume-weighted average
price is unavailable, the market value of one share of Capital Stock on such
Trading Day as determined, using a volume-weighted average method, by the
Company's Board of Directors in good faith. Daily VWAP will be determined
without regard to after hours trading or any other trading outside of the
regular trading hours.
"Scheduled Trading Day" means a day that is scheduled to be a trading day
on the primary United States national securities exchange or market on which the
Capital Stock is listed or admitted to trading.
The Settlement Amount in respect of any Security converted will be
delivered to converting Holders on the third Business Day immediately following
the last day of the Observation Period for such Security.
(d) Cash Payments in Lieu of Fractional Shares. The Company shall not issue
fractional shares of Capital Stock upon conversion of Securities. Instead the
Company shall deliver cash for the current market value of the fractional share,
subject to the Company's right to deliver one share of its Capital Stock in lieu
of a fractional share. The current market value of a fractional share shall be
determined to the nearest 1/10,000th of a share by multiplying the Daily VWAP of
a full share of Capital Stock on final Trading Day of the related Observation
Period by the fractional amount and rounding the product to the nearest whole
cent. The Company's delivery to the Holder of cash or a combination of cash and
the full number of shares of Capital Stock, if applicable, together with any
cash payment for any fractional share, into which a Security is convertible,
will be deemed to satisfy in full the Company's obligation to pay (i) the
principal amount of the Security; and (ii) accrued and unpaid interest and
additional interest, if any, to, but not including, the conversion date. As a
result, accrued and unpaid interest and additional interest, if any, to, but not
including, the conversion date will be deemed to be paid in full rather than
cancelled, extinguished or forfeited.
63
Notwithstanding the preceding paragraph, if Securities are converted after
5:00 p.m., New York City time, on a regular Record Date for the payment of
interest, Holders of such Securities at 5:00 p.m., New York City time, on such
Record Date will receive the interest and Additional Interest, if any, payable
on such Securities on the corresponding interest payment date notwithstanding
the conversion. Securities, upon surrender for conversion during the period from
5:00 p.m., New York City time, on any regular Record Date to 9:00 a.m., New York
City time, on the immediately following interest payment date, must be
accompanied by funds equal to the amount of interest and Additional Interest, if
any, payable on the Securities so converted; provided that no such payment need
be made (i) for conversions on or following March 1, 2014; (ii) if the Company
has specified a Fundamental Change Purchase Date that is after a Record Date and
on or prior to the Trading Day after the corresponding interest payment date; or
(iii) to the extent of any overdue interest, if any overdue interest exists at
the time of conversion with respect to such Security.
(e) Taxes on Conversion. If a Holder converts Securities, the Company shall
pay any documentary, stamp or similar issue or transfer tax due on the issue of
shares of Capital Stock upon the conversion. However, the Holder shall pay any
such tax which is due because the Holder requests the shares to be issued in a
name other than the Holder's name. The Conversion Agent may refuse to deliver
the certificates representing the Capital 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 shall be due because the shares are to be issued in a name
other than the Holder's name, but the Conversion Agent shall have no duty to
determine if any such tax is due. Nothing herein shall preclude any withholding
of tax required by law.
(f) Certain Covenants of the Company.
(i) The Company shall, prior to issuance of any Securities hereunder,
and from time to time as may be necessary, reserve out of its authorized
but unissued Capital Stock or shares of Capital Stock held in treasury,
sufficient number of shares of Capital Stock, free of preemptive rights, to
permit the conversion of the Securities.
64
(ii) All shares of Capital Stock delivered upon conversion of the
Securities shall be newly issued shares or treasury shares, shall be duly
and validly issued and fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim.
(iii) The Company shall endeavor promptly to comply with all federal
and state securities laws regulating the issuance and delivery of shares of
Capital Stock upon the conversion of Securities, if any. The Company does
not intend to list the Securities on a national securities exchange or
interdealer quotation system.
(iv) Before taking any action which would cause an adjustment
increasing the Conversion Rate to an amount that would cause the Conversion
Price to be reduced below the then par value per share the Capital Stock,
if any, of the shares of Capital Stock issuable upon conversion of the
Securities, the Company will take all corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly
and legally issue shares of such Capital Stock at such adjusted Conversion
Rate.
Section 11.02. Adjustments to Conversion Rate. The Conversion Rate shall be
adjusted from time to time by the Company as described below, except that the
Company will not make any adjustments to the Conversion Rate if Holders of the
Security participate, as a result of holding the Securities, in any transaction
described below without having to convert their Securities:
(a) If the Company issues shares of Capital Stock as a dividend or
distribution on shares of the Capital Stock, or effects a share split or share
combination, the Conversion Rate will be adjusted based on the following
formula:
CR'=CR0 x OS'
---
OS0
where,
CR0 = the Conversion Rate in effect immediately prior to the
Ex-Dividend Date of such dividend or distribution, or the
effective date of such share split or share combination, as
applicable
65
CR' = the Conversion Rate in effect immediately after such
Ex-Dividend Date or effective date
OS0 = the number of shares of Capital Stock outstanding
immediately prior to such Ex-Dividend Date or effective date
OS' = the number of shares of Capital Stock outstanding
immediately prior to such Ex-Dividend date or effective date
after giving effect to such dividend, distribution, share
split or share combination
Such adjustment shall become effective immediately after 9:00 a.m., New York
City time, on the Business Day following the Record Date for such dividend or
distribution, or the date fixed for determination for such share split or share
combination. The Company will not pay any dividend or make any distribution on
shares of Capital Stock held in treasury by the Company. If any dividend or
distribution of the type described in this Section 11.02(a) is declared but not
so paid or made, the Conversion Rate shall again be adjusted to the Conversion
Rate that would then be in effect if such dividend or distribution had not been
declared.
(b) If the Company issues to all or substantially all holders of its
Capital Stock any rights or warrants entitling them for a period of not more
than 45 calendar days to subscribe for or purchase shares of Capital Stock at a
price per share less than the average of the Last Reported Sale Prices of the
Capital Stock for the 10 consecutive Trading-Day period ending on the Scheduled
Trading Day immediately preceding the date of announcement of such issuance, the
Conversion Rate will be adjusted based on the following formula:
CR'=CR0 x OS0+X
-----
OS0+Y
where,
CR0 = the conversion rate in effect immediately prior the
Ex-Dividend Date for such issuance
CR' = the conversion rate in effect immediately after such
Ex-Dividend Date
OS0 = the number of shares of Capital Stock outstanding
immediately after such Ex-Dividend Date
X = the total number of shares of Capital Stock issuable
pursuant to such rights or warrants
Y = the number of shares of Capital Stock equal to the aggregate
price payable to exercise such rights or warrants divided by
the average of the Last Reported Sale Prices of the Capital
Stock over the 10 consecutive Trading-Day period ending on
the Trading Day immediately preceding the date of
announcement of the issuance of such rights or warrants
66
Such adjustment shall be successively made whenever any such rights or warrants
are issued and shall become effective immediately after 9:00 a.m., New York City
time, on the Business Day following the date fixed for such determination. The
Company shall not issue any such rights, options or warrants in respect of
shares of Capital Stock held in treasury by the Company. To the extent that
shares of Capital Stock are not delivered after the expiration of such rights or
warrants, the Conversion Rate shall be readjusted to the Conversion Rate that
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made on the basis of delivery of only the number of
shares of Capital Stock actually delivered. If such rights or warrants are not
so issued, the Conversion Rate shall again be adjusted to be the Conversion Rate
that would then be in effect if such date fixed for the determination of
stockholders entitled to receive such rights or warrants had not been fixed.
In determining whether any rights or warrants entitle the Holders to
subscribe for or purchase shares of Capital Stock at less than such Last
Reported Sale Price, and in determining the aggregate offering price of such
shares of Capital Stock, there shall be taken into account any consideration
received by the Company for such rights or warrants and any amount payable on
exercise or conversion thereof, the value of such consideration, if other than
cash, to be determined by the Company's Board of Directors.
(c) If the Company distributes shares of capital stock of the Company,
evidences of its indebtedness or other assets or property of the Company to all
or substantially all holders of the Capital Stock, excluding:
(i) dividends or distributions and rights or warrants referred to in
clause (a) or (b) above; and
(ii) dividends or distributions paid exclusively in cash;
then the Conversion Rate will be adjusted based on the following formula:
CR'=CR0 x SP0
-------
SP0-FMV
where,
CR0 = the Conversion Rate in effect immediately prior to the
Ex-Dividend Date for such distribution
67
CR' = the Conversion Rate in effect immediately after such Ex-Dividend
Date
SP0 = the average of the Last Reported Sale Prices of the Capital Stock
over the 10 consecutive Trading-Day period ending on the
Scheduled Trading Day immediately preceding the Ex-Dividend Date
for such distribution
FMV = the Fair Market Value (as determined by the Company's Board of
Directors) of the shares of capital stock, evidences of
indebtedness, assets or property distributed with respect to each
outstanding share of Capital Stock on the Record Date for such
distribution.
Such adjustment shall become effective immediately prior to 9:00 a.m., New York
City time, on the Business Day following the date fixed for the determination of
stockholders entitled to receive such distribution. With respect to an
adjustment pursuant to this clause (c) where there has been a payment of a
dividend or other distribution on the Capital Stock or shares of capital stock
of any class or series, or similar equity interest, of or relating to a
Subsidiary or other business unit (a "Spin-Off"), the Conversion Rate in effect
immediately before 5:00 p.m., New York City time, on the effective date for such
Spin-off will be increased based on the following formula:
CR'-CR0 x FMV0+MP0
--------
MP0
where,
CR0 = the Conversion Rate in effect immediately prior to the effective
date of the adjustment
CR' = the Conversion Rate in effect immediately after the effective
date of the adjustment
FMV0 = the average of the Last Reported Sale Prices of the capital stock
or similar equity interest distributed to Holders of Capital
Stock applicable to one share of Capital Stock over the first 10
consecutive Trading-Day period after, and including, the
effective date of the Spin-Off
MP0 = the average of the Last Reported Sale Prices of Capital Stock
over the first 10 consecutive Trading-Day period after, and
including, the effective date of the Spin-Off.
Such adjustment shall occur on the tenth Trading Day from, and including, the
effective date of the Spin-Off; provided that in respect of any conversion
within 10 Trading Days immediately following, and including, the effective date
of any Spin-Off, references with respect to 10 Trading Days shall be deemed
replaced with such lesser number of Trading Days as have elapsed between the
effective date of such Spin-Off and the Conversion Date in determining the
applicable Conversion Rate.
68
(d) If any regular, quarterly cash dividend or distribution made to all or
substantially all holders of Capital Stock does not equal $0.06 per share (the
"Initial Dividend Threshold"), the Conversion Rate will be adjusted based on the
following formulas:
(A) if the per share amount of such regular, quarterly cash
dividend or distribution is greater than the Initial Dividend
Threshold, the Conversion Rate will be adjusted based on the following
formula:
CR'=CR0 x SP0
-----
SP0-C
where,
CR0 = the Conversion Rate in effect immediately prior to the
Ex-Dividend Date for such distribution
CR' = the Conversion Rate in effect immediately after the Ex-Dividend
Date for such distribution
SP0 = the Last Reported Sale Price of the Capital Stock on the Trading
Day immediately preceding the Ex-Dividend Date for such
distribution
C = the amount in cash per share the Company distributes to holders
of Capital Stock in excess of the Initial Dividend Threshold in
the case of a regular quarterly dividend.
(B) if the per share amount of such regular, quarterly cash
dividend or distribution is less than the Initial Dividend Threshold,
the Conversion Rate will be adjusted based on the following formula:
CR'=CR0 x SP0
-----
SP0+C
where,
CR0 = the Conversion Rate in effect immediately prior to the
Ex-Dividend Date for such distribution
CR' = the Conversion Rate in effect immediately after the Ex-Dividend
Date for such distribution
SP0 = the Last Reported Sale Price of the Capital Stock on the Trading
Day immediately preceding the Ex-Dividend Date for such
distribution
69
C = the Initial Dividend Threshold minus the amount in cash per share
the Company distributes to holders of Capital Stock.
The Initial Dividend Threshold is subject to adjustment in a manner inversely
proportional to adjustments to the Conversion Rate; provided that no adjustment
will be made to the dividend threshold amount for any adjustment made to the
Conversion Rate under this clause (d)(i).
(ii) If the Company pays any cash dividend or distribution that
is not a regular, quarterly cash dividend or distribution to all or
substantially all holders of Capital Stock, the Conversion Rate will
be adjusted based on the following formula:
CR=CR0 x SP0
-----
SP0-C
where,
CR0 = the Conversion Rate in effect immediately prior to the
Ex-Dividend Date for such distribution
CR = the Conversion Rate in effect immediately after the Ex-Dividend
Date for such distribution
SP0 = the Last Reported Sale Prices of the Company's Capital Stock on
the Trading Day immediately preceding the Ex-Dividend Date for
such distribution
C = the amount in cash per share distributed to holders of the
Capital Stock.
(e) If the Company or any of its Subsidiaries makes a payment in respect of
a tender or exchange offer for Capital Stock, to the extent that the cash and
value of any other consideration included in the payment per share of Capital
Stock exceeds the Last Reported Sale Price of the Capital Stock on the Trading
Day next succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer (such last date, the "Expiration
Time"), the Conversion Rate will be increased based on the following formula:
CR'=CR0 x AC+(SP'xOS')
------------
OS0xSP'
where,
CR0 = the Conversion Rate in effect on immediately prior to the
effective date of the adjustment
CR' = the Conversion Rate in effect immediately after the effective
date of the adjustment
70
AC = the aggregate value of all cash and any other consideration (as
determined by the Company's Board of Directors) paid or payable
for shares purchased in such tender or exchange offer
OS0 = the number of shares of Capital Stock outstanding immediately
prior to the date such tender or exchange offer expires
OS' = the number of shares of Capital Stock outstanding immediately
after the date such tender or exchange offer expires (after
giving effect to such tender or exchange offer)
SP' = the average of the Last Reported Sale Prices of the Capital Stock
over the 10 consecutive Trading-Day period commencing on the
Trading Day next succeeding the date such tender or exchange
offer expires.
If the Company is obligated to purchase shares pursuant to any such tender 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 that would then be in
effect if such tender or exchange offer had not been made.
(f) If the application of the foregoing formulas (other than clause
(d)(i)(B)) would result in a decrease to the Conversion Rate, no adjustment to
the Conversion Rate will be made.
(g) Intentionally omitted.
(h) The Company may (but is not required to) increase the Conversion Rate
to avoid or diminish income tax to holders of Capital Stock or rights to
purchase Capital Stock in connection with a dividend or distribution of shares
(or rights to acquire shares) or any similar event treated as such for income
tax purposes.
(i) To the extent permitted by applicable law and the rules of any stock
exchange or market upon which the Capital Stock is listed or admitted for
trading, the Company may increase the Conversion Rate by any amount for a period
of at least 20 days if the Company's Board of Directors determines that such
increase would be in the best interests of the Company, which determination
shall be conclusive.
(j) Notwithstanding the foregoing provisions of this Section 11.02, the
applicable Conversion Rate need not be adjusted:
(i) upon the issuance of any shares of Capital Stock pursuant to any
present or future plan providing for the reinvestment of dividends or
interest payable on the securities of the Company and the investment of
additional optional amounts in shares of Capital Stock under any plan;
71
(ii) upon the issuance of any shares of Capital Stock or options or
rights to purchase shares of Capital Stock pursuant to any present or
future employee, director or consultant benefit plan or program of or
assumed by the Company or any of its Subsidiaries;
(iii) upon the issuance of any shares of Capital Stock pursuant to any
option, warrant, right, or exercisable, exchangeable or convertible
security not described in clause (ii) above and outstanding as of the Issue
Date;
(iv) for a change in the par value of the Capital Stock; or
(v) for accrued and unpaid Interest (including any Additional
Interest).
(k) All calculations under this Section 11.02 shall be made by the Company
and shall be made to the nearest cent or to the nearest one-ten thousandth
(1/10,000) of a share, as the case may be. The Company will not be required to
adjust the Conversion Rate unless the adjustment would result in a change in the
Conversion Rate of at least 1%. However, the Company is required to carry
forward any adjustments to the Conversion Rate that are less than 1% and make
such adjustments upon the first day of the Observation Period in connection with
any conversion of the Securities.
(l) Whenever the Conversion Rate is adjusted as herein provided, the
Company shall promptly file with the Trustee and any Conversion Agent other than
the Trustee an Officers' Certificate setting forth the Conversion Rate after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Unless and until a Trust Officer of the Trustee shall have received
such Officers' Certificate, the Trustee shall not be deemed to have knowledge of
any adjustment of the Conversion Rate and may assume that the last Conversion
Rate of which it has knowledge is still in effect. Promptly after delivery of
such certificate, the Company shall prepare a notice of such adjustment of the
Conversion Rate setting forth the adjusted Conversion Rate and the date on which
each adjustment becomes effective and shall mail such notice of such adjustment
of the Conversion Rate to the Holder of each Security at such Holder's last
address appearing on the Securities Register provided for in Section 2.05 of
this Indenture within 20 days after execution thereof. Failure to deliver such
notice shall not affect the legality or validity of any such adjustment.
(m) Any case in which this Section 11.02 provides that an adjustment shall
become effective immediately after (i) a Record Date for an event, (ii) the date
fixed for the determination of a share split or combination pursuant to Section
11.02(a), or (iii) the Expiration Time for any tender or exchange offer pursuant
to Section 11.02(e), (each a "Determination Date"), the Company may elect to
defer until the occurrence of the applicable Adjustment Event (x) issuing to the
Holder of any Security converted after such Determination Date and before the
occurrence of such Adjustment Event, the additional shares of Capital Stock or
other Securities issuable upon such conversion by reason of the adjustment
required by such Adjustment Event over and above the Capital Stock issuable upon
such conversion before giving effect to such adjustment and (y) paying to such
Holder any amount in cash in lieu of any fraction pursuant to Section 11.01. For
purposes of this Section 11.02(l), the term "Adjustment Event" shall mean:
72
(1) in any case referred to in clause (i) hereof, the occurrence of
such event,
(2) in any case referred to in clause (ii) hereof, the date any such
dividend or distribution is paid or made, and
(3) in any case referred to in clause (iii) hereof, the date a sale or
exchange of Capital Stock pursuant to such tender or exchange offer is
consummated and becomes irrevocable.
(n) For purposes of this Section 11.02, the number of shares of Capital
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Capital Stock. The Company will not pay
any dividend or make any distribution on shares of Capital Stock held in the
treasury of the Company.
(o) Whenever any provision of this Article 11 requires a calculation of an
average of Last Reported Sale Prices or Daily VWAP over a span of multiple days,
the Company will make appropriate adjustments (determined in good faith by the
Company's Board of Directors) to account for any adjustment to the Conversion
Rate that becomes effective, or any event requiring an adjustment to the
Conversion Rate where the Ex-Dividend Date of the event occurs, at any time
during the period from which the average is to be calculated.
Section 11.03. Adjustment Upon Certain Fundamental Changes.
(a) If a Holder elects to convert Securities pursuant to Section
11.01(a)(iii) above in connection with a transaction described therein and the
transaction has an Effective Date occurring on or prior to March 1, 2014 and
also constitutes a Fundamental Change as described in clause (1) or (2) of the
definition of Fundamental Change, subject to Section 11.04, the Conversion Rate
for such Securities shall be increased by an additional number of shares of
Capital Stock (the "Additional Shares") as described below. Any conversion shall
be deemed to have occurred in connection with such Fundamental Change only if
such Securities are surrendered for conversion at a time when the Securities
would be convertible in light of the expected or actual occurrence of a
Fundamental Change and notwithstanding the fact that a Security may then be
convertible because another condition to conversion has been satisfied.
73
(b) The number of Additional Shares by which the Conversion Rate will be
increased will be determined by reference to the table attached as Schedule A
hereto, based on the date on which the Fundamental Change occurs or becomes
effective (the "Effective Date") and the Stock Price paid per share of Capital
Stock in the Fundamental Change.
(c) The Stock Prices set forth in the first row of the table in Schedule A
hereto will be adjusted as of any date on which the Conversion Rate of the
Securities is adjusted pursuant to Section 11.02. The adjusted Stock Prices will
equal the Stock Prices applicable immediately prior to such adjustment,
multiplied by a fraction, the numerator of which is the Conversion Rate
immediately prior to such adjustment and the denominator of which is the
Conversion Rate as so adjusted. The number of Additional Shares set forth in
such table will be adjusted in the same manner as the Conversion Rate as set
forth in Section 11.02.
The exact Stock Prices and Effective Dates may not be set forth in the
table in Schedule A, in which case:
(i) if the Stock Price is between two Stock Price amounts in the table
or the Effective Date is between two Effective Dates in the table, the
number of Additional Shares will be determined by a straight-line
interpolation between the number of Additional Shares set forth for the
higher and lower Stock Price amounts and the two dates, as applicable,
based on a 365-year.
(ii) if the Stock Price is greater than $200 per share (subject to
adjustment), no Additional Shares will be issued upon conversion.
(iii) if the Stock Price is less than $65.90 per share (subject to
adjustment), no Additional Shares will be issued upon conversion.
Notwithstanding the foregoing, in no event will the total number of shares
of Capital Stock issuable upon conversion exceed 15.1745 per $1,000 principal
amount of Securities, subject to adjustments in the same manner as the
Conversion Rate.
(d) Settlement of Securities tendered for conversion as to which the
Conversion Rate will be increased by Additional Shares pursuant to this Section
11.03 shall occur as follows:
74
(i) if the last day of the Observation Period for such Securities is
on or prior to the fourth Trading Day immediately preceding the Effective
Date, the Company shall deliver the Settlement Amount (together with cash
in lieu of fractional shares), determined in accordance with Section
11.01(c) and Section 11.01(d) above, on the third Business Day immediately
following the last day of the Observation Period; provided that such
Settlement Amount and related Daily Conversion Values shall be based on the
Conversion Rate without giving effect to the Additional Shares to be added
thereto as set forth in this subsection. As soon as practicable following
the Effective Date, the Company shall calculate an increased Settlement
Amount for such Securities (based upon the same Observation Period and the
same Daily VWAP for each Trading Day in such Observation Period) as if the
Conversion Rate had been increased by the number of Additional Shares
pursuant to this subsection. Promptly following the Effective Date, the
Company shall deliver the excess of the cash portion, if any, and Capital
Stock portion, if any, of such increased Settlement Amount over the cash
and Capital Stock portions of the Settlement Amount calculated without such
Additional Shares. Any shares of Capital Stock to be delivered following
the Effective Date shall be subject to Section 11.04 and shall be delivered
in Reference Property. In no event shall the Company pay any such increase
to the Settlement Amount if the transaction causing the increase to the
Conversion Rate pursuant to this subsection never becomes effective.
(ii) If the last day of the Observation Period for such Securities is
after the fourth Trading Day immediately preceding the Effective Date, the
Company shall deliver the Settlement Amount (together with cash in lieu of
fractional shares) in accordance with Section 11.01(c) and Section 11.01(d)
above (such determination, for the avoidance of doubt, to include the
number of Additional Shares to be added to the Conversion Rate as set forth
in this subsection) on the later to occur of (a) the Effective Date and (b)
the third Business Day immediately following the Conversion Date relating
to such Securities. Any shares of Capital Stock to be delivered on or
following the Effective Date shall be subject to Section 11.04 and shall be
delivered in Reference Property.
Section 11.04. Effect of Reclassification, Consolidation, Merger or Sale.
75
(a) If any of the following events occur: (i) any recapitalization,
reclassification or change of the outstanding shares of Capital Stock (other
than a subdivision or combination to which Section 11.02(a) applies), (ii) any
consolidation, merger, binding share exchange or combination of the Company with
another Person as a result of which Holders of Capital Stock shall be entitled
to receive cash, securities or other property (or any combination thereof) with
respect to or in exchange for such Capital Stock, or (iii) any sale or
conveyance of all or substantially all of the properties and assets of the
Company to any other Person as a result of which Holders of Capital Stock shall
be entitled to receive cash, securities or other property (or any combination
thereof) with respect to or in exchange for such Capital Stock (any such event
or transaction, a "Reorganization Event"), then the Company or the successor or
purchasing Person, as the case may be, shall execute with the Trustee a
supplemental indenture (which shall comply with the Trust Indenture Act as in
force at the date of execution of such supplemental indenture) providing that
each Security shall be convertible into the kind and amount of cash, securities
or other property (and in the same proportion) receivable (the "Reference
Property") upon such Reorganization Event by a holder of a number of shares of
Capital Stock equal to the Conversion Rate immediately prior to such
Reorganization Event. For purposes of the foregoing, the type and amount of
consideration that a holder of Capital Stock would have been entitled to receive
in the case of any such Reorganization Event that causes the Capital Stock to be
converted into the right to receive more than a single type of consideration
(determined based in part upon any form of stockholder election) will be deemed
to be the weighted average of the types and amounts of consideration received by
the holders of Capital Stock that affirmatively make such an election. Such
supplemental indenture shall provide for provisions and adjustments which shall
be as nearly equivalent as may be practicable to the provisions and adjustments
provided for in this Article 11, Article 10 and Article 8 and the definition of
Fundamental Change, as appropriate, as determined in good faith by the Company
(which determination shall be conclusive and binding), to make such provisions
apply to such other Person if different from the original issuer of the
Securities.
(b) Following the effective time of any such Reorganization Event,
settlement of Securities converted shall be in cash and units of Reference
Property determined in accordance with Section 11.01(c) above based on the Daily
Conversion Value and Daily VWAP of such Reference Property. For the purposes of
determining such Daily Conversion Value and Daily VWAP, if the Reference
Property includes securities for which the price can be determined in a manner
contemplated by the definition of Daily VWAP, then the value of such securities
shall be determined in accordance with the principles set forth in such
definition; (ii) if the Reference Property includes other property (other than
securities as to which clause (i) applies or cash), then the value of such
property shall be the Fair Market Value of such property as determined by the
Company's Board of Directors in good faith; and (iii) if the Reference Property
includes cash, then the value of such cash shall be the amount thereof.
(c) Any issuer of securities included in the Reference Property shall
execute an amendment to the Registration Rights Agreement (to the extent any
Registrable Securities (as defined therein) remain outstanding) to make the
provisions thereof applicable to such securities included in the Reference
Property.
76
(d) The Company shall cause notice of the execution of any supplemental
indenture required by this Section 11.04 to be mailed to each Holder of
Securities, at its address appearing on the Securities Register provided for in
Section 2.05 of this Indenture, within 20 calendar days after execution thereof.
Failure to deliver such notice shall not affect the legality or validity of such
supplemental indenture.
(e) The above provisions of this Section 11.04 shall similarly apply to
successive Reorganization Events.
(f) If this Section 11.04 applies to any event or occurrence, Section 11.02
shall not apply in respect of such event or occurrence.
(g) The Company shall not become a party to any Reorganization Event unless
its terms are consistent with the foregoing. None of the foregoing provisions
shall affect the right of a Holder of Securities to convert the Securities into
cash and shares of Capital Stock, if applicable, as set forth in Section 11.01
prior to the effective time of such Reorganization Event.
Section 11.05. Responsibility of Trustee. The Trustee and any other
Conversion Agent shall not at any time be under any duty or responsibility to
the Company or any Holder of Securities to determine the Conversion Rate, or
whether any facts exist which may require any adjustment of the Conversion Rate,
or with respect to the nature or extent or calculation of any such adjustment
when made, or with respect to the method employed in making the same. The
Trustee and any other Conversion Agent shall not be accountable with respect to
the validity or value (or the kind or amount) of any shares of Capital Stock, or
of any securities or property, which may at any time be issued or delivered upon
the conversion of any Security; and the Trustee and any other Conversion Agent
make no representations with respect thereto. Neither the Trustee nor any
Conversion Agent shall be responsible for any failure of the Company to issue,
transfer or deliver any cash or shares of Capital Stock or stock certificates or
other securities or property upon the surrender of any Security for the purpose
of conversion or to comply with any of the duties, responsibilities or covenants
of the Company contained in this Article 11. Without limiting the generality of
the foregoing, neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
supplemental indenture entered into pursuant to Section 11.04 relating either to
the kind or amount of shares of stock or securities or property (including cash)
receivable by Holders upon the conversion of their Securities after any
Reorganization Event or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 6.01, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
77
Section 11.06. Notice to Holders Prior to Certain Actions. In case:
(a) the Company shall declare a dividend (or any other distribution) on its
Capital Stock that would require an adjustment in the Conversion Rate pursuant
to Section 11.02; or
(b) the Company shall authorize the granting to the holders of all or
substantially all of its Capital Stock of rights or warrants to subscribe for or
purchase any share of any class or any other rights or warrants; or
(c) of any reclassification or reorganization of the Capital Stock of the
Company (other than a subdivision or combination of its outstanding Capital
Stock, or a change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up
of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
Holder of Securities at his address appearing on the Securities Register
provided for in Section 2.05 of this Indenture, as promptly as possible but in
any event at least three (3) calendar days prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution or rights or warrants, or,
if a record is not to be taken, the date as of which the holders of Capital
Stock of record to be entitled to such dividend, distribution or rights are to
be determined, or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective or occur, and the date as of which it is expected that holders
of Capital Stock of record shall be entitled to exchange their Capital Stock for
securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of such dividend, distribution, reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up.
Section 11.07. Stockholder Rights Plan. To the extent that the Company has
a rights plan in effect upon conversion of the Securities into Capital Stock,
the Holder will receive, in addition to the Capital Stock, the rights under the
rights plan, unless prior to any conversion, the rights have separated from the
Capital Stock, in which case the Conversion Rate will be adjusted at the time of
separation as if the Company distributed to all Holders of Capital Stock shares
of the Company's Capital Stock, evidences of indebtedness or assets as described
in Section 11.02(c) above, subject to readjustment in the event of the
expiration, termination of such rights. In lieu of any such adjustment, the
Company may amend such applicable stockholder rights agreement to provide that
upon conversion of the Securities the Holders will receive, in addition to the
Capital Stock issuable upon such conversion, the rights which would have
attached to such Capital Stock if the rights had not become separated from the
Capital Stock under such applicable stockholder rights agreement.
78
ARTICLE 12
MISCELLANEOUS
Section 12.01. 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 provision required by
the TIA shall control. Each Subsidiary Guarantor in addition to performing its
obligations under its Subsidiary Guarantee shall perform such other obligations
as may be imposed upon it with respect to this Indenture under the TIA.
Section 12.02. Notices. Any notice or communication shall be in writing
(including telecopy promptly confirmed in writing) and delivered in person or
mailed by first-class mail addressed as follows:
if to the Company or any Subsidiary Guarantor:
Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202-4726
Attention: [ ]
Telecopy: [ ]
With a copy to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Andrew J. Pitts
Telecopy: 212-979-3700
79
if to the Trustee:
LaSalle Bank National Association
135 South LaSalle Street, Suite 1560
Chicago, Illinois 60603
Attention: Corporate Trust Debt Services Division -
Chemed Corporation Notes due 2014
Telecopy: (312) 904-4018
For purposes of Section 2.05 (with respect to presentation of Securities
for payment or for registrations of transfer or exchange) if to the Trustee:
LaSalle Bank National Association
135 South LaSalle Street, Suite 1560
Chicago, Illinois 60603
Attention: Corporate Trust Debt Services Division -
Chemed Corporation Notes due 2014
Telecopy: (312) 904-4018
The Company, any Subsidiary Guarantor or the Trustee by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a registered Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it, except that notices to the
Trustee shall be effective only upon receipt.
Section 12.03. 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).
80
Section 12.04. Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably satisfactory
to the Trustee stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory to
the Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with.
Section 12.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(a) a statement that the individual making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such individual,
such covenant or condition has been complied with.
In giving such Opinion of Counsel, counsel may rely as to factual matters
on an Officers' Certificate or on certificates of public officials.
Section 12.06. When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which a Trust Officer of the Trustee actually knows are so owned
shall be so disregarded. Also, subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.
81
Section 12.07. Rules by Trustee, Paying Agent and Registrar. The Trustee
may make reasonable rules for action by, or a meeting of, Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
Section 12.08. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
other day on which commercial banking institutions are authorized or required to
be closed in New York City. If a payment date is a Legal Holiday, payment shall
be made on the next succeeding day that is not a Legal Holiday, and no interest
or Additional Interest, if any, shall accrue for the intervening period. If a
Regular Record Date is a Legal Holiday, the Record Date shall not be affected.
Section 12.09. Governing Law; Waiver of Jury Trial. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
EACH OF THE COMPANY, EACH SUBSIDIARY GUARANTOR AND THE TRUSTEE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY;
PROVIDED, HOWEVER, THAT SUCH WAIVER OF TRIAL BY JURY BY THE COMPANY, EACH
SUBSIDIARY GUARANTOR AND THE TRUSTEE SHALL IN NO WAY LIMIT ANY AND ALL RIGHT TO
TRIAL BY JURY OF ANY HOLDER OF THE SECURITIES IN ANY LEGAL PROCEEDING ARISING
OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 12.10. No Recourse Against Others. An incorporator, director,
officer, employee, Affiliate or stockholder of the Company or any Subsidiary
Guarantor, solely by reason of this status, shall not have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities,
this Indenture or the Subsidiary Guarantees or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder shall waive and release all such liability. The
waiver and release shall be part of the consideration for the issue of the
Securities.
Section 12.11. 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.
82
Section 12.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
Section 12.13. Qualification of Indenture. The Company shall qualify this
Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all reasonable costs and expenses
(including attorneys' fees and expenses for the Company and the Trustee)
incurred in connection therewith, including, but not limited to, costs and
expenses of qualification of this Indenture and the Securities and printing this
Indenture and the Securities. The Trustee shall be entitled to receive from the
Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
Section 12.14. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
Section 12.15. Severability Clause. In case any provision in this Indenture
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 such provision shall be ineffective only to the extent of
such invalidity, illegality or unenforceability.
[Remainder of the page intentionally left blank]
83
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
THE COMPANY
CHEMED CORPORATION
By: /s/ David P. Williams
-------------------------
Name: David P. Williams
Title: Vice President and CFO
THE SUBSIDIARY GUARANTORS
COMFORT CARE HOLDINGS, CO.
JET RESOURCE, INC.
ROTO-ROOTER CORPORATION
ROTO-ROOTER SERVICES COMPANY
NUROTOCO OF MASSACHUSETTS, INC.
CONSOLIDATED HVAC, INC.
ROTO-ROOTER GROUP, INC.
R.R. UK, INC.
ROTO-ROOTER DEVELOPMENT COMPANY
VITAS HEALTHCARE CORPORATION
VITAS HEALTHCARE CORPORATION OF CALIFORNIA
VITAS HEALTHCARE CORPORATION OF CENTRAL FLORIDA
VITAS HEALTHCARE CORPORATION OF FLORIDA
VITAS HEALTHCARE CORPORATION OF ILLINOIS
VITAS HEALTHCARE CORPORATION OF OHIO
VITAS HEALTHCARE CORPORATION ATLANTIC
VITAS HEALTHCARE CORPORATION MIDWEST
VITAS HME SOLUTIONS, INC.
VITAS HOLDINGS CORPORATION
HOSPICE CARE INCORPORATED
VITAS HOSPICE SERVICES, L.L.C.
VITAS HEALTHCARE OF TEXAS, L.P.
VITAS HEALTHCARE CORPORATION OF GEORGIA
VITAS HEALTHCARE CORPORATION OF ARIZONA
VITAS CARE SOLUTIONS, INC.
By: /s/ David P. Williams
--------------------------------------------
Name: David P. Williams
Title: Vice President
THE TRUSTEE
LASALLE BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ Margaret M. Muir
-------------------------------
Name: Margaret M. Muir
Title: First Vice President
SCHEDULE A
The following table sets forth the number of Additional Shares to be
received per $1,000 principal amount of Securities pursuant to Section
11.03 of this Indenture:
- --------------------------------------------------------------------------------
Stock Price
------------------------------------------------------------
Effective Date $ $ $ $ $ $ $ $ $ $ $ $ $
- --------------------------------------------------------------------------------
May 15, 2007.......
May 15, 2008.......
May 15, 2009.......
May 15, 2010.......
May 15, 2011.......
May 15, 2012.......
May 15, 2013.......
May 15, 2014.......
- --------------------------------------------------------------------------------
A-1
EXHIBIT A
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT WITHIN THE LATER
OF (X) TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY AND (Y) THREE
MONTHS AFTER IT CEASES TO BE AN AFFILIATE (WITHIN THE MEANING OF RULE 144
ADOPTED UNDER THE SECURITIES ACT) OF THE COMPANY, RESELL OR OTHERWISE
TRANSFER THE SECURITY EVIDENCED HEREBY OR THE CAPITAL STOCK ISSUABLE UPON
CONVERSION OF SUCH SECURITY, EXCEPT (A) TO THE COMPANY; (B) UNDER A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE (OR DESIGNATED)
UNDER THE SECURITIES ACT; (C) TO A PERSON THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A ADOPTED UNDER THE
SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, ALL IN COMPLIANCE WITH
RULE 144A (IF AVAILABLE); OR (D) UNDER ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (2) THAT IT WILL,
PRIOR TO ANY TRANSFER OF THIS SECURITY WITHIN THE LATER OF (X) TWO YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY AND (Y) THREE MONTHS AFTER IT
CEASES TO BE AN AFFILIATE (WITHIN THE MEANING OF RULE 144 ADOPTED UNDER THE
SECURITIES ACT) OF THE COMPANY, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED
PURSUANT TO THE INDENTURE 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. AS USED HEREIN, THE TERM
"UNITED STATES" HAS THE MEANING GIVEN TO IT BY REGULATION S UNDER THE
SECURITIES ACT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, 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 DTC 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 THE INDENTURE REFERRED TO IN THE TERMS OF SECURITIES ATTACHED HERETO.
A-2
No.[ ] Principal Amount $[principal amount]
[include in global security only: as revised by
the Schedule of Increases and Decreases in
Global Security attached hereto.]
CUSIP No.: 16359RAB9
ISIN: US16359RAB96
1.875% Convertible Senior Notes due 2014
Chemed Corporation, a Delaware corporation, promises to pay to Cede & Co.,
or registered assigns, the principal sum of [principal amount] Dollars [include
in global security only: as revised by the Schedule of Increases and Decreases
in Global Security attached hereto], on May 15, 2014.
Interest Payment Dates: May 15 and November 15
Regular Record Dates: May 1 and November 1
Additional provisions of this Security are set forth on the attached "Terms
of Securities."
Dated:
A-3
CHEMED CORPORATION
By:
-------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
LASALLE BANK NATIONAL ASSOCIATION,
as Trustee, certifies that this is one of the
Securities referred to in the Indenture.
By:
------------------------------------------
Authorized Signatory
A-1
TERMS OF SECURITIES
1.875% Convertible Senior Notes due 2014
The Company issued the Securities under an Indenture dated as of May 14,
2007 (as it may be amended or supplemented from time to time in accordance with
the terms thereof, the "Indenture"), among the Company, the Subsidiary
Guarantors and the Trustee, to which reference is hereby made for a description
of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company, the Subsidiary Guarantors and the
Holders. Additional Securities may be issued under the Indenture in an unlimited
aggregate principal amount subject to certain conditions specified in the
Indenture. Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Indenture.
1) Interest
--------
Chemed Corporation, a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate of 1.875% per annum until May 15, 2014.
The Company will pay interest semiannually on May 15 and November 15 of
each year commencing November 15, 2007. Interest on the Securities will accrue
from the most recent date to which interest has been paid on the Securities or,
if no interest has been paid, from May 14, 2007 or any later issue date in
respect of Additional Securities. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
The Holder of this Security after 5:00 p.m., New York City time, on a
Regular Record Date shall be entitled to receive interest (including any
Additional Interest), on this Security on the corresponding interest payment
date. The Holder of this Security after 5:00 p.m., New York City time, on a
Regular Record Date will receive payment of interest (including any Additional
Interest) payable on the corresponding interest payment date notwithstanding the
conversion of this Security at any time after the close of business on such
Regular Record Date. If this Security is surrendered for conversion during the
period after 5:00 p.m., New York City time, on any Regular Record Date to 9:00
a.m., New York City time, on the corresponding interest payment date, it must be
accompanied by payment of an amount equal to the interest (including any
Additional Interest) that the Holder is to receive on the Securities.
Notwithstanding the foregoing, no such payment of interest (including any
Additional Interest) need be made by any converting Holder (i) for conversions
on or following March 1, 2014, (ii) if the Company has specified a Fundamental
Change Purchase Date during such period, or (iii) to the extent of any overdue
interest (including any Additional Interest) existing at the time of conversion
of such Security. Except where this Security is surrendered for conversion and
must be accompanied by payment as described above, no interest or Additional
Interest thereon will be payable by the Company on any interest payment date
subsequent to the date of conversion, and delivery of the cash and shares of
Capital Stock, if applicable, pursuant to Article 11 of the Indenture, together
with any cash payment for any fractional share, upon conversion will be deemed
to satisfy the Company's obligation to pay the principal amount of the
Securities and accrued and unpaid interest and Additional Interest, if any, to,
but not including, the related Conversion Date.
A-5
2) Method of Payment
-----------------
By no later than 11:00 a.m. (New York City time) on the date on which any
principal of or interest (including any Additional Interest), on any Security is
due and payable, the Company shall deposit with the Paying Agent money
sufficient to pay such amount. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of Securities
represented by a Global Security (including principal and interest (including
any Additional Interest)) will be made by wire transfer of immediately available
funds to the accounts specified by The Depository Trust Company. The Company
will pay principal of Definitive Securities at the office or agency designated
by the Company in Chicago, Illinois. Interest (including any Additional
Interest), on Definitive Securities will be payable (i) to Holders having an
aggregate principal amount of $5,000,000 or less, by check mailed to the Holders
of these Securities and (ii) to Holders having an aggregate principal amount of
more than $5,000,000, either by check mailed to each Holder or, upon application
by a Holder to the Registrar not later than the relevant Record Date, by wire
transfer in immediately available funds to that Holder's account within the
United States, which application shall remain in effect until the Holder
notifies, in writing, the Registrar to the contrary.
3) Purchase at the Option of the Holder Upon a Fundamental Change
--------------------------------------------------------------
If a Fundamental Change shall occur at any time, each Holder shall have the
right, at such Holder's option and subject to the terms and conditions of the
Indenture, to require the Company to purchase all or a portion of its Securities
at a Fundamental Change Purchase Price specified in the Indenture.
4) Conversion
----------
Subject to the conditions and procedures set forth in the Indenture, and
during the periods specified in the Indenture, a Holder may convert Securities,
on or prior to the close of business on the third Business Day immediately
preceding Stated Maturity, into cash and shares of Capital Stock, if any, at the
Conversion Rate.
The initial Conversion Rate is 12.3874 shares of Capital Stock per $1,000
principal amount of Securities, subject to adjustment in certain events
described in the Indenture. Upon conversion, the Company will pay cash and
shares of Capital Stock, if any, based on a Daily Conversion Value calculated on
a proportionate basis for each day of the 40-day Observation Period, as set
forth in the Indenture.
A Holder may convert a portion of the Securities only if the principal
amount of such portion is $1,000 or a multiple of $1,000. No payment or
adjustment shall be made for dividends on the Capital Stock except as provided
in the Indenture.
A-6
5) Denominations; Transfer; Exchange
---------------------------------
The Securities are in registered form without coupons in denominations of
principal amount of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange of
Securities surrendered for conversion or, if a portion of any Security is
surrendered for conversion, the portion thereof surrendered for conversion.
6) Persons Deemed Owners
---------------------
The registered Holder of this Security may be treated as the owner of it
for all purposes.
7) Unclaimed Money
---------------
If money for the payment of principal or interest (including any Additional
Interest) remains unclaimed for two years, the Trustee or Paying Agent shall pay
the money back to the Company. After any such payment, Holders entitled to the
money must look only to the Company and not to the Trustee for payment.
8) Amendment, Waiver
-----------------
The Indenture contains provisions permitting an amendment of the Indenture
or the Securities with the written consent of the Holders of at least a majority
in principal amount of the then outstanding Securities and the waiver of any
Event of Default (other than with respect to nonpayment or in respect of a
provision that cannot be amended without the written consent of each
Securityholder affected) or noncompliance with any provision with the written
consent of the Holders of a majority in principal amount of the then outstanding
Securities.
In addition, the Indenture permits an amendment of the Indenture or the
Security without the consent of any Securityholder under circumstances specified
in the Indenture.
9) Defaults and Remedies
---------------------
If an Event of Default specified in the Indenture occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the Securities
may declare all the Securities by notice to the Company to be due and payable
immediately. In addition, certain specified Events of Default will cause the
Securities to become immediately due and payable without further action by the
Holders.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
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 of principal or
interest (including any Additional Interest)) if it determines that withholding
notice is in their interest.
A-7
10) Trustee Dealings with the Company
---------------------------------
Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
11) No Recourse Against Others
--------------------------
An incorporator, director, Officer, employee, Affiliate or stockholder, of
each of the Company, or any Subsidiary Guarantor, solely by reason of this
status, shall not have any liability for any obligations of the Company or any
Subsidiary Guarantor under the Securities, the Indenture or any Subsidiary
Guarantee or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
12) Authentication
--------------
This Security shall not be valid until an authorized signatory of the
Trustee manually authenticates this Security.
13) 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 rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
14) CUSIP Numbers
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to Securityholders. No representation
is made as to the accuracy of such numbers as printed on the Securities and
reliance may be placed only on the other identification numbers placed thereon.
A-8
15) Governing Law
-------------
This Security shall be governed by, and construed in accordance with, the
laws of the State of New York.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security. Requests may be made to:
Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202-4726
Attention: Naomi C. Dallob
A-9
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
-----------------------------------------------------
(Print or type assignee's name, address and zip code)
-----------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ___________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date:_____________________________ Your Signature:______________________
Signature Guarantee:______________________________________________________
(Signature must be guaranteed)
Sign exactly as your name appears on the other side of this Security
-------
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions) with
membership in an approved signature guarantee medallion program, pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
|_| 1 acquired for the undersigned's own account, without transfer; or
|_| 2 transferred to the Company; or
|_| 3 transferred pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"); or
|_| 4 transferred pursuant to and in compliance with Rule 144A under the
Securities Act; or
|_| 5 transferred pursuant to another available exemption from the
registration requirements of the Securities Act.
Unless one of the boxes 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 box (5) is
checked, the Trustee or the Company may require, prior to registering any such
transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request 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, such as the exemption provided by Rule 144
under such Act.
A-10
---------------------------
Signature:
Signature Guarantee:
- ---------------------------------- ---------------------------
(Signature must be guaranteed) Signature:
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions) with
membership in an approved signature guarantee medallion program, pursuant to
S.E.C. Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF (1) OR (3) 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 not to request
such information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
- ----------------------------------
Dated:
A-11
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been made:
Principal Amount of
Amount of decrease in Amount of increase in this Global Security Signature of authorized
Principal Amount of Principal Amount of this following such decrease signatory of Trustee or
Date this Global Security Global Security or increase Securities Custodian
- ------ --------------------- ------------------------ ----------------------- -----------------------
A-12
FORM OF CONVERSION NOTICE
To: Chemed Corporation
The undersigned registered holder of this Security hereby exercises the
option to convert this Security, or portion hereof (which is $1,000 principal
amount or a multiple thereof) designated below, for cash and shares of Capital
Stock of Chemed Corporation, if any, in accordance with the terms of the
Indenture referred to in this Security, and directs that cash and the shares, if
any, issuable and deliverable upon such conversion, and any Securities
representing any unconverted principal amount hereof, be issued and delivered to
the registered holder hereof unless a different name has been indicated below.
If cash, shares or any portion of this Security not converted are to be issued
in the name of a Person other than the undersigned, the undersigned shall pay
all transfer taxes payable with respect thereto.
This notice shall be deemed to be an irrevocable exercise of the option to
convert this Security.
Dated:
-------------------------------------------------------
-------------------------------------------------------
Signature(s)
The signature(s) should be guaranteed by an eligible
guarantor institution (banks, stockbrokers, savings and
loan associations and credit unions) with membership in
an approved signature guarantee medallion program,
pursuant to S.E.C. Rule 17Ad-15.
-------------------------------------------------------
Signature Guarantee
Fill in for registration
of shares if to be
delivered, and
Securities if to be
issued other than to and
in the name of
registered holder:
- ------------------------
(Name) Principal amount to be converted (if less than all):
$__________,000
- ------------------------
(Street Address)
- ------------------------ -------------------------------------------------------
(City state and zip Social Security or Other Taxpayer Number
code)
Please print name and
address
B-13
FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE
To: Chemed Corporation
The undersigned registered holder of this Security hereby acknowledges
receipt of a notice from Chemed Corporation (the "Company") as to the occurrence
of a Fundamental Change with respect to the Company and requests and instructs
the Company to repurchase this Security, or the portion hereof (which is $1,000
principal amount or a multiple thereof) designated below, in accordance with the
terms of the Indenture referred to in this Security and directs that the check
or Capital Stock of the Company, as applicable, in payment for this Security or
the portion thereof and any Securities representing any unrepurchased principal
amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If any portion of this Security not
repurchased is to be issued in the name of a Person other than the undersigned,
the undersigned shall pay all transfer taxes payable with respect thereto.
Dated:
-------------------------------------------------------
-------------------------------------------------------
Signature(s)
The signature(s) should be guaranteed by an eligible
guarantor institution (banks, stockbrokers, savings and
loan associations and credit unions) with membership in
an approved signature guarantee medallion program,
pursuant to S.E.C. Rule 17Ad-15.
-------------------------------------------------------
Signature Guarantee
Fill in if a check is to be issued, or Securities are to be issued, other than
to and in the name of registered holder:
- ------------------------
(Name)
Principal amount to be purchased
(if less than all): $___________,000
- ------------------------
(Street Address)
- ------------------------ -------------------------------------------------------
(City state and zip Social Security or Other Taxpayer Number
code)
Please print name and
address
B-14
EXHIBIT B
FORM OF INDENTURE SUPPLEMENT TO ADD SUBSIDIARY GUARANTORS
This Supplemental Indenture, dated as of [__________] (this "Supplemental
Indenture" or "Guarantee"), among [name of future Subsidiary Guarantor] (the
"Guarantor"), Chemed Corporation (together with its successors and assigns, the
"Company"), each other then existing Subsidiary Guarantor under the Indenture
referred to below, and LaSalle Bank National Association, as Trustee under the
Indenture referred to below.
W I T N E S S E T H:
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have
heretofore executed and delivered an Indenture, dated as of May 19, 2007 (as
amended, supplemented, waived or otherwise modified, the "Indenture"), providing
for the issuance of 1.875% Convertible Senior Notes due 2014 of the Company (the
"Securities");
WHEREAS, pursuant to Section 8.01 of the Indenture, the Trustee and the
Company are authorized to execute and deliver this Supplemental Indenture to
amend the Indenture, without the consent of any Securityholder;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor, the Company, the other Subsidiary Guarantors and the Trustee mutually
covenant and agree for the equal and ratable benefit of the Holders of the
Securities as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms. As used in this Supplemental Indenture, terms
defined in the Indenture or in the preamble or recital hereto are used herein as
therein defined, except that the term "Holders" in this Guarantee shall refer to
the term "Holders" as defined in the Indenture and the Trustee acting on behalf
or for the benefit of such Holders. The words "herein," "hereof" and "hereby"
and other words of similar import used in this Supplemental Indenture refer to
this Supplemental Indenture as a whole and not to any particular section hereof.
ARTICLE II
AGREEMENT TO BE BOUND; GUARANTEE
B-1
Section 2.01. Agreement to be Bound. The Guarantor hereby becomes a party
to the Indenture as a Subsidiary Guarantor and as such will have all of the
rights and be subject to all of the obligations and agreements of a Subsidiary
Guarantor under the Indenture. The Guarantor agrees to be bound by all of the
provisions of the Indenture applicable to a Subsidiary Guarantor and to perform
all of the obligations and agreements of a Subsidiary Guarantor under the
Indenture.
Section 2.02. Guarantee. The Guarantor fully, unconditionally and
irrevocably Guarantees to each Holder of the Securities and the Trustee the
Obligations pursuant to Article 9 of the Indenture.
ARTICLE III
MISCELLANEOUS
Section 3.01. Notices. All notices and other communications to the
Guarantor shall be given as provided in the Indenture to the Guarantor, at its
address set forth below, with a copy to the Company as provided in the Indenture
for notices to the Company.
Section 3.02. Parties. Nothing expressed or mentioned herein is intended or
shall be construed to give any Person, firm or corporation, other than the
Holders and the Trustee, any legal or equitable right, remedy or claim under or
in respect of this Supplemental Indenture or the Indenture or any provision
herein or therein contained.
Section 3.03. Governing Law. This Supplemental Indenture shall be governed
by, and construed in accordance with, the laws of the State of New York.
Section 3.04. Severability Clause. In case any provision in this
Supplemental Indenture 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 such provision shall be ineffective only to the
extent of such invalidity, illegality or unenforceability.
Section 3.05. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every Holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby. The
Trustee makes no representation or warranty as to the validity or sufficiency of
this Supplemental Indenture.
B-2
Section 3.06. Counterparts. The parties hereto may sign one or more copies
of this Supplemental Indenture in counterparts, all of which together shall
constitute one and the same agreement.
Section 3.07. Headings. The headings of the Articles and the sections in
this Guarantee are for convenience of reference only and shall not be deemed to
alter or affect the meaning or interpretation of any provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
THE COMPANY
CHEMED CORPORATION
By:
-----------------------------
Name:
Title:
[NAME OF NEW SUBSIDIARY GUARANTORS]
------------------------------------
By:
--------------------------------
Name:
Title:
THE TRUSTEE
LASALLE BANK NATIONAL ASSOCIATION,
as Trustee
By:
-------------------------------
Name:
Title:
EXHIBIT 10.1
JPMorgan Chase Bank, National Association
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
May 8, 2007
To: Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
Re: Call Option Transaction
The purpose of this letter agreement (this "Confirmation") is to
confirm the terms and conditions of the call option transaction entered into
between JPMorgan Chase Bank, National Association, London Branch ("JPMorgan")
and Chemed Corporation ("Counterparty") on the Trade Date specified below (the
"Transaction"). This letter agreement constitutes a "Confirmation" as referred
to in the ISDA Master Agreement specified below. This Confirmation shall replace
any previous agreements and serve as the final documentation for this
Transaction.
The definitions and provisions contained in the 2002 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc. ("ISDA") are incorporated
into this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. This
Transaction shall constitute a Share Option Transaction within the meaning set
forth in the Equity Definitions. Certain defined terms used herein have the
meanings assigned to them in the Offering Memorandum dated May 8, 2007 (the
"Offering Memorandum") relating to the USD 180,000,000 principal amount of
1.875% Convertible Senior Notes due 2014, (the "Convertible Notes" and each USD
1,000 principal amount of Convertible Notes, a "Convertible Note") issued by
Counterparty pursuant to an Indenture to be dated May 14, 2007 between
Counterparty and LaSalle Bank, N.A., as trustee (the "Indenture"). In the event
of any inconsistency between the terms defined in the Offering Memorandum, the
Indenture and this Confirmation, this Confirmation shall govern. The parties
acknowledge that this Confirmation is entered into on the date hereof with the
understanding that (i) definitions set forth in the Indenture which are also
defined herein by reference to the Indenture and (ii) sections of the Indenture
that are referred to herein will conform to the descriptions thereof in the
Offering Memorandum. If any such definitions in the Indenture or any such
sections of the Indenture differ from the descriptions thereof in the Offering
Memorandum, the descriptions thereof in the Offering Memorandum will govern for
purposes of this Confirmation. The parties further acknowledge that the
Indenture section numbers used herein are based on the draft of the Indenture
last reviewed by JPMorgan as of the date of this Confirmation, and if any such
section numbers are changed in the Indenture as executed, the parties will amend
this Confirmation in good faith to preserve the intent of the parties. For the
avoidance of doubt, references to the Indenture herein are references to the
Indenture as in effect on the date of its execution and if the Indenture is
amended following its execution, any such amendment will be disregarded for
purposes of this Confirmation unless the parties agree otherwise in writing.
Each party is hereby advised, and each such party acknowledges, that
the other party has engaged in, or refrained from engaging in, substantial
financial transactions and has taken other material actions in reliance upon the
parties' entry into the Transaction to which this Confirmation relates on the
terms and conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between JPMorgan
and Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall supplement, form a part of, and be subject to
an agreement in the form of the 2002 ISDA Master Agreement (the "Agreement") as
if JPMorgan and Counterparty had executed an agreement in such form (but without
any Schedule except for the election of the laws of the State of New York as the
governing law) on the Trade Date. In the event of any inconsistency between
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which
this Confirmation relates shall be governed by the Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Trade Date: May 8, 2007
Option Style: "Modified American", as described
under "Procedures for Exercise"
below
Option Type: Call
Buyer: Counterparty
Seller: JPMorgan
Shares: The capital stock of Counterparty,
par value USD 1 per Share
(Exchange symbol "CHE")
Number of Options: 90,000; provided that the Number of
Options shall be automatically
increased as of the date of
exercise (the "Greenshoe
Exercise") by J.P. Morgan
Securities Inc. and Citigroup
Global Markets Inc. as
representatives of the Initial
Purchasers (as defined in the
Purchase Agreement dated as of May
8, 2007 between Counterparty, J.P.
Morgan Securities Inc. and
Citigroup Global Markets Inc. as
representatives of the Initial
Purchasers party thereto (the
"Purchase Agreement")), of their
option pursuant to Section 1 of
the Purchase Agreement by the
number of additional Convertible
Notes in denominations of USD
1,000 principal amount issued
pursuant to such exercise (such
Convertible Notes, the "Additional
Convertible Notes") multiplied by
50% (the "Additional Options").
For the avoidance of doubt, the
Number of Options shall be reduced
by any Options exercised by
Counterparty. In no event will the
Number of Options be less than
zero.
2
Option Entitlement: As of any date, a number equal to
the Conversion Rate as of such
date (as defined in the Indenture,
but without regard to any
adjustments to the Conversion Rate
pursuant to Section 11.02(h),
Section 11.02(i) or to Section
11.03 of the Indenture), for each
Convertible Note.
Strike Price: USD 80.7275
Premium: USD 24,702,300 (Premium per Option:
USD 274.4700); provided that if
the Number of Options is increased
pursuant to the proviso to the
definition of "Number of Options"
above, there shall be an
additional Premium equal to the
product of the number of
Additional Options and the Premium
per Option (the "Additional
Premium"), and such Additional
Premium shall be paid by
Counterparty to JPMorgan on the
Additional Premium Payment Date.
Premium Payment Date: May 14, 2007
Additional Premium Payment Date: The closing date for the purchase
and sale of the Additional
Convertible Notes.
Exchange: The New York Stock Exchange
Related Exchange(s): All Exchanges
Procedures for Exercise:
Exercise Period(s): Notwithstanding anything to the
contrary in the Equity
Definitions, an Exercise Period
shall occur with respect to an
Option hereunder only if such
Option is an Exercisable Option
(as defined below) and the
Exercise Period shall be, in
respect of any Exercisable Option,
the period commencing on, and
including, the relevant Conversion
Date and ending on, and including,
the Scheduled Valid Day
immediately preceding the first
day of the relevant Settlement
Averaging Period in respect of
such Conversion Date; provided
that in respect of Exercisable
Options relating to Convertible
Notes for which the relevant
Conversion Date occurs on or after
March 1, 2014, the final day of
the Exercise Period shall be the
Scheduled Valid Day immediately
preceding the Expiration Date.
Conversion Date: With respect to any conversion of
Convertible Notes, the date on
which the Holder (as such term is
defined in the Indenture) of such
Convertible Notes satisfies all of
the requirements for conversion
thereof as set forth in Section
11.01(b) of the Indenture.
Exercisable Options: In respect of each Exercise Period,
a number of Options equal to 50%
of the number of USD 1,000
principal amount of Convertible
Notes surrendered to Counterparty
for conversion with respect to
such Exercise Period but no
greater than the Number of
Options.
3
Expiration Time: The Valuation Time
Expiration Date: May 15, 2014, subject to earlier
exercise.
Multiple Exercise: Applicable, as described under
Exercisable Options above.
Automatic Exercise: Applicable; and means that in
respect of an Exercise Period, a
number of Options not previously
exercised hereunder equal to the
number of Exercisable Options
shall be deemed to be exercised on
the final day of such Exercise
Period for such Exercisable
Options; provided that such
Options shall be deemed exercised
only to the extent that
Counterparty has provided a Notice
of Exercise to JPMorgan.
Notice of Exercise: Notwithstanding anything to the
contrary in the Equity
Definitions, in order to exercise
any Exercisable Options,
Counterparty must notify JPMorgan
in writing before 5:00 p.m. (New
York City time) on the Scheduled
Valid Day prior to the scheduled
first day of the Settlement
Averaging Period for the
Exercisable Options being
exercised (the "Notice Deadline")
of (i) the number of such Options
and (ii) the scheduled first day
of the Settlement Averaging Period
and the scheduled Settlement Date;
provided that, notwithstanding the
foregoing, such notice (and the
related exercise of Exercisable
Options) shall be effective if
given after the Notice Deadline
but prior to 5:00 p.m. (New York
City time) on the fifth Scheduled
Valid Day after the Notice
Deadline, in which event the
Calculation Agent shall have the
right to adjust the number of Net
Shares as appropriate to reflect
the additional costs (including,
but not limited to, hedging
mismatches and market losses) and
expenses incurred by JPMorgan in
connection with its hedging
activities (including the
unwinding of any hedge position)
as a result of JPMorgan not having
received such notice prior to the
Notice Deadline; provided further
that in respect of Exercisable
Options relating to Convertible
Notes with a Conversion Date
occurring on or after March 1,
2014, such notice may be given on
or prior to the second Scheduled
Valid Day immediately preceding
the Expiration Date and need only
specify the number of such
Exercisable Options.
Valuation Time: At the close of trading of the
regular trading session on the
Exchange.
Market Disruption Event: Section 6.3(a) of the Equity
Definitions is hereby replaced in
its entirety by the following:
4
"'Market Disruption Event' means in
respect of a Share, (i) a failure
by the primary United States
national or regional securities
exchange or market on which Shares
are listed or admitted to trading
to open for trading during its
regular trading session or (ii)
the occurrence or existence prior
to 1:00 p.m. (New York City time)
on any Scheduled Valid Day for the
Shares for an aggregate one half
hour period of any suspension or
limitation imposed on trading (by
reason of movements in price
exceeding limits permitted by the
relevant stock exchange or
otherwise) in the Shares or in any
options, contracts or future
contracts relating to the Shares."
Settlement Terms:
Settlement Method: Net Share Settlement
Net Share Settlement: JPMorgan will deliver to
Counterparty, on the relevant
Settlement Date, a number of
Shares equal to the Net Shares in
respect of any Exercisable Option
exercised or deemed exercised
hereunder. In no event will the
Net Shares be less than zero.
Net Shares: In respect of any Exercisable
Option exercised or deemed
exercised, a number of Shares
equal to (i) the Option
Entitlement multiplied by (ii) the
sum of the quotients, for each
Valid Day during the Settlement
Averaging Period for such
Exercisable Option, of (A) the
Relevant Price on such Valid Day
less the Strike Price, divided by
(B) such Relevant Price, divided
by (iii) the number of Valid Days
in the Settlement Averaging
Period; provided, however, that if
the calculation contained in
clause (A) above results in a
negative number, such number shall
be replaced with the number
"zero".
JPMorgan will deliver cash in lieu
of any fractional Shares to be
delivered with respect to any Net
Shares valued at the Relevant
Price for the last Valid Day of
the Settlement Averaging Period.
Valid Day: A day on which (i) trading in the
Shares generally occurs on the
Exchange or, if the Shares are not
then listed on the Exchange, on
the principal other U.S. national
or regional securities exchange on
which the Shares are then listed
or, if the Shares are not then
listed on a U.S. national or
regional securities exchange, on
the principal other market on
which the Shares are then traded
and (ii) there is no Market
Disruption Event.
Scheduled Valid Day: A day on which trading in the
Shares is scheduled to occur on
the principal U.S. national or
regional securities exchange or
market on which the Shares are
listed or admitted for trading.
Relevant Price: On any Valid Day, the per Share
volume-weighted average price as
displayed under the heading
"Bloomberg VWAP" on Bloomberg page
CHE.N (equity) AQR (or any
successor thereto) in respect of
the period from the scheduled
opening time of the Exchange to
the Scheduled Closing Time of the
Exchange on such Valid Day (or if
such volume-weighted average price
is unavailable, the market value
of one Share on such Valid Day, as
determined by the Calculation
Agent using a volume-weighted
method).
5
Settlement Averaging Period: For any Exercisable Option, (x) if
Counterparty has, on or prior to
March 1, 2014, delivered a Notice
of Exercise to JPMorgan with
respect to such Exercisable Option
with a Conversion Date occurring
prior to March 1, 2014, the forty
(40) consecutive Valid Days
commencing on and including the
second Scheduled Valid Day
following such Conversion Date, or
(y) if Counterparty has, on or
following March 1, 2014, delivered
a Notice of Exercise to JPMorgan
with respect to such Exercisable
Option with a Conversion Date
occurring on or following March 1,
2014, the forty (40) consecutive
Valid Days commencing on, and
including, the forty second (42nd)
Scheduled Valid Day immediately
prior to the Expiration Date.
Settlement Date: For any Exercisable Option, the
date Shares will be delivered with
respect to the Convertible Notes
related to such Exercisable
Options, under the terms of the
Indenture.
Settlement Currency: USD
Failure to Deliver: Applicable
Other Applicable Provisions: The provisions of Sections 9.1(c),
9.8, 9.9, 9.11, 9.12 and 10.5 of
the Equity Definitions will be
applicable, except that all
references in such provisions to
"Physically-settled" shall be read
as references to "Net Share
Settled". "Net Share Settled" in
relation to any Option means that
Net Share Settlement is applicable
to that Option.
Representation and Agreement: Notwithstanding Section 9.11 of the
Equity Definitions, the parties
acknowledge that any Shares
delivered to Counterparty shall
be, upon delivery, subject to
restrictions and limitations
arising from Counterparty's status
as issuer of the Shares under
applicable securities laws.
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Transaction:
Potential Adjustment Events: Notwithstanding Section 11.2(e) of
the Equity Definitions, a
"Potential Adjustment Event" means
an occurrence of any event or
condition, as set forth in Section
11.02 of the Indenture that would
result in an adjustment to the
Conversion Rate of the Convertible
Notes; provided that in no event
shall there be any adjustment
hereunder as a result of an
adjustment to the Conversion Rate
pursuant to Section 11.02(h),
Section 11.02(i) or Section 11.03
of the Indenture.
6
Method of Adjustment: Calculation Agent Adjustment, and
means that, notwithstanding
Section 11.2(c) of the Equity
Definitions, upon any adjustment
to the Conversion Rate of the
Convertible Notes pursuant to the
Indenture (other than Section
11.02(h), Section 11.02(i) and
Section 11.03 of the Indenture),
the Calculation Agent will make a
corresponding adjustment to any
one or more of the Strike Price,
Number of Options, the Option
Entitlement and any other variable
relevant to the exercise,
settlement or payment for the
Transaction. The Calculation Agent
shall promptly thereafter notify
JPMorgan and Counterparty of any
such corresponding adjustment.
Extraordinary Events applicable to the Transaction:
Merger Events: Notwithstanding Section 12.1(b) of
the Equity Definitions, a "Merger
Event" means the occurrence of any
event or condition set forth in
clause (2) of the definition of
Fundamental Change in Section 1.01
of the Indenture.
Tender Offers: Applicable; provided that
notwithstanding Section 12.1(d) of
the Equity Definitions, a "Tender
Offer" means the occurrence of any
event or condition set forth in
clause (1) of the definition of
Fundamental Change in Section 1.01
of the Indenture.
Consequence of Merger Events/
Tender Offers: Notwithstanding Section 12.2 and
Section 12.3 of the Equity
Definitions, upon the occurrence
of a Merger Event or a Tender
Offer, the Calculation Agent shall
make a corresponding adjustment in
respect of any adjustment under
the Indenture to any one or more
of the nature of the Shares,
Strike Price, Number of Options,
the Option Entitlement and any
other variable relevant to the
exercise, settlement or payment
for the Transaction; provided,
however, that such adjustment
shall be made without regard to
any adjustment to the Conversion
Rate for the issuance of
additional shares as set forth in
Section 11.03 of the Indenture;
provided further that if, with
respect to a Merger Event or a
Tender Offer, the consideration
for the Shares includes (or, at
the option of a holder of Shares,
may include) shares of an entity
or person not organized under the
laws of the United States, any
State thereof or the District of
Columbia," Cancellation and
Payment shall apply.
7
Nationalization, Insolvency or Delisting: Cancellation and Payment
(Calculation Agent Determination);
provided that, in addition to the
provisions of Section 12.6(a)(iii)
of the Equity Definitions, it will
also constitute a Delisting if the
Exchange is located in the United
States and the Shares are not
immediately re-listed, re-traded
or re-quoted on any of the New
York Stock Exchange, the American
Stock Exchange, The NASDAQ Global
Select Market or The NASDAQ Global
Market (or their respective
successors); if the Shares are
immediately re-listed, re-traded
or re-quoted on any of the New
York Stock Exchange, the American
Stock Exchange, The NASDAQ Global
Select Market or The NASDAQ Global
Market (or their respective
successors), such exchange or
quotation system shall thereafter
be deemed to be the Exchange.
Additional Disruption Events:
Change in Law: Applicable
Insolvency Filing: Applicable
Failure to Deliver: Applicable
Hedging Party: For all applicable Additional
Disruption Events, JPMorgan
Determining Party: For all applicable Additional
Disruption Events, JPMorgan
Non-Reliance: Applicable
Agreements and Acknowledgements
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
4. Calculation Agent: JPMorgan. The Calculation Agent
shall, upon request by the
Counterparty, provide a written
explanation of any calculation
made by it including, where
applicable, a description of the
methodology and data applied.
5. Account Details:
(a) Account for payments to Counterparty:
JP Morgan Chase Bank
ABA# 021000021
Acct: Chemed Corporation
Acct No.: 94-13065
Account for delivery of Shares to Counterparty:
To be provided by Counterparty
8
(b) Account for payments to JPMorgan:
JPMorgan Chase Bank, National Association, New York
ABA: 021 000 021
Favour: JPMorgan Chase Bank, National Association - London
A/C: 0010962009 CHASUS33
Account for delivery of Shares from JPMorgan:
DTC 0060
6. Offices:
The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is
not a Multibranch Party.
The Office of JPMorgan for the Transaction is: London
JPMorgan Chase Bank, National Association
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
(b) Address for notices or communications to JPMorgan:
JPMorgan Chase Bank, National Association
277 Park Avenue, 11th Floor
New York, NY 10172
Attention: Eric Stefanik
Title: Operations Analyst
EDG Corporate Marketing
Telephone No: (212) 622-5814
Facsimile No: (212) 622-8534
9
8. Representations and Warranties
(i) Representations and Warranties of Counterparty
The representations and warranties of Counterparty set forth in Section 3 of the
Purchase Agreement are true and correct and are hereby deemed to be repeated to
JPMorgan as if set forth herein. Counterparty hereby further represents and
warrants to JPMorgan that:
(a) Counterparty has all necessary corporate power and authority to
execute, deliver and perform its obligations in respect of this
Transaction; such execution, delivery and performance have been
duly authorized by all necessary corporate action on
Counterparty's part; and this Confirmation has been duly and
validly executed and delivered by Counterparty and constitutes
its valid and binding obligation, enforceable against
Counterparty in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and
remedies generally, and to general principles of equity,
including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except that rights to
indemnification and contribution hereunder may be limited by
federal or state securities laws or public policy relating
thereto.
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of Counterparty
hereunder will (i) conflict with or result in a breach of the
certificate of incorporation or by-laws (or any equivalent
documents) of Counterparty, or any applicable law or regulation,
or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument
to which Counterparty or any of its subsidiaries is a party or by
which Counterparty or any of its subsidiaries is bound or to
which Counterparty or any of its subsidiaries is subject
(including, but not limited to, any agreements and contracts of
Counterparty or any of its subsidiaries filed as exhibits to
Counterparty's Annual Report on Form 10-K for the year ended
December 31, 2006, incorporated by reference in the Offering
Memorandum), or (ii) constitute a default under, or result in the
creation of any lien under, any such agreement or instrument.
(c) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required in
connection with the execution, delivery or performance by
Counterparty of this Confirmation, except such as have been
obtained or made and such as may be required under the Securities
Act of 1933, as amended (the "Securities Act") or state
securities laws.
(d) It is an "eligible contract participant" (as such term is defined
in Section 1a(12) of the Commodity Exchange Act, as amended (the
"CEA")) because one or more of the following is true:
Counterparty is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) Counterparty has total assets in excess of USD 10,000,000;
(B) the obligations of Counterparty hereunder are guaranteed, or
otherwise supported by a letter of credit or keepwell,
support or other agreement, by an entity of the type
described in Section 1a(12)(A)(i) through (iv),
1a(12)(A)(v)(I), 1a(12)(A)(vii) or 1a(12)(C) of the CEA; or
10
(C) Counterparty has a net worth in excess of USD 1,000,000 and
has entered into this Agreement in connection with the
conduct of Counterparty's business or to manage the risk
associated with an asset or liability owned or incurred or
reasonably likely to be owned or incurred by Counterparty in
the conduct of Counterparty's business.
(e) Each of it and its controlled affiliates is not, on the date
hereof, in possession of any material non-public information with
respect to Counterparty.
(ii) Additional representations and warranties
(a) JPMorgan represents that it is an "eligible contract participant"
as defined in Section 1a(12) of the CEA.
(b) Each of JPMorgan and Counterparty acknowledges that the offer and
sale of the Transaction to it is intended to be exempt from
registration under the Securities Act, by virtue of Section 4(2)
thereof.
9. Other Provisions:
(a) Opinions. Counterparty shall deliver to JPMorgan an opinion of
counsel, dated as of the Trade Date, with respect to the matters
set forth in Sections 8(i)(a) through (c) of this Confirmation.
(b) Reserved
(c) Repurchase Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares, promptly give
JPMorgan a written notice of such repurchase (a "Repurchase
Notice") on such day if following such repurchase, the number of
outstanding Shares as determined on such day is (i) less than 21
million (in the case of the first such notice) or (ii) thereafter
more than 1.6 million less than the number of Shares included in
the immediately preceding Repurchase Notice. Counterparty agrees
to indemnify and hold harmless JPMorgan and its affiliates and
their respective officers, directors, employees, affiliates,
advisors, agents and controlling persons (each, an "Indemnified
Person") from and against any and all losses (including losses
relating to JPMorgan's hedging activities as a consequence of
becoming, or of the risk of becoming, a Section 16 "insider",
including without limitation, any forbearance from hedging
activities or cessation of hedging activities and any losses in
connection therewith with respect to this Transaction), claims,
damages, judgments, liabilities and expenses (including
reasonable attorney's fees), joint or several, which an
Indemnified Person may become subject to, as a result of
Counterparty's failure to provide JPMorgan with a Repurchase
Notice on the day and in the manner specified in this paragraph,
and to reimburse, within 30 days, upon written request, each of
such Indemnified Persons for any reasonable legal or other
expenses incurred in connection with investigating, preparing
for, providing testimony or other evidence in connection with or
defending any of the foregoing. If any suit, action, proceeding
(including any governmental or regulatory investigation), claim
or demand shall be brought or asserted against the Indemnified
Person as a result of Counterparty's failure to provide JPMorgan
with a Repurchase Notice in accordance with this paragraph, such
Indemnified Person shall promptly notify Counterparty in writing,
and Counterparty, upon request of the Indemnified Person, shall
retain counsel reasonably satisfactory to the Indemnified Person
to represent the Indemnified Person and any others Counterparty
may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. Counterparty
shall not be liable for any settlement of any proceeding
contemplated by this paragraph that is effected without its
written consent, but if settled with such consent or if there be
11
a final judgment for the plaintiff, Counterparty agrees to
indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Counterparty
shall not, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened
proceeding contemplated by this paragraph that is in respect of
which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement (x) includes an unconditional
release of such Indemnified Person, in form and substance
reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such
proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on
behalf of any Indemnified Person. If the indemnification provided
for in this paragraph is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then Counterparty hereunder, in
lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph (c) are
not exclusive and shall not limit any rights or remedies which
may otherwise be available to any Indemnified Party at law or in
equity. The indemnity and contribution agreements contained in
this paragraph shall remain operative and in full force and
effect regardless of the termination of this Transaction.
(d) Regulation M. Counterparty is not on the date hereof engaged in a
distribution, as such term is used in Regulation M under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
of any securities of Counterparty, other than (i) a distribution
meeting the requirements of the exception set forth in Rules
101(b)(10) and 102(b)(7) of Regulation M and (ii) the
distribution of the Convertible Notes. Counterparty shall not,
until the second Scheduled Trading Day immediately following the
Trade Date, engage in any such distribution.
(e) No Manipulation. Counterparty is not entering into this
Transaction to create actual or apparent trading activity in the
Shares (or any security convertible into or exchangeable for the
Shares) or to raise or depress or otherwise manipulate the price
of the Shares (or any security convertible into or exchangeable
for the Shares) or otherwise in violation of the Exchange Act.
(f) Early Unwind. In the event the sale of Convertible Notes (or, in
respect of the Greenshoe Exercise, the Additional Convertible
Notes) is not consummated with the Initial Purchasers for any
reason by the close of business in New York on May 14, 2007 (or,
in respect of the Greenshoe Exercise, the third Clearance System
Business Day following the date of the Greenshoe Exercise (the
"Additional Closing Date")) (or such later date as agreed upon by
the parties) (May 14, 2007 or such later date as agreed upon
being or, in respect of the Greenshoe Exercise, the Additional
Closing Date, the "Early Unwind Date"), this Transaction (or, in
respect of the Greenshoe Exercise, the Additional Options) shall
automatically terminate (the "Early Unwind"), on the Early Unwind
Date and (i) the Transaction (or, in respect of the Greenshoe
Exercise, the Additional Options) and all of the respective
rights and obligations of JPMorgan and Counterparty under the
Transaction (or, in respect of the Greenshoe Exercise, the
Additional Options) shall be cancelled and terminated and (ii)
each party shall be released and discharged by the other party
from and agrees not to make any claim against the other party
with respect to any obligations or liabilities of the other party
arising out of and to be performed in connection with the
Transaction (or, in respect of the Greenshoe Exercise, the
Additional Options) either prior to or after the Early Unwind
Date; provided that, unless the sale of the Convertible Notes or
the Additional Convertible Notes, as applicable, is not
consummated due to a breach of the Purchase Agreement by the
Initial Purchasers, Counterparty shall purchase from JPMorgan on
the Early Unwind Date all Shares purchased by JPMorgan or one or
12
more of its affiliates and reimburse JPMorgan for any
commercially reasonable costs or expenses (including market
losses) relating to the unwinding of its hedging activities in
connection with the Transaction (or, in respect of the Greenshoe
Exercise, the Additional Options) (including any loss or cost
incurred as a result of its terminating, liquidating, obtaining
or reestablishing any hedge or related trading position). The
amount of any such reimbursement shall be determined by JPMorgan
in its sole good faith discretion. JPMorgan shall notify
Counterparty of such amount and Counterparty shall pay such
amount in immediately available funds on the Early Unwind Date.
JPMorgan and Counterparty represent and acknowledge to the other
that, subject to the proviso included in this paragraph, upon an
Early Unwind, all obligations with respect to the Transaction
shall be deemed fully and finally discharged.
(g) Transfer or Assignment. Counterparty may not transfer any of its
rights or obligations under this Transaction without the prior
written consent of JPMorgan. JPMorgan may not, without
Counterparty's consent, transfer or assign all or any part of its
rights or obligations under the Transaction; provided that if (i)
JPMorgan's "beneficial ownership" (within the meaning of Section
13 of the Exchange Act and rules promulgated thereunder) exceeds
7.5% of Counterparty's outstanding Shares or (ii) the quotient of
(x) the product of (a) the Number of Options and (b) the Option
Entitlement divided by (y) the number of Counterparty's
outstanding Shares (such quotient expressed as a percentage, the
"Option Equity Percentage") exceeds 14.5%, JPMorgan may assign or
transfer a portion of the Transaction without Counterparty's
consent to any third party with a rating for its long term,
unsecured and unsubordinated indebtedness equal to or better than
the lesser of (i) the credit rating of JPMorgan at the time of
the transfer and (ii) A- by Standard and Poor's Rating Group,
Inc. or its successor ("S&P"), or A3 by Moody's Investor Service,
Inc. ("Moody's") or, if either S&P or Moody's ceases to rate such
debt, at least an equivalent rating or better by a substitute
agency rating mutually agreed by Counterparty and JPMorgan to
reduce (i) JPMorgan's "beneficial ownership" (within the meaning
of Section 13 of the Exchange Act and rules promulgated
thereunder) to 7.5% of Counterparty's outstanding Shares or less
or (ii) the Option Equity Percentage to 14.5% or less. If after
JPMorgan's commercially reasonable efforts, JPMorgan is unable to
effect a transfer or assignment permitted by the proviso to the
immediately preceding sentence on pricing terms reasonably
acceptable to JPMorgan and within a time period reasonably
acceptable to JPMorgan of a sufficient number of Options JPMorgan
may designate any Exchange Business Day as an Early Termination
Date with respect to a portion (the "Terminated Portion") of this
Transaction, such that (i) its "beneficial ownership" following
such partial termination will be equal to or less than 7.5% or
(ii) the Option Equity Percentage following such partial
termination will be equal to or less than 14.5%. In the event
that JPMorgan so designates an Early Termination Date with
respect to a portion of this Transaction, a payment shall be made
pursuant to Section 6 of the Agreement as if (i) an Early
Termination Date had been designated in respect of a Transaction
having terms identical to this Transaction and a Number of
Options equal to the Terminated Portion, (ii) Counterparty shall
be the sole Affected Party with respect to such partial
termination and (iii) such Transaction shall be the only
Terminated Transaction (and, for the avoidance of doubt, the
provisions of Section 9(n) shall apply to any amount that is
payable by JPMorgan to Counterparty pursuant to this sentence as
if Counterparty was not the Affected Party). Notwithstanding any
other provision in this Confirmation to the contrary requiring or
allowing JPMorgan to purchase, sell, receive or deliver any
shares or other securities to or from Counterparty, JPMorgan may
designate any of its affiliates to purchase, sell, receive or
deliver such shares or other securities and otherwise to perform
JPMorgan's obligations in respect of this Transaction and any
such designee may assume such obligations. JPMorgan shall be
discharged of its obligations to Counterparty to the extent of
any such performance.
13
(h) Staggered Settlement. If upon advice of counsel with respect to
applicable legal and regulatory requirements, including any
requirements relating to JPMorgan's hedging activities hereunder,
JPMorgan reasonably determines that it would not be practicable
or advisable to deliver, or to acquire Shares to deliver, any or
all of the Shares to be delivered by JPMorgan on the Settlement
Date for the Transaction, JPMorgan may, by notice to Counterparty
on or prior to any Settlement Date (a "Nominal Settlement Date"),
elect to deliver the Shares on two or more dates (each, a
"Staggered Settlement Date") as follows:
(a) in such notice, JPMorgan will specify to Counterparty the
related Staggered Settlement Dates (the first of which will
be such Nominal Settlement Date and the last of which will
be no later than the twentieth (20th) Exchange Business Day
following such Nominal Settlement Date) and the number of
Shares that it will deliver on each Staggered Settlement
Date;
(b) the aggregate number of Shares that JPMorgan will deliver to
Counterparty hereunder on all such Staggered Settlement
Dates will equal the number of Shares that JPMorgan would
otherwise be required to deliver on such Nominal Settlement
Date; and
(c) if the Net Share Settlement terms set forth above were to
apply on the Nominal Settlement Date, then the Net Share
Settlement terms will apply on each Staggered Settlement
Date, except that the Net Shares will be allocated among
such Staggered Settlement Dates as specified by JPMorgan in
the notice referred to in clause (a) above.
(i) Role of Agent. Each party agrees and acknowledges that (i) J.P.
Morgan Securities Inc., an affiliate of JPMorgan ("JPMSI"), has
acted solely as agent and not as principal with respect to this
Transaction and (ii) JPMSI has no obligation or liability, by way
of guaranty, endorsement or otherwise, in any manner in respect
of this Transaction (including, if applicable, in respect of the
settlement thereof). Each party agrees it will look solely to the
other party (or any guarantor in respect thereof) for performance
of such other party's obligations under this Transaction.
(j) Reserved
(k) Additional Termination Events. Notwithstanding anything to the
contrary in this Confirmation if an event of default with respect
to Counterparty shall occur under the terms of the Convertible
Notes as set forth in Section 5.01 of the Indenture and such
event of default results in the declaration of any principal and
interest immediately due and payable pursuant to Section 5.02 of
the Indenture, then such event of default shall constitute an
Additional Termination Event applicable to the Transaction and,
with respect to such event of default (A) Counterparty shall be
deemed to be the sole Affected Party and the Transaction shall be
the sole Affected Transaction and (B) JPMorgan shall be the party
entitled to designate an Early Termination Date pursuant to
Section 6(b) of the Agreement.
(l) Amendments to Equity Definitions. (i) Section 12.6(a)(ii) of the
Equity Definitions is hereby amended by (1) deleting from the
fourth line thereof the word "or" after the word "official" and
inserting a comma therefor, and (2) deleting the semi-colon at
the end of subsection (B) thereof and inserting the following
words therefor "or (C) at JPMorgan's option, the occurrence of
any of the events specified in Section 5(a)(vii) (1) through (9)
of the ISDA Master Agreement with respect to that Issuer."
14
(ii) Section 12.9(b)(i) of the Equity Definitions is hereby
amended by (1) replacing "either party may elect" with
"JPMorgan may elect" and (2) replacing "notice to the other
party" with "notice to Counterparty" in the first sentence
of such section.
(m) Setoff. In addition to and without limiting any rights of set-off
that a party hereto may have as a matter of law, pursuant to
contract or otherwise, upon the occurrence of an Early
Termination Date, JPMorgan (and only JPMorgan) shall have the
right to set off any obligation that it may have to Counterparty
under this Confirmation, including without limitation any
obligation to make any payment of cash or delivery of Shares to
Counterparty, against any obligation Counterparty may have to
JPMorgan under any other agreement between JPMorgan and
Counterparty relating to Shares (each such contract or agreement,
a "Separate Agreement"), including without limitation any
obligation to make a payment of cash or a delivery of Shares or
any other property or securities. For this purpose, JPMorgan
shall be entitled to convert any obligation (or the relevant
portion of such obligation) denominated in one currency into
another currency at the rate of exchange at which it would be
able to purchase the relevant amount of such currency, and to
convert any obligation to deliver any non-cash property into an
obligation to deliver cash in an amount calculated by reference
to the market value of such property as of the Early Termination
Date, as determined by the Calculation Agent in its sole
discretion; provided that in the case of a set-off of any
obligation to release or deliver assets against any right to
receive fungible assets, such obligation and right shall be set
off in kind and; provided further that in determining the value
of any obligation to deliver Shares, the value at any time of
such obligation shall be determined by reference to the market
value of the Shares at such time, as determined in good faith by
the Calculation Agent. If an obligation is unascertained at the
time of any such set-off, the Calculation Agent may in good faith
estimate the amount or value of such obligation, in which case
set-off will be effected in respect of that estimate, and the
relevant party shall account to the other party at the time such
obligation or right is ascertained.
(n) Alternative Calculations and Payment on Early Termination and on
Certain Extraordinary Events. If in respect of this Transaction,
an amount is payable by JPMorgan to Counterparty (i) pursuant to
Section 12.7 or Section 12.9 of the Equity Definitions or (ii)
pursuant to Section 6(d)(ii) of the Agreement (a "Payment
Obligation"), Counterparty may request JPMorgan to satisfy any
such Payment Obligation by the Share Termination Alternative (as
defined below) (except that Counterparty shall not make such an
election in the event of a Nationalization, Insolvency, a Merger
Event or Tender Offer, in each case, in which the consideration
to be paid to holders of Shares consists solely of cash, or an
Event of Default in which Counterparty is the Defaulting Party or
a Termination Event in which Counterparty is the Affected Party,
other than an Event of Default of the type described in Section
5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a
Termination Event of the type described in Section 5(b) of the
Agreement in each case that resulted from an event or events
outside Counterparty's control) and shall give irrevocable
telephonic notice to JPMorgan, confirmed in writing within one
Currency Business Day, no later than 12:00 p.m. New York local
time on the Merger Date, the Announcement Date (in the case of
Nationalization, Insolvency or Delisting), the Early Termination
Date or date of cancellation, as applicable; provided that if
Counterparty does not validly request JPMorgan to satisfy its
Payment Obligation by the Share Termination Alternative, JPMorgan
shall have the right, in its sole discretion, to satisfy its
Payment Obligation by the Share Termination Alternative,
notwithstanding Counterparty's election to the contrary. In
calculating any amounts under Section 6(e) of the Agreement,
notwithstanding anything to the contrary in the Agreement, (1)
separate amounts shall be calculated as set forth in Section 6(e)
with respect to (i) this Transaction and (ii) all other
Transactions, and (2) such separate amounts shall be payable
pursuant to Section 6(d)(ii) of the Agreement. For the avoidance
of doubt, the parties agree that in calculating the Payment
Obligation the Determining Party may consider the purchase price
paid in connection with the purchase of Share Termination
Delivery Property.
15
Share Termination Alternative: If Applicable, JPMorgan shall
deliver to Counterparty the Share
Termination Delivery Property on,
or within a commercially
reasonable period of time after,
the date when the Payment
Obligation would otherwise be due
pursuant to Section 12.7 or 12.9
of the Equity Definitions or
Section 6(d)(ii) and 6(e) of the
Agreement, as applicable (the
"Share Termination Payment Date"),
in satisfaction of the Payment
Obligation in the manner
reasonably requested by
Counterparty free of payment.
Share Termination Delivery Property: A number of Share Termination
Delivery Units, as calculated by
the Calculation Agent, equal to
the Payment Obligation divided by
the Share Termination Unit Price.
The Calculation Agent shall adjust
the Share Termination Delivery
Property by replacing any
fractional portion of a security
therein with an amount of cash
equal to the value of such
fractional security based on the
values used to calculate the Share
Termination Unit Price.
Share Termination Unit Price: The value to JPMorgan of property
contained in one Share Termination
Delivery Unit, as determined by
the Calculation Agent in its
discretion by commercially
reasonable means and notified by
the Calculation Agent to JPMorgan
at the time of notification of the
Payment Obligation.
Share Termination Delivery Unit: One Share or, if a Merger Event has
occurred and a corresponding
adjustment to this Transaction has
been made, a unit consisting of
the number or amount of each type
of property received by a holder
of one Share (without
consideration of any requirement
to pay cash or other consideration
in lieu of fractional amounts of
any securities) in such Merger
Event, as determined by the
Calculation Agent.
Failure to Deliver: Applicable
Other applicable provisions: If Share Termination Alternative is
applicable, the provisions of
Sections 9.8, 9.9, 9.11, 9.12 and
10.5 (as modified above) of the
Equity Definitions will be
applicable, except that all
references in such provisions to
"Physically-settled" shall be read
as references to "Share
Termination Settled" and all
references to "Shares" shall be
read as references to "Share
Termination Delivery Units".
"Share Termination Settled" in
relation to this Transaction means
that Share Termination Alternative
is applicable to this Transaction.
16
(o) Governing Law. New York law (without reference to choice of law
doctrine).
(p) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by
jury in respect of any suit, action or proceeding relating to
this Transaction. Each party (i) certifies that no
representative, agent or attorney of either party has
represented, expressly or otherwise, that such other party would
not, in the event of such a suit, action or proceeding, seek to
enforce the foregoing waiver and (ii) acknowledges that it and
the other party have been induced to enter into this Transaction,
as applicable, by, among other things, the mutual waivers and
certifications provided herein.
(q) Registration. Counterparty hereby agrees that if, in the good
faith reasonable judgment of JPMorgan, the Shares ("Hedge
Shares") acquired by JPMorgan for the purpose of hedging its
obligations pursuant to this Transaction cannot be sold in the
public market by JPMorgan without registration under the
Securities Act, Counterparty shall, at its election, either (i)
in order to allow JPMorgan to sell the Hedge Shares in a
registered offering, make available to JPMorgan an effective
registration statement under the Securities Act and enter into an
agreement, in form and substance satisfactory to JPMorgan,
substantially in the form of an underwriting agreement for a
registered secondary offering; provided, however, that if
JPMorgan, in its reasonable discretion, is not satisfied with
access to due diligence materials, the results of its due
diligence investigation, or the procedures and documentation for
the registered offering referred to above, then clause (ii) or
clause (iii) of this paragraph shall apply at the election of
Counterparty, (ii) in order to allow JPMorgan to sell the Hedge
Shares in a private placement, enter into a private placement
agreement substantially similar to private placement purchase
agreements customary for private placements of equity securities,
in form and substance satisfactory to JPMorgan (in which case,
the Calculation Agent shall make any adjustments to the terms of
this Transaction that are necessary, in its reasonable judgment,
to compensate JPMorgan for any discount from the public market
price of the Shares incurred on the sale of Hedge Shares in a
private placement), or (iii) purchase the Hedge Shares from
JPMorgan at the Relevant Price on such Exchange Business Days,
and in the amounts, requested by JPMorgan.
(r) Tax Disclosure. Effective from the date of commencement of
discussions concerning the Transaction, Counterparty and each of
its employees, representatives, or other agents may disclose to
any and all persons, without limitation of any kind, the tax
treatment and tax structure of the Transaction and all materials
of any kind (including opinions or other tax analyses) that are
provided to Counterparty relating to such tax treatment and tax
structure.
(s) Right to Extend. JPMorgan may delay any Settlement Date or any
other date of delivery by JPMorgan, with respect to some or all
of the Options hereunder, if JPMorgan reasonably determines, in
its discretion, that such extension is reasonably necessary to
enable JPMorgan to effect purchases of Shares in connection with
its hedging activity or settlement activity hereunder in a manner
that would, if JPMorgan were Counterparty or an affiliated
purchaser of Counterparty, be in compliance with applicable legal
and regulatory requirements.
17
(t) Status of Claims in Bankruptcy. JPMorgan acknowledges and agrees
that this Confirmation is not intended to convey to JPMorgan
rights against Counterparty with respect to the Transaction that
are senior to the claims of common stockholders of Counterparty
in any U.S. bankruptcy proceedings of Counterparty; provided that
nothing herein shall limit or shall be deemed to limit JPMorgan's
right to pursue remedies in the event of a breach by Counterparty
of its obligations and agreements with respect to the
Transaction; provided, further, that nothing herein shall limit
or shall be deemed to limit JPMorgan's rights in respect of any
transactions other than the Transaction.
(u) Securities Contract; Swap Agreement. The parties hereto intend
for: (a) the Transaction to be a "securities contract" and a
"swap agreement" as defined in the Bankruptcy Code (Title 11 of
the United States Code) (the "Bankruptcy Code"), and the parties
hereto to be entitled to the protections afforded by, among other
Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and
560 of the Bankruptcy Code; (b) a party's right to liquidate the
Transaction and to exercise any other remedies upon the
occurrence of any Event of Default under the Agreement with
respect to the other party to constitute a "contractual right" as
described in the Bankruptcy Code; and (c) each payment and
delivery of cash, securities or other property hereunder to
constitute a "margin payment" or "settlement payment" and a
"transfer" as defined in the Bankruptcy Code.
(v) Additional Provisions. Counterparty covenants and agrees that, as
promptly as practicable following the public announcement of any
consolidation, merger and binding share exchange to which
Counterparty is a party, or any sale of all or substantially all
of Counterparty's assets, in each case pursuant to which the
Shares will be converted into cash, securities or other property,
Counterparty shall notify JPMorgan in writing of the types and
amounts of consideration that holders of Shares have elected to
receive upon consummation of such transaction or event (the date
of such notification, the "Consideration Notification Date");
provided that in no event shall the Consideration Notification
Date be later than the date on which such transaction or event is
consummated.
[signature page follows]
18
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to EDG Confirmation
Group, J.P. Morgan Securities Inc., 277 Park Avenue, 11th Floor, New York, NY
10172-3401, or by fax to (212) 622 8519.
Very truly yours,
J.P. Morgan Securities Inc., as agent for
JPMorgan Chase Bank, National
Association
By: /s/ Sudheer Tegulapalle
----------------------------------------
Authorized Signatory
Name: Sudheer Tegulapalle
Accepted and confirmed
as of the Trade Date:
Chemed Corporation
By: David P. Williams
---------------------------------------
Authorized Signatory
Name: David P. Williams
EXHIBIT 10.2
May 8, 2007
From: Citibank, N.A.
390 Greenwich Street
New York, NY 10013
Equity Derivatives
Telephone: (212) 723-7357
Facsimile: (212) 723-8328
To: Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
Re: Call Option Transaction
The purpose of this letter agreement (this "Confirmation") is to
confirm the terms and conditions of the call option transaction entered into
between Citibank, N.A. ("Citibank") and Chemed Corporation ("Counterparty") on
the Trade Date specified below (the "Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below. This Confirmation shall replace any previous agreements and
serve as the final documentation for this Transaction.
The definitions and provisions contained in the 2002 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc. ("ISDA") are incorporated
into this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. This
Transaction shall constitute a Share Option Transaction within the meaning set
forth in the Equity Definitions. Certain defined terms used herein have the
meanings assigned to them in the Offering Memorandum dated May 8, 2007 (the
"Offering Memorandum") relating to the USD 180,000,000 principal amount of
1.875% Convertible Senior Notes due 2014, (the "Convertible Notes" and each USD
1,000 principal amount of Convertible Notes, a "Convertible Note") issued by
Counterparty pursuant to an Indenture to be dated May 14, 2007 between
Counterparty and LaSalle Bank, N.A., as trustee (the "Indenture"). In the event
of any inconsistency between the terms defined in the Offering Memorandum, the
Indenture and this Confirmation, this Confirmation shall govern. The parties
acknowledge that this Confirmation is entered into on the date hereof with the
understanding that (i) definitions set forth in the Indenture which are also
defined herein by reference to the Indenture and (ii) sections of the Indenture
that are referred to herein will conform to the descriptions thereof in the
Offering Memorandum. If any such definitions in the Indenture or any such
sections of the Indenture differ from the descriptions thereof in the Offering
Memorandum, the descriptions thereof in the Offering Memorandum will govern for
purposes of this Confirmation. The parties further acknowledge that the
Indenture section numbers used herein are based on the draft of the Indenture
last reviewed by Citibank as of the date of this Confirmation, and if any such
section numbers are changed in the Indenture as executed, the parties will amend
this Confirmation in good faith to preserve the intent of the parties. For the
avoidance of doubt, references to the Indenture herein are references to the
Indenture as in effect on the date of its execution and if the Indenture is
amended following its execution, any such amendment will be disregarded for
purposes of this Confirmation unless the parties agree otherwise in writing.
Each party is hereby advised, and each such party acknowledges, that
the other party has engaged in, or refrained from engaging in, substantial
financial transactions and has taken other material actions in reliance upon the
parties' entry into the Transaction to which this Confirmation relates on the
terms and conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between Citibank
and Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall supplement, form a part of, and be subject to
an agreement in the form of the 2002 ISDA Master Agreement (the "Agreement") as
if Citibank and Counterparty had executed an agreement in such form (but without
any Schedule except for the election of the laws of the State of New York as the
governing law) on the Trade Date. In the event of any inconsistency between
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which
this Confirmation relates shall be governed by the Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: May 8, 2007
Option Style: "Modified American", as described under
"Procedures for Exercise" below
Option Type: Call
Buyer: Counterparty
Seller: Citibank
Shares: The capital stock of Counterparty, par value
USD 1 per Share (Exchange symbol "CHE")
Number of Options: 90,000; provided that the Number of Options
shall be automatically increased as of the
date of exercise (the "Greenshoe Exercise")
by J.P. Morgan Securities Inc. and
Citigroup Global Markets Inc. as
representatives of the Initial Purchasers
(as defined in the Purchase Agreement dated
as of May 8, 2007 between Counterparty,
J.P. Morgan Securities Inc. and Citigroup
Global Markets Inc. as representatives of
the Initial Purchasers party thereto (the
"Purchase Agreement")), of their option
pursuant to Section 1 of the Purchase
Agreement by the number of additional
Convertible Notes in denominations of USD
1,000 principal amount issued pursuant to
such exercise (such Convertible Notes, the
"Additional Convertible Notes") multiplied
by 50% (the "Additional Options"). For the
avoidance of doubt, the Number of Options
shall be reduced by any Options exercised
by Counterparty. In no event will the
Number of Options be less than zero.
Option Entitlement: As of any date, a number equal to the
Conversion Rate as of such date (as defined
in the Indenture, but without regard to any
adjustments to the Conversion Rate pursuant
to Section 11.02(h), Section 11.02(i) or to
Section 11.03 of the Indenture), for each
Convertible Note.
2
Strike Price: USD 80.7275
Premium: USD 24,702,300 (Premium per Option: USD
274.4700); provided that if the Number of
Options is increased pursuant to the
proviso to the definition of "Number of
Options" above, there shall be an
additional Premium equal to the product of
the number of Additional Options and the
Premium per Option (the "Additional
Premium"), and such Additional Premium
shall be paid by Counterparty to Citibank
on the Additional Premium Payment Date.
Premium Payment Date: May 14, 2007
Additional Premium Payment Date: The closing date for the purchase and sale
of the Additional Convertible Notes.
Exchange: The New York Stock Exchange
Related Exchange(s): All Exchanges
Procedures for Exercise:
Exercise Period(s): Notwithstanding anything to the contrary in
the Equity Definitions, an Exercise Period
shall occur with respect to an Option
hereunder only if such Option is an
Exercisable Option (as defined below) and
the Exercise Period shall be, in respect of
any Exercisable Option, the period
commencing on, and including, the relevant
Conversion Date and ending on, and
including, the Scheduled Valid Day
immediately preceding the first day of the
relevant Settlement Averaging Period in
respect of such Conversion Date; provided
that in respect of Exercisable Options
relating to Convertible Notes for which the
relevant Conversion Date occurs on or after
March 1, 2014, the final day of the
Exercise Period shall be the Scheduled
Valid Day immediately preceding the
Expiration Date.
Conversion Date: With respect to any conversion of
Convertible Notes, the date on which the
Holder (as such term is defined in the
Indenture) of such Convertible Notes
satisfies all of the requirements for
conversion thereof as set forth in Section
11.01(b) of the Indenture.
Exercisable Options: In respect of each Exercise Period, a number
of Options equal to 50% of the number of
USD 1,000 principal amount of Convertible
Notes surrendered to Counterparty for
conversion with respect to such Exercise
Period but no greater than the Number of
Options.
Expiration Time: The Valuation Time
3
Expiration Date: May 15, 2014, subject to earlier exercise.
Multiple Exercise: Applicable, as described under Exercisable
Options above.
Automatic Exercise: Applicable; and means that in respect of an
Exercise Period, a number of Options not
previously exercised hereunder equal to the
number of Exercisable Options shall be
deemed to be exercised on the final day of
such Exercise Period for such Exercisable
Options; provided that such Options shall
be deemed exercised only to the extent that
Counterparty has provided a Notice of
Exercise to Citibank.
Notice of Exercise: Notwithstanding anything to the contrary in
the Equity Definitions, in order to
exercise any Exercisable Options,
Counterparty must notify Citibank in
writing before 5:00 p.m. (New York City
time) on the Scheduled Valid Day prior to
the scheduled first day of the Settlement
Averaging Period for the Exercisable
Options being exercised (the "Notice
Deadline") of (i) the number of such
Options and (ii) the scheduled first day of
the Settlement Averaging Period and the
scheduled Settlement Date; provided that,
notwithstanding the foregoing, such notice
(and the related exercise of Exercisable
Options) shall be effective if given after
the Notice Deadline but prior to 5:00 p.m.
(New York City time) on the fifth Scheduled
Valid Day after the Notice Deadline, in
which event the Calculation Agent shall
have the right to adjust the number of Net
Shares as appropriate to reflect the
additional costs (including, but not
limited to, hedging mismatches and market
losses) and expenses incurred by Citibank
in connection with its hedging activities
(including the unwinding of any hedge
position) as a result of Citibank not
having received such notice prior to the
Notice Deadline; provided further that in
respect of Exercisable Options relating to
Convertible Notes with a Conversion Date
occurring on or after March 1, 2014, such
notice may be given on or prior to the
second Scheduled Valid Day immediately
preceding the Expiration Date and need only
specify the number of such Exercisable
Options.
Valuation Time: At the close of trading of the regular
trading session on the Exchange.
Market Disruption Event: Section 6.3(a) of the Equity Definitions is
hereby replaced in its entirety by the
following:
"'Market Disruption Event' means in respect
of a Share, (i) a failure by the primary
United States national or regional
securities exchange or market on which
Shares are listed or admitted to trading to
open for trading during its regular trading
session or (ii) the occurrence or existence
prior to 1:00 p.m. (New York City time) on
any Scheduled Valid Day for the Shares for
an aggregate one half hour period of any
suspension or limitation imposed on trading
(by reason of movements in price exceeding
limits permitted by the relevant stock
exchange or otherwise) in the Shares or in
any options, contracts or future contracts
relating to the Shares."
4
Settlement Terms:
Settlement Method: Net Share Settlement
Net Share Settlement: Citibank will deliver to Counterparty, on
the relevant Settlement Date, a number of
Shares equal to the Net Shares in respect
of any Exercisable Option exercised or
deemed exercised hereunder. In no event
will the Net Shares be less than zero.
Net Shares: In respect of any Exercisable Option
exercised or deemed exercised, a number of
Shares equal to (i) the Option Entitlement
multiplied by (ii) the sum of the
quotients, for each Valid Day during the
Settlement Averaging Period for such
Exercisable Option, of (A) the Relevant
Price on such Valid Day less the Strike
Price, divided by (B) such Relevant Price,
divided by (iii) the number of Valid Days
in the Settlement Averaging Period;
provided, however, that if the calculation
contained in clause (A) above results in a
negative number, such number shall be
replaced with the number "zero".
Citibank will deliver cash in lieu of any
fractional Shares to be delivered with
respect to any Net Shares valued at the
Relevant Price for the last Valid Day of
the Settlement Averaging Period.
Valid Day: A day on which (i) trading in the Shares
generally occurs on the Exchange or, if the
Shares are not then listed on the Exchange,
on the principal other U.S. national or
regional securities exchange on which the
Shares are then listed or, if the Shares
are not then listed on a U.S. national or
regional securities exchange, on the
principal other market on which the Shares
are then traded and (ii) there is no Market
Disruption Event.
Scheduled Valid Day: A day on which trading in the Shares is
scheduled to occur on the principal U.S.
national or regional securities exchange or
market on which the Shares are listed or
admitted for trading.
Relevant Price: On any Valid Day, the per Share volume-
weighted average price as displayed under
the heading "Bloomberg VWAP" on Bloomberg
page CHE.N (equity) AQR (or any successor
thereto) in respect of the period from the
scheduled opening time of the Exchange to
the Scheduled Closing Time of the Exchange
on such Valid Day (or if such volume-
weighted average price is unavailable, the
market value of one Share on such Valid
Day, as determined by the Calculation Agent
using a volume-weighted method).
5
Settlement Averaging Period: For any Exercisable Option, (x) if
Counterparty has, on or prior to March 1,
2014, delivered a Notice of Exercise to
Citibank with respect to such Exercisable
Option with a Conversion Date occurring
prior to March 1, 2014, the forty (40)
consecutive Valid Days commencing on and
including the second Scheduled Valid Day
following such Conversion Date, or (y) if
Counterparty has, on or following March 1,
2014, delivered a Notice of Exercise to
Citibank with respect to such Exercisable
Option with a Conversion Date occurring on
or following March 1, 2014, the forty (40)
consecutive Valid Days commencing on, and
including, the forty second (42nd)
Scheduled Valid Day immediately prior to
the Expiration Date.
Settlement Date: For any Exercisable Option, the date Shares
will be delivered with respect to the
Convertible Notes related to such
Exercisable Options, under the terms of the
Indenture.
Settlement Currency: USD
Failure to Deliver: Applicable
Other Applicable Provisions: The provisions of Sections 9.1(c), 9.8, 9.9,
9.11, 9.12 and 10.5 of the Equity
Definitions will be applicable, except that
all references in such provisions to
"Physically-settled" shall be read as
references to "Net Share Settled". "Net
Share Settled" in relation to any Option
means that Net Share Settlement is
applicable to that Option.
Representation and Agreement: Notwithstanding Section 9.11 of the Equity
Definitions, the parties acknowledge that
any Shares delivered to Counterparty shall
be, upon delivery, subject to restrictions
and limitations arising from Counterparty's
status as issuer of the Shares under
applicable securities laws.
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Transaction:
Potential Adjustment Events: Notwithstanding Section 11.2(e) of the
Equity Definitions, a "Potential Adjustment
Event" means an occurrence of any event or
condition, as set forth in Section 11.02 of
the Indenture that would result in an
adjustment to the Conversion Rate of the
Convertible Notes; provided that in no
event shall there be any adjustment
hereunder as a result of an adjustment to
the Conversion Rate pursuant to Section
11.02(h), Section 11.02(i) or Section 11.03
of the Indenture.
6
Method of Adjustment: Calculation Agent Adjustment, and means
that, notwithstanding Section 11.2(c) of
the Equity Definitions, upon any adjustment
to the Conversion Rate of the Convertible
Notes pursuant to the Indenture (other than
Section 11.02(h), Section 11.02(i) and
Section 11.03 of the Indenture), the
Calculation Agent will make a corresponding
adjustment to any one or more of the Strike
Price, Number of Options, the Option
Entitlement and any other variable relevant
to the exercise, settlement or payment for
the Transaction. The Calculation Agent
shall promptly thereafter notify Citibank
and Counterparty of any such corresponding
adjustment.
Extraordinary Events applicable to the Transaction:
Merger Events: Notwithstanding Section 12.1(b) of the
Equity Definitions, a "Merger Event" means
the occurrence of any event or condition
set forth in clause (2) of the definition
of Fundamental Change in Section 1.01 of
the Indenture.
Tender Offers: Applicable; provided that notwithstanding
Section 12.1(d) of the Equity Definitions,
a "Tender Offer" means the occurrence of
any event or condition set forth in clause
(1) of the definition of Fundamental Change
in Section 1.01 of the Indenture.
Consequence of Merger Events/
Tender Offers: Notwithstanding Section 12.2 and Section
12.3 of the Equity Definitions, upon the
occurrence of a Merger Event or a Tender
Offer, the Calculation Agent shall make a
corresponding adjustment in respect of any
adjustment under the Indenture to any one
or more of the nature of the Shares, Strike
Price, Number of Options, the Option
Entitlement and any other variable relevant
to the exercise, settlement or payment for
the Transaction; provided, however, that
such adjustment shall be made without
regard to any adjustment to the Conversion
Rate for the issuance of additional shares
as set forth in Section 11.03 of the
Indenture; provided further that if, with
respect to a Merger Event or a Tender
Offer, the consideration for the Shares
includes (or, at the option of a holder of
Shares, may include) shares of an entity or
person not organized under the laws of the
United States, any State thereof or the
District of Columbia," Cancellation and
Payment shall apply.
Nationalization, Insolvency or Cancellation and Payment (Calculation Agent
Delisting: Determination); provided that, in addition
to the provisions of Section 12.6(a)(iii)
of the Equity Definitions, it will also
constitute a Delisting if the Exchange is
located in the United States and the Shares
are not immediately re-listed, re-traded or
re-quoted on any of the New York Stock
Exchange, the American Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ
Global Market (or their respective
successors); if the Shares are immediately
re-listed, re-traded or re-quoted on any of
the New York Stock Exchange, the American
Stock Exchange, The NASDAQ Global Select
Market or The NASDAQ Global Market (or
their respective successors), such exchange
or quotation system shall thereafter be
deemed to be the Exchange.
7
Additional Disruption Events:
Change in Law: Applicable
Insolvency Filing: Applicable
Failure to Deliver: Applicable
Hedging Party: For all applicable Additional Disruption
Events, Citibank
Determining Party: For all applicable Additional Disruption
Events, Citibank
Non-Reliance: Applicable
Agreements and Acknowledgements
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
4. Calculation Agent: Citibank. The Calculation Agent shall, upon
request by the Counterparty, provide a
written explanation of any calculation made
by it including, where applicable, a
description of the methodology and data
applied.
5. Account Details:
(a) Account for payments to Counterparty:
JP Morgan Chase Bank
ABA# 021000021
Acct: Chemed Corporation
Acct No.: 94-13065
Account for delivery of Shares to Counterparty:
To be provided by Counterparty
(b) Account for payments to Citibank:
Citibank, N.A.
ABA #021000089
DDA 00167679
Ref: Equity Derivatives
Account for delivery of Shares from Citibank:
DTC 418
8
6. Offices:
The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is
not a Multibranch Party.
The Office of Citibank for the Transaction is: 390 Greenwich Street, New York,
NY 10013
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Counterparty:
Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
(b) Address for notices or communications to Citibank:
To: Citibank, N.A.
390 Greenwich Street, 5th Floor
New York, NY 10013
Attention: Equity Derivatives
Telephone: (212) 723-7357
Facsimile: (212) 723-8328
To: Citibank, N.A.
3880 Greenwich Street, 17th Floor
New York, NY 10013
Attention: CIB Legal Group--Derivatives
Telephone: (212) 816-2944
Facsimile: (646) 291-5875
8. Representations and Warranties
(i) Representations and Warranties of Counterparty
The representations and warranties of Counterparty set forth in Section 3 of the
Purchase Agreement are true and correct and are hereby deemed to be repeated to
Citibank as if set forth herein. Counterparty hereby further represents and
warrants to Citibank that:
(a) Counterparty has all necessary corporate power and authority to
execute, deliver and perform its obligations in respect of this
Transaction; such execution, delivery and performance have been duly
authorized by all necessary corporate action on Counterparty's part;
and this Confirmation has been duly and validly executed and delivered
by Counterparty and constitutes its valid and binding obligation,
enforceable against Counterparty in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity) and except that rights to indemnification and
contribution hereunder may be limited by federal or state securities
laws or public policy relating thereto.
9
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of Counterparty hereunder
will (i) conflict with or result in a breach of the certificate of
incorporation or by-laws (or any equivalent documents) of
Counterparty, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency,
or any agreement or instrument to which Counterparty or any of its
subsidiaries is a party or by which Counterparty or any of its
subsidiaries is bound or to which Counterparty or any of its
subsidiaries is subject (including, but not limited to, any agreements
and contracts of Counterparty or any of its subsidiaries filed as
exhibits to Counterparty's Annual Report on Form 10-K for the year
ended December 31, 2006, incorporated by reference in the Offering
Memorandum), or (ii) constitute a default under, or result in the
creation of any lien under, any such agreement or instrument.
(c) No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection
with the execution, delivery or performance by Counterparty of this
Confirmation, except such as have been obtained or made and such as
may be required under the Securities Act of 1933, as amended (the
"Securities Act") or state securities laws.
(d) It is an "eligible contract participant" (as such term is defined in
Section 1a(12) of the Commodity Exchange Act, as amended (the "CEA"))
because one or more of the following is true:
Counterparty is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) Counterparty has total assets in excess of USD 10,000,000;
(B) the obligations of Counterparty hereunder are guaranteed, or
otherwise supported by a letter of credit or keepwell, support or
other agreement, by an entity of the type described in Section
1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or
1a(12)(C) of the CEA; or
(C) Counterparty has a net worth in excess of USD 1,000,000 and has
entered into this Agreement in connection with the conduct of
Counterparty's business or to manage the risk associated with an
asset or liability owned or incurred or reasonably likely to be
owned or incurred by Counterparty in the conduct of
Counterparty's business.
(e) Each of it and its controlled affiliates is not, on the date hereof,
in possession of any material non-public information with respect to
Counterparty.
(ii) Additional representations and warranties
(a) Citibank represents that it is an "eligible contract participant" as
defined in Section 1a(12) of the CEA.
(b) Each of Citibank and Counterparty acknowledges that the offer and sale
of the Transaction to it is intended to be exempt from registration
under the Securities Act, by virtue of Section 4(2) thereof.
10
9. Other Provisions:
(a) Opinions. Counterparty shall deliver to Citibank an opinion of
counsel, dated as of the Trade Date, with respect to the matters set
forth in Sections 8(i)(a) through (c) of this Confirmation.
(b) Reserved
(c) Repurchase Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares, promptly give Citibank
a written notice of such repurchase (a "Repurchase Notice") on such
day if following such repurchase, the number of outstanding Shares as
determined on such day is (i) less than 21 million (in the case of the
first such notice) or (ii) thereafter more than 1.60 million less than
the number of Shares included in the immediately preceding Repurchase
Notice. Counterparty agrees to indemnify and hold harmless Citibank
and its affiliates and their respective officers, directors,
employees, affiliates, advisors, agents and controlling persons (each,
an "Indemnified Person") from and against any and all losses
(including losses relating to Citibank's hedging activities as a
consequence of becoming, or of the risk of becoming, a Section 16
"insider", including without limitation, any forbearance from hedging
activities or cessation of hedging activities and any losses in
connection therewith with respect to this Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable
attorney's fees), joint or several, which an Indemnified Person may
become subject to, as a result of Counterparty's failure to provide
Citibank with a Repurchase Notice on the day and in the manner
specified in this paragraph, and to reimburse, within 30 days, upon
written request, each of such Indemnified Persons for any reasonable
legal or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action,
proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified
Person as a result of Counterparty's failure to provide Citibank with
a Repurchase Notice in accordance with this paragraph, such
Indemnified Person shall promptly notify Counterparty in writing, and
Counterparty, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent
the Indemnified Person and any others Counterparty may designate in
such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. Counterparty shall not be liable for any
settlement of any proceeding contemplated by this paragraph that is
effected without its written consent, but if settled with such consent
or if there be a final judgment for the plaintiff, Counterparty agrees
to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. Counterparty shall
not, without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding
contemplated by this paragraph that is in respect of which any
Indemnified Person is or could have been a party and indemnity could
have been sought hereunder by such Indemnified Person, unless such
settlement (x) includes an unconditional release of such Indemnified
Person, in form and substance reasonably satisfactory to such
Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (y) does not include any statement as to
or any admission of fault, culpability or a failure to act by or on
behalf of any Indemnified Person. If the indemnification provided for
in this paragraph is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then Counterparty hereunder, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to
the amount paid or payable by such Indemnified Person as a result of
such losses, claims, damages or liabilities. The remedies provided for
in this paragraph (c) are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any Indemnified Party
at law or in equity. The indemnity and contribution agreements
contained in this paragraph shall remain operative and in full force
and effect regardless of the termination of this Transaction.
11
(d) Regulation M. Counterparty is not on the date hereof engaged in a
distribution, as such term is used in Regulation M under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
any securities of Counterparty, other than (i) a distribution meeting
the requirements of the exception set forth in Rules 101(b)(10) and
102(b)(7) of Regulation M and (ii) the distribution of the Convertible
Notes. Counterparty shall not, until the second Scheduled Trading Day
immediately following the Trade Date, engage in any such distribution.
(e) No Manipulation. Counterparty is not entering into this Transaction to
create actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or to raise
or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for the Shares) or otherwise
in violation of the Exchange Act.
(f) Early Unwind. In the event the sale of Convertible Notes (or, in
respect of the Greenshoe Exercise, the Additional Convertible Notes)
is not consummated with the Initial Purchasers for any reason by the
close of business in New York on May 14, 2007 (or, in respect of the
Greenshoe Exercise, the third Clearance System Business Day following
the date of the Greenshoe Exercise (the "Additional Closing Date"))
(or such later date as agreed upon by the parties) (May 14, 2007 or
such later date as agreed upon being or, in respect of the Greenshoe
Exercise, the Additional Closing Date, the "Early Unwind Date"), this
Transaction (or, in respect of the Greenshoe Exercise, the Additional
Options) shall automatically terminate (the "Early Unwind"), on the
Early Unwind Date and (i) the Transaction (or, in respect of the
Greenshoe Exercise, the Additional Options) and all of the respective
rights and obligations of Citibank and Counterparty under the
Transaction (or, in respect of the Greenshoe Exercise, the Additional
Options) shall be cancelled and terminated and (ii) each party shall
be released and discharged by the other party from and agrees not to
make any claim against the other party with respect to any obligations
or liabilities of the other party arising out of and to be performed
in connection with the Transaction (or, in respect of the Greenshoe
Exercise, the Additional Options) either prior to or after the Early
Unwind Date; provided that, unless the sale of the Convertible Notes
or the Additional Convertible Notes, as applicable, is not consummated
due to a breach of the Purchase Agreement by the Initial Purchasers,
Counterparty shall purchase from Citibank on the Early Unwind Date all
Shares purchased by Citibank or one or more of its affiliates and
reimburse Citibank for any commercially reasonable costs or expenses
(including market losses) relating to the unwinding of its hedging
activities in connection with the Transaction (or, in respect of the
Greenshoe Exercise, the Additional Options) (including any loss or
cost incurred as a result of its terminating, liquidating, obtaining
or reestablishing any hedge or related trading position). The amount
of any such reimbursement shall be determined by Citibank in its sole
good faith discretion. Citibank shall notify Counterparty of such
amount and Counterparty shall pay such amount in immediately available
funds on the Early Unwind Date. Citibank and Counterparty represent
and acknowledge to the other that, subject to the proviso included in
this paragraph, upon an Early Unwind, all obligations with respect to
the Transaction shall be deemed fully and finally discharged.
(g) Transfer or Assignment. Counterparty may not transfer any of its
rights or obligations under this Transaction without the prior written
consent of Citibank. Citibank may not, without Counterparty's consent,
transfer or assign all or any part of its rights or obligations under
the Transaction; provided that if (i) Citibank's "beneficial
ownership" (within the meaning of Section 13 of the Exchange Act and
rules promulgated thereunder) exceeds 7.5% of Counterparty's
outstanding Shares or (ii) the quotient of (x) the product of (a) the
Number of Options and (b) the Option Entitlement divided by (y) the
12
number of Counterparty's outstanding Shares (such quotient expressed
as a percentage, the "Option Equity Percentage") exceeds 14.5%,
Citibank may assign or transfer a portion of the Transaction without
Counterparty's consent to any third party with a rating for its long
term, unsecured and unsubordinated indebtedness equal to or better
than the lesser of (i) the credit rating of Citibank at the time of
the transfer and (ii) A- by Standard and Poor's Rating Group, Inc. or
its successor ("S&P"), or A3 by Moody's Investor Service, Inc.
("Moody's") or, if either S&P or Moody's ceases to rate such debt, at
least an equivalent rating or better by a substitute agency rating
mutually agreed by Counterparty and Citibank to reduce (i) Citibank's
"beneficial ownership" (within the meaning of Section 13 of the
Exchange Act and rules promulgated thereunder) to 7.5% of
Counterparty's outstanding Shares or less or (ii) the Option Equity
Percentage to 14.5% or less. If after Citibank's commercially
reasonable efforts, Citibank is unable to effect a transfer or
assignment permitted by the proviso to the immediately preceding
sentence on pricing terms reasonably acceptable to Citibank and within
a time period reasonably acceptable to Citibank of a sufficient number
of Options Citibank may designate any Exchange Business Day as an
Early Termination Date with respect to a portion (the "Terminated
Portion") of this Transaction, such that (i) its "beneficial
ownership" following such partial termination will be equal to or less
than 7.5% or (ii) the Option Equity Percentage following such partial
termination will be equal to or less than 14.5%. In the event that
Citibank so designates an Early Termination Date with respect to a
portion of this Transaction, a payment shall be made pursuant to
Section 6 of the Agreement as if (i) an Early Termination Date had
been designated in respect of a Transaction having terms identical to
this Transaction and a Number of Options equal to the Terminated
Portion, (ii) Counterparty shall be the sole Affected Party with
respect to such partial termination and (iii) such Transaction shall
be the only Terminated Transaction (and, for the avoidance of doubt,
the provisions of Section 9(n) shall apply to any amount that is
payable by Citibank to Counterparty pursuant to this sentence as if
Counterparty was not the Affected Party). Notwithstanding any other
provision in this Confirmation to the contrary requiring or allowing
Citibank to purchase, sell, receive or deliver any shares or other
securities to or from Counterparty, Citibank may designate any of its
affiliates to purchase, sell, receive or deliver such shares or other
securities and otherwise to perform Citibank's obligations in respect
of this Transaction and any such designee may assume such obligations.
Citibank shall be discharged of its obligations to Counterparty to the
extent of any such performance.
(h) Staggered Settlement. If upon advice of counsel with respect to
applicable legal and regulatory requirements, including any
requirements relating to Citibank's hedging activities hereunder,
Citibank reasonably determines that it would not be practicable or
advisable to deliver, or to acquire Shares to deliver, any or all of
the Shares to be delivered by Citibank on the Settlement Date for the
Transaction, Citibank may, by notice to Counterparty on or prior to
any Settlement Date (a "Nominal Settlement Date"), elect to deliver
the Shares on two or more dates (each, a "Staggered Settlement Date")
as follows:
(a) in such notice, Citibank will specify to Counterparty the related
Staggered Settlement Dates (the first of which will be such
Nominal Settlement Date and the last of which will be no later
than the twentieth (20th) Exchange Business Day following such
Nominal Settlement Date) and the number of Shares that it will
deliver on each Staggered Settlement Date;
(b) the aggregate number of Shares that Citibank will deliver to
Counterparty hereunder on all such Staggered Settlement Dates
will equal the number of Shares that Citibank would otherwise be
required to deliver on such Nominal Settlement Date; and
13
(c) if the Net Share Settlement terms set forth above were to apply
on the Nominal Settlement Date, then the Net Share Settlement
terms will apply on each Staggered Settlement Date, except that
the Net Shares will be allocated among such Staggered Settlement
Dates as specified by Citibank in the notice referred to in
clause (a) above.
(i) Reserved
(j) Reserved
(k) Additional Termination Events. Notwithstanding anything to the
contrary in this Confirmation if an event of default with respect to
Counterparty shall occur under the terms of the Convertible Notes as
set forth in Section 5.01 of the Indenture and such event of default
results in the declaration of any principal and interest immediately
due and payable pursuant to Section 5.02 of the Indenture, then such
event of default shall constitute an Additional Termination Event
applicable to the Transaction and, with respect to such event of
default (A) Counterparty shall be deemed to be the sole Affected Party
and the Transaction shall be the sole Affected Transaction and (B)
Citibank shall be the party entitled to designate an Early Termination
Date pursuant to Section 6(b) of the Agreement.
(l) Amendments to Equity Definitions. (i) Section 12.6(a)(ii) of the
Equity Definitions is hereby amended by (1) deleting from the fourth
line thereof the word "or" after the word "official" and inserting a
comma therefor, and (2) deleting the semi-colon at the end of
subsection (B) thereof and inserting the following words therefor "or
(C) at Citibank's option, the occurrence of any of the events
specified in Section 5(a)(vii) (1) through (9) of the ISDA Master
Agreement with respect to that Issuer."
(ii) Section 12.9(b)(i) of the Equity Definitions is hereby amended by
(1) replacing "either party may elect" with "Citibank may elect"
and (2) replacing "notice to the other party" with "notice to
Counterparty" in the first sentence of such section.
(m) Setoff. In addition to and without limiting any rights of set-off that
a party hereto may have as a matter of law, pursuant to contract or
otherwise, upon the occurrence of an Early Termination Date, Citibank
(and only Citibank) shall have the right to set off any obligation
that it may have to Counterparty under this Confirmation, including
without limitation any obligation to make any payment of cash or
delivery of Shares to Counterparty, against any obligation
Counterparty may have to Citibank under any other agreement between
Citibank and Counterparty relating to Shares (each such contract or
agreement, a "Separate Agreement"), including without limitation any
obligation to make a payment of cash or a delivery of Shares or any
other property or securities. For this purpose, Citibank shall be
entitled to convert any obligation (or the relevant portion of such
obligation) denominated in one currency into another currency at the
rate of exchange at which it would be able to purchase the relevant
amount of such currency, and to convert any obligation to deliver any
non-cash property into an obligation to deliver cash in an amount
calculated by reference to the market value of such property as of the
Early Termination Date, as determined by the Calculation Agent in its
sole discretion; provided that in the case of a set-off of any
obligation to release or deliver assets against any right to receive
fungible assets, such obligation and right shall be set off in kind
and; provided further that in determining the value of any obligation
to deliver Shares, the value at any time of such obligation shall be
determined by reference to the market value of the Shares at such
time, as determined in good faith by the Calculation Agent. If an
obligation is unascertained at the time of any such set-off, the
Calculation Agent may in good faith estimate the amount or value of
such obligation, in which case set-off will be effected in respect of
that estimate, and the relevant party shall account to the other party
at the time such obligation or right is ascertained.
14
(n) Alternative Calculations and Payment on Early Termination and on
Certain Extraordinary Events. If in respect of this Transaction, an
amount is payable by Citibank to Counterparty (i) pursuant to Section
12.7 or Section 12.9 of the Equity Definitions or (ii) pursuant to
Section 6(d)(ii) of the Agreement (a "Payment Obligation"),
Counterparty may request Citibank to satisfy any such Payment
Obligation by the Share Termination Alternative (as defined below)
(except that Counterparty shall not make such an election in the event
of a Nationalization, Insolvency, a Merger Event or Tender Offer, in
each case, in which the consideration to be paid to holders of Shares
consists solely of cash, or an Event of Default in which Counterparty
is the Defaulting Party or a Termination Event in which Counterparty
is the Affected Party, other than an Event of Default of the type
described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the
Agreement or a Termination Event of the type described in Section 5(b)
of the Agreement in each case that resulted from an event or events
outside Counterparty's control) and shall give irrevocable telephonic
notice to Citibank, confirmed in writing within one Currency Business
Day, no later than 12:00 p.m. New York local time on the Merger Date,
the Announcement Date (in the case of Nationalization, Insolvency or
Delisting), the Early Termination Date or date of cancellation, as
applicable; provided that if Counterparty does not validly request
Citibank to satisfy its Payment Obligation by the Share Termination
Alternative, Citibank shall have the right, in its sole discretion, to
satisfy its Payment Obligation by the Share Termination Alternative,
notwithstanding Counterparty's election to the contrary. In
calculating any amounts under Section 6(e) of the Agreement,
notwithstanding anything to the contrary in the Agreement, (1)
separate amounts shall be calculated as set forth in Section 6(e) with
respect to (i) this Transaction and (ii) all other Transactions, and
(2) such separate amounts shall be payable pursuant to Section
6(d)(ii) of the Agreement. For the avoidance of doubt, the parties
agree that in calculating the Payment Obligation the Determining Party
may consider the purchase price paid in connection with the purchase
of Share Termination Delivery Property.
Share Termination Alternative: If Applicable, Citibank shall
deliver to Counterparty the
Share Termination Delivery
Property on, or within a
commercially reasonable period
of time after, the date when the
Payment Obligation would
otherwise be due pursuant to
Section 12.7 or 12.9 of the
Equity Definitions or Section
6(d)(ii) and 6(e) of the
Agreement, as applicable (the
"Share Termination Payment
Date"), in satisfaction of the
Payment Obligation in the manner
reasonably requested by
Counterparty free of payment.
Share Termination Delivery Property: A number of Share Termination
Delivery Units, as calculated by
the Calculation Agent, equal to
the Payment Obligation divided
by the Share Termination Unit
Price. The Calculation Agent
shall adjust the Share
Termination Delivery Property by
replacing any fractional portion
of a security therein with an
amount of cash equal to the
value of such fractional
security based on the values
used to calculate the Share
Termination Unit Price.
15
Share Termination Unit Price: The value to Citibank of property
contained in one Share
Termination Delivery Unit, as
determined by the Calculation
Agent in its discretion by
commercially reasonable means
and notified by the Calculation
Agent to Citibank at the time of
notification of the Payment
Obligation.
Share Termination Delivery Unit: One Share or, if a Merger Event
has occurred and a corresponding
adjustment to this Transaction
has been made, a unit consisting
of the number or amount of each
type of property received by a
holder of one Share (without
consideration of any requirement
to pay cash or other
consideration in lieu of
fractional amounts of any
securities) in such Merger
Event, as determined by the
Calculation Agent.
Failure to Deliver: Applicable
Other applicable provisions: If Share Termination Alternative
is applicable, the provisions of
Sections 9.8, 9.9, 9.11, 9.12
and 10.5 (as modified above) of
the Equity Definitions will be
applicable, except that all
references in such provisions to
"Physically-settled" shall be
read as references to "Share
Termination Settled" and all
references to "Shares" shall be
read as references to "Share
Termination Delivery Units".
"Share Termination Settled" in
relation to this Transaction
means that Share Termination
Alternative is applicable to
this Transaction.
(o) Governing Law. New York law (without reference to choice of law
doctrine).
(p) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury
in respect of any suit, action or proceeding relating to this
Transaction. Each party (i) certifies that no representative, agent or
attorney of either party has represented, expressly or otherwise, that
such other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into this
Transaction, as applicable, by, among other things, the mutual waivers
and certifications provided herein.
(q) Registration. Counterparty hereby agrees that if, in the good faith
reasonable judgment of Citibank, the Shares ("Hedge Shares") acquired
by Citibank for the purpose of hedging its obligations pursuant to
this Transaction cannot be sold in the public market by Citibank
without registration under the Securities Act, Counterparty shall, at
its election, either (i) in order to allow Citibank to sell the Hedge
Shares in a registered offering, make available to Citibank an
effective registration statement under the Securities Act and enter
into an agreement, in form and substance satisfactory to Citibank,
substantially in the form of an underwriting agreement for a
registered secondary offering; provided, however, that if Citibank, in
its reasonable discretion, is not satisfied with access to due
diligence materials, the results of its due diligence investigation,
or the procedures and documentation for the registered offering
16
referred to above, then clause (ii) or clause (iii) of this paragraph
shall apply at the election of Counterparty, (ii) in order to allow
Citibank to sell the Hedge Shares in a private placement, enter into a
private placement agreement substantially similar to private placement
purchase agreements customary for private placements of equity
securities, in form and substance satisfactory to Citibank (in which
case, the Calculation Agent shall make any adjustments to the terms of
this Transaction that are necessary, in its reasonable judgment, to
compensate Citibank for any discount from the public market price of
the Shares incurred on the sale of Hedge Shares in a private
placement), or (iii) purchase the Hedge Shares from Citibank at the
Relevant Price on such Exchange Business Days, and in the amounts,
requested by Citibank.
(r) Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Counterparty and each of its employees,
representatives, or other agents may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of
the Transaction and all materials of any kind (including opinions or
other tax analyses) that are provided to Counterparty relating to such
tax treatment and tax structure.
(s) Right to Extend. Citibank may delay any Settlement Date or any other
date of delivery by Citibank, with respect to some or all of the
Options hereunder, if Citibank reasonably determines, in its
discretion, that such extension is reasonably necessary to enable
Citibank to effect purchases of Shares in connection with its hedging
activity or settlement activity hereunder in a manner that would, if
Citibank were Counterparty or an affiliated purchaser of Counterparty,
be in compliance with applicable legal and regulatory requirements.
(t) Status of Claims in Bankruptcy. Citibank acknowledges and agrees that
this Confirmation is not intended to convey to Citibank rights against
Counterparty with respect to the Transaction that are senior to the
claims of common stockholders of Counterparty in any U.S. bankruptcy
proceedings of Counterparty; provided that nothing herein shall limit
or shall be deemed to limit Citibank's right to pursue remedies in the
event of a breach by Counterparty of its obligations and agreements
with respect to the Transaction; provided, further, that nothing
herein shall limit or shall be deemed to limit Citibank's rights in
respect of any transactions other than the Transaction.
(u) Securities Contract; Swap Agreement. The parties hereto intend for:
(a) the Transaction to be a "securities contract" and a "swap
agreement" as defined in the Bankruptcy Code (Title 11 of the United
States Code) (the "Bankruptcy Code"), and the parties hereto to be
entitled to the protections afforded by, among other Sections,
Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the
Bankruptcy Code; (b) a party's right to liquidate the Transaction and
to exercise any other remedies upon the occurrence of any Event of
Default under the Agreement with respect to the other party to
constitute a "contractual right" as described in the Bankruptcy Code;
and (c) each payment and delivery of cash, securities or other
property hereunder to constitute a "margin payment" or "settlement
payment" and a "transfer" as defined in the Bankruptcy Code.
(v) Additional Provisions. Counterparty covenants and agrees that, as
promptly as practicable following the public announcement of any
consolidation, merger and binding share exchange to which Counterparty
is a party, or any sale of all or substantially all of Counterparty's
assets, in each case pursuant to which the Shares will be converted
into cash, securities or other property, Counterparty shall notify
Citibank in writing of the types and amounts of consideration that
holders of Shares have elected to receive upon consummation of such
transaction or event (the date of such notification, the
"Consideration Notification Date"); provided that in no event shall
the Consideration Notification Date be later than the date on which
such transaction or event is consummated.
[signature page follows]
17
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning an executed copy to
Equity Derivatives, Citibank, N.A., 390 Greenwich Street, New York, New York
10013, Facsimile No. (212) 723-8328.
Very truly yours,
CITIBANK, N.A.
/s/ William Ortner
----------------------
Authorized Signatory
Accepted and confirmed
as of the Trade Date:
CHEMED CORPORATION
By: /s/ David P. Williams
------------------------------------
Authorized Signatory
Name: David P. Williams
EXHIBIT 10.3
JPMorgan Chase Bank, National Association
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
May 8, 2007
To: Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
Re: Warrants
The purpose of this letter agreement (this "CONFIRMATION") is to
confirm the terms and conditions of the Warrants issued by Chemed Corporation
("COMPANY") to JPMorgan Chase Bank, National Association, London Branch
("JPMORGAN") on the Trade Date specified below (the "TRANSACTION"). This letter
agreement constitutes a "Confirmation" as referred to in the ISDA Master
Agreement specified below. This Confirmation shall replace any previous
agreements and serve as the final documentation for this Transaction.
The definitions and provisions contained in the 2002 ISDA Equity
Derivatives Definitions (the "EQUITY DEFINITIONS"), as published by the
International Swaps and Derivatives Association, Inc. ("ISDA"), are incorporated
into this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern.
Each party is hereby advised, and each such party acknowledges, that
the other party has engaged in, or refrained from engaging in, substantial
financial transactions and has taken other material actions in reliance upon the
parties' entry into the Transaction to which this Confirmation relates on the
terms and conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between
JPMorgan and Company as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall supplement, form a part
of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the "AGREEMENT") as if JPMorgan and Company had executed an
agreement in such form (but without any Schedule except for the
election of the laws of the State of New York as the governing law) on
the Trade Date. In the event of any inconsistency between provisions of
that Agreement and this Confirmation, this Confirmation will prevail
for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction
to which this Confirmation relates shall be governed by the Agreement.
2. The Transaction is a Warrant Transaction, which shall be considered a
Share Option Transaction for purposes of the Equity Definitions. The
terms of the particular Transaction to which this Confirmation relates
are as follows:
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION ORGANISED
UNDER THE LAWS OF THE UNITED STATES AS A NATIONAL BANKING ASSOCIATION.
MAIN OFFICE 1111 POLARIS PARKWAY, COLUMBUS, OHIO 43271
REGISTERED AS A BRANCH IN ENGLAND & WALES BRANCH NO. BR000746. REGISTERED
BRANCH OFFICE 125 LONDON WALL, LONDON EC2Y 5AJ
AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY
General Terms:
Trade Date: May 8, 2007
Warrants: Equity call warrants, each giving the holder the right to purchase
one Share at the Strike Price, subject to the Settlement Terms set
forth below. For the purposes of the Equity Definitions, each
reference to a Warrant herein shall be deemed to be a reference to
a Call Option.
Warrant Style: European
Seller: Company
Buyer: JPMorgan
Shares: The capital stock of Company, par value USD 1 per Share
(Exchange symbol "CHE")
Number of Warrants: 1,114,862, subject to adjustment as provided herein; provided
that the Number of Warrants shall be automatically increased as
of the date of exercise (the "Greenshoe Exercise") by J.P.
Morgan Securities Inc. and Citigroup Global Markets Inc. as
representatives of the Initial Purchasers (as defined in the
Purchase Agreement dated as of May 8, 2007 between Company, J.P.
Morgan Securities Inc. and Citigroup Global Markets Inc. as
representatives of the Initial Purchasers party thereto (the
"Purchase Agreement")), of their option pursuant to Section 1 of
the Purchase Agreement by the number of additional Warrants in
proportion to the increase in the number of 1.875% Convertible
Senior Notes due 2014 (the "Convertible Notes"), in
denominations of USD 1,000 principal amount issued pursuant to
such exercise (such Convertible Notes, the "Additional
Convertible Notes") (the "Additional Warrants").
Warrant Entitlement: One Share per Warrant
Strike Price: USD 105.4400
Premium: USD 12,426,300 (Premium per Warrant: USD 11.1460); provided that
if the Number of Warrants is increased pursuant to the proviso
to the definition of "Number of Warrants" above, there shall be
an additional Premium equal to the product of the number of
Additional Warrants and the Premium per Warrant (the "Additional
Premium"), and such Additional Premium shall be paid by JPMorgan
to Company on the Additional Premium Payment Date.
Premium Payment Date: May 14, 2007
Additional Premium Payment Date: The closing date for the purchase and sale of the Additional
Convertible Notes.
Exchange: The New York Stock Exchange
Related Exchange(s): All Exchanges
2
Procedures for Exercise:
Expiration Time: The Valuation Time
Expiration Date(s): Each Scheduled Trading Day during the period from and including
the First Expiration Date and to and including the 79th
Scheduled Trading Day following the First Expiration Date shall
be an "Expiration Date" for a number of Warrants equal to the
Daily Number of Warrants on such date; provided that,
notwithstanding anything to the contrary in the Equity
Definitions, if any such date is a Disrupted Day, the
Calculation Agent shall make adjustments, if applicable, to the
Daily Number of Warrants or shall reduce such Daily Number of
Warrants to zero for which such day shall be an Expiration Date
and shall designate a Scheduled Trading Day or a number of
Scheduled Trading Days as the Expiration Date(s) for the
remaining Daily Number of Warrants or a portion thereof for the
originally scheduled Expiration Date; and provided further that
if such Expiration Date has not occurred pursuant to this clause
as of the eighth Scheduled Trading Day following the last
scheduled Expiration Date under this Transaction, the
Calculation Agent shall have the right to declare such Scheduled
Trading Day to be the final Expiration Date and the Calculation
Agent shall determine its good faith estimate of the fair market
value for the Shares as of the Valuation Time on that eighth
Scheduled Trading Day or on any subsequent Scheduled Trading
Day, as the Calculation Agent shall determine using commercially
reasonable means.
First Expiration Date: August 15, 2014 (or if such day is not a Scheduled Trading Day,
the next following Scheduled Trading Day), subject to Market
Disruption Event below.
Multiple Exercise: Applicable
Minimum Number of Warrants: 1
Daily Number of Warrants: For any Expiration Date, the Number of Warrants that have not
expired or been exercised as of such day, divided by the
remaining number of Expiration Dates (including such day),
rounded down to the nearest whole number, subject to adjustment
pursuant to the provisos to "Expiration Date(s)".
Maximum Number of Warrants: All warrants remaining unexercised as of the remaining Exercise
Date(s).
Automatic Exercise: Applicable; and means that, unless all Warrants have been
previously exercised hereunder, a number of Warrants for each
Expiration Date equal to the Daily Number of Warrants (as
adjusted pursuant to the terms hereof) for such Expiration Date
will be deemed to be automatically exercised; provided that
"In-the-Money" means that the Relevant Price for such Expiration
Date exceeds the Strike Price for such Expiration Date; and
provided further that all references in Section 3.4(b) of the
Equity Definitions to "Physical Settlement" shall be read as
references to "Net Share Settlement".
3
Market Disruption Event: Section 6.3(a)(ii) of the Equity Definitions is hereby amended
by replacing clause (ii) in its entirety with "(ii) an Exchange
Disruption, or" and inserting immediately following clause (iii)
the phrase "; in each case that the Calculation Agent determines
is material."
Valuation:
Valuation Time: Scheduled Closing Time.
Valuation Date: Each Exercise Date.
Settlement Terms:
Settlement Method: Net Share Settlement.
Net Share Settlement: On the relevant Settlement Date, Company shall deliver to
JPMorgan the Share Delivery Quantity of Shares for such
Settlement Date to the account specified hereto free of payment
through the Clearance System.
Share Delivery Quantity: For any Settlement Date, a number of Shares, as calculated by
the Calculation Agent, equal to the Net Share Settlement Amount
for such Settlement Date divided by the Settlement Price on the
Valuation Date in respect of such Settlement Date, rounded down
to the nearest whole number plus any Fractional Share Amount.
Net Share Settlement Amount: For any Settlement Date, an amount equal to the product of (i)
the Number of Warrants exercised or deemed exercised on the
relevant Exercise Date, (ii) the Strike Price Differential for
such Settlement Date and (iii) the Warrant Entitlement.
Settlement Price: For any Valuation Date, the per Share volume-weighted average
price as displayed under the heading "Bloomberg VWAP" on
Bloomberg page CHE.N [equity] AQR (or any successor thereto) in
respect of the period from the scheduled opening time of the
Exchange to the Scheduled Closing Time on such Valuation Date
(or if such volume-weighted average price is unavailable, the
market value of one Share on such Valuation Date, as determined
by the Calculation Agent). Notwithstanding the foregoing, if (i)
any Expiration Date is a Disrupted Day and (ii) the Calculation
Agent determines that such Expiration Date shall be an
Expiration Date for fewer than the Daily Number of Warrants, as
described above, then the Settlement Price for the relevant
Valuation Date shall be the volume-weighted average price per
Share on such Valuation Date on the Exchange, as determined by
the Calculation Agent based on such sources as it deems
appropriate using a volume-weighted methodology, for the portion
of such Valuation Date for which the Calculation Agent
determines there is no Market Disruption Event.
Settlement Date(s): As determined in reference to Section 9.4 of the Equity
Definitions, subject to Section 9(m)(i) hereof.
4
Other Applicable Provisions: The provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and 10.5
of the Equity Definitions will be applicable, except that all
references in such provisions to "Physically-settled" shall be
read as references to "Net Share Settled." "Net Share Settled"
in relation to any Warrant means that Net Share Settlement is
applicable to that Warrant.
Representation and Agreement: Notwithstanding Section 9.11 of the Equity Definitions, the
parties acknowledge that any Shares delivered to JPMorgan may
be, upon delivery, subject to restrictions and limitations
arising from Company's status as issuer of the Shares under
applicable securities laws.
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Warrants:
Method of Adjustment: Calculation Agent Adjustment. For the avoidance of doubt, in
making any adjustments under the Equity Definitions, the
Calculation Agent may make adjustments, if any, to any one or
more of the Strike Price, the Number of Warrants, the Daily
Number of Warrants and the Warrant Entitlement. Notwithstanding
the foregoing, any cash dividends or distributions on the
Shares, whether or not extraordinary, shall be governed by
Section 9(h) of this Confirmation in lieu of Article 10 or
Section 11.2(c) of the Equity Definitions. The Calculation
Agent shall promptly thereafter notify JPMorgan and Company of
any such adjustment.
Extraordinary Events applicable to the Transaction:
New Shares: Section 12.1(i) of the Equity Definitions is hereby amended by
deleting the text in clause (i) in its entirety and replacing it
with the phrase "publicly quoted, traded or listed on any of the
New York Stock Exchange, the American Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or their
respective successors)".
Consequence of Merger Events:
Share-for-Share: Modified Calculation Agent Adjustment
Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
Share-for-Combined: Cancellation and Payment (Calculation Agent Determination);
provided that JPMorgan may elect, in its commercially reasonable
judgment, Component Adjustment (Calculation Agent Determination).
Consequence of Tender Offers:
Tender Offer: Applicable; provided however that if an event occurs that
constitutes both a Tender Offer under Section 12.1(d) of the
Equity Definitions and Additional Termination Event under
Section 9(j)(ii)(C) of this Confirmation, JPMorgan may elect, in
its commercially reasonable judgment, whether the provisions of
Section 12.3 of the Equity Definitions or Section 9(j)(ii)(C)
will apply.
Share-for-Share: Modified Calculation Agent Adjustment
Share-for-Other: Modified Calculation Agent Adjustment
Share-for-Combined: Modified Calculation Agent Adjustment
5
Nationalization, Insolvency or Cancellation and Payment (Calculation Agent Determination);
Delisting: provided that, in addition to the provisions of Section
12.6(a)(iii) of the Equity Definitions, it will also constitute
a Delisting if the Exchange is located in the United States and
the Shares are not immediately re-listed, re-traded or re-quoted
on any of the New York Stock Exchange, the American Stock
Exchange, The NASDAQ Global Select Market or The NASDAQ Global
Market (or their respective successors); if the Shares are
immediately re-listed, re-traded or re-quoted on any of The New
York Stock Exchange, the American Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or their
respective successors), such exchange or quotation system shall
thereafter be deemed to be the Exchange.
Additional Disruption Events:
Change in Law: Applicable
Failure to Deliver: Not Applicable
Insolvency Filing: Applicable
Hedging Disruption: Applicable
Increased Cost of Hedging: Not Applicable
Loss of Stock Borrow: Applicable
Maximum Stock Loan Rate: 250 bps
Increased Cost of Stock Borrow: Applicable
Initial Stock Loan Rate: 0 bps
Hedging Party: JPMorgan for all applicable Additional
Disruption Events
Determining Party: JPMorgan for all applicable Additional
Disruption Events
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
4. Calculation Agent: JPMorgan. The Calculation Agent shall, upon request by the
Company, provide a written explanation of any calculation
made by it including, where applicable, a description of the
methodology and data applied.
6
5. Account Details:
(a) Account for payments to Company:
JP Morgan Chase Bank
ABA# 021000021
Acct: Chemed Corporation
Acct No.: 94-13065
Account for delivery of Shares from Company:
To be provided by Company
(b) Account for payments to JPMorgan:
JPMorgan Chase Bank, N.A., New York
ABA: 021 000 021
Favour: JPMorgan Chase Bank N.A., London
A/C: 0010962009
CHASUS33
Account for delivery of Shares to JPMorgan:
DTC 0060
6. Offices:
The Office of Company for the Transaction is: Inapplicable, Company is not a
Multibranch Party.
The Office of JPMorgan for the Transaction is: London
JPMorgan Chase Bank, National Association
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Company: Chemed
Corporation 2600 Chemed Center 255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
(b) Address for notices or communications to JPMorgan:
JPMorgan notice information to follow:
JPMorgan Chase Bank, National Association
277 Park Avenue, 11th Floor
New York, NY 10172
Attention: Eric Stefanik
Title: Operations Analyst
EDG Corporate Marketing
Telephone No: (212) 622-5814
Facsimile No: (212) 622-8534
7
8. Representations and Warranties
(i) Representations and Warranties of Company
The representations and warranties of Company set forth in Section 3 of the
Purchase Agreement are true and correct and are hereby deemed to be repeated to
JPMorgan as if set forth herein. Company hereby further represents and warrants
to JPMorgan that:
(a) Company has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of this Transaction;
such execution, delivery and performance have been duly authorized by
all necessary corporate action on Company's part; and this
Confirmation has been duly and validly executed and delivered by
Company and constitutes its valid and binding obligation, enforceable
against Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity)
and except that rights to indemnification and contribution hereunder
may be limited by federal or state securities laws or public policy
relating thereto.
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of Company hereunder will (i)
conflict with or result in a breach of the certificate of
incorporation or by-laws (or any equivalent documents) of Company, or
any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any
agreement or instrument to which Company or any of its subsidiaries is
a party or by which Company or any of its subsidiaries is bound or to
which Company or any of its subsidiaries is subject (including, but
not limited to, any agreements and contracts of Counterparty or any of
its subsidiaries filed as exhibits to Company's Annual Report on Form
10-K for the year ended December 31, 2006, incorporated by reference
in the Offering Memorandum), or (ii) constitute a default under, or
result in the creation of any lien under, any such agreement or
instrument.
(c) No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection
with the execution, delivery or performance by Company of this
Confirmation, except such as have been obtained or made and such as
may be required under the Securities Act of 1933, as amended (the
"SECURITIES ACT") or state securities laws.
(d) The Shares of Company initially issuable upon exercise of the Warrant
by the net share settlement method (the "WARRANT SHARES") have been
reserved for issuance by all required corporate action of Company. The
Warrant Shares have been duly authorized and, when delivered against
payment therefor (which may include Net Share Settlement in lieu of
cash) and otherwise as contemplated by the terms of the Warrant
following the exercise of the Warrant in accordance with the terms and
conditions of the Warrant, will be validly issued, fully-paid and
non-assessable, and the issuance of the Warrant Shares will not be
subject to any preemptive or similar rights.
8
(e) Company is an "eligible contract participant" (as such term is defined
in Section 1a(12) of the Commodity Exchange Act, as amended (the
"CEA")) because one or more of the following is true:
Company is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) Company has total assets in excess of USD 10,000,000;
(B) the obligations of Company hereunder are guaranteed,
or otherwise supported by a letter of credit or
keepwell, support or other agreement, by an entity of
the type described in Section 1a(12)(A)(i) through
(iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or 1a(12)(C) of
the CEA; or
(C) Company has a net worth in excess of USD 1,000,000
and has entered into this Agreement in connection
with the conduct of Company's business or to manage
the risk associated with an asset or liability owned
or incurred or reasonably likely to be owned or
incurred by Company in the conduct of Company's
business.
(f) Company and each of its controlled affiliates is not, on the date
hereof, in possession of any material non-public information with
respect to Company.
(ii) Additional representations and warranties
(a) JPMorgan represents that it is an "eligible contract participant" as
defined in Section 1a(12) of the CEA.
(b) Each of JPMorgan and Company acknowledges that the offer and sale of
the Transaction to it is intended to be exempt from registration under
the Securities, by virtue of Section 4(2) thereof.
9. Other Provisions:
(A) OPINIONS. Company shall deliver an opinion of counsel, dated as of the
Trade Date, to JPMorgan, with respect to the matters set forth in
Sections 8(i)(a) through (d) of this Confirmation.
(B) RESERVED
(C) REPURCHASE NOTICES. Company shall, on any day on which Company effects
any repurchase of Shares, promptly give JPMorgan a written notice of
such repurchase (a "REPURCHASE NOTICE") on such day if following such
repurchase, the number of outstanding Shares on such day, subject to
any adjustments provided herein, is (i) less than 21 million (in the
case of the first such notice) or (ii) thereafter more than 1.60
million less than the number of Shares included in the immediately
preceding Repurchase Notice. Company agrees to indemnify and hold
harmless JPMorgan and its affiliates and their respective officers,
directors, employees, affiliates, advisors, agents and controlling
persons (each, an "INDEMNIFIED PERSON") from and against any and all
losses (including losses relating to JPMorgan's hedging activities as
a consequence of becoming, or of the risk of becoming, a Section 16
"insider", including without limitation, any forbearance from hedging
activities or cessation of hedging activities and any losses in
connection therewith with respect to this Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable
attorney's fees), joint or several, which an Indemnified Person
actually may become subject to, as a result of Company's failure to
provide JPMorgan with a Repurchase Notice on the day and in the manner
specified in this paragraph, and to reimburse, within 30 days, upon
written request, each of such Indemnified Persons for any reasonable
legal or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action,
9
proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified
Person, such Indemnified Person shall promptly notify Company in
writing, and Company, upon request of the Indemnified Person, shall
retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others Company may designate
in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. Company shall not be liable for any
settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, Company agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or
judgment. Company shall not, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have
been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an
unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and
(y) does not include any statement as to or any admission of fault,
culpability or a failure to act by or on behalf of any Indemnified
Person. If the indemnification provided for in this paragraph is
unavailable to an Indemnified Person or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then
Company under such paragraph, in lieu of indemnifying such Indemnified
Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph are not
exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in equity.
The indemnity and contribution agreements contained in this paragraph
shall remain operative and in full force and effect regardless of the
termination of this Transaction.
(D) REGULATION M. Company is not on the date hereof engaged in a
distribution, as such term is used in Regulation M under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), of
any securities of Company, other than a distribution meeting the
requirements of the exception set forth in Rules 101(b)(10) and
102(b)(7) of Regulation M. Company shall not, until the second
Scheduled Trading Day immediately following the Trade Date, engage in
any such distribution.
(E) NO MANIPULATION. Company is not entering into this Transaction to
create actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or to raise
or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for the Shares) or otherwise
in violation of the Exchange Act.
(F) TRANSFER OR ASSIGNMENT. Company may not transfer any of its rights or
obligations under this Transaction without the prior written consent
of JPMorgan. JPMorgan may, without Company's consent, transfer or
assign all or any part of its rights or obligations under this
Transaction to any third party. If after JPMorgan's commercially
reasonable efforts, JPMorgan is unable to effect such a transfer or
assignment on pricing terms reasonably acceptable to JPMorgan and
within a time period reasonably acceptable to JPMorgan of a sufficient
number of Warrants to reduce (i) JPMorgan's "beneficial ownership"
(within the meaning of Section 13 of the Exchange Act and rules
promulgated thereunder) to 7.5% of Company's outstanding Shares or
less or (ii) the quotient of (x) the product of (a) the Number of
Warrants and (b) the Warrant Entitlement divided by (y) the number of
Company's outstanding Shares (such quotient expressed as a percentage,
the "WARRANT EQUITY PERCENTAGE") to 14.5% or less, JPMorgan may
designate any Exchange Business Day as an Early Termination Date with
respect to a portion (the "TERMINATED PORTION") of this Transaction,
such that (i) its "beneficial ownership" following such partial
termination will be equal to or less than 7.5% or (ii) the Warrant
Equity Percentage following such partial termination will be equal to
or less than 14.5%. In the event that JPMorgan so designates an Early
Termination Date with respect to a portion of this Transaction, a
payment shall be made pursuant to Section 6 of the Agreement as if (i)
an Early Termination Date had been designated in respect of a
Transaction having terms identical to this Transaction and a Number of
Warrants equal to the Terminated Portion, (ii) Company shall be the
sole Affected Party with respect to such partial termination and (iii)
such Transaction shall be the only Terminated Transaction (and, for
the avoidance of doubt, the provisions of paragraph 9(l) shall apply
to any amount that is payable by JPMorgan to Company pursuant to this
sentence). Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing JPMorgan to purchase, sell, receive
or deliver any Shares or other securities to or from Company, JPMorgan
may designate any of its affiliates to purchase, sell, receive or
deliver such Shares or other securities and otherwise to perform
JPMorgan's obligations in respect of this Transaction and any such
designee may assume such obligations. JPMorgan shall be discharged of
its obligations to Company to the extent of any such performance.
10
(G) EARLY UNWIND. In the event the sale of Convertible Notes (or, in
respect of the Greenshoe Exercise, the Additional Convertible Notes)
is not consummated with the initial purchasers for any reason by the
close of business in New York on May 14, 2007 (or, in respect of the
Greenshoe Exercise, the third Clearance System Business Day following
the date of the Greenshoe Exercise (the "ADDITIONAL CLOSING DATE"))
(or such later date as agreed upon by the parties) (May 14, 2007 or
such later date, if any, as agreed upon being or, in respect of the
Greenshoe Exercise, the Additional Closing Date, the "EARLY UNWIND
Date"), this Transaction (or, in respect of the Greenshoe Exercise,
the Additional Warrants) shall automatically terminate (the "EARLY
UNWIND"), on the Early Unwind Date and (i) the Transaction (or, in
respect of the Greenshoe Exercise, the Additional Warrants) and all of
the respective rights and obligations of JPMorgan and Company under
the Transaction (or, in respect of the Greenshoe Exercise, the
Additional Warrants) shall be cancelled and terminated and (ii) each
party shall be released and discharged by the other party from and
agrees not to make any claim against the other party with respect to
any obligations or liabilities of the other party arising out of and
to be performed in connection with the Transaction (or, in respect of
the Greenshoe Exercise, the Additional Warrants) either prior to or
after the Early Unwind Date; PROVIDED that Company, unless the sale of
the Convertible Notes or the Additional Convertible Notes, as
applicable, is not consummated due to a breach of the Purchase
Agreement by the Initial Purchasers, shall purchase from JPMorgan on
the Early Unwind Date all Shares purchased by JPMorgan or one or more
of its affiliates and shall, notwithstanding anything to the contrary
in the Equity Definitions, reimburse JPMorgan for any commercially
reasonable costs or expenses (including market losses) relating to the
unwinding of its hedging activities in connection with the Transaction
(or, in respect of the Greenshoe Exercise, the Additional Warrants)
(including any loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading
position). The amount of any such reimbursement shall be determined by
JPMorgan in its sole good faith discretion. JPMorgan shall notify
Company of such amount and Company shall pay such amount in
immediately available funds on the Early Unwind Date. JPMorgan and
Company represent and acknowledge to the other that, subject to the
proviso included in this Section, upon an Early Unwind, all
obligations with respect to the Transaction shall be deemed fully and
finally discharged.
(H) DIVIDENDS. If at any time during the period from but excluding the
Trade Date, to and including the Expiration Date, (i) an ex-dividend
date for a cash dividend occurs with respect to the Shares (an
"EX-DIVIDEND DATE"), and that dividend differs from the Regular
Dividend on a per Share basis or (ii) if no Ex-Dividend Date for a
cash dividend occurs with respect to the Shares in any quarterly
dividend period of Company, then the Calculation Agent will adjust any
of the Strike Price, Number of Warrants and/or Daily Number of
Warrants to preserve the fair value of the Options to JPMorgan after
taking into account such dividend or lack thereof. "REGULAR DIVIDEND"
shall mean for any calendar quarter, USD 0.06 for the first cash
dividend or distribution on the Shares for which the Ex-Dividend Date
falls within such calendar quarter, and zero for any subsequent
dividend or distribution on the Shares for which the Ex-Dividend Date
falls within the same calendar quarter.
(I) ROLE OF AGENT. Each party agrees and acknowledges that (i) J.P. Morgan
Securities Inc., an affiliate of JPMorgan ("JPMSI"), has acted solely
as agent and not as principal with respect to this Transaction and
(ii) JPMSI has no obligation or liability, by way of guaranty,
endorsement or otherwise, in any manner in respect of this Transaction
(including, if applicable, in respect of the settlement thereof). Each
party agrees it will look solely to the other party (or any guarantor
in respect thereof) for performance of such other party's obligations
under this Transaction.
11
(J) ADDITIONAL PROVISIONS.
(i) Amendments to the Equity Definitions:
(A) Section 11.2(a) of the Equity Definitions is hereby amended
by deleting the words "diluting or concentrative" and
replacing them with the words "material".
(B) Section 11.2(c) of the Equity Definitions is hereby amended
by (x) replacing the words "diluting or concentrative" with
"an" and (y) deleting the phrase "(provided that no
adjustments will be made to account solely for changes in
volatility, expected dividends, stock loan rate or liquidity
relative to the relevant Shares)" and replacing it with the
phrase "(and, for the avoidance of doubt, adjustments may be
made to account solely for changes in volatility, expected
dividends, stock loan rate or liquidity relative to the
relevant Shares)."
(C) Section 11.2(e)(vii) of the Equity Definitions is hereby
amended by deleting the words "diluting or concentrative"
and replacing them with the word "material"; and adding the
phrase "or Warrants" at the end of the sentence.
(D) Section 12.6(a)(ii) of the Equity Definitions is hereby
amended by (1) deleting from the fourth line thereof the
word "or" after the word "official" and inserting a comma
therefor, and (2) deleting the semi-colon at the end of
subsection (B) thereof and inserting the following words
therefor "or (C) at JPMorgan's option, the occurrence of any
of the events specified in Section 5(a)(vii) (1) through (9)
of the ISDA Master Agreement with respect to that Issuer."
(E) Section 12.9(b)(iv) of the Equity Definitions is hereby
amended by:
(x) deleting (1) subsection (A) in its entirety,
(2) the phrase "or (B)" following subsection (A)
and (3) the phrase "in each case" in subsection
(B); and
(y) deleting the phrase "neither the Non-Hedging
Party nor the Lending Party lends Shares in the
amount of the Hedging Shares or" in the
penultimate sentence.
(F) Section 12.9(b)(v) of the Equity Definitions is hereby
amended by:
(x) adding the word "or" immediately before
subsection "(B)" and deleting the comma at the
end of subsection (A); and
(y) (1) deleting subsection (C) in its entirety,
(2) deleting the word "or" immediately preceding
subsection (C) and (3) deleting the final
sentence in its entirety and replacing it with
the sentence "The Hedging Party will determine
the Cancellation Amount payable by one party to
the other."
(ii) Notwithstanding anything to the contrary in this Confirmation,
upon the occurrence of one of the following events, with respect
to this Transaction, (1) JPMorgan shall have the right to
designate such event an Additional Termination Event and
designate an Early Termination Date pursuant to Section 6(b) of
the Agreement, and (2) Company shall be deemed the sole Affected
Party and the Transaction shall be deemed the sole Affected
Transaction:
(A) Consummation of (A) any recapitalization,
reclassification or change of the Shares (other than
changes resulting from a subdivision or combination) as
a result of which the Shares would be converted into,
or exchanged for, stock, other securities, other
property or assets or (B) any consolidation with or
merger of the Company with or into another person
pursuant to which Shares will be converted into cash,
securities or other property or any conveyance,
transfer or lease of all or substantially all of
Company's properties and assets to any person other
than one of its subsidiaries; PROVIDED, HOWEVER, that a
transaction where the holders of more than 50% of all
classes of common equity of the Company immediately
prior to such transaction own, directly or indirectly,
more than 50% of all classes of common equity of the
continuing or surviving corporation or transferee
immediately after such event shall not be an Additional
Termination Event.
12
(B) There is a default by Company or any subsidiary in the
payment of the principal or interest on any mortgage,
agreement or other instrument under which there may be
outstanding, or by which there may be secured or
evidenced any indebtedness for money borrowed in excess
of $20 million in the aggregate of Company and/or any
subsidiary, whether such indebtedness now exists or
shall hereafter be created resulting in such
indebtedness becoming or being declared due and
payable.
(C) Any "person" or "group" within the meaning of Section
13(d) of the Exchange Act other than the Company, any
of its subsidiaries or its employee benefit plans,
files a Schedule TO or any schedule, form or report
under the Exchange Act disclosing that such person or
group has become the direct or indirect ultimate
"beneficial owner", as defined in Rule 13d-3 under the
Exchange Act, of the capital stock of the Company
representing more than 50% of the voting power of such
capital stock.
(D) JPMorgan, despite using commercially reasonable
efforts, is unable or reasonably determines that it is
impractical or illegal, to hedge its obligations
pursuant to this Transaction in the public market
without registration under the Securities Act or as a
result of any legal, regulatory or self-regulatory
requirements or related policies and procedures
(whether or not such requirements, policies or
procedures are imposed by law or have been voluntarily
adopted by JPMorgan).
Notwithstanding the forgoing, a transaction set forth
in clauses (A) or (C) above will not constitute an
Additional Termination Event if 100% of the
consideration, excluding cash payments for fractional
shares, in such transaction or transactions consists
of shares of capital stock listed on a national
securities exchange or quoted on The NASDAQ Global
Market or The NASDAQ Global Select Market or will be
so listed or quoted when issued or exchanged in
connection with such transaction or transactions.
(K) NO COLLATERAL OR SETOFF. Notwithstanding any provision of
the Agreement or any other agreement between the parties to
the contrary, the obligations of Company hereunder are not
secured by any collateral. Obligations under this
Transaction shall not be set off by Company against any
other obligations of the parties, whether arising under the
Agreement, this Confirmation, under any other agreement
between the parties hereto, by operation of law or
otherwise. Any provision in the Agreement with respect to
the satisfaction of Company's payment obligations to the
extent of JPMorgan's payment obligations to Company in the
same currency and in the same Transaction (including,
without limitation Section 2(c) thereof) shall not apply to
Company and, for the avoidance of doubt, Company shall fully
satisfy such payment obligations notwithstanding any payment
obligation to Company by JPMorgan in the same currency and
in the same Transaction. In calculating any amounts under
Section 6(e) of the Agreement, notwithstanding anything to
the contrary in the Agreement, (1) separate amounts shall be
calculated as set forth in such Section 6(e) with respect to
(a) this Transaction and (b) all other Transactions, and (2)
such separate amounts shall be payable pursuant to Section
6(d)(ii) of the Agreement.
(L) ALTERNATIVE CALCULATIONS AND PAYMENT ON EARLY TERMINATION
AND ON CERTAIN EXTRAORDINARY EVENTS. If, in respect of this
Transaction, an amount is payable by Company to JPMorgan,
(i) pursuant to Section 12.7 or Section 12.9 of the Equity
Definitions (except in the event of an Insolvency,
Nationalization, Tender Offer or Merger Event in which the
consideration or proceeds to be paid to holders of shares
consists solely of cash) or (ii) pursuant to Section
6(d)(ii) of the Agreement (except in the event of an Event
of Default in which Company is the Defaulting Party or a
Termination Event in which Company is the Affected Party,
other than an Event of Default of the type described in (x)
Section 5(a)(iii), (v), (vi), (vii) or (viii) of the
Agreement or (y) a Termination Event of the type described
13
in Section 5(b) of the Agreement, in the case of both (x)
and (y), resulting from an event or events outside Company's
control) (a "PAYMENT OBLIGATION"), Company shall have the
right, in its sole discretion, to satisfy any such Payment
Obligation by the Share Termination Alternative (as defined
below) by giving irrevocable telephonic notice to JPMorgan,
confirmed in writing within one Scheduled Trading Day, no
later than 12:00 p.m. New York local time on the Merger
Date, Tender Offer Date, Announcement Date (in the case of a
Nationalization, Insolvency or Delisting), Early Termination
Date or date of cancellation, as applicable; PROVIDED that
if Company does not validly elect to satisfy its Payment
Obligation by the Share Termination Alternative, JPMorgan
shall have the right to require Company to satisfy its
Payment Obligation by the Share Termination Alternative.
Notwithstanding the foregoing, Company's or JPMorgan's right
to elect satisfaction of a Payment Obligation in the Share
Termination Alternative as set forth in this clause shall
only apply to Transactions under this Confirmation and,
notwithstanding anything to the contrary in the Agreement,
(1) separate amounts shall be calculated with respect to (a)
Transactions hereunder and (b) all other Transactions under
the Agreement, and (2) such separate amounts shall be
payable pursuant to Section 6(d)(ii) of the Agreement,
subject to, in the case of clause (a), Company's Share
Termination Alternative right hereunder.
Share Termination Alternative: If applicable, Company shall
deliver to JPMorgan the Share
Termination Delivery Property on
the date (the "SHARE TERMINATION
PAYMENT DATE") on which the
Payment Obligation would otherwise
be due pursuant to Section 12.7 or
Section 12.9 of the Equity
Definitions or Section 6(d)(ii)
and 6(e) of the Agreement, subject
to paragraph (m)(i) below, in
satisfaction, subject to paragraph
(m)(ii) below, of the Payment
Obligation in the manner
reasonably requested by JPMorgan
free of payment.
Share Termination Delivery Property: A number of Share Termination
Delivery Units, as calculated by
the Calculation Agent, equal to
the Payment Obligation divided by
the Share Termination Unit Price.
The Calculation Agent shall adjust
the amount of Share Termination
Delivery Property by replacing any
fractional portion of a security
therein with an amount of cash
equal to the value of such
fractional security based on the
values used to calculate the Share
Termination Unit Price.
Share Termination Unit Price: The value to JPMorgan of property
contained in one Share Termination
Delivery Unit on the date such
Share Termination Delivery Units
are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation
Agent in its discretion by
commercially reasonable means.
The Calculation Agent shall notify
Company of such Share Termination
Unit Price at the time of
notification of the Payment
Obligation. In the case of a
Private Placement of Share
Termination Delivery Units that
are Restricted Shares (as defined
below), as set forth in paragraph
14
(m)(i) below, the Share
Termination Unit Price shall be
determined by the discounted price
applicable to such Share
Termination Delivery Units. In
the case of a Registration
Settlement of Share Termination
Delivery Units that are Restricted
Shares (as defined below) as set
forth in paragraph (m)(ii) below,
the Share Termination Unit Price
shall be the Settlement Price on
the Merger Date, the Announcement
Date (in the case of a
Nationalization, Insolvency or
Delisting) or the Early
Termination Date, as applicable.
Share Termination Delivery Unit: In the case of a Termination
Event, Event of Default or
Delisting, one Share or, in the
case of Nationalization,
Insolvency, Tender Offer or Merger
Event, a unit consisting of the
number or amount of each type of
property received by a holder of
one Share (without consideration
of any requirement to pay cash or
other consideration in lieu of
fractional amounts of any
securities) in such
Nationalization, Insolvency,
Tender Offer or Merger Event. If
such Nationalization, Insolvency,
Tender Offer or Merger Event
involves a choice of consideration
to be received by holders, such
holder shall be deemed to have
elected to receive the maximum
possible amount of cash.
Failure to Deliver: Inapplicable
Other applicable provisions: If Share Termination Alternative
is applicable, the provisions of
Sections 9.8, 9.9, 9.11, 9.12 and
10.5 (as modified above) of the
Equity Definitions will be
applicable, except that all
references in such provisions to
"Physically-settled" shall be read
as references to "Share
Termination Settled" and all
references to "Shares" shall be
read as references to "Share
Termination Delivery Units".
"Share Termination Settled" in
relation to this Transaction means
that Share Termination Alternative
is applicable to this Transaction.
(M) REGISTRATION/PRIVATE PLACEMENT PROCEDURES. If, in the
reasonable opinion of JPMorgan, following any delivery of
Shares or Share Termination Delivery Property to JPMorgan
hereunder, such Shares or Share Termination Delivery
Property would be in the hands of JPMorgan subject to any
applicable restrictions with respect to any registration or
qualification requirement or prospectus delivery requirement
for such Shares or Share Termination Delivery Property
pursuant to any applicable federal or state securities law
(including, without limitation, any such requirement arising
under Section 5 of the Securities Act as a result of such
Shares or Share Termination Delivery Property being
"restricted securities", as such term is defined in Rule 144
under the Securities Act, or as a result of the sale of such
Shares or Share Termination Delivery Property being subject
to paragraph (c) of Rule 145 under the Securities Act) (such
Shares or Share Termination Delivery Property, "RESTRICTED
SHARES"), then delivery of such Restricted Shares shall be
effected pursuant to either clause (i) or (ii) below at the
election of Company, unless JPMorgan waives the need for
registration/private placement procedures set forth in (i)
and (ii) below. Notwithstanding the foregoing, solely in
respect of any Daily Number of Warrants exercised or deemed
exercised on any Expiration Date, Company shall elect, prior
to the first Settlement Date for the first Expiration Date,
a Private Placement Settlement or Registration Settlement
for all deliveries of Restricted Shares for all such
Expiration Dates which election shall be applicable to all
Settlement Dates for such Warrants and the procedures in
clause (i) or clause (ii) below shall apply for all such
delivered Restricted Shares on an aggregate basis commencing
after the final Settlement Date for such Warrants. The
Calculation Agent shall make reasonable adjustments to
settlement terms and provisions under this Confirmation to
reflect a single Private Placement or Registration
Settlement for such aggregate Restricted Shares delivered
hereunder.
15
(i) If Company elects to settle the Transaction pursuant to
this clause (i) (a "PRIVATE PLACEMENT SETTLEMENT"),
then delivery of Restricted Shares by Company shall be
effected in customary private placement procedures with
respect to such Restricted Shares reasonably acceptable
to JPMorgan; PROVIDED that Company may not elect a
Private Placement Settlement if, on the date of its
election, it has taken, or caused to be taken, any
action that would make unavailable either the exemption
pursuant to Section 4(2) of the Securities Act for the
sale by Company to JPMorgan (or any affiliate
designated by JPMorgan) of the Restricted Shares or the
exemption pursuant to Section 4(1) or Section 4(3) of
the Securities Act for resales of the Restricted Shares
by JPMorgan (or any such affiliate of JPMorgan). The
Private Placement Settlement of such Restricted Shares
shall include customary representations, covenants,
blue sky and other governmental filings and/or
registrations, indemnities to JPMorgan, due diligence
rights (for JPMorgan or any designated buyer of the
Restricted Shares by JPMorgan), opinions and
certificates, and such other documentation as is
customary for private placement agreements, all
reasonably acceptable to JPMorgan. In the case of a
Private Placement Settlement, JPMorgan shall determine
the appropriate discount to the Share Termination Unit
Price (in the case of settlement of Share Termination
Delivery Units pursuant to paragraph (l) above) or any
Settlement Price (in the case of settlement of Shares
pursuant to Section 2 above) applicable to such
Restricted Shares in a commercially reasonable manner
and appropriately adjust the number of such Restricted
Shares to be delivered to JPMorgan hereunder; PROVIDED
that in no event shall such number be greater than
3,700,000 (the "MAXIMUM AMOUNT"). Notwithstanding the
Agreement or this Confirmation, the date of delivery of
such Restricted Shares shall be the Exchange Business
Day following notice by JPMorgan to Company, of such
applicable discount and the number of Restricted Shares
to be delivered pursuant to this clause (i). For the
avoidance of doubt, delivery of Restricted Shares shall
be due as set forth in the previous sentence and not be
due on the Share Termination Payment Date (in the case
of settlement of Share Termination Delivery Units
pursuant to paragraph (l) above) or on the Settlement
Date for such Restricted Shares (in the case of
settlement in Shares pursuant to Section 2 above).
In the event Company shall not have delivered the full
number of Restricted Shares otherwise applicable as a
result of the proviso above relating to the Maximum
Amount (such deficit, the "DEFICIT RESTRICTED SHARES"),
Company shall be continually obligated to deliver, from
time to time until the full number of Deficit
Restricted Shares have been delivered pursuant to this
paragraph, Restricted Shares when, and to the extent,
that (i) Shares are repurchased, acquired or otherwise
received by Company or any of its subsidiaries after
the Trade Date (whether or not in exchange for cash,
fair value or any other consideration), (ii) authorized
and unissued Shares reserved for issuance in respect of
other transactions prior to such date which prior to
the relevant date become no longer so reserved and
(iii) Company additionally authorizes any unissued
Shares that are not reserved for other transactions.
Company shall immediately notify JPMorgan of the
occurrence of any of the foregoing events (including
the number of Shares subject to clause (i), (ii) or
(iii) and the corresponding number of Restricted Shares
to be delivered) and promptly deliver such Restricted
Shares thereafter.
In the event of a Private Placement Settlement, the Net
Share Settlement Amount or the Payment Obligation,
respectively, shall be deemed to be the Net Share
Settlement Amount or the Payment Obligation,
respectively, plus an additional amount (determined
from time to time by the Calculation Agent in its
commercially reasonable judgment) attributable to
interest that would be earned on such Net Share
Settlement Amount or the Payment Obligation,
respectively, (increased on a daily basis to reflect
the accrual of such interest and reduced from time to
time by the amount of net proceeds received by JPMorgan
as provided herein) at a rate equal to the open Federal
Funds Rate plus the Spread for the period from, and
including, such Settlement Date or the date on which
the Payment Obligation is due, respectively, to, but
excluding, the related date on which all the Restricted
Shares have been sold and calculated on an Actual/360
basis. The foregoing provision shall be without
prejudice to JPMorgan's rights under the Agreement
(including, without limitation, Sections 5 and 6
thereof).
16
As used in this Section, "SPREAD" means, with respect
to any Net Share Settlement Amount or Payment
Obligation, respectively, the credit spread over the
applicable overnight rate that would be imposed if
JPMorgan were to extend credit to Company in an amount
equal to such Net Share Settlement Amount, all as
determined by the Calculation Agent using its
commercially reasonable judgment as of the related
Settlement Date or the date on which the Payment
Obligation is due, respectively. Commercial
reasonableness shall take into consideration all
factors deemed relevant by the Calculation Agent, which
are expected to include, among other things, the credit
quality of Company (and any relevant affiliates) in the
then-prevailing market and the credit spread of similar
companies in the relevant industry and other companies
having a substantially similar credit quality.
(ii) If Company elects to settle the Transaction pursuant to
this clause (ii) (a "REGISTRATION SETTLEMENT"), then
Company shall promptly (but in any event no later than
the beginning of the Resale Period) file and use its
reasonable best efforts to make effective under the
Securities Act a registration statement or supplement
or amend an outstanding registration statement in form
and substance reasonably satisfactory to JPMorgan, to
cover the resale of such Restricted Shares in
accordance with customary resale registration
procedures, including covenants, conditions,
representations, underwriting discounts (if
applicable), commissions (if applicable), indemnities,
due diligence rights, opinions and certificates, and
such other documentation as is customary for equity
resale underwriting agreements, all reasonably
acceptable to JPMorgan. If JPMorgan, in its sole
reasonable discretion, is not satisfied with such
procedures and documentation Private Placement
Settlement shall apply. If JPMorgan is satisfied with
such procedures and documentation, it shall sell the
Restricted Shares pursuant to such registration
statement during a period (the "RESALE PERIOD")
commencing on the Exchange Business Day following
delivery of such Restricted Shares (which, for the
avoidance of doubt, shall be (x) any Settlement Date in
the case of an exercise of Warrants prior to the first
Expiration Date pursuant to Section 2 above, (y) the
Share Termination Payment Date in case of settlement in
Share Termination Delivery Units pursuant to paragraph
(l) above or (z) the Settlement Date in respect of the
final Expiration Date for all Daily Number of Warrants)
and ending on the earliest of (i) the Exchange Business
Day on which JPMorgan completes the sale of all
Restricted Shares or, in the case of settlement of
Share Termination Delivery Units, a sufficient number
of Restricted Shares so that the realized net proceeds
of such sales equals or exceeds the Payment Obligation
(as defined above), (ii) the date upon which all
Restricted Shares have been sold or transferred
pursuant to Rule 144 (or similar provisions then in
force) or Rule 145(d)(1) or (2) (or any similar
provision then in force) under the Securities Act and
(iii) the date upon which all Restricted Shares may be
sold or transferred by a non-affiliate pursuant to Rule
144(k) (or any similar provision then in force) or Rule
145(d)(3) (or any similar provision then in force)
under the Securities Act. If the Payment Obligation
exceeds the realized net proceeds from such resale,
Company shall transfer to JPMorgan by the open of the
regular trading session on the Exchange on the Exchange
Trading Day immediately following the last day of the
Resale Period the amount of such excess (the
"ADDITIONAL Amount") in cash or in a number of Shares
("MAKE-WHOLE SHARES") in an amount that, based on the
Settlement Price on the last day of the Resale Period
(as if such day was the "Valuation Date" for purposes
of computing such Settlement Price), has a dollar value
equal to the Additional Amount. The Resale Period shall
continue to enable the sale of the Make-whole Shares.
If Company elects to pay the Additional Amount in
Shares, the requirements and provisions for
Registration Settlement shall apply. This provision
shall be applied successively until the Additional
Amount is equal to zero. In no event shall Company
deliver a number of Restricted Shares greater than the
Maximum Amount.
17
(iii) Without limiting the generality of the foregoing,
Company agrees that any Restricted Shares delivered to
JPMorgan, as purchaser of such Restricted Shares, (i)
may be transferred by and among JPMorgan and its
affiliates and Company shall effect such transfer
without any further action by JPMorgan and (ii) after
the minimum "holding period" within the meaning of Rule
144(d) under the Securities Act has elapsed after any
Settlement Date for such Restricted Shares, Company
shall promptly remove, or cause the transfer agent for
such Restricted Shares to remove, any legends referring
to any such restrictions or requirements from such
Restricted Shares upon delivery by JPMorgan (or such
affiliate of JPMorgan) to Company or such transfer
agent of seller's and broker's representation letters
customarily delivered by JPMorgan in connection with
resales of restricted securities pursuant to Rule 144
under the Securities Act, without any further
requirement for the delivery of any certificate,
consent, agreement, opinion of counsel, notice or any
other document, any transfer tax stamps or payment of
any other amount or any other action by JPMorgan (or
such affiliate of JPMorgan).
If the Private Placement Settlement or the Registration
Settlement shall not be effected as set forth in clauses (i)
or (ii), as applicable, then failure to effect such Private
Placement Settlement or such Registration Settlement shall
constitute an Event of Default with respect to which Company
shall be the Defaulting Party.
(N) LIMIT ON BENEFICIAL OWNERSHIP. Notwithstanding any other
provisions hereof, JPMorgan may not exercise any Warrant
hereunder or be entitled to take delivery of any Shares
deliverable hereunder, and Automatic Exercise shall not
apply with respect to any Warrant hereunder, to the extent
(but only to the extent) that, after such receipt of any
Shares upon the exercise of such Warrant or otherwise
hereunder, JPMorgan Chase & Co. would directly or indirectly
beneficially own (as such term is defined for purposes of
Section 13(d) of the Exchange Act) in excess of 8.0% of the
outstanding Shares. Any purported delivery hereunder shall
be void and have no effect to the extent (but only to the
extent) that, after such delivery, JPMorgan Chase & Co.
would directly or indirectly so beneficially own in excess
of 8.0% of the outstanding Shares. If any delivery owed to
JPMorgan hereunder is not made, in whole or in part, as a
result of this provision, Company's obligation to make such
delivery shall not be extinguished and Company shall make
such delivery as promptly as practicable after, but in no
event later than one Business Day after, JPMorgan gives
notice to Company that, after such delivery, JPMorgan Chase
& Co. would not directly or indirectly so beneficially own
in excess of 8.0% of the outstanding Shares. No additional
compensation or amounts shall be due JPMorgan as a
consequence of such delayed settlement.
(O) SHARE DELIVERIES. Company acknowledges and agrees that, to
the extent the holder of this Warrant is not then an
affiliate and has not been an affiliate for 90 days (it
being understood that JPMorgan will not be considered an
affiliate under this paragraph solely by reason of its
receipt of Shares pursuant to this Transaction), and
otherwise satisfies all holding period and other
requirements of Rule 144 of the Securities Act applicable to
it, any delivery of Shares or Share Termination Property
hereunder at any time after 2 years from the Trade Date
shall be eligible for resale under Rule 144(k) of the
Securities Act and Company agrees to promptly remove, or
cause the transfer agent for such Shares or Share
Termination Property, to remove, any legends referring to
any restrictions on resale under the Securities Act from the
Shares or Share Termination Property. Company further
agrees, for any delivery of Shares or Share Termination
Property hereunder at any time after 1 year from the Trade
Date but within 2 years of the Trade Date, to the to the
extent the holder of this Warrant then satisfies the holding
period and other requirements of Rule 144 of the Securities
Act, to promptly remove, or cause the transfer agent for
such Restricted Share to remove, any legends referring to
any such restrictions or requirements from such Restricted
Shares. Such Restricted Shares will be de-legended upon
delivery by JPMorgan (or such affiliate of JPMorgan) to
Company or such transfer agent of customary seller's and
broker's representation letters in connection with resales
18
of restricted securities pursuant to Rule 144 of the
Securities Act, without any further requirement for the
delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax
stamps or payment of any other amount or any other action by
JPMorgan (or such affiliate of JPMorgan). Company further
agrees that any delivery of Shares or Share Termination
Delivery Property prior to the date that is 1 year from the
Trade Date, may be transferred by and among JPMorgan and its
affiliates and Company shall effect such transfer without
any further action by JPMorgan. Notwithstanding anything to
the contrary herein, Company agrees that any delivery of
Shares or Share Termination Delivery Property shall be
effected by book-entry transfer through the facilities of
DTC, or any successor depositary, if at the time of
delivery, such class of Shares or class of Share Termination
Delivery Property is in book-entry form at DTC or such
successor depositary and such Shares or Share Termination
Delivery Property are not "restricted securities" for
purposes of the Securities Act. Notwithstanding anything to
the contrary herein, to the extent the provisions of Rule
144 of the Securities Act or any successor rule are amended,
or the applicable interpretation thereof by the Securities
and Exchange Commission or any court change after the Trade
Date, the agreements of Company herein shall be deemed
modified to the extent necessary, in the opinion of outside
counsel of Company, to comply with Rule 144 of the
Securities Act, including Rule 144(k) as in effect at the
time of delivery of the relevant Shares or Share Termination
Property.
(P) GOVERNING LAW. New York law (without reference to choice of
law doctrine).
(Q) WAIVER OF JURY TRIAL. Each party waives, to the fullest
extent permitted by applicable law, any right it may have to
a trial by jury in respect of any suit, action or proceeding
relating to this Transaction. Each party (i) certifies that
no representative, agent or attorney of the other party has
represented, expressly or otherwise, that such other party
would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other party have been induced
to enter into this Transaction, as applicable, by, among
other things, the mutual waivers and certifications provided
herein.
(R) TAX DISCLOSURE. Effective from the date of commencement of
discussions concerning the Transaction, Company and each of
its employees, representatives, or other agents may disclose
to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the Transaction and all
materials of any kind (including opinions or other tax
analyses) that are provided to Company relating to such tax
treatment and tax structure.
(S) MAXIMUM SHARE DELIVERY. Notwithstanding any other provision
of this Confirmation or the Agreement, in no event will
Company be required to deliver more than the Maximum Amount
of Shares in the aggregate to JPMorgan in connection with
this Transaction, subject to the provisions regarding
Deficit Restricted Shares
(T) RIGHT TO EXTEND. JPMorgan may postpone, in whole or in part,
any Expiration Date or any other date of valuation or
delivery with respect to some or all of the relevant
Warrants (in which event the Calculation Agent shall make
appropriate adjustments to the Daily Number of Warrants with
respect to one or more Expiration Dates) if JPMorgan
determines, in its commercially reasonable judgment, that
such extension is reasonably necessary or appropriate to
preserve JPMorgan's hedging or hedge unwind activity
hereunder in light of existing liquidity conditions or to
enable JPMorgan to effect purchases of Shares in connection
with its hedging, hedge unwind or settlement activity
hereunder in a manner that would, if JPMorgan were Issuer or
an affiliated purchaser of Issuer, be in compliance with
applicable legal, regulatory or self-regulatory
requirements, or with related policies and procedures
applicable to JPMorgan.
(U) STATUS OF CLAIMS IN BANKRUPTCY. JPMorgan acknowledges and
agrees that this Confirmation is not intended to convey to
JPMorgan rights against Company with respect to the
Transaction that are senior to the claims of common
stockholders of Company in any U.S. bankruptcy proceedings
of Company; provided that nothing herein shall limit or
shall be deemed to limit JPMorgan's right to pursue remedies
in the event of a breach by Company of its obligations and
agreements with respect to the Transaction; PROVIDED,
FURTHER, that nothing herein shall limit or shall be deemed
to limit JPMorgan's rights in respect of any transactions
other than the Transaction.
19
(V) SECURITIES CONTRACT; SWAP AGREEMENT. The parties hereto
intend for: (a) the Transaction to be a "securities
contract" and a "swap agreement" as defined in the
Bankruptcy Code (Title 11 of the United States Code) (the
"BANKRUPTCY Code"), and the parties hereto to be entitled to
the protections afforded by, among other Sections, Sections
362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the
Bankruptcy Code; (b) a party's right to liquidate the
Transaction and to exercise any other remedies upon the
occurrence of any Event of Default under the Agreement with
respect to the other party to constitute a "contractual
right" as described in the Bankruptcy Code; and (c) each
payment and delivery of cash, securities or other property
hereunder to constitute a "margin payment" or "settlement
payment" and a "transfer" as defined in the Bankruptcy Code.
[signature page follows]
20
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to EDG Confirmation
Group, J.P. Morgan Securities Inc., 277 Park Avenue, 11th Floor, New York, NY
10172-3401, or by fax to (212) 622 8519.
Very truly yours,
J.P. MORGAN SECURITIES INC., AS
AGENT FOR JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION
By: /s/ Sudheer Tegulapalle
---------------------------------------
Authorized Signatory
Name: Sudheer Tegulapalle
Accepted and confirmed
as of the Trade Date:
CHEMED CORPORATION
By: /s/ David P. Williams
----------------------------------------
Authorized Signatory
Name: David P. Williams
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION ORGANISED
UNDER THE LAWS OF THE UNITED STATES AS A NATIONAL BANKING ASSOCIATION.
MAIN OFFICE 1111 POLARIS PARKWAY, COLUMBUS, OHIO 43271
REGISTERED AS A BRANCH IN ENGLAND & WALES BRANCH NO. BR000746. REGISTERED
BRANCH OFFICE 125 LONDON WALL, LONDON EC2Y 5AJ
AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY
21
EXHIBIT 10.4
May 8, 2007
From: Citibank, N.A.
390 Greenwich Street
New York, NY 10013
Equity Derivatives
Telephone: (212) 723-7357
Facsimile: (212) 723-8328
To: Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
Re: Warrants
The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the Warrants issued by Chemed Corporation
("Company") to Citibank, N.A. ("Citibank") on the Trade Date specified below
(the "Transaction"). This letter agreement constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below. This Confirmation
shall replace any previous agreements and serve as the final documentation for
this Transaction.
The definitions and provisions contained in the 2002 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc. ("ISDA"), are incorporated
into this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern.
Each party is hereby advised, and each such party acknowledges, that the
other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties'
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between
Citibank and Company as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall supplement, form a part of,
and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the "Agreement") as if Citibank and Company had executed an
agreement in such form (but without any Schedule except for the election of
the laws of the State of New York as the governing law) on the Trade Date.
In the event of any inconsistency between provisions of that Agreement and
this Confirmation, this Confirmation will prevail for the purpose of the
Transaction to which this Confirmation relates. The parties hereby agree
that no Transaction other than the Transaction to which this Confirmation
relates shall be governed by the Agreement.
2. The Transaction is a Warrant Transaction, which shall be considered a Share
Option Transaction for purposes of the Equity Definitions. The terms of the
particular Transaction to which this Confirmation relates are as follows:
General Terms:
Trade Date: May 8, 2007
Warrants: Equity call warrants, each giving the holder the right to purchase
one Share at the Strike Price, subject to the Settlement Terms set
forth below. For the purposes of the Equity Definitions, each
reference to a Warrant herein shall be deemed to be a reference to
a Call Option.
Warrant Style: European
Seller: Company
Buyer: Citibank
Shares: The capital stock of Company, par value USD 1 per Share
(Exchange symbol "CHE")
Number of Warrants: 1,114,862, subject to adjustment as provided herein; provided
that the Number of Warrants shall be automatically increased as
of the date of exercise (the "Greenshoe Exercise") by J.P.
Morgan Securities Inc. and Citigroup Global Markets Inc. as
representatives of the Initial Purchasers (as defined in the
Purchase Agreement dated as of May 8, 2007 between Company,
J.P. Morgan Securities Inc. and Citigroup Global Markets Inc.
as representatives of the Initial Purchasers party thereto (the
"Purchase Agreement")), of their option pursuant to Section 1
of the Purchase Agreement by the number of additional Warrants
in proportion to the increase in the number of 1.875%
Convertible Senior Notes due 2014 (the "Convertible Notes"), in
denominations of USD 1,000 principal amount issued pursuant to
such exercise (such Convertible Notes, the "Additional
Convertible Notes") (the "Additional Warrants").
Warrant Entitlement: One Share per Warrant
Strike Price: USD 105.4400
Premium: USD 12,426,300 (Premium per Warrant: USD 11.1460); provided
that if the Number of Warrants is increased pursuant to the
proviso to the definition of "Number of Warrants" above, there
shall be an additional Premium equal to the product of the
number of Additional Warrants and the Premium per Warrant (the
"Additional Premium"), and such Additional Premium shall be paid
by Citibank to Company on the Additional Premium Payment Date.
Premium Payment Date: May 14, 2007
Additional Premium Payment Date: The closing date for the purchase and sale of the Additional
Convertible Notes.
Exchange: The New York Stock Exchange
Related Exchange(s): All Exchanges
2
Procedures for Exercise:
Expiration Time: The Valuation Time
Expiration Date(s): Each Scheduled Trading Day during the period from and including
the First Expiration Date and to and including the 79th
Scheduled Trading Day following the First Expiration Date shall
be an "Expiration Date" for a number of Warrants equal to the
Daily Number of Warrants on such date; provided that,
notwithstanding anything to the contrary in the Equity
Definitions, if any such date is a Disrupted Day, the
Calculation Agent shall make adjustments, if applicable, to the
Daily Number of Warrants or shall reduce such Daily Number of
Warrants to zero for which such day shall be an Expiration Date
and shall designate a Scheduled Trading Day or a number of
Scheduled Trading Days as the Expiration Date(s) for the
remaining Daily Number of Warrants or a portion thereof for the
originally scheduled Expiration Date; and provided further that
if such Expiration Date has not occurred pursuant to this
clause as of the eighth Scheduled Trading Day following the
last scheduled Expiration Date under this Transaction, the
Calculation Agent shall have the right to declare such
Scheduled Trading Day to be the final Expiration Date and the
Calculation Agent shall determine its good faith estimate of
the fair market value for the Shares as of the Valuation Time
on that eighth Scheduled Trading Day or on any subsequent
Scheduled Trading Day, as the Calculation Agent shall determine
using commercially reasonable means.
First Expiration Date: August 15, 2014 (or if such day is not a Scheduled Trading Day,
the next following Scheduled Trading Day), subject to Market
Disruption Event below.
Multiple Exercise: Applicable
Minimum Number of Warrants: 1
Daily Number of Warrants: For any Expiration Date, the Number of Warrants that have not
expired or been exercised as of such day, divided by the
remaining number of Expiration Dates (including such day),
rounded down to the nearest whole number, subject to adjustment
pursuant to the provisos to "Expiration Date(s)".
Maximum Number of Warrants: All warrants remaining unexercised as of the remaining Exercise
Date(s).
Automatic Exercise: Applicable; and means that, unless all Warrants have been
previously exercised hereunder, a number of Warrants for each
Expiration Date equal to the Daily Number of Warrants (as
adjusted pursuant to the terms hereof) for such Expiration Date
will be deemed to be automatically exercised; provided that
"In-the-Money" means that the Relevant Price for such Expiration
Date exceeds the Strike Price for such Expiration Date; and
provided further that all references in Section 3.4(b) of the
Equity Definitions to "Physical Settlement" shall be read as
references to "Net Share Settlement".
3
Market Disruption Event: Section 6.3(a)(ii) of the Equity Definitions is hereby amended
by replacing clause (ii) in its entirety with "(ii) an Exchange
Disruption, or" and inserting immediately following clause
(iii) the phrase "; in each case that the Calculation Agent
determines is material."
Valuation:
Valuation Time: Scheduled Closing Time.
Valuation Date: Each Exercise Date.
Settlement Terms:
Settlement Method: Net Share Settlement.
Net Share Settlement: On the relevant Settlement Date, Company shall deliver to
Citibank the Share Delivery Quantity of Shares for such
Settlement Date to the account specified hereto free of payment
through the Clearance System.
Share Delivery Quantity: For any Settlement Date, a number of Shares, as calculated by
the Calculation Agent, equal to the Net Share Settlement Amount
for such Settlement Date divided by the Settlement Price on the
Valuation Date in respect of such Settlement Date, rounded down
to the nearest whole number plus any Fractional Share Amount.
Net Share Settlement Amount: For any Settlement Date, an amount equal to the product of (i)
the Number of Warrants exercised or deemed exercised on the
relevant Exercise Date, (ii) the Strike Price Differential for
such Settlement Date and (iii) the Warrant Entitlement.
Settlement Price: For any Valuation Date, the per Share volume-weighted average
price as displayed under the heading "Bloomberg VWAP" on
Bloomberg page CHE.N [equity] AQR (or any successor thereto) in
respect of the period from the scheduled opening time of the
Exchange to the Scheduled Closing Time on such Valuation Date
(or if such volume-weighted average price is unavailable, the
market value of one Share on such Valuation Date, as determined
by the Calculation Agent). Notwithstanding the foregoing, if
(i) any Expiration Date is a Disrupted Day and (ii) the
Calculation Agent determines that such Expiration Date shall be
an Expiration Date for fewer than the Daily Number of Warrants,
as described above, then the Settlement Price for the relevant
Valuation Date shall be the volume-weighted average price per
Share on such Valuation Date on the Exchange, as determined by
the Calculation Agent based on such sources as it deems
appropriate using a volume-weighted methodology, for the
portion of such Valuation Date for which the Calculation Agent
determines there is no Market Disruption Event.
Settlement Date(s): As determined in reference to Section 9.4 of the Equity
Definitions, subject to Section 9(m)(i) hereof.
4
Other Applicable Provisions: The provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and
10.5 of the Equity Definitions will be applicable, except that
all references in such provisions to "Physically-settled" shall
be read as references to "Net Share Settled." "Net Share
Settled" in relation to any Warrant means that Net Share
Settlement is applicable to that Warrant.
Representation and Agreement: Notwithstanding Section 9.11 of the Equity Definitions, the
parties acknowledge that any Shares delivered to Citibank may
be, upon delivery, subject to restrictions and limitations
arising from Company's status as issuer of the Shares under
applicable securities laws.
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Warrants:
Method of Adjustment: Calculation Agent Adjustment. For the avoidance of doubt, in
making any adjustments under the Equity Definitions, the
Calculation Agent may make adjustments, if any, to any one or
more of the Strike Price, the Number of Warrants, the Daily
Number of Warrants and the Warrant Entitlement.
Notwithstanding the foregoing, any cash dividends or
distributions on the Shares, whether or not extraordinary,
shall be governed by Section 9(h) of this Confirmation in lieu
of Article 10 or Section 11.2(c) of the Equity Definitions.
The Calculation Agent shall promptly thereafter notify Citibank
and Company of any such adjustment.
Extraordinary Events applicable to the Transaction:
New Shares: Section 12.1(i) of the Equity Definitions is hereby amended by
deleting the text in clause (i) in its entirety and replacing
it with the phrase "publicly quoted, traded or listed on any of
the New York Stock Exchange, the American Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ Global Market (or
their respective successors)".
Consequence of Merger Events:
Share-for-Share: Modified Calculation Agent Adjustment
Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
Share-for-Combined: Cancellation and Payment (Calculation Agent Determination);
provided that Citibank may elect, in its commercially
reasonable judgment, Component Adjustment (Calculation Agent
Determination).
Consequence of Tender Offers:
Tender Offer: Applicable; provided however that if an event occurs that
constitutes both a Tender Offer under Section 12.1(d) of the
Equity Definitions and Additional Termination Event under
Section 9(j)(ii)(C) of this Confirmation, Citibank may elect,
in its commercially reasonable judgment, whether the provisions
of Section 12.3 of the Equity Definitions or Section
9(j)(ii)(C) will apply.
5
Share-for-Share: Modified Calculation Agent Adjustment
Share-for-Other: Modified Calculation Agent Adjustment
Share-for-Combined: Modified Calculation Agent Adjustment
Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination);
provided that, in addition to the provisions of Section
12.6(a)(iii) of the Equity Definitions, it will also constitute
a Delisting if the Exchange is located in the United States and
the Shares are not immediately re-listed, re-traded or
re-quoted on any of the New York Stock Exchange, the American
Stock Exchange, The NASDAQ Global Select Market or The NASDAQ
Global Market (or their respective successors); if the Shares
are immediately re-listed, re-traded or re-quoted on any of The
New York Stock Exchange, the American Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ Global Market (or
their respective successors), such exchange or quotation system
shall thereafter be deemed to be the Exchange.
Additional Disruption Events:
Change in Law: Applicable
Failure to Deliver: Not Applicable
Insolvency Filing: Applicable
Hedging Disruption: Applicable
Increased Cost of Hedging: Not Applicable
Loss of Stock Borrow: Applicable
Maximum Stock Loan Rate: 250 bps
Increased Cost of Stock Borrow: Applicable
Initial Stock Loan Rate: 0 bps
Hedging Party: Citibank for all applicable Additional Disruption Events
Determining Party: Citibank for all applicable Additional Disruption Events
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
4. Calculation Agent: Citibank. The Calculation Agent shall, upon request by the
Company, provide a written explanation of any calculation made
by it including, where applicable, a description of the
methodology and data applied.
6
5. Account Details:
(a) Account for payments to Company:
JP Morgan Chase Bank
ABA# 021000021
Acct: Chemed Corporation
Acct No.: 94-13065
Account for delivery of Shares from Company:
To be provided by Company
(b) Account for payments to Citibank:
Citibank, N.A.
ABA #021000089
DDA 00167679
Ref: Equity Derivatives
Account for delivery of Shares to Citibank:
DTC 418
6. Offices:
The Office of Company for the Transaction is: Inapplicable, Company is not a
Multibranch Party.
The Office of Citibank for the Transaction is: 390 Greenwich Street, New York,
NY 10013
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Company:
Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
(b) Address for notices or communications to Citibank:
Citibank notice information to follow:
To: Citibank, N.A.
390 Greenwich Street, 5th Floor
New York, NY 10013
Attention: Equity Derivatives
Telephone: (212) 723-7357
Facsimile: (212) 723-8328
To: Citibank, N.A.
3880 Greenwich Street, 17th Floor
New York, NY 10013
Attention: CIB Legal Group--Derivatives
Telephone: (212) 816-2944
Facsimile: (646) 291-5875
7
8. Representations and Warranties
(i) Representations and Warranties of Company
The representations and warranties of Company set forth in Section 3 of the
Purchase Agreement are true and correct and are hereby deemed to be repeated to
Citibank as if set forth herein. Company hereby further represents and warrants
to Citibank that:
(a) Company has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of this Transaction;
such execution, delivery and performance have been duly authorized by
all necessary corporate action on Company's part; and this
Confirmation has been duly and validly executed and delivered by
Company and constitutes its valid and binding obligation, enforceable
against Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity)
and except that rights to indemnification and contribution hereunder
may be limited by federal or state securities laws or public policy
relating thereto.
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of Company hereunder will (i)
conflict with or result in a breach of the certificate of
incorporation or by-laws (or any equivalent documents) of Company, or
any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any
agreement or instrument to which Company or any of its subsidiaries is
a party or by which Company or any of its subsidiaries is bound or to
which Company or any of its subsidiaries is subject (including, but
not limited to, any agreements and contracts of Counterparty or any of
its subsidiaries filed as exhibits to Company's Annual Report on Form
10-K for the year ended December 31, 2006, incorporated by reference
in the Offering Memorandum), or (ii) constitute a default under, or
result in the creation of any lien under, any such agreement or
instrument.
(c) No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection
with the execution, delivery or performance by Company of this
Confirmation, except such as have been obtained or made and such as
may be required under the Securities Act of 1933, as amended (the
"Securities Act") or state securities laws.
(d) The Shares of Company initially issuable upon exercise of the Warrant
by the net share settlement method (the "Warrant Shares") have been
reserved for issuance by all required corporate action of Company. The
Warrant Shares have been duly authorized and, when delivered against
payment therefor (which may include Net Share Settlement in lieu of
cash) and otherwise as contemplated by the terms of the Warrant
following the exercise of the Warrant in accordance with the terms and
conditions of the Warrant, will be validly issued, fully-paid and
non-assessable, and the issuance of the Warrant Shares will not be
subject to any preemptive or similar rights.
(e) Company is an "eligible contract participant" (as such term is defined
in Section 1a(12) of the Commodity Exchange Act, as amended (the
"CEA")) because one or more of the following is true:
Company is a corporation, partnership, proprietorship, organization, trust or
other entity and:
(A) Company has total assets in excess of USD 10,000,000;
(B) the obligations of Company hereunder are guaranteed, or otherwise
supported by a letter of credit or keepwell, support or other
agreement, by an entity of the type described in Section
1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or
1a(12)(C) of the CEA; or
(C) Company has a net worth in excess of USD 1,000,000 and has
entered into this Agreement in connection with the conduct of
Company's business or to manage the risk associated with an asset
or liability owned or incurred or reasonably likely to be owned
or incurred by Company in the conduct of Company's business.
(f) Company and each of its controlled affiliates is not, on the date
hereof, in possession of any material non-public information with
respect to Company.
(ii) Additional representations and warranties
(a) Citibank represents that it is an "eligible contract participant" as
defined in Section 1a(12) of the CEA.
(b) Each of Citibank and Company acknowledges that the offer and sale of
the Transaction to it is intended to be exempt from registration under
the Securities, by virtue of Section 4(2) thereof.
9. Other Provisions:
(a) Opinions. Company shall deliver an opinion of counsel, dated as of the
Trade Date, to Citibank, with respect to the matters set forth in
Sections 8(i)(a) through (d) of this Confirmation.
(b) Reserved
(c) Repurchase Notices. Company shall, on any day on which Company effects
any repurchase of Shares, promptly give Citibank a written notice of
such repurchase (a "Repurchase Notice") on such day if following such
repurchase, the number of outstanding Shares on such day, subject to
any adjustments provided herein, is (i) less than 21 million (in the
case of the first such notice) or (ii) thereafter more than 1.60
million less than the number of Shares included in the immediately
preceding Repurchase Notice. Company agrees to indemnify and hold
harmless Citibank and its affiliates and their respective officers,
directors, employees, affiliates, advisors, agents and controlling
persons (each, an "Indemnified Person") from and against any and all
losses (including losses relating to Citibank's hedging activities as
a consequence of becoming, or of the risk of becoming, a Section 16
"insider", including without limitation, any forbearance from hedging
activities or cessation of hedging activities and any losses in
connection therewith with respect to this Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable
attorney's fees), joint or several, which an Indemnified Person
actually may become subject to, as a result of Company"s failure to
provide Citibank with a Repurchase Notice on the day and in the manner
specified in this paragraph, and to reimburse, within 30 days, upon
written request, each of such Indemnified Persons for any reasonable
legal or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action,
proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified
Person, such Indemnified Person shall promptly notify Company in
writing, and Company, upon request of the Indemnified Person, shall
retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others Company may designate
in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. Company shall not be liable for any
settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, Company agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or
judgment. Company shall not, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have
been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an
unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and
(y) does not include any statement as to or any admission of fault,
culpability or a failure to act by or on behalf of any Indemnified
Person. If the indemnification provided for in this paragraph is
unavailable to an Indemnified Person or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then
Company under such paragraph, in lieu of indemnifying such Indemnified
Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph are not
exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in equity.
The indemnity and contribution agreements contained in this paragraph
shall remain operative and in full force and effect regardless of the
termination of this Transaction.
9
(d) Regulation M. Company is not on the date hereof engaged in a
distribution, as such term is used in Regulation M under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
any securities of Company, other than a distribution meeting the
requirements of the exception set forth in Rules 101(b)(10) and
102(b)(7) of Regulation M. Company shall not, until the second
Scheduled Trading Day immediately following the Trade Date, engage in
any such distribution.
(e) No Manipulation. Company is not entering into this Transaction to
create actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or to raise
or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for the Shares) or otherwise
in violation of the Exchange Act.
(f) Transfer or Assignment. Company may not transfer any of its rights or
obligations under this Transaction without the prior written consent
of Citibank. Citibank may, without Company's consent, transfer or
assign all or any part of its rights or obligations under this
Transaction to any third party. If after Citibank's commercially
reasonable efforts, Citibank is unable to effect such a transfer or
assignment on pricing terms reasonably acceptable to Citibank and
within a time period reasonably acceptable to Citibank of a sufficient
number of Warrants to reduce (i) Citibank's "beneficial ownership"
(within the meaning of Section 13 of the Exchange Act and rules
promulgated thereunder) to 7.5% of Company's outstanding Shares or
less or (ii) the quotient of (x) the product of (a) the Number of
Warrants and (b) the Warrant Entitlement divided by (y) the number of
Company's outstanding Shares (such quotient expressed as a percentage,
the "Warrant Equity Percentage") to 14.5% or less, Citibank may
designate any Exchange Business Day as an Early Termination Date with
respect to a portion (the "Terminated Portion") of this Transaction,
such that (i) its "beneficial ownership" following such partial
termination will be equal to or less than 7.5% or (ii) the Warrant
Equity Percentage following such partial termination will be equal to
or less than 14.5%. In the event that Citibank so designates an Early
Termination Date with respect to a portion of this Transaction, a
payment shall be made pursuant to Section 6 of the Agreement as if (i)
an Early Termination Date had been designated in respect of a
Transaction having terms identical to this Transaction and a Number of
Warrants equal to the Terminated Portion, (ii) Company shall be the
sole Affected Party with respect to such partial termination and (iii)
such Transaction shall be the only Terminated Transaction (and, for
the avoidance of doubt, the provisions of paragraph 9(l) shall apply
to any amount that is payable by Citibank to Company pursuant to this
sentence). Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing Citibank to purchase, sell, receive
or deliver any Shares or other securities to or from Company, Citibank
may designate any of its affiliates to purchase, sell, receive or
deliver such Shares or other securities and otherwise to perform
Citibank's obligations in respect of this Transaction and any such
designee may assume such obligations. Citibank shall be discharged of
its obligations to Company to the extent of any such performance.
10
(g) Early Unwind. In the event the sale of Convertible Notes (or, in
respect of the Greenshoe Exercise, the Additional Convertible Notes)
is not consummated with the initial purchasers for any reason by the
close of business in New York on May 14, 2007 (or, in respect of the
Greenshoe Exercise, the third Clearance System Business Day following
the date of the Greenshoe Exercise (the "Additional Closing Date"))
(or such later date as agreed upon by the parties) (May 14, 2007 or
such later date, if any, as agreed upon being or, in respect of the
Greenshoe Exercise, the Additional Closing Date, the "Early Unwind
Date"), this Transaction (or, in respect of the Greenshoe Exercise,
the Additional Warrants) shall automatically terminate (the "Early
Unwind"), on the Early Unwind Date and (i) the Transaction (or, in
respect of the Greenshoe Exercise, the Additional Warrants) and all of
the respective rights and obligations of Citibank and Company under
the Transaction (or, in respect of the Greenshoe Exercise, the
Additional Warrants) shall be cancelled and terminated and (ii) each
party shall be released and discharged by the other party from and
agrees not to make any claim against the other party with respect to
any obligations or liabilities of the other party arising out of and
to be performed in connection with the Transaction (or, in respect of
the Greenshoe Exercise, the Additional Warrants) either prior to or
after the Early Unwind Date; provided that Company, unless the sale of
the Convertible Notes or the Additional Convertible Notes, as
applicable, is not consummated due to a breach of the Purchase
Agreement by the Initial Purchasers, shall purchase from Citibank on
the Early Unwind Date all Shares purchased by Citibank or one or more
of its affiliates and shall, notwithstanding anything to the contrary
in the Equity Definitions, reimburse Citibank for any commercially
reasonable costs or expenses (including market losses) relating to the
unwinding of its hedging activities in connection with the Transaction
(or, in respect of the Greenshoe Exercise, the Additional Warrants)
(including any loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading
position). The amount of any such reimbursement shall be determined by
Citibank in its sole good faith discretion. Citibank shall notify
Company of such amount and Company shall pay such amount in
immediately available funds on the Early Unwind Date. Citibank and
Company represent and acknowledge to the other that, subject to the
proviso included in this Section, upon an Early Unwind, all
obligations with respect to the Transaction shall be deemed fully and
finally discharged.
(h) Dividends. If at any time during the period from but excluding the
Trade Date, to and including the Expiration Date, (i) an ex-dividend
date for a cash dividend occurs with respect to the Shares (an
"Ex-Dividend Date"), and that dividend differs from the Regular
Dividend on a per Share basis or (ii) if no Ex-Dividend Date for a
cash dividend occurs with respect to the Shares in any quarterly
dividend period of Company, then the Calculation Agent will adjust any
of the Strike Price, Number of Warrants and/or Daily Number of
Warrants to preserve the fair value of the Options to Citibank after
taking into account such dividend or lack thereof. "Regular Dividend"
shall mean for any calendar quarter, USD 0.06 for the first cash
dividend or distribution on the Shares for which the Ex-Dividend Date
falls within such calendar quarter, and zero for any subsequent
dividend or distribution on the Shares for which the Ex-Dividend Date
falls within the same calendar quarter.
(i) Reserved
(j) Additional Provisions.
(i) Amendments to the Equity Definitions:
(A) Section 11.2(a) of the Equity Definitions is hereby amended
by deleting the words "diluting or concentrative" and
replacing them with the words "material".
(B) Section 11.2(c) of the Equity Definitions is hereby amended
by (x) replacing the words "diluting or concentrative" with
"an" and (y) deleting the phrase "(provided that no
adjustments will be made to account solely for changes in
volatility, expected dividends, stock loan rate or liquidity
relative to the relevant Shares)" and replacing it with the
phrase "(and, for the avoidance of doubt, adjustments may be
made to account solely for changes in volatility, expected
dividends, stock loan rate or liquidity relative to the
relevant Shares)."
11
(C) Section 11.2(e)(vii) of the Equity Definitions is hereby
amended by deleting the words "diluting or concentrative"
and replacing them with the word "material"; and adding the
phrase "or Warrants" at the end of the sentence.
(D) Section 12.6(a)(ii) of the Equity Definitions is hereby
amended by (1) deleting from the fourth line thereof the
word "or" after the word "official" and inserting a comma
therefor, and (2) deleting the semi-colon at the end of
subsection (B) thereof and inserting the following words
therefor "or (C) at Citibank's option, the occurrence of any
of the events specified in Section 5(a)(vii) (1) through (9)
of the ISDA Master Agreement with respect to that Issuer."
(E) Section 12.9(b)(iv) of the Equity Definitions is hereby
amended by:
(x) deleting (1) subsection (A) in its entirety, (2) the
phrase "or (B)" following subsection (A) and (3) the
phrase "in each case" in subsection (B); and
(y) deleting the phrase "neither the Non-Hedging Party nor
the Lending Party lends Shares in the amount of the
Hedging Shares or" in the penultimate sentence.
(F) Section 12.9(b)(v) of the Equity Definitions is hereby
amended by:
(x) adding the word "or" immediately before subsection
"(B)" and deleting the comma at the end of subsection
(A); and
(y) (1) deleting subsection (C) in its entirety, (2)
deleting the word "or" immediately preceding subsection
(C) and (3) deleting the final sentence in its entirety
and replacing it with the sentence "The Hedging Party
will determine the Cancellation Amount payable by one
party to the other."
(ii) Notwithstanding anything to the contrary in this Confirmation,
upon the occurrence of one of the following events, with respect to
this Transaction, (1) Citibank shall have the right to designate such
event an Additional Termination Event and designate an Early
Termination Date pursuant to Section 6(b) of the Agreement, and (2)
Company shall be deemed the sole Affected Party and the Transaction
shall be deemed the sole Affected Transaction:
(A) Consummation of (A) any recapitalization, reclassification or
change of the Shares (other than changes resulting from a
subdivision or combination) as a result of which the Shares would
be converted into, or exchanged for, stock, other securities,
other property or assets or (B) any consolidation with or merger
of the Company with or into another person pursuant to which
Shares will be converted into cash, securities or other property
or any conveyance, transfer or lease of all or substantially all
of Company's properties and assets to any person other than one
of its subsidiaries; provided, however, that a transaction where
the holders of more than 50% of all classes of common equity of
the Company immediately prior to such transaction own, directly
or indirectly, more than 50% of all classes of common equity of
the continuing or surviving corporation or transferee immediately
after such event shall not be an Additional Termination Event.
(B) There is a default by Company or any subsidiary in the payment of
the principal or interest on any mortgage, agreement or other
instrument under which there may be outstanding, or by which
there may be secured or evidenced any indebtedness for money
borrowed in excess of $20 million in the aggregate of Company
and/or any subsidiary, whether such indebtedness now exists or
shall hereafter be created resulting in such indebtedness
becoming or being declared due and payable.
12
(C) Any "person" or "group" within the meaning of Section 13(d) of
the Exchange Act other than the Company, any of its subsidiaries
or its employee benefit plans, files a Schedule TO or any
schedule, form or report under the Exchange Act disclosing that
such person or group has become the direct or indirect ultimate
"beneficial owner", as defined in Rule 13d-3 under the Exchange
Act, of the capital stock of the Company representing more than
50% of the voting power of such capital stock.
(D) Citibank, despite using commercially reasonable efforts, is
unable or reasonably determines that it is impractical or
illegal, to hedge its obligations pursuant to this Transaction in
the public market without registration under the Securities Act
or as a result of any legal, regulatory or self-regulatory
requirements or related policies and procedures (whether or not
such requirements, policies or procedures are imposed by law or
have been voluntarily adopted by Citibank).
Notwithstanding the forgoing, a transaction set forth in clauses
(A) or (C) above will not constitute an Additional Termination
Event if 100% of the consideration, excluding cash payments for
fractional shares, in such transaction or transactions consists
of shares of capital stock listed on a national securities
exchange or quoted on The NASDAQ Global Market or The NASDAQ
Global Select Market or will be so listed or quoted when issued
or exchanged in connection with such transaction or transactions.
(k) No Collateral or Setoff. Notwithstanding any provision of the
Agreement or any other agreement between the parties to the contrary,
the obligations of Company hereunder are not secured by any
collateral. Obligations under this Transaction shall not be set off by
Company against any other obligations of the parties, whether arising
under the Agreement, this Confirmation, under any other agreement
between the parties hereto, by operation of law or otherwise. Any
provision in the Agreement with respect to the satisfaction of
Company's payment obligations to the extent of Citibank's payment
obligations to Company in the same currency and in the same
Transaction (including, without limitation Section 2(c) thereof) shall
not apply to Company and, for the avoidance of doubt, Company shall
fully satisfy such payment obligations notwithstanding any payment
obligation to Company by Citibank in the same currency and in the same
Transaction. In calculating any amounts under Section 6(e) of the
Agreement, notwithstanding anything to the contrary in the Agreement,
(1) separate amounts shall be calculated as set forth in such Section
6(e) with respect to (a) this Transaction and (b) all other
Transactions, and (2) such separate amounts shall be payable pursuant
to Section 6(d)(ii) of the Agreement.
(l) Alternative Calculations and Payment on Early Termination and on
Certain Extraordinary Events. If, in respect of this Transaction, an
amount is payable by Company to Citibank, (i) pursuant to Section 12.7
or Section 12.9 of the Equity Definitions (except in the event of an
Insolvency, Nationalization, Tender Offer or Merger Event in which the
consideration or proceeds to be paid to holders of shares consists
solely of cash) or (ii) pursuant to Section 6(d)(ii) of the Agreement
(except in the event of an Event of Default in which Company is the
Defaulting Party or a Termination Event in which Company is the
Affected Party, other than an Event of Default of the type described
in (x) Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement
or (y) a Termination Event of the type described in Section 5(b) of
the Agreement, in the case of both (x) and (y), resulting from an
event or events outside Company's control) (a "Payment Obligation"),
Company shall have the right, in its sole discretion, to satisfy any
such Payment Obligation by the Share Termination Alternative (as
defined below) by giving irrevocable telephonic notice to Citibank,
confirmed in writing within one Scheduled Trading Day, no later than
12:00 p.m. New York local time on the Merger Date, Tender Offer Date,
Announcement Date (in the case of a Nationalization, Insolvency or
Delisting), Early Termination Date or date of cancellation, as
applicable; provided that if Company does not validly elect to satisfy
its Payment Obligation by the Share Termination Alternative, Citibank
shall have the right to require Company to satisfy its Payment
Obligation by the Share Termination Alternative. Notwithstanding the
foregoing, Company's or Citibank's right to elect satisfaction of a
Payment Obligation in the Share Termination Alternative as set forth
in this clause shall only apply to Transactions under this
Confirmation and, notwithstanding anything to the contrary in the
Agreement, (1) separate amounts shall be calculated with respect to
(a) Transactions hereunder and (b) all other Transactions under the
Agreement, and (2) such separate amounts shall be payable pursuant to
Section 6(d)(ii) of the Agreement, subject to, in the case of clause
(a), Company's Share Termination Alternative right hereunder.
13
Share Termination Alternative: If applicable, Company shall deliver to Citibank
the Share Termination Delivery Property on the date
(the "Share Termination Payment Date") on which the
Payment Obligation would otherwise be due pursuant
to Section 12.7 or Section 12.9 of the Equity
Definitions or Section 6(d)(ii) and 6(e) of the
Agreement, subject to paragraph (m)(i) below, in
satisfaction, subject to paragraph (m)(ii) below,
of the Payment Obligation in the manner reasonably
requested by Citibank free of payment.
Share Termination Delivery Property: A number of Share Termination Delivery Units, as
calculated by the Calculation Agent, equal to the
Payment Obligation divided by the Share Termination
Unit Price. The Calculation Agent shall adjust the
amount of Share Termination Delivery Property by
replacing any fractional portion of a security
therein with an amount of cash equal to the value
of such fractional security based on the values
used to calculate the Share Termination Unit Price.
Share Termination Unit Price: The value to Citibank of property contained in one
Share Termination Delivery Unit on the date such
Share Termination Delivery Units are to be
delivered as Share Termination Delivery Property,
as determined by the Calculation Agent in its
discretion by commercially reasonable means. The
Calculation Agent shall notify Company of such
Share Termination Unit Price at the time of
notification of the Payment Obligation. In the
case of a Private Placement of Share Termination
Delivery Units that are Restricted Shares (as
defined below), as set forth in paragraph (m)(i)
below, the Share Termination Unit Price shall be
determined by the discounted price applicable to
such Share Termination Delivery Units. In the case
of a Registration Settlement of Share Termination
Delivery Units that are Restricted Shares (as
defined below) as set forth in paragraph (m)(ii)
below, the Share Termination Unit Price shall be
the Settlement Price on the Merger Date, the
Announcement Date (in the case of a
Nationalization, Insolvency or Delisting) or the
Early Termination Date, as applicable.
Share Termination Delivery Unit: In the case of a Termination Event, Event of
Default or Delisting, one Share or, in the case of
Nationalization, Insolvency, Tender Offer or Merger
Event, a unit consisting of the number or amount of
each type of property received by a holder of one
Share (without consideration of any requirement to
pay cash or other consideration in lieu of
fractional amounts of any securities) in such
Nationalization, Insolvency, Tender Offer or Merger
Event. If such Nationalization, Insolvency, Tender
Offer or Merger Event involves a choice of
consideration to be received by holders, such
holder shall be deemed to have elected to receive
the maximum possible amount of cash.
14
Failure to Deliver: Inapplicable
Other applicable provisions: If Share Termination Alternative is applicable, the
provisions of Sections 9.8, 9.9, 9.11, 9.12 and
10.5 (as modified above) of the Equity Definitions
will be applicable, except that all references in
such provisions to "Physically-settled" shall be
read as references to "Share Termination Settled"
and all references to "Shares" shall be read as
references to "Share Termination Delivery Units".
"Share Termination Settled" in relation to this
Transaction means that Share Termination
Alternative is applicable to this Transaction.
(m) Registration/Private Placement Procedures. If, in the reasonable
opinion of Citibank, following any delivery of Shares or Share
Termination Delivery Property to Citibank hereunder, such Shares or
Share Termination Delivery Property would be in the hands of Citibank
subject to any applicable restrictions with respect to any
registration or qualification requirement or prospectus delivery
requirement for such Shares or Share Termination Delivery Property
pursuant to any applicable federal or state securities law (including,
without limitation, any such requirement arising under Section 5 of
the Securities Act as a result of such Shares or Share Termination
Delivery Property being "restricted securities", as such term is
defined in Rule 144 under the Securities Act, or as a result of the
sale of such Shares or Share Termination Delivery Property being
subject to paragraph (c) of Rule 145 under the Securities Act) (such
Shares or Share Termination Delivery Property, "Restricted Shares"),
then delivery of such Restricted Shares shall be effected pursuant to
either clause (i) or (ii) below at the election of Company, unless
Citibank waives the need for registration/private placement procedures
set forth in (i) and (ii) below. Notwithstanding the foregoing, solely
in respect of any Daily Number of Warrants exercised or deemed
exercised on any Expiration Date, Company shall elect, prior to the
first Settlement Date for the first Expiration Date, a Private
Placement Settlement or Registration Settlement for all deliveries of
Restricted Shares for all such Expiration Dates which election shall
be applicable to all Settlement Dates for such Warrants and the
procedures in clause (i) or clause (ii) below shall apply for all such
delivered Restricted Shares on an aggregate basis commencing after the
final Settlement Date for such Warrants. The Calculation Agent shall
make reasonable adjustments to settlement terms and provisions under
this Confirmation to reflect a single Private Placement or
Registration Settlement for such aggregate Restricted Shares delivered
hereunder.
(i) If Company elects to settle the Transaction pursuant to this
clause (i) (a "Private Placement Settlement"), then delivery of
Restricted Shares by Company shall be effected in customary
private placement procedures with respect to such Restricted
Shares reasonably acceptable to Citibank; provided that Company
may not elect a Private Placement Settlement if, on the date of
its election, it has taken, or caused to be taken, any action
that would make unavailable either the exemption pursuant to
Section 4(2) of the Securities Act for the sale by Company to
Citibank (or any affiliate designated by Citibank) of the
15
Restricted Shares or the exemption pursuant to Section 4(1) or
Section 4(3) of the Securities Act for resales of the Restricted
Shares by Citibank (or any such affiliate of Citibank). The
Private Placement Settlement of such Restricted Shares shall
include customary representations, covenants, blue sky and other
governmental filings and/or registrations, indemnities to
Citibank, due diligence rights (for Citibank or any designated
buyer of the Restricted Shares by Citibank), opinions and
certificates, and such other documentation as is customary for
private placement agreements, all reasonably acceptable to
Citibank. In the case of a Private Placement Settlement, Citibank
shall determine the appropriate discount to the Share Termination
Unit Price (in the case of settlement of Share Termination
Delivery Units pursuant to paragraph (l) above) or any Settlement
Price (in the case of settlement of Shares pursuant to Section 2
above) applicable to such Restricted Shares in a commercially
reasonable manner and appropriately adjust the number of such
Restricted Shares to be delivered to Citibank hereunder; provided
that in no event shall such number be greater than 3,700,000 (the
"Maximum Amount"). Notwithstanding the Agreement or this
Confirmation, the date of delivery of such Restricted Shares
shall be the Exchange Business Day following notice by Citibank
to Company, of such applicable discount and the number of
Restricted Shares to be delivered pursuant to this clause (i).
For the avoidance of doubt, delivery of Restricted Shares shall
be due as set forth in the previous sentence and not be due on
the Share Termination Payment Date (in the case of settlement of
Share Termination Delivery Units pursuant to paragraph (l) above)
or on the Settlement Date for such Restricted Shares (in the case
of settlement in Shares pursuant to Section 2 above).
In the event Company shall not have delivered the full number of
Restricted Shares otherwise applicable as a result of the proviso
above relating to the Maximum Amount (such deficit, the "Deficit
Restricted Shares"), Company shall be continually obligated to
deliver, from time to time until the full number of Deficit
Restricted Shares have been delivered pursuant to this paragraph,
Restricted Shares when, and to the extent, that (i) Shares are
repurchased, acquired or otherwise received by Company or any of
its subsidiaries after the Trade Date (whether or not in exchange
for cash, fair value or any other consideration), (ii) authorized
and unissued Shares reserved for issuance in respect of other
transactions prior to such date which prior to the relevant date
become no longer so reserved and (iii) Company additionally
authorizes any unissued Shares that are not reserved for other
transactions. Company shall immediately notify Citibank of the
occurrence of any of the foregoing events (including the number
of Shares subject to clause (i), (ii) or (iii) and the
corresponding number of Restricted Shares to be delivered) and
promptly deliver such Restricted Shares thereafter.
In the event of a Private Placement Settlement, the Net Share
Settlement Amount or the Payment Obligation, respectively, shall
be deemed to be the Net Share Settlement Amount or the Payment
Obligation, respectively, plus an additional amount (determined
from time to time by the Calculation Agent in its commercially
reasonable judgment) attributable to interest that would be
earned on such Net Share Settlement Amount or the Payment
Obligation, respectively, (increased on a daily basis to reflect
the accrual of such interest and reduced from time to time by the
amount of net proceeds received by Citibank as provided herein)
at a rate equal to the open Federal Funds Rate plus the Spread
for the period from, and including, such Settlement Date or the
date on which the Payment Obligation is due, respectively, to,
but excluding, the related date on which all the Restricted
Shares have been sold and calculated on an Actual/360 basis. The
foregoing provision shall be without prejudice to Citibank's
rights under the Agreement (including, without limitation,
Sections 5 and 6 thereof).
As used in this Section, "Spread" means, with respect to any Net
Share Settlement Amount or Payment Obligation, respectively, the
credit spread over the applicable overnight rate that would be
imposed if Citibank were to extend credit to Company in an amount
equal to such Net Share Settlement Amount, all as determined by
the Calculation Agent using its commercially reasonable judgment
as of the related Settlement Date or the date on which the
Payment Obligation is due, respectively. Commercial
reasonableness shall take into consideration all factors deemed
relevant by the Calculation Agent, which are expected to include,
among other things, the credit quality of Company (and any
relevant affiliates) in the then-prevailing market and the credit
spread of similar companies in the relevant industry and other
companies having a substantially similar credit quality.
16
(ii) If Company elects to settle the Transaction pursuant to this
clause (ii) (a "Registration Settlement"), then Company
shall promptly (but in any event no later than the beginning
of the Resale Period) file and use its reasonable best
efforts to make effective under the Securities Act a
registration statement or supplement or amend an outstanding
registration statement in form and substance reasonably
satisfactory to Citibank, to cover the resale of such
Restricted Shares in accordance with customary resale
registration procedures, including covenants, conditions,
representations, underwriting discounts (if applicable),
commissions (if applicable), indemnities, due diligence
rights, opinions and certificates, and such other
documentation as is customary for equity resale underwriting
agreements, all reasonably acceptable to Citibank. If
Citibank, in its sole reasonable discretion, is not
satisfied with such procedures and documentation Private
Placement Settlement shall apply. If Citibank is satisfied
with such procedures and documentation, it shall sell the
Restricted Shares pursuant to such registration statement
during a period (the "Resale Period") commencing on the
Exchange Business Day following delivery of such Restricted
Shares (which, for the avoidance of doubt, shall be (x) any
Settlement Date in the case of an exercise of Warrants prior
to the first Expiration Date pursuant to Section 2 above,
(y) the Share Termination Payment Date in case of settlement
in Share Termination Delivery Units pursuant to paragraph
(l) above or (z) the Settlement Date in respect of the final
Expiration Date for all Daily Number of Warrants) and ending
on the earliest of (i) the Exchange Business Day on which
Citibank completes the sale of all Restricted Shares or, in
the case of settlement of Share Termination Delivery Units,
a sufficient number of Restricted Shares so that the
realized net proceeds of such sales equals or exceeds the
Payment Obligation (as defined above), (ii) the date upon
which all Restricted Shares have been sold or transferred
pursuant to Rule 144 (or similar provisions then in force)
or Rule 145(d)(1) or (2) (or any similar provision then in
force) under the Securities Act and (iii) the date upon
which all Restricted Shares may be sold or transferred by a
non-affiliate pursuant to Rule 144(k) (or any similar
provision then in force) or Rule 145(d)(3) (or any similar
provision then in force) under the Securities Act. If the
Payment Obligation exceeds the realized net proceeds from
such resale, Company shall transfer to Citibank by the open
of the regular trading session on the Exchange on the
Exchange Trading Day immediately following the last day of
the Resale Period the amount of such excess (the "Additional
Amount") in cash or in a number of Shares ("Make-whole
Shares") in an amount that, based on the Settlement Price on
the last day of the Resale Period (as if such day was the
"Valuation Date" for purposes of computing such Settlement
Price), has a dollar value equal to the Additional Amount.
The Resale Period shall continue to enable the sale of the
Make-whole Shares. If Company elects to pay the Additional
Amount in Shares, the requirements and provisions for
Registration Settlement shall apply. This provision shall be
applied successively until the Additional Amount is equal to
zero. In no event shall Company deliver a number of
Restricted Shares greater than the Maximum Amount.
(iii) Without limiting the generality of the foregoing, Company
agrees that any Restricted Shares delivered to Citibank, as
purchaser of such Restricted Shares, (i) may be transferred
by and among Citibank and its affiliates and Company shall
effect such transfer without any further action by Citibank
and (ii) after the minimum "holding period" within the
meaning of Rule 144(d) under the Securities Act has elapsed
after any Settlement Date for such Restricted Shares,
Company shall promptly remove, or cause the transfer agent
for such Restricted Shares to remove, any legends referring
to any such restrictions or requirements from such
Restricted Shares upon delivery by Citibank (or such
affiliate of Citibank) to Company or such transfer agent of
seller's and broker's representation letters customarily
delivered by Citibank in connection with resales of
restricted securities pursuant to Rule 144 under the
Securities Act, without any further requirement for the
delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax
stamps or payment of any other amount or any other action by
Citibank (or such affiliate of Citibank).
17
If the Private Placement Settlement or the Registration
Settlement shall not be effected as set forth in clauses (i) or
(ii), as applicable, then failure to effect such Private
Placement Settlement or such Registration Settlement shall
constitute an Event of Default with respect to which Company
shall be the Defaulting Party.
(n) Limit on Beneficial Ownership. Notwithstanding anything to the
contrary in the Agreement or this Confirmation, in no event shall
Citibank be entitled to receive, or shall be deemed to receive, any
Shares if, upon such receipt of such Shares, the "beneficial
ownership" (within the meaning of Section 13 of the Exchange Act and
the rules promulgated thereunder) of Shares by Citibank or any entity
that directly or indirectly controls Citibank (collectively, "Citibank
Group") would be equal to or greater than 4.5% or more of the
outstanding Shares. If any delivery owed to Citibank hereunder is not
made, in whole or in part, as a result of this provision, Company's
obligation to make such delivery shall not be extinguished and Company
shall make such delivery as promptly as practicable after, but in no
event later than one Exchange Business Day after, Citibank gives
notice to Issuer that such delivery would not result in Citibank Group
directly or indirectly so beneficially owning in excess of 4.5% of the
outstanding Shares. No additional compensation or amounts shall be due
Citibank as a consequence of such delayed settlement.
(o) Share Deliveries. Company acknowledges and agrees that, to the extent
the holder of this Warrant is not then an affiliate and has not been
an affiliate for 90 days (it being understood that Citibank will not
be considered an affiliate under this paragraph solely by reason of
its receipt of Shares pursuant to this Transaction), and otherwise
satisfies all holding period and other requirements of Rule 144 of the
Securities Act applicable to it, any delivery of Shares or Share
Termination Property hereunder at any time after 2 years from the
Trade Date shall be eligible for resale under Rule 144(k) of the
Securities Act and Company agrees to promptly remove, or cause the
transfer agent for such Shares or Share Termination Property, to
remove, any legends referring to any restrictions on resale under the
Securities Act from the Shares or Share Termination Property. Company
further agrees, for any delivery of Shares or Share Termination
Property hereunder at any time after 1 year from the Trade Date but
within 2 years of the Trade Date, to the to the extent the holder of
this Warrant then satisfies the holding period and other requirements
of Rule 144 of the Securities Act, to promptly remove, or cause the
transfer agent for such Restricted Share to remove, any legends
referring to any such restrictions or requirements from such
Restricted Shares. Such Restricted Shares will be de-legended upon
delivery by Citibank (or such affiliate of Citibank) to Company or
such transfer agent of customary seller's and broker's representation
letters in connection with resales of restricted securities pursuant
to Rule 144 of the Securities Act, without any further requirement for
the delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax stamps or
payment of any other amount or any other action by Citibank (or such
affiliate of Citibank). Company further agrees that any delivery of
Shares or Share Termination Delivery Property prior to the date that
is 1 year from the Trade Date, may be transferred by and among
Citibank and its affiliates and Company shall effect such transfer
without any further action by Citibank. Notwithstanding anything to
the contrary herein, Company agrees that any delivery of Shares or
Share Termination Delivery Property shall be effected by book-entry
transfer through the facilities of DTC, or any successor depositary,
if at the time of delivery, such class of Shares or class of Share
Termination Delivery Property is in book-entry form at DTC or such
successor depositary and such Shares or Share Termination Delivery
Property are not "restricted securities" for purposes of the
Securities Act. Notwithstanding anything to the contrary herein, to
the extent the provisions of Rule 144 of the Securities Act or any
successor rule are amended, or the applicable interpretation thereof
by the Securities and Exchange Commission or any court change after
the Trade Date, the agreements of Company herein shall be deemed
modified to the extent necessary, in the opinion of outside counsel of
Company, to comply with Rule 144 of the Securities Act, including Rule
144(k) as in effect at the time of delivery of the relevant Shares or
Share Termination Property.
18
(p) Governing Law. New York law (without reference to choice of law
doctrine).
(q) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury
in respect of any suit, action or proceeding relating to this
Transaction. Each party (i) certifies that no representative, agent or
attorney of the other party has represented, expressly or otherwise,
that such other party would not, in the event of such a suit, action
or proceeding, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other party have been induced to enter
into this Transaction, as applicable, by, among other things, the
mutual waivers and certifications provided herein.
(r) Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Company and each of its employees,
representatives, or other agents may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of
the Transaction and all materials of any kind (including opinions or
other tax analyses) that are provided to Company relating to such tax
treatment and tax structure.
(s) Maximum Share Delivery. Notwithstanding any other provision of this
Confirmation or the Agreement, in no event will Company be required to
deliver more than the Maximum Amount of Shares in the aggregate to
Citibank in connection with this Transaction, subject to the
provisions regarding Deficit Restricted Shares
(t) Right to Extend. Citibank may postpone, in whole or in part, any
Expiration Date or any other date of valuation or delivery with
respect to some or all of the relevant Warrants (in which event the
Calculation Agent shall make appropriate adjustments to the Daily
Number of Warrants with respect to one or more Expiration Dates) if
Citibank determines, in its commercially reasonable judgment, that
such extension is reasonably necessary or appropriate to preserve
Citibank's hedging or hedge unwind activity hereunder in light of
existing liquidity conditions or to enable Citibank to effect
purchases of Shares in connection with its hedging, hedge unwind or
settlement activity hereunder in a manner that would, if Citibank were
Issuer or an affiliated purchaser of Issuer, be in compliance with
applicable legal, regulatory or self-regulatory requirements, or with
related policies and procedures applicable to Citibank.
(u) Status of Claims in Bankruptcy. Citibank acknowledges and agrees that
this Confirmation is not intended to convey to Citibank rights against
Company with respect to the Transaction that are senior to the claims
of common stockholders of Company in any U.S. bankruptcy proceedings
of Company; provided that nothing herein shall limit or shall be
deemed to limit Citibank's right to pursue remedies in the event of a
breach by Company of its obligations and agreements with respect to
the Transaction; provided, further, that nothing herein shall limit or
shall be deemed to limit Citibank's rights in respect of any
transactions other than the Transaction.
(v) Securities Contract; Swap Agreement. The parties hereto intend for:
(a) the Transaction to be a "securities contract" and a "swap
agreement" as defined in the Bankruptcy Code (Title 11 of the United
States Code) (the "Bankruptcy Code"), and the parties hereto to be
entitled to the protections afforded by, among other Sections,
Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the
Bankruptcy Code; (b) a party's right to liquidate the Transaction and
to exercise any other remedies upon the occurrence of any Event of
Default under the Agreement with respect to the other party to
constitute a "contractual right" as described in the Bankruptcy Code;
and (c) each payment and delivery of cash, securities or other
property hereunder to constitute a "margin payment" or "settlement
payment" and a "transfer" as defined in the Bankruptcy Code.
[signature page follows]
19
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning an executed copy to
Equity Derivatives, Citibank, N.A., 390 Greenwich Street, New York, New York
10013, Facsimile No. (212) 723-8328.
Very truly yours,
CITIBANK, N.A.
/s/ William Ortner
---------------------
Authorized Signatory
Accepted and confirmed
as of the Trade Date:
CHEMED CORPORATION
By: /s/ David P. Williams
------------------------------------------
Authorized Signatory
Name: David P. Williams
20
EXHIBIT 10.5
EXECUTION COPY
$200,000,000
Chemed Corporation
1.875% Convertible Senior Notes due May 15, 2014
REGISTRATION RIGHTS AGREEMENT
May 14, 2007
J.P. Morgan Securities Inc.
277 Park Avenue
9th Floor
New York, New York 10172
Citigroup Global Markets Inc.
390 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
This Registration Rights Agreement (the "AGREEMENT") is made and
entered into as of May 14, 2007, by and among Chemed Corporation, a Delaware
corporation (the "COMPANY"), the Guarantors (as defined below) and J.P. Morgan
Securities Inc. and Citigroup Global Markets Inc. (the "REPRESENTATIVES"), as
the Representatives of the initial purchasers (the "INITIAL PURCHASERS") listed
on Schedule 1 to the purchase agreement dated as of May 8, 2007 among the
Company, the Guarantors and the Initial Purchasers (the "PURCHASE AGREEMENT").
As an inducement to the Initial Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the Initial
Purchasers thereunder, the Company agrees with the Initial Purchasers, for the
benefit of the holders (including the Initial Purchasers) of the Notes and the
Shares (as defined below) (collectively, the "HOLDERS"), as follows:
1. CERTAIN DEFINITIONS.
For purposes of this Registration Rights Agreement, the following terms
shall have the following meanings:
(a) "Additional Interest" has the meaning assigned thereto in Section 2(d).
(b) "Additional Interest Payment Date" has the meaning assigned thereto in
Section 2(d).
(c) "Agreement" means this Registration Rights Agreement, as the same may
be amended from time to time pursuant to the terms hereof.
(d) "Closing Date" means the date on which any Notes are initially issued.
(e) "Commission" means the Securities and Exchange Commission, or any other
federal agency at the time administering the Exchange Act or the Securities Act,
whichever is the relevant statute for the particular purpose.
(f) "Company" has the meaning specified in the first paragraph of this
Agreement.
(g) "Deferral Notice" has the meaning assigned thereto in Section 3(b).
(h) "Deferral Period" has the meaning assigned thereto in Section 3(b).
(i) "Effective Period" has the meaning assigned thereto in Section 2(a).
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
(k) "Guarantors" means all of the domestic subsidiaries of the Company that
are signatories hereto and all of the direct and indirect future domestic
subsidiaries of the Company who execute a supplemental indenture in order to
become Guarantors in accordance with the terms of the Indenture.
(l) "Guarantees" means the full and unconditional unsecured unsubordinated
guarantees by the Guarantors of the Notes in accordance with the terms of the
Indenture.
(m) "Holder" means each holder, from time to time, of Registrable
Securities (including the Initial Purchasers).
(n) "Indenture" means the Indenture dated as of May 14, 2007 among the
Company, the Guarantors and LaSalle Bank National Association, as Trustee,
pursuant to which the Notes are being issued.
(o) "Initial Purchasers" has the meaning specified in the first paragraph
of this Agreement.
(p) "Material Event" has the meaning assigned thereto in Section 3(a)(iv).
(q) "Majority Holders" shall mean, on any date, holders of the majority of
the Shares constituting Registrable Securities; for the purposes of this
definition, Holders of Notes constituting Registrable Securities shall be deemed
to be the Holders of the number of Shares into which such Notes are or would be
convertible as of such date.
2
(r) "NASD" shall mean the National Association of Securities Dealers, Inc.
(s) "NASD Rules" shall mean the Conduct Rules and the By-Laws of the NASD.
(t) "Notes" mean the 1.875% Convertible Senior Notes due May 15, 2014, to
be issued under the Indenture and sold by the Company to the Initial Purchasers.
(u) "Notice and Questionnaire" means a written notice delivered to the
Company containing substantially the information called for by the Form of
Selling Securityholder Notice and Questionnaire attached as Annex A to the
Offering Memorandum.
(v) "Notice Holder" means, on any date, any Holder that has delivered a
Notice and Questionnaire to the Company on or prior to such date.
(w) "Offering Memorandum" means the Offering Memorandum dated May 8, 2007
relating to the offer and sale of the Securities.
(x) "Person" means a corporation, association, partnership, organization,
business, individual, government or political subdivision thereof or
governmental agency.
(y) "Prospectus" means the prospectus included in any Shelf Registration
Statement, as amended or supplemented by any amendment or prospectus supplement,
including post-effective amendments, and all materials incorporated by reference
or explicitly deemed to be incorporated by reference in such Prospectus.
(z) "Purchase Agreement" has the meaning specified in the first paragraph
of this Agreement.
(aa) "Registrable Securities" means
(a) the Notes, including the Guarantees, until the earliest of
(i) their effective registration under the Securities Act
and the resale of all such Notes in accordance with the
Shelf Registration Statement, (ii) the expiration of the
holding period applicable to Notes held by persons who are
not affiliates of the Company under Rule 144(k) or any
successor provision or similar provisions then in effect,
(iii) the date on which all such Notes are freely
transferable by persons who are not affiliates of the
Company without registration under the Securities Act or
(iv) the date on which all such Notes have been converted or
otherwise cease to be outstanding;
(b) the Shares, if any, issuable upon conversion of the Notes,
until the earliest of (i) their effective registration under
the Securities Act and the resale of all such Shares in
accordance with the Shelf Registration Statement, (ii) the
expiration of the holding period applicable to Shares held
by persons who are not affiliates of the Company under Rule
144(k), (iii) the date on which all such Shares are freely
transferable by persons who are not affiliates of the
Company without registration under the Securities Act or
(iv) the date on which all such Shares cease to be
outstanding.
3
(bb) "Registration Default" has the meaning assigned thereto in Section
2(d).
(cc) "Registration Expenses" has the meaning assigned thereto in Section 5.
(dd) "Rule 144," "Rule 405" and "Rule 415" mean, in each case, such rule as
promulgated under the Securities Act.
(ee) "Securities" means, collectively, the Notes, the Guarantees and the
Shares.
(ff) "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
(gg) "Shares" means the shares of capital stock of the Company, par value
$1.00 per share, into which the Notes are convertible or that have
been issued upon any conversion from Notes into capital stock of the
Company.
(hh) "Shelf Registration Statement" means the shelf registration statement
referred to in Section 2(a), as amended or supplemented by any
amendment or supplement, including post-effective amendments, and all
materials incorporated by reference or explicitly deemed to be
incorporated by reference in such Shelf Registration Statement.
(ii) "Special Counsel" shall have the meaning assigned thereto in
Section 5.
(jj) "Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, or any successor thereto, and the rules, regulations and
forms promulgated thereunder, all as the same shall be amended
from time to time.
(kk) "Trustee" shall have the meaning assigned such term in the
Indenture.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of this
Agreement, and the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision. Unless the context otherwise requires, any
reference to a statute, rule or regulation refers to the same (including any
successor statute, rule or regulation thereto) as it may be amended from time to
time.
2. REGISTRATION UNDER THE SECURITIES ACT.
(a) The Company and the Guarantors agree to file under the
Securities Act, or otherwise designate an existing registration
statement previously filed with the Commission, within 120 days after
the Closing Date a shelf registration statement providing for the
registration of, and the sale on a continuous or delayed basis by the
Holders of, all of the Registrable Securities, and, if necessary by
the Company of all of the Shares, pursuant to Rule 415 or any similar
rule that may be adopted by the Commission. The Company and the
Guarantors agree to use their commercially reasonable efforts to cause
the Shelf Registration Statement to become or be declared effective
within 180 days after the Closing Date (unless such Shelf Registration
Statement is a previously filed registration statement that is
effective at the time it is so designated) and to keep such Shelf
Registration Statement continuously effective until each of the
Registrable Securities covered by the Shelf Registration Statement
ceases to be a Registrable Security (the "Effective Period"). None of
the Company's or any Guarantor's securityholders (other than Holders
of Registrable Securities) shall have the right to include any of the
Company's securities in the Shelf Registration Statement.
4
(b) The Company and each Guarantor further agrees that they shall
cause the Shelf Registration Statement and the related Prospectus and
any amendment or supplement thereto, as of the effective date of the
Shelf Registration Statement or such amendment or supplement, (i) to
comply in all material respects with the applicable requirements of
the Securities Act; and (ii) not to contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein (in the
case of the Prospectus, in the light of the circumstances under which
they were made) not misleading, and the Company agrees to furnish to
the Holders of the Registrable Securities copies of any supplement or
amendment prior to its being used or promptly following its filing
with the Commission; PROVIDED, HOWEVER, that the Company shall have no
obligation to deliver to Holders of Registrable Securities copies of
any amendment consisting exclusively of an Exchange Act report or
other Exchange Act filing otherwise publicly available on the
Company's website. If the Shelf Registration Statement, as amended or
supplemented from time to time, ceases to be effective for any reason
at any time during the Effective Period (other than because all
Registrable Securities registered thereunder shall have been sold
pursuant thereto or shall have otherwise ceased to be Registrable
Securities), the Company and each Guarantor shall use their
commercially reasonable efforts to obtain the prompt withdrawal of any
order suspending the effectiveness (or designation) thereof.
(c) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell Registrable Securities pursuant to the Shelf
Registration Statement and related Prospectus, it will do so only in
accordance with this Section 2(c) and Section 3(b). From and after the
date the Shelf Registration Statement is declared effective (or
designated if such Shelf Registration Statement is effective at the
time it is so designated), the Company and each Guarantor shall, as
promptly as is practicable after the date a Notice and Questionnaire
is delivered, and in any event within five (5) Business Days after
such date,
(i) if required by applicable law, file with the Commission
a post-effective amendment to the Shelf Registration Statement or
prepare and, if required by applicable law, file a supplement to
the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other
required document so that the Holder delivering such Notice and
Questionnaire is named as a selling security holder in the Shelf
Registration Statement and the related Prospectus in such a
manner as to permit such Holder to deliver such Prospectus to
purchasers of the Registrable Securities in accordance with
applicable law and, if the Company and each Guarantor shall file
a post-effective amendment to the Shelf Registration Statement,
use their commercially reasonable efforts to cause such
post-effective amendment to be declared effective under the
Securities Act as promptly as is practicable;
5
(ii) provide such Holder copies of any documents filed
pursuant to Section 2(c)(i); and
(iii) notify such Holder as promptly as practicable after
the effectiveness (or designation) under the Securities Act of
any post-effective amendment filed pursuant to Section 2(c)(i);
PROVIDED, that if such Notice and Questionnaire is delivered during a
Deferral Period, the Company shall so inform the Holder delivering such
Notice and Questionnaire and shall take the actions set forth in
clauses (i), (ii) and (iii) above within 5 days after expiration of the
Deferral Period in accordance with Section 3(b). Notwithstanding the
foregoing, the Company will not be required to file more than one
post-effective amendment or supplement to the related prospectus during
any 30-day period. Notwithstanding anything contained herein to the
contrary, the Company shall be under no obligation to name any Holder
that is not a Notice Holder as a selling securityholder in any Shelf
Registration Statement or related Prospectus; PROVIDED, HOWEVER, that
any Holder that becomes a Notice Holder pursuant to the provisions of
this Section 2(c) (whether or not such Holder was a Notice Holder at
the time the Shelf Registration Statement was declared effective) shall
be named as a selling securityholder in the Shelf Registration
Statement or related Prospectus in accordance with the requirements of
this Section 2(c).
(d) If any of the following events (any such event a
"Registration Default") shall occur, then additional interest (the
"Additional Interest") shall become payable by the Company and each
Guarantor to Holders in respect of the Notes as follows:
(i) if the Shelf Registration Statement is not filed with
the Commission or an existing Shelf Registration Statement is not
designated within 120 days following the Closing Date, then
commencing on the 121st day after the Closing Date, Additional
Interest shall accrue on the principal amount of the outstanding
Notes that are Registrable Securities at a rate of 0.25% per
annum for the first 90 days following such 121st day and at a
rate of 0.5% per annum thereafter; or
(ii) if the Shelf Registration Statement is not declared
effective by the Commission or an existing effective Shelf
Registration Statement is not designated within 180 days
following the Closing Date, then commencing on the 181st day
after the Closing Date, Additional Interest shall accrue on the
principal amount of the outstanding Notes that are Registrable
Securities at a rate of 0.25% per annum for the first 90 days
following such 181st day and at a rate of 0.5% per annum
thereafter; or
6
(iii) if the Shelf Registration Statement has been declared
effective but such Shelf Registration Statement ceases to be
effective at any time during the Effective Period (other than
pursuant to Section 3(b) hereof), then commencing on the day such
Shelf Registration Statement ceases to be effective, Additional
Interest shall accrue on the principal amount of the outstanding
Notes that are Registrable Securities at a rate of 0.25% per
annum for the first 90 days following such date on which the
Shelf Registration Statement ceases to be effective and at a rate
of 0.5% per annum thereafter; or
(iv) if the aggregate duration of Deferral Periods in any
period exceeds the number of days permitted in respect of such
period pursuant to Section 3(b) hereof, then commencing on the
day the aggregate duration of Deferral Periods in any period
exceeds the number of days permitted in respect of such period
(and again on the first day of any subsequent Deferral Period
during such period), Additional Interest shall accrue on the
principal amount of the outstanding Notes that are Registrable
Securities at a rate of 0.25% per annum for the first 90 days and
at a rate of 0.5% per annum thereafter;
PROVIDED, HOWEVER, that the Additional Interest rate on the Notes shall not
exceed in the aggregate 0.5% per annum and shall not be payable under more than
one clause above for any given period of time, except that if Additional
Interest would be payable under more than one clause above, but at a rate of
0.25% per annum under one clause and at a rate of 0.5% per annum under the
other, then the Additional Interest rate shall be the higher rate of 0.5% per
annum; PROVIDED FURTHER, however, that (1) upon the filing or designation of the
Shelf Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness (or designation) of the Shelf Registration Statement (in the case
of clause (ii) above), (3) upon the effectiveness (or designation) of the Shelf
Registration Statement which had ceased to remain effective (in the case of
clause (iii) above), (4) upon the termination of the Deferral Period that caused
the limit on the aggregate duration of Deferral Periods in a period set forth in
Section 3(b) to be exceeded (in the case of clause (iv) above), (5) upon the
termination of certain transfer restrictions on the Notes as a result of the
application of Rule 144(k) or any successor provision, (6) for any period after
the second anniversary from the Closing Date, or (7) at the time the Notes cease
to be Registrable Securities, Additional Interest on the Notes as a result of
such clause, as the case may be, shall cease to accrue.
Notwithstanding the foregoing, no Additional Interest or other amounts will
be payable in respect of Shares in the event of a Registration Default, even if
such Shares are Registrable Securities.
Additional Interest on the Notes, if any, will be payable in cash on May 15
and November 15 of each year (the "Additional Interest Payment Date") to holders
of record of outstanding Notes that are Registrable Securities at the close of
business on May 1 or November 1, as the case may be, immediately preceding the
relevant interest payment date, PROVIDED that any Additional Interest accrued
with respect to any Notes or portion thereof called for redemption on a
redemption date or converted into Shares on a conversion date prior to an
Additional Interest Payment Date shall, in any such event, be paid instead to
the Holder who submitted such Notes or portion thereof for redemption or
conversion on the applicable redemption date or conversion date, as the case may
be, on such date (or promptly following the conversion date, in the case of
conversion). Following the cure of all Registration Defaults requiring the
payment of Additional Interest to the Holders of Notes that are Registrable
Securities pursuant to this Section, the accrual of Additional Interest will
cease (without in any way limiting the effect of any subsequent Registration
Default requiring the payment of Additional Interest).
7
The Company shall notify the Trustee immediately upon the happening of each
and every Registration Default. The Trustee shall be entitled, on behalf of
Holders of Securities, to seek any available remedy for the enforcement of this
Agreement, including for the payment of any Additional Interest. Notwithstanding
the foregoing, the parties agree that the sole monetary damages payable for a
violation of the terms of this Agreement with respect to which additional
monetary amounts are expressly provided shall be as set forth in this Section
2(d). Nothing shall preclude a Notice Holder or Holder of Registrable Securities
from pursuing specific performance or other equitable relief with respect to
this Agreement.
(e) Although the Company is required by this Agreement to register the
Registrable Securities, including Shares issued upon conversion of the
Notes, for resale, the Company will not be required to issue registered
shares upon conversion of the Notes.
3. REGISTRATION PROCEDURES.
The following provisions shall apply to the Shelf Registration Statement
filed pursuant to Section 2:
(a) The Company and each Guarantor shall:
(i) prepare and file with the Commission a registration statement with
respect to the shelf registration on any form which may be utilized by the
Company or designate an existing effective registration statement and
which, in each case, shall permit the disposition of the Registrable
Securities in accordance with the intended method or methods thereof, as
specified in writing by the Holders of the Registrable Securities, and use
commercially reasonable efforts to cause such registration statement to
become effective in accordance with Section 2(a) above;
(ii) before filing or designating any Shelf Registration Statement or
Prospectus or any amendments or supplements thereto with the Commission,
furnish to each Initial Purchaser copies of all such documents proposed to
be filed and use commercially reasonable efforts to reflect in each such
document when so filed with the Commission such comments as such Initial
Purchaser reasonably shall propose within three (3) Business Days of the
delivery of such copies to such Initial Purchaser;
8
(iii) use its commercially reasonable efforts to prepare and file with
the Commission such amendments and post-effective amendments to the Shelf
Registration Statement and file with the Commission any other required
document as may be necessary to keep such Shelf Registration Statement
continuously effective until the expiration of the Effective Period; cause
the related Prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and comply with
the provisions of the Securities Act applicable to it with respect to the
disposition of all Securities covered by such Shelf Registration Statement
during the Effective Period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Shelf Registration
Statement as so amended or such Prospectus as so supplemented;
(iv) promptly notify the Notice Holders of Registrable Securities (A)
when such Shelf Registration Statement or the Prospectus included therein
or any amendment or supplement to the Prospectus or post-effective
amendment has been filed with the Commission or designated, and, with
respect to such Shelf Registration Statement or any post-effective
amendment, when the same has become effective, (B) of any request,
following the effectiveness (or designation) of the Shelf Registration
Statement, by the Commission or any other Federal or state governmental
authority for amendments or supplements to the Shelf Registration Statement
or related Prospectus or for additional information, (C) of the issuance by
the Commission of any stop order suspending the effectiveness of such Shelf
Registration Statement or the initiation or written threat of any
proceedings for that purpose, (D) of the receipt by the Company or any
Guarantor of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or written threat of any proceeding for such purpose, (E) of
the occurrence of (but not the nature of or details concerning) any event
or the existence of any fact (a "Material Event") as a result of which any
Shelf Registration Statement shall contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, or any
Prospectus shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading (PROVIDED, HOWEVER, that no notice by the Company
shall be required pursuant to this clause (E) in the event that the Company
either promptly files a prospectus supplement to update the Prospectus or a
Form 8-K or other appropriate Exchange Act report that is incorporated by
reference into the Shelf Registration Statement, which, in either case,
contains the requisite information with respect to such Material Event that
results in such Shelf Registration Statement no longer containing any
untrue statement of material fact or omitting to state a material fact
necessary to make the statements contained therein not misleading), (F) of
the determination by the Company that a post-effective amendment to the
Shelf Registration Statement will be filed with the Commission, which
notice may, at the discretion of the Company (or as required pursuant to
Section 3(b)), state that it constitutes a Deferral Notice, in which event
the provisions of Section 3(b) shall apply or (G) at any time when a
Prospectus is required to be delivered under the Securities Act, that the
Shelf Registration Statement, Prospectus, Prospectus amendment or
supplement or post-effective amendment does not conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder;
9
(v) prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, use its commercially
reasonable efforts to register or qualify, or cooperate with the Notice
Holders of Securities included therein and their respective counsel in
connection with the registration or qualification of, such Securities for
offer and sale under the securities or blue sky laws of such jurisdictions
within the United States as any such Notice Holders reasonably requests in
writing and do any and all other acts or things necessary or advisable to
enable the offer and sale in such jurisdictions of the Securities covered
by the Shelf Registration Statement; prior to any public offering of the
Registrable Securities pursuant to the Shelf Registration Statement, use
its commercially reasonable efforts to keep each such registration or
qualification (or exemption therefrom) effective during the Effective
Period in connection with such Notice Holder's offer and sale of
Registrable Securities pursuant to such registration or qualification (or
exemption therefrom) and do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of such
Registrable Securities in the manner set forth in the Shelf Registration
Statement and the related Prospectus; PROVIDED that the Company will not be
required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to
general service of process or to taxation in any such jurisdiction where it
is not then so subject;
(vi) use its commercially reasonable efforts to prevent the issuance
of, and if issued, to obtain the withdrawal of any order suspending the
effectiveness of the Shelf Registration Statement or any post-effective
amendment thereto, and to lift any suspension of the qualification of any
of the Registrable Securities for sale in any jurisdiction in which they
have been qualified for sale, in each case at the earliest practicable
date;
(vii) upon reasonable notice, for a reasonable period prior to the
filing or designation of the Shelf Registration Statement, and throughout
the Effective Period, (i) make reasonably available for inspection by a
representative of, and Special Counsel acting for, Majority Holders of the
Securities being sold and any underwriter (and its counsel) participating
in any disposition of Securities pursuant to such Shelf Registration
Statement, all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries and (ii) use
commercially reasonable efforts to have their officers, directors,
employees, accountants and counsel supply all relevant information
reasonably requested by such representative, Special Counsel or any such
underwriter in connection with such Shelf Registration Statement;
10
(viii) in connection with an underwritten offering pursuant to the
Shelf Registration Statement with an aggregate public offering price of at
least $20 million, if requested by Majority Holders of the Securities being
sold in such underwriting, its Special Counsel or the managing
underwriters, use its commercially reasonable efforts to cause (i) its
counsel to deliver an opinion relating to the Shelf Registration Statement
and the Securities in customary form, (ii) its officers to execute and
deliver all customary documents and certificates reasonably requested by
the Majority Holders of the Securities being sold, their Special Counsel or
the managing underwriters (if any) and (iii) its independent public
accountants to provide a comfort letter or letters in customary form,
subject to receipt of appropriate documentation as contemplated, and only
if permitted, by Statement of Auditing Standards No. 72; PROVIDED, that
such underwritten offering is subject to the consent of the Company, such
consent not to be unreasonably withheld;
(ix) if reasonably requested by any Initial Purchaser or any Notice
Holder, promptly incorporate in a prospectus supplement or post-effective
amendment to the Shelf Registration Statement such information as such
Initial Purchaser or such Notice Holder shall, on the basis of a written
opinion of nationally-recognized counsel experienced in such matters,
determine to be required to be included therein by applicable law and make
any required filings of such prospectus supplement or such post-effective
amendment; PROVIDED, that the Company shall not be required to take any
actions under this Section 3(a)(ix) that are not, in the reasonable opinion
of counsel for the Company, in compliance with applicable law;
(x) promptly furnish to each Notice Holder and each Initial Purchaser,
upon their request and without charge, at least one (1) conformed copy of
the Shelf Registration Statement and any amendments thereto, including
financial statements but excluding schedules, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits; PROVIDED,
HOWEVER, that the Company shall have no obligation to deliver to Notice
Holders or the Initial Purchasers a copy of any amendment publicly
available on the Company's website;
(xi) during the Effective Period, deliver to each Notice Holder in
connection with any sale of Registrable Securities pursuant to the Shelf
Registration Statement, without charge, as many copies of the Prospectus
relating to such Registrable Securities (including each preliminary
prospectus) and any amendment or supplement thereto as such Notice Holder
may reasonably request; and the Company hereby consents (except during such
periods that a Deferral Notice is outstanding and has not been revoked) to
the use of such Prospectus or each amendment or supplement thereto by each
Notice Holder in connection with any offering and sale of the Registrable
Securities covered by such Prospectus or any amendment or supplement
thereto in the manner set forth therein; and
11
(xii) cooperate with the Notice Holders of Securities to facilitate
the timely preparation and delivery of certificates representing Securities
to be sold pursuant to the Shelf Registration Statement free of any
restrictive legends and in such denominations and registered in such names
as the Holders thereof may request in writing at least two business days
prior to sales of Securities pursuant to such Shelf Registration Statement.
(b) Upon (A) the issuance by the Commission of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any Material Event as a result of which the Shelf Registration Statement
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (C) the occurrence or existence
of any corporate development that, in the discretion of the Company, makes it
appropriate to suspend the availability of the Shelf Registration Statement and
the related Prospectus, the Company will (i) in the case of clause (B) above,
subject to the third sentence of this provision, as promptly as practicable
prepare and file a post-effective amendment to such Shelf Registration Statement
or a supplement to the related Prospectus or any document incorporated therein
by reference or file any other required document that would be incorporated by
reference into such Shelf Registration Statement and Prospectus so that such
Shelf Registration Statement does not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and such Prospectus
does not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, and, in the case of a post-effective amendment
to the Shelf Registration Statement, subject to the third sentence of this
provision, use commercially reasonable efforts to cause it to be declared
effective as promptly as is practicable, and (ii) give notice to the Notice
Holders that the availability of the Shelf Registration Statement is suspended
(a "Deferral Notice"). Upon receipt of any Deferral Notice, each Notice Holder
agrees not to sell any Registrable Securities pursuant to the Shelf Registration
Statement until such Notice Holder's receipt of copies of the supplemented or
amended Prospectus provided for in clause (i) above, or until it is advised in
writing by the Company that the Prospectus may be used, and has received copies
of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such Prospectus. The Company and each Guarantor
will use its commercially reasonable efforts to ensure that the use of the
Prospectus may be resumed (x) in the case of clause (A) above, as promptly as
practicable, (y) in the case of clause (B) above, as soon as, in the sole
judgment of the Company, public disclosure of such Material Event would not be
prejudicial to or contrary to the interests of the Company or, if necessary to
avoid unreasonable burden or expense, as soon as practicable thereafter and (z)
in the case of clause (C) above, as soon as, in the discretion of the Company,
such suspension is no longer appropriate; PROVIDED that the period during which
the availability of the Shelf Registration Statement and any Prospectus is
suspended (the "Deferral Period"), without the Company incurring any obligation
to pay Additional Interest pursuant to Section 2(d), shall not exceed thirty
(30) days in the aggregate in any fiscal quarter or ninety (90) days in the
aggregate in any twelve (12) month period.
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(c) Each Holder of Registrable Securities agrees that upon receipt of any
Deferral Notice from the Company, such Holder shall forthwith discontinue (and
cause any placement or sales agent or underwriters acting on their behalf to
discontinue) the disposition of Registrable Securities pursuant to the
registration statement applicable to such Registrable Securities until such
Holder (i) shall have received copies of such amended or supplemented Prospectus
and, if so directed by the Company, such Holder shall deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
such Holder's possession of the Prospectus covering such Registrable Securities
at the time of receipt of such notice or (ii) shall have received notice from
the Company that the disposition of Registrable Securities pursuant to the Shelf
Registration may continue.
(d) The Company may require each Holder of Registrable Securities as to
which any registration pursuant to Section 2(a) is being effected to furnish to
the Company such information regarding such Holder and such Holder's intended
method of distribution of such Registrable Securities as the Company may from
time to time reasonably request in writing, but only to the extent that such
information is required in order to comply with the Securities Act. Each such
Holder agrees to notify the Company as promptly as practicable of any inaccuracy
or change in information previously furnished by such Holder to the Company or
of the occurrence of any event in either case as a result of which any
Prospectus relating to such registration contains or would contain an untrue
statement of a material fact regarding such Holder or such Holder's intended
method of disposition of such Registrable Securities or omits to state any
material fact regarding such Holder or such Holder's intended method of
disposition of such Registrable Securities required to be stated therein or
necessary to make the statements therein not misleading, and promptly to furnish
to the Company any additional information required to correct and update any
previously furnished information or required so that such Prospectus shall not
contain, with respect to such Holder or the disposition of such Registrable
Securities, an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
(e) The Company and each Guarantor shall comply with all applicable rules
and regulations of the Commission and make generally available to its
securityholders earning statements (which need not be audited) satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 40 days
after the end of any 12-month period (or 75 days after the end of any 12-month
period if such period is a fiscal year) commencing on the first day of the first
fiscal quarter of the Company commencing after the effective date of the Shelf
Registration Statement, which statements shall cover said 12-month periods.
13
(f) The Company shall provide a CUSIP number for all Registrable Securities
covered by the Shelf Registration Statement not later than the effective date of
such Shelf Registration Statement and provide the Trustee for the Notes and the
transfer agent for the Shares with printed certificates for the Registrable
Securities that are in a form eligible for deposit with The Depository Trust
Company.
(g) The Company and each Guarantor shall use its commercially reasonable
efforts to provide such information as is required for any filings required to
be made with the National Association of Securities Dealers, Inc.
(h) Until the expiration of the Effectiveness Period, the Company will not,
and will not permit any of its controlled "affiliates" (as defined in Rule 144)
to, resell any of the Securities that have been reacquired by any of them except
pursuant to an effective registration statement under the Securities Act.
(i) The Company and each of the Guarantors shall cause the Indenture to be
qualified under the Trust Indenture Act in a timely manner.
4. HOLDER'S OBLIGATIONS.
Each Holder agrees, by acquisition of the Registrable Securities, that
no Holder of Registrable Securities shall be entitled to sell any of such
Registrable Securities pursuant to the Shelf Registration Statement or to
receive a Prospectus relating thereto, unless such Holder has furnished the
Company with a Notice and Questionnaire as required pursuant to Section 2(c)
hereof (including the information required to be included in such Notice and
Questionnaire) and the information set forth in the next sentence. Each Notice
Holder agrees promptly to furnish to the Company all information required to be
disclosed in order to make the information previously furnished to the Company
by such Notice Holder not misleading and any other information regarding such
Notice Holder and the distribution of such Registrable Securities as may be
required to be disclosed in the Shelf Registration Statement under applicable
law or pursuant to Commission comments. Each Holder further agrees not to sell
any Registrable Securities pursuant to the Shelf Registration Statement without
delivering, or causing to be delivered, a Prospectus to the purchaser thereof
and, following termination of the Effective Period, to notify the Company,
within 10 Business Days of a request by the Company, of the amount of
Registrable Securities sold pursuant to the Shelf Registration Statement and, in
the absence of a response, the Company may assume that all of the Holder's
Registrable Securities were so sold.
5. REGISTRATION EXPENSES.
The Company and each Guarantor agrees to bear and to pay or cause to be
paid promptly upon request being made therefor all expenses incident to the
Company's performance of or compliance with this Agreement, including, but not
limited to, (a) all Commission and any NASD registration and filing fees and
expenses, (b) all fees and expenses in connection with the qualification of the
Securities for offering and sale under the State securities and Blue Sky laws
referred to in Section 3(a)(v) hereof, including reasonable fees and
disbursements of one counsel for the placement agent or underwriters, if any, in
connection with such qualifications, (c) all expenses relating to the
preparation, printing, distribution and reproduction of the Shelf Registration
Statement, the related Prospectus, each amendment or supplement to each of the
foregoing, the certificates representing the Securities and all other documents
relating hereto, (d) fees and expenses of the Trustee under the Indenture, any
escrow agent or custodian, and of the registrar and transfer agent for the
Shares, (e) fees, disbursements and expenses of counsel and independent
certified public accountants of the Company (including the expenses of any
reports required by the Securities Act or the rules and regulations thereunder
to be included or incorporated by reference in the Shelf Registration Statement
or "cold comfort" letters required by or incident to such performance and
compliance) and (f) reasonable fees, disbursements and expenses of one counsel
for the Holders of Registrable Securities retained in connection with the Shelf
Registration Statement, as selected by the Company (unless reasonably objected
to by the Majority Holders of the Registrable Securities being registered, in
which case the Majority Holders shall select such counsel for the
Holders)("Special Counsel"), and fees, expenses and disbursements of any other
Persons, including special experts, retained by the Company in connection with
such registration (collectively, the "Registration Expenses"). To the extent
that any Registration Expenses are incurred, assumed or paid by any Holder of
Registrable Securities or any underwriter or placement agent therefor, the
Company shall reimburse such Person for the full amount of the Registration
Expenses so incurred, assumed or paid promptly after receipt of a documented
request therefor. Notwithstanding the foregoing, the Holders of the Registrable
Securities being registered shall pay all underwriting discounts and commissions
and placement agent fees and commissions attributable to the sale of such
Registrable Securities and the fees and disbursements of any counsel or other
advisors or experts retained by such Holders (severally or jointly), other than
the counsel and experts specifically referred to above.
14
6. INDEMNIFICATION.
(a) The Company and each Guarantor agrees to indemnify and hold
harmless each Holder (including, without limitation, each Initial
Purchaser), the directors, officers, employees and affiliates of each
Initial Purchaser and each person who controls such Holder within the
meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of
them may become subject under the Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement
or any prospectus forming part thereof or in any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that neither the
Company nor any Guarantor will be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission from any such document, in reliance upon and in conformity
with written information provided by a Holder in its most recent Notice and
Questionnaire; PROVIDED FURTHER, that with respect to any untrue statement
or omission of material fact from any related preliminary prospectus, the
indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any Holder from whom the Person asserting any such loss, claim,
damage or liability purchased the securities concerned, to the extent that
any such loss, claim, damage or liability of such Holder occurs under the
circumstance that (y) the untrue statement or omission of a material fact
from the related preliminary prospectus was corrected in the final
prospectus unless, in either case, such failure to deliver the final
Prospectus was a result of non-compliance by the Company with Section 3 and
(z) there was not sent or given to such Person, at or prior to the written
confirmation of the sale of such securities to such Person, a copy of the
final prospectus. This indemnity agreement will be in addition to any
liability that the Company or any Guarantor may otherwise have.
15
(b) Each Holder agrees to indemnify and hold harmless the Company,
each Guarantor, each of its directors, each of its officers, and each
person, if any, who controls the Company or any Guarantor within the
meaning of either the Act or the Exchange Act, against any and all losses,
claims, damages or liabilities, joint or several, to which the Company or
any Guarantor may become subject under the Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, but in
each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with any information furnished to the Company by such Holder in
its most recent Notice and Questionnaire, and agrees to reimburse the
Company, as incurred, for any legal or other expenses reasonably incurred
by it in connection with investigating or defending any such loss, claim,
damage, liability or action PROVIDED, HOWEVER, that no such Holder shall be
liable for any indemnity claims hereunder in excess of the amount of net
proceeds received by such Holder from the sale of Securities pursuant to
such Shelf Registration Statement. This indemnity agreement will be in
addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party
(i) will not relieve it from liability under paragraph (a) or (b) above
16
unless and to the extent it has been materially prejudiced through the
forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b). If any action shall be brought
against an indemnified party and it shall have notified the indemnifying
party thereof, the indemnifying party shall be entitled to appoint counsel
(including local counsel) of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any
action for which indemnification is sought (in which case the indemnifying
party shall not thereafter be responsible for the fees and expenses of any
separate counsel, other than local counsel if not appointed by the
indemnifying party, retained by the indemnified party or parties except as
set forth below); PROVIDED, HOWEVER, that such counsel shall be reasonably
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel (including local counsel) to represent
the indemnified party in an action, the indemnified party shall have the
right to employ separate counsel (including local counsel), and the
indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest; (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties that are different from or additional to those
available to the indemnifying party; (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
the institution of such action; or (iv) the indemnifying party shall
authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the
prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding and does not include an
admission of fault, culpability or a failure to act, by or on behalf of
such indemnified party.
(d) The provisions of this Section 6 and Section 7 shall remain in
full force and effect, regardless of any investigation made by or on behalf
of any Holder, the Company, or any of the indemnified Persons referred to
in this Section 6 and Section 7, and shall survive the sale by a Holder of
securities covered by the Shelf Registration Statement.
7. CONTRIBUTION.
If the indemnification provided for in Section 6 is unavailable or
insufficient to hold harmless an indemnified party under Section 6(a) or 6(b),
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
17
received by the Company from the offering and sale of the Notes, on the one
hand, and a Holder with respect to the sale by such Holder of Securities, on the
other, or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company and the Guarantors on the one hand and such Holder on the other with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors on the one hand and a Holder on the other with respect to such
offering and such sale shall be deemed to be in the same proportion as the total
net proceeds from such offering (excluding discounts and commissions, but before
deducting expenses) received by or on behalf of the Company and the Guarantors,
on the one hand, and the total net proceeds (excluding discounts and
commissions, but before deducting expenses) received by such Holder, on the
other, bear to the total gross proceeds from the sale all Securities pursuant to
the Shelf Registration Statement in the offering of the Securities from which
the contribution claim arises. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to the Company and the Guarantors or information supplied by the Company
and the Guarantors on the one hand or to any information contained in the
relevant Notice and Questionnaire supplied by such Holder on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this Section 7 were to be determined by PRO RATA allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 7 shall be deemed to include, for
purposes of this Section 7, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending or
preparing to defend any such action or claim. Notwithstanding the provisions of
this Section 7, an indemnifying party that is a Holder of Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Securities sold by such indemnifying party to any purchaser
exceeds the amount of any damages which such indemnifying party has otherwise
paid or become liable to pay by reason of any untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
8. RULE 144A AND RULE 144.
So long as any Registrable Securities remain outstanding, the Company
and each of the Guarantors shall use its commercially reasonable efforts to file
the reports required to be filed by it under Rule 144A(d)(4) under the Exchange
Act in a timely manner and, if at any time the Company and each of the
Guarantors is not required to file such reports, it will, upon the written
request of any Holder of Restricted Securities, make publicly available other
information so long as necessary to permit sales of such Holder's securities
pursuant to Rules 144 and 144A. The Company and each of the Guarantors covenants
that it will take such further action as any Holder of Restricted Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rules 144 and 144A
(including, without limitation, the requirements of Rule 144A(d)(4)). Upon the
written request of any Holder of Registrable Securities, the Company shall
deliver to such Holder a written statement as to whether it and each of the
Guarantors has complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 8 shall be deemed to require the Company or any of the
Guarantors to register any of its securities pursuant to the Exchange Act.
18
9. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given, unless the Company has
obtained the written consent of the Majority Holders. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
Securities are being sold pursuant to the Shelf Registration Statement and
that does not directly or indirectly affect the rights of other Holders may
be given by Holders of a majority in aggregate amount of the Securities
being sold by such Holders pursuant to the Shelf Registration Statement.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:
(1) If to the Company, initially at the address set forth in the
Purchase Agreement;
(2) If to the Representatives, initially at the address set
forth in the Purchase Agreement; and
(3) If to a Holder, to the address of such Holder set forth in
the security register, the Notice and Questionnaire or other
records of the Company.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
(c) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company, each Guarantor and each of their respective successors and assigns.
(d) COUNTERPARTS. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
19
(e) DEFINITION OF TERMS. For purposes of this Agreement, (a) the term
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule 405 under the Securities Act.
(f) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) REMEDIES. In the event of a breach by the Company or by any Holder of
any of their respective obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages (other than the recovery of
damages for a breach by the Company of its obligations under Section 3 hereof
for which Additional Interest have been paid pursuant to Section 2 hereof), will
be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement (other than the recovery of damages for a breach by
the Company of its obligations under Section 3 hereof for which Additional
Interest have been paid pursuant to Section 2 hereof), and hereby further agree
that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.
(i) NO INCONSISTENT AGREEMENTS. The Company and each of the Guarantors
represents, warrants and agrees that (i) it has not entered into, shall not, on
or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof, (ii) it has not previously
entered into any agreement which remains in effect granting any registration
rights with respect to any of its debt securities to any person and (iii)
without limiting the generality of the foregoing, without the written consent of
the Majority Holders, it shall not grant to any Person the right to request the
Company to register any securities of the Company under the Securities Act
unless the rights so granted are not in conflict or inconsistent with the
provisions of this Agreement.
(j) NO PIGGYBACK ON REGISTRATIONS. Neither the Company nor any of its
security holders (other than the Holders of Restricted Securities in such
capacity) shall have the right to include any securities of the Company in any
Shelf Registration Statement other than Registrable Securities.
(k) SEVERABILITY. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
20
(l) SURVIVAL. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Agreement or made pursuant
hereto shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any Holder of
Registrable Securities, any director, officer or partner of such Holder, any
agent or underwriter or any director, officer or partner thereof, or any
controlling person of any of the foregoing, and shall survive delivery of and
payment for the Registrable Securities pursuant to the Purchase Agreement and
the transfer and registration of Registrable Securities by such Holder.
(m) SECURITIES HELD BY THE COMPANY, ETC. Whenever the consent or approval
of Holders of a specified percentage of Securities is required hereunder,
Securities held by the Company or its affiliates (other than subsequent Holders
of Securities if such subsequent Holders are deemed to be affiliates solely by
reason of their holdings of such Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
21
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Guarantors and
the Initial Purchasers in accordance with its terms.
Very truly yours,
CHEMED CORPORATION
By /s/ David P. Williams
- -----------------------------------------
Name: David P. Williams
Title: Vice President and CFO
THE GUARANTORS
COMFORT CARE HOLDINGS, CO.
JET RESOURCE, INC.
ROTO-ROOTER CORPORATION
ROTO-ROOTER SERVICES COMPANY
NUROTOCO OF MASSACHUSETTS, INC.
CONSOLIDATED HVAC, INC.
ROTO-ROOTER GROUP, INC.
R.R. UK, INC.
ROTO-ROOTER DEVELOPMENT COMPANY
VITAS HEALTHCARE CORPORATION
VITAS HEALTHCARE CORPORATION OF CALIFORNIA
VITAS HEALTHCARE CORPORATION OF CENTRAL FLORIDA
VITAS HEALTHCARE CORPORATION OF FLORIDA
VITAS HEALTHCARE CORPORATION OF ILLINOIS
VITAS HEALTHCARE CORPORATION OF OHIO
VITAS HEALTHCARE CORPORATION ATLANTIC
VITAS HEALTHCARE CORPORATION MIDWEST
VITAS HME SOLUTIONS, INC.
VITAS HOLDINGS CORPORATION
HOSPICE CARE INCORPORATED
VITAS HOSPICE SERVICES, L.L.C.
VITAS HEALTHCARE OF TEXAS, L.P.
VITAS HEALTHCARE CORPORATION OF GEORGIA
VITAS HEALTHCARE CORPORATION OF ARIZONA
VITAS CARE SOLUTIONS, INC.
By /s/ David P. Williams
- -------------------------------------------
Name: David P. Williams
Title: Vice President
Accepted: May 14, 2007
For itself and on behalf of the several Initial Purchasers listed on Schedule 1
to the Purchase Agreement.
J.P. MORGAN SECURITIES INC.
By /s/ Sudheer Tegulapalle
- --------------------------------------
Name: Sudheer Tegulapalle
Authorized Signatory
CITIGROUP GLOBAL MARKETS INC.
By /s/ Dung Nguyen
- --------------------------------------
Name: Dung Nguyen
Authorized Signatory
EXHIBIT 99.1
Chemed Corporation Announces the Issuance of
$200 Million Senior Convertible Notes
CINCINNATI--(BUSINESS WIRE)--May 14, 2007--Chemed Corporation
"Chemed" (NYSE:CHE) today announced it has issued $200 million
aggregate principal amount of senior convertible notes due 2014 (the
"Notes") in a private offering to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "Securities Act").
The Notes are unsecured, unsubordinated obligations of the
Company, will pay interest semi-annually at a rate of 1.875% per
annum, and will be convertible upon satisfaction of certain
conditions. The Notes will be convertible into cash up to the
principal amount of the Notes and, with respect to any excess
conversion value, into shares of the Company's capital stock. The
Notes will have an initial conversion rate of 12.3874 shares of
capital stock per $1,000 principal amount of the Notes. This
represents an initial conversion price (which is subject to adjustment
in certain circumstances) of approximately $80.73 per share,
representing a 22.5% conversion premium based on the closing price of
$65.90 per share on May 8, 2007. Holders of the Notes will have the
right to require the Company to repurchase for cash all or some of
their Notes upon the occurrence of certain events. The Company
estimates that the net proceeds from the offering will be
approximately $194 million, after deducting estimated discounts and
expenses. The Notes will mature on May 15, 2014.
In connection with the offering, the Company has entered into
convertible note hedge transactions with affiliates of the initial
purchasers of the Notes (the "hedge counterparties") and intends to
use a portion of the net proceeds from this offering to pay for the
cost of the convertible note hedge transactions. The Company has also
entered into separate warrant transactions with the hedge
counterparties, which have partially offset the cost of the
convertible note hedge transactions. The convertible note hedge and
warrant transactions increase the effective conversion price of the
notes to over $105.00 per common share. In connection with the
convertible note hedge and warrant transactions, the hedge
counterparties have advised the Company that they or their affiliates
expect to enter into various derivative transactions with respect to
the capital stock of the Company, concurrently with or shortly
following pricing of the Notes. These activities could have the effect
of increasing or preventing a decline in the price of the capital
stock of the Company concurrently or following the pricing of the
Notes. In addition, the hedge counterparties or their affiliates may
from time to time, following the pricing of the Notes, enter into or
unwind various derivative transactions with respect to the capital
stock of the Company and/or purchase or sell capital stock of the
Company in secondary market transactions. These activities could have
the effect of decreasing the price of the capital stock of the Company
and could affect the price of the Notes during any averaging period
related to the conversion of Notes.
In addition, concurrent with the issue of the Notes, the Company
repurchased approximately 1.3 million shares of its capital stock in
negotiated transactions with institutional investors amounting to
approximately $86 million. The repurchase price of the shares is
$65.90 per share, the closing price of the Company's capital stock on
May 8, 2007.
The Company anticipates that approximately $14 million of the
remaining net proceeds of the offering will be used within
approximately 30 days after the issue of the Notes for additional
purchases of its capital stock in the open market or in negotiated
transactions. The balance of the net proceeds will be used to repay
borrowings under its revolving credit facility.
The Notes and the shares of capital stock issuable upon conversion
of the Notes have not been registered under the Securities Act or the
securities laws of any other jurisdiction and may not be offered or
sold in the United States absent registration or an applicable
exemption from the registration requirements of the Securities Act.
This announcement does not constitute an offer to sell or the
solicitation of offers to buy any security and shall not constitute an
offer, solicitation or sale of any security in any jurisdiction in
which such offer, solicitation or sale would be unlawful.
Statements in this press release or in other Chemed communications
may relate to future events or Chemed's future performance. Such
statements are forward-looking statements and are based on present
information Chemed has related to its existing business circumstances.
Investors are cautioned that such forward-looking statements are
subject to inherent risk that actual results may differ materially
from such forward-looking statements. Further, investors are cautioned
that Chemed does not assume any obligation to update forward-looking
statements based on unanticipated events or changed expectations.
CONTACT: Chemed Corporation
David P. Williams, 513-762-6901