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Exhibit 10.7
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HYBRIDON, INC.
4% CONVERTIBLE SUBORDINATED NOTES DUE 2008
NOTEHOLDERS AGREEMENT
Dated as of May 20, 2005
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NOTEHOLDERS
AGREEMENT (this "Agreement"), dated as of May 20, 2005, among
Hybridon, Inc., a Delaware corporation (the
"Company"), and the holders of the
Company's 4% Convertible Subordinated Notes
due 2008 as set forth on the list of
Holders attached to this Agreement (such
notes, the "Notes" and such holders,
the "Holders").
It is agreed as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. DEFINITIONS.
"Affiliate"
means, with respect to any specified person, any other person
directly or indirectly controlling or
controlled by or under direct or indirect
common control with such specified person.
For the purposes of this definition,
"control", when used with respect to any
person, means the power to direct the
management and policies of such person,
directly or indirectly, whether through
the ownership of voting securities, by
contract or otherwise; and the terms
"controlling" and "controlled" have
meanings correlative to the foregoing.
"Applicable
Conversion Rate" means, at the time any determination thereof
is to be made, the Initial Conversion Rate
as adjusted pursuant to Section 4.6,
and "Applicable Conversion Price" means
$1,000 divided by the Applicable
Conversion Rate.
"Board of
Directors" means either the board of directors of the Company
or
any committee of the Board of Directors
authorized to act for it with respect to
this Agreement.
"Business Day"
shall have the same meaning as Trading Day.
"Capital Stock"
means (a) in the case of a corporation, corporate stock,
(b) in the case of an association or
business entity, shares, interests,
participations, rights or other equivalents
(however designated) of corporate
stock, (c) in the case of a partnership or
limited liability company,
partnership or membership interests
(whether general or limited) and (d) any
other interest or participation that
confers on a person the right to receive a
share of the profits and losses of, or
distribution of the assets of, the
issuing person.
"cash" means
such coin or currency of the United States as at any time of
payment is legal tender for the payment of
public and private debts.
"Closing Price"
of the Common Stock on any date means the last reported
sales price or, in case no such reported
sale takes place on such date, the
average of the reported closing bid and ask
prices on the principal trading
market for the Common Stock. If no such
prices are available, the current market
price per share shall be the fair value of
a share of Common Stock as determined
in good faith by the Board of
Directors.
"Common Stock"
means the common stock of the Company as it exists on the
date of this Agreement, and any shares of
any class or classes of capital stock
of the Company resulting from any
reclassification or reclassifications thereof
and which have no preference in respect of
dividends or of amounts payable in
the event of any voluntary or involuntary
liquidation,
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dissolution or winding-up of the Company
and which are not subject to redemption
by the Company; provided, however, that if
at any time there shall be more than
one such resulting class, the shares of
each such class then so issuable on
conversion of Notes shall be substantially
in the proportion which the total
number of shares of such class resulting
from all such reclassifications bears
to the total number of shares of all such
classes resulting from all such
reclassifications.
"Company" means
the party named as such in the first paragraph of this
Agreement until a successor replaces it
pursuant to the applicable provisions of
this Agreement, and thereafter "Company"
shall mean such successor Company.
"Default" or
"default" means, when used with respect to the Notes, any
event which is or, after notice or passage
of time or both, would be an Event of
Default.
"Exchange Act"
means the United States Securities Exchange Act of 1934, as
amended, and the rules and regulations
promulgated thereunder, as in effect from
time to time.
"Final Maturity
Date" means April 30, 2008.
"Fundamental
Change" means the occurrence of any of the following at a time
after the Notes are originally issued:
(a) the Common Stock (or other common stock into which the Notes
are
convertible) is
neither listed for trading on a United States national
securities
exchange nor approved for listing on the Nasdaq National Market
or the Nasdaq
SmallCap Market or another established over-the-counter
trading market
in the United States; or
(b) any Person acquires beneficial ownership, directly or
indirectly,
through a
purchase, merger or other acquisition transaction or series of
transactions, of
shares of the Company's Capital Stock entitling the Person
to exercise a
majority of the total voting power of all shares of the
Company's
Capital Stock entitled to vote generally in elections of
directors, other
than an acquisition by the Company, any of its
Subsidiaries or
any of its employee benefit plans; or
(c) the Company merges or consolidates with or into any other
Person
(other than a
Subsidiary of the Company), another Person merges with or
into the
Company, or the Company conveys, sells, transfers or leases all
or
substantially
all of its assets to another Person, other than any
transaction:
(i) that does not result in a reclassification, conversion,
exchange or
cancellation of any outstanding Common Stock;
(ii) pursuant to which the holders of Common Stock immediately
prior to the
transaction have the entitlement to exercise, directly or
indirectly, a
majority of the total voting power of all shares of the
Capital Stock
entitled to vote generally in the election of directors of
the continuing
or surviving corporation immediately after the transaction;
or
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(iii) that is effected solely to change the Company's
jurisdiction of
incorporation and results in a reclassification, conversion
or exchange of
outstanding shares of Common Stock solely into shares of
common stock of
the surviving entity.
For purposes of this definition, whether a
Person is a "beneficial owner" will
be determined in accordance with Rule 13d-3
under the Exchange Act, and "Person"
includes any syndicate or group that would
be deemed to be a "person" under
Section 13(d)(3) of the Exchange Act.
"Holder" or
"Noteholder" means the person in whose name a Note is
registered on the books of the Company.
"Initial
Conversion Rate" means 1123.5955 shares of Common Stock per
$1,000
principal amount of Notes.
"Person" or
"person" means any individual, corporation, partnership,
limited liability company, joint venture,
association, joint-stock company,
trust, unincorporated organization,
government or any agency or political
subdivision thereof or any other
entity.
"Principal" or
"principal" of a debt security, including the Notes, means
the stated principal amount of, the premium
on, such debt security.
"Registration
Rights Agreement" means the Registration Rights Agreement,
dated as of the date hereof, among the
Company, the initial Noteholders and the
placement agent.
"SEC" means the
United States Securities and Exchange Commission.
"Notes" means
the 4% Convertible Subordinated Notes due April 30, 2008 or
any of them (each, a "Note"), as amended or
supplemented from time to time that
are issued under this Agreement.
"SEC" means the
United States Securities and Exchange Commission.
"Securities Act"
means the United States Securities Act of 1933, as
amended, and the rules and regulations
promulgated thereunder, as in effect from
time to time.
"Senior
Indebtedness" means the principal of, premium (if any) and
interest
on, the Company's indebtedness for borrowed
money (or guarantees thereof),
except such indebtedness as is by its terms
expressly stated not to be superior
in right of payment to the Notes or to rank
pari passu with the Notes.
"Significant
Subsidiary" means, in respect of any Person, a Subsidiary of
such Person that would constitute a
"significant subsidiary", as such term is
defined under Rule 1-02 of the SEC's
Regulation S-X.
"Subsidiary"
means, in respect of any Person, any corporation, association,
partnership or other business entity of
which more than 50% of the total voting
power of shares of Capital Stock or other
interests (including partnership
interests) entitled (without regard to the
occurrence of any contingency) to
vote in the election of directors,
managers, general partners or
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trustees thereof is at the time owned or
controlled, directly or indirectly, by
(i) such Person; (ii) such Person and one
or more Subsidiaries of such Person;
or (iii) one or more Subsidiaries of such
Person.
"Trading Day"
means, with respect to any security, each Monday, Tuesday,
Wednesday, Thursday and Friday, other than
any day on which securities are not
generally traded on the principal exchange
or market in which such security is
traded.
ARTICLE 2
THE NOTES
SECTION 2.1. FORM AND DATING.
The Notes shall
be issued solely in registered form substantially as set
forth in Exhibit A, which exhibit is
incorporated in and made part of this
Agreement. Each Note shall be dated as of
such date as will not result in the
loss of any interest. The Notes are being
offered and sold by the Company
pursuant to one or more Subscription
Agreements dated the date hereof (the
"Subscription Agreements") between the
Company and the initial Holders, in
transactions exempt from, or not subject
to, the registration requirements of
the Securities Act.
SECTION 2.2. TRANSFER.
Subject to
compliance with any applicable additional requirements
contained
in Section 2.5 of this Agreement, in the
Subscription Agreements and applicable
law, when a Note is presented to the
Company with a request to register a
transfer thereof, the Company shall
register the transfer as requested;
provided, however, that every Note
presented or surrendered for registration of
transfer shall be duly endorsed or
accompanied by an assignment form in the form
included as part of the Note on Exhibit A,
and, if applicable, a transfer
certificate in the form included in Exhibit
B, and in form satisfactory to the
Company duly executed by the Holder thereof
or its attorney duly authorized in
writing. Any transfer shall be without
charge. All Notes issued upon any such
transfer shall be valid obligations of the
Company, evidencing the same debt and
entitled to the same benefits under this
Agreement, as the Notes surrendered
upon such transfer.
SECTION 2.3. REPLACEMENT NOTES.
If any mutilated
Note is surrendered to the Company or the Company receives
evidence to its satisfaction of the
destruction, loss or theft of any Note, and
there is delivered to the Company such an
indemnity agreement as will be
reasonably required by it to save it
harmless, then, in the absence of notice to
the Company that such Note has been
acquired by a bona fide purchaser, the
Company shall, at its expense, execute and
deliver, in exchange for any such
mutilated Note or in lieu of any such
destroyed, lost or stolen Note, a new Note
of like tenor and principal amount. In case
any Note that has matured or is
about to mature, or is about to be
repurchased by the Company upon a Fundamental
Change, shall become mutilated, destroyed,
lost or stolen, the Company may,
instead of issuing a substitute Note, pay
or authorize the payment of the same
(without surrender thereof except in the
case of a mutilated Note) if the
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applicant for such payment shall furnish to
the Company such Note such an
indemnity agreement as will be reasonably
required by it to save it harmless.
Every new Note
issued pursuant to this Section 2.3 in lieu of any
mutilated, destroyed, lost or stolen Note
shall constitute an original
additional contractual obligation of the
Company, whether or not the mutilated,
destroyed, lost or stolen Note shall be at
any time enforceable by anyone, and
shall be entitled to all benefits of this
Agreement equally and proportionately
with any and all other Notes duly issued
hereunder. All Notes shall be held and
owned upon the express condition that the
foregoing provisions are exclusive
with respect to the replacement or payment
of mutilated, destroyed, lost or
stolen Notes and shall preclude (to the
extent lawful) any and all other rights
or remedies, notwithstanding any law or
statute existing or hereafter enacted to
the contrary with respect to he replacement
or payment of negotiable instruments
or other securities without their
surrender.
SECTION 2.4. NOTES HELD BY THE COMPANY.
In determining
whether the Holders of the required principal amount of
Notes have concurred in any notice,
direction, waiver or consent, Notes owned by
the Company or any other obligor on the
Notes or by any Affiliate of the Company
or of such other obligor shall be
disregarded.
SECTION 2.5. LEGEND; ADDITIONAL TRANSFER
AND EXCHANGE REQUIREMENTS.
(a) If Notes are
issued upon the transfer, exchange or replacement of Notes
subject to restrictions on transfer and
bearing the legends set forth on the
form of Note attached hereto as Exhibit A
(collectively, the "Legend"), or if a
request is made to remove the Legend on a
Note, the Notes so issued shall bear
the Legend, or the Legend shall not be
removed, as the case may be, unless there
is delivered to the Company such
satisfactory evidence, which shall include an
opinion of counsel if requested by the
Company, as may be reasonably required by
the Company, that neither the Legend nor
the restrictions on transfer set forth
therein are required to ensure that
transfers thereof comply with the
registration provisions of the Securities
Act or that such Notes are not
"restricted" within the meaning of Rule 144
under the Securities Act.
(b) Subject to
the succeeding paragraph, every Note shall be subject to the
restrictions on transfer provided in the
Legend. Whenever a Note is presented or
surrendered for registration of transfer,
such Note must be accompanied by a
certificate in substantially the form set
forth in Exhibit B, dated the date of
such surrender and signed by the Holder of
such Note, as to compliance with such
restrictions on transfer.
(c) The
restrictions imposed by the Legend upon the transferability of
any
Note shall cease and terminate when such
Note has been sold pursuant to an
effective registration statement under the
Securities Act or transferred in
compliance with Rule 144 (or any successor
provision) or, if earlier, upon the
expiration of the holding period applicable
to sales thereof under Rule 144(k)
under the Securities Act (or any successor
provision). Any Note as to which such
restrictions on transfer shall have expired
in accordance with their terms or
shall have terminated may, upon a surrender
of such Note for exchange to the
Company in accordance with the
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provisions of this Section 2.5 accompanied,
in the event that such restrictions
on transfer have terminated by reason of a
transfer in compliance with Rule 144
(or any successor provision), by, if
requested, an opinion of counsel reasonably
acceptable to the Company, addressed to the
Company and in form acceptable to
the Company, to the effect that the
transfer of such Note has been made in
compliance with Rule 144 (or such successor
provision) and may be exchanged for
a new Note of like tenor and aggregate
principal amount which shall not bear the
restrictive Legend.
(d) As used in
the preceding two paragraphs of this Section 2.5, the term
"transfer" encompasses any sale, pledge,
transfer, hypothecation or other
disposition of any Note.
ARTICLE 3
AUTOMATIC CONVERSION AND REPURCHASE
SECTION 3.1. AUTOMATIC CONVERSION
(a) The Company
may elect to automatically convert all, but not less than
all, of the Notes (an "Automatic
Conversion") at any time prior to maturity if:
(i) during the period ending on the first
anniversary of the date of the
original issuance of the Notes, the
volume-weighted average of the Closing
Prices of the Company's Common Stock for
the 10 Trading Days in an applicable
Measurement Period is more than 200% of the
Conversion Price; or (ii) at any
time thereafter the condition specified in
clause (i) is satisfied but
substituting 125% for 200%. "Measurement
Period" is a period of 10 consecutive
Trading Days ending within three Trading
Days of the date of the giving of the
Automatic Conversion Notice by the Company
in accordance with the provisions of
this Agreement.
(b) The Company
may elect to automatically convert all, but not less than
all, of the Notes (also an "Automatic
Conversion") at any time prior to maturity
upon the completion by the Company of a
Qualified Financing. "Qualified
Financing" means a sale by the Company for
cash or Common Stock, other equity
securities or convertible debt securities
for the purpose of financing the
Company's business (as opposed to sales
under benefit plans, for acquisitions of
another business and the like) which
results in aggregate gross proceeds to the
Company of at least $10,000,000;provided
that the purchase price paid by the
purchasers of such securities (as
determined in good faith by the Board of
Directors of the Company on a Common
Stock-equivalent basis) is greater than or
equal to the Applicable Conversion Price on
the Trading Day of such sale.
(c) In case the
Company be entitled to and shall desire to exercise the
right to convert the Notes pursuant to
Section 3.1(a), it shall fix a date for
the Automatic Conversion (the "Automatic
Conversion Date"), and it shall give
notice of such Automatic Conversion (the
"3.1(a) Conversion Notice") at least
five Trading Days and not more than 10
Trading Days prior to the Automatic
Conversion Date to the Holders of the Notes
in accordance with the provisions of
Section 9.4. If the Company shall desire to
exercise its right to convert the
Notes in connection with a Qualified
Financing pursuant to Section 3.1(b), the
Company shall give notice (the "Qualified
Financing Notice"), and together with
the Qualified Financing Notice, the
"Automatic Conversion Notice" to the Holders
of the Notes in accordance with the
provisions of Section 9.4 of the securities
being sold in the Qualified Financing, the
price being paid by purchasers for
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such securities in such Qualified
Financing, the aggregate gross proceeds to the
Company from such Qualified Financing and
the anticipated closing date of such
Qualified Financing at least 10 days before
the anticipated closing date of the
Qualified Financing. Upon, the Automatic
Conversion Date or the closing of the
Qualified Financing, as the case may be,
the principal amount of the Notes will
automatically convert into Common Stock at
the Applicable Conversion Rate unless
previously converted. The Automatic
Conversion Notice if delivered in the manner
herein provided shall be conclusively
presumed to have been duly given, whether
or not the Holder receives such notice. In
any case, any defect in such
procedures with respect to a particular
Holder shall not affect the validity of
the proceedings for the conversion of the
Notes of any other Holder. The
Automatic Conversion of the Notes shall
require the Company to pay to the
Holders of the Notes interest accrued on
the Notes to the date of the Automatic
Conversion in the manner specified in
subparagraph (d).
Each Automatic
Conversion Notice, whether provided with respect to
Automatic Conversion under Section 3.1(a)
or 3.1(b), shall specify:
(1) the Automatic Conversion Date;
(2) the amount of accrued interest on each $1,000 principal amount
of
Notes;
(3) the Applicable Conversion Rate then in effect; and
(4) the place or places where the automatically converted Notes are
to
be delivered for cancellation.
(d) If the
Automatic Conversion Notice has been given as above provided,
on
and after the Automatic Conversion Date or
the closing date of the Qualified
Financing, as the case may be (unless the
Company shall default in its
obligations with respect to the Automatic
Conversion), interest on the Notes
shall cease to accrue, the Notes shall
automatically convert into Common Stock
at the Applicable Conversion Rate, the
Notes shall be deemed no longer
outstanding, and the Holders shall have no
right in respect of the Notes except
the right to receive the shares of Common
Stock issuable upon conversion of the
Notes together with the cash specified in
Section 4.3. All Notes surrendered for
conversion shall be cancelled by the
Company unless the Company shall default as
aforesaid. On surrender of the Notes as
specified in said Automatic Conversion
Notice, the Company shall issue and shall
deliver a certificate or certificates
for the number of full shares of Common
Stock issuable upon conversion of the
Notes so converted, and shall pay accrued
interest and any cash in respect of
any fractional shares of Common Stock
arising from such conversion as provided
herein. The cash due to a Holder shall be
made by wire transfer, initiated on
the date such Notes are so surrendered, to
an account or accounts specified by
such Holder with appropriate wire
instructions; if no such instructions are
received, a check for the accrued interest
shall be sent by recognized courier
service (with no more than two-day
delivery) to such Holder within two Business
Days of the later of (i) the surrender of
the Notes and (ii) the Automatic
Conversion Date. The certificates for the
shares of Common Stock issued upon
surrender of the Notes shall be sent by
recognized courier service (with no more
than two-day delivery) to such Holder
within two Business Days of the later of
(i) the surrender of the Notes and (ii) the
Automatic Conversion Date.
(e)
Notwithstanding the failure to present and surrender the Notes
as
specified in the Automatic Conversion
Notice, the effective date of the
conversion of any Note subject to any
Automatic Conversion that complies with
this Section 3.1 shall be the Automatic
Conversion
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Date or the closing date of the Qualified
Financing, as the case may be. All
Holders shall be deemed to be the holders
of record of the shares of Common
Stock that they are entitled to receive on
Automatic Conversion as of the close
of business on the Automatic Conversion
Date or the closing date of the
Qualified Financing, as the case may be,
provided, however, that the Company
shall be under no obligation to deliver
such certificates to a Holder until the
procedures specified herein have been
complied with by such Holder.
(e) If any of
the foregoing provisions or other provisions of this Section
3.1 are inconsistent with applicable law at
the time of such Automatic
Conversion, such law shall govern.
SECTION 3.2. REPURCHASE AT OPTION OF THE
HOLDER UPON A FUNDAMENTAL CHANGE.
(a) Subject to the
satisfaction of the requirements of this Section 3.2, if
a Fundamental Change occurs at any time
prior to the Final Maturity Date, each
Holder separately will, upon receipt of the
notice of the occurrence of a
Fundamental Change described in Section
3.2(c), have the right to require the
Company to repurchase all, but not less
than all, of such Holder's Notes for
cash in an amount equal to 100% of the
principal amount of the Notes to be
repurchased plus accrued and unpaid
interest, if any, to (but not including) the
Fundamental Change Repurchase Date (the
"Fundamental Change Repurchase Price").
(b)
Notwithstanding the foregoing, Holders will not have the right
to
require the Company to repurchase any Notes
if a Fundamental Change described in
clause (b) or (c) in the definition of
Fundamental Change occurs (and the
Company will not be required to deliver the
notice described in Section 3.2(c)),
if either:
(1) the Closing Price for any five Trading Days within the period
of
10 consecutive Trading Days ending immediately after the later of
the
effective date of the Fundamental Change or the date of the
public
announcement of the Fundamental Change, in the case of a
Fundamental
Change relating to an acquisition of Capital Stock under clause (b)
of
the definition of Fundamental Change, or the period of five
consecutive Trading Days ending immediately before the effective
date
of the Fundamental Change or in the case of a Fundamental
Change
relating to a merger, consolidation, asset sale or otherwise
under
clause (c) of the definition of Fundamental Change, equals or
exceeds
110% of the Applicable Conversion Rate in effect on each of those
five
Trading Days; or
(2) at least 95% of the consideration paid for the Common Stock
(excluding cash payments for fractional shares and cash payments
made
pursuant to dissenters' or appraisal rights) in a merger or
consolidation or a conveyance, sale, transfer or lease
otherwise
constituting a Fundamental Change under clause (b) and/or (c) of
the
definition of Fundamental Change consisting of shares of Capital
Stock
traded on a United States national securities exchange or quoted
on
the Nasdaq National Market or another established
over-the-counter
trading market in the United States (or will be so traded or
quoted
immediately following the
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merger or consolidation) and as a result of the merger or
consolidation the Notes become convertible into shares of such
Capital
Stock.
(c) Subject to
Section 3.2(b), on or before the 15th day after the
effective date of a Fundamental Change
(which Fundamental Change results in the
Holders of such Notes having the right to
cause the Company to repurchase their
Notes), the Company will provide to all
Holders of the Notes a notice of the
occurrence of the Fundamental Change and of
the resulting repurchase right. Such
notice shall state:
(1) the events causing the Fundamental Change;
(2) the effective date of the Fundamental Change;
(3) the last date on which a Holder may exercise its repurchase
right;
(4) the Fundamental Change Repurchase Price;
(5) the Fundamental Change Repurchase Date;
(6) the Applicable Conversion Rate and any adjustments to the
Applicable
Conversion Rate, if and to the extent applicable;
(7) that the Notes with respect to which a Fundamental Change
repurchase notice has been given by the Holder may be converted
only
if the Holder withdraws the Fundamental Change repurchase notice
as
described in clause (d) below; and
(8) the procedures that Holders must follow to require the Company
to
repurchase their Notes and to withdraw any repurchase notice.
(d) To exercise
the repurchase right in connection with a Fundamental
Change, a Holder must, before the close of
business on the second Business Day
immediately preceding the Fundamental
Change Repurchase Date, deliver to the
Company (i) the Notes to be purchased by
the Company, and (ii) a duly completed
Fundamental Change repurchase notice. The
Fundamental Change repurchase notice
must state:
(1) the certificate number or numbers of the Note or Notes
being
delivered for repurchase; and
(2) that the Note or Notes are to be repurchased by the Company
pursuant to the applicable provisions of the Note or Notes and
this
Agreement.
A Holder may
withdraw any Fundamental Change repurchase notice by a written
notice of withdrawal delivered to the
Company prior to the close of business on
the Business Day prior to the Fundamental
Change Repurchase Date. The notice of
withdrawal must state:
(1) the principal amount of the Note or Notes for which the
repurchase
notice has
been withdrawn; and
(2) the certificate numbers of the withdrawn Note or Notes.
(e) The Company
must repurchase the Notes for which a Fundamental Change
repurchase notice has been delivered and
not withdrawn no less than 20 days
after the date of the Company's notice of
the occurrence of the relevant
Fundamental Change and no more than 60 days
after the effective date of the
Fundamental Change, subject to extension to
comply with applicable law (the
"Fundamental Change Repurchase Date"). In
addition to delivering a
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repurchase note that has not been
withdrawn, in order to receive payment of the
Fundamental Change Repurchase Price, a
Holder must deliver the Notes, together
with necessary endorsements, to the Company
after delivery of the repurchase
notice. Holders will receive payment of the
Fundamental Change Repurchase Price
promptly following the later of (i) the
Fundamental Change Repurchase Date and
(ii) the time of the delivery of the Notes.
In such event on the Fundamental
Change Repurchase Date:
(1) the Notes will cease to be outstanding and interest, if any,
will
cease to accrue (whether or not the Notes are delivered to the
Company); and
(2) all other rights of the Holder will terminate (other than
the
right to receive the Fundamental Change Repurchase Price upon
delivery
or transfer of the Notes).
ARTICLE 4
CONVERSION
SECTION 4.1. CONVERSION PRIVILEGE.
Subject to the
further provisions of this Article 4, a Holder of a Note may
convert the principal amount of such Note
(or any portion thereof equal to
$1,000 or any integral multiple of $1,000
in excess thereof) into Common Stock
at any time prior to the close of business
on the last Business Day prior to the
Final Maturity Date, at the Applicable
Conversion Rate in effect on the
Conversion Date; provided, however, that,
if such Note is submitted or presented
for purchase pursuant to Article 3, such
conversion right shall terminate at the
close of business on the Business Day
immediately preceding the Fundamental
Change Repurchase Date for such Note or
such earlier date as the Holder presents
such Note for purchase (unless the Company
shall default in making the
Fundamental Change Repurchase Price payment
when due, in which case the
conversion right shall terminate at the
close of business on the date such
default is cured and such Note is
purchased). The Initial Conversion Rate is
subject to adjustment as provided in this
Article 4.
Provisions of
this Agreement that apply to conversion of all of a Note also
apply to conversion of a portion of a
Note.
A Note in
respect of which a Holder has delivered a notice pursuant to
Section 3.2(d) exercising the option of
such Holder to require the Company to
purchase such Note may be converted only if
such notice is withdrawn by a
written notice of withdrawal delivered to
the Company prior to the close of
business on the Business Day immediately
preceding the Fundamental Change
Repurchase Date in accordance with Section
3.2(d).
A Holder of
Notes is not entitled to any rights of a holder of Common Stock
until such Holder has converted its Notes
to Common Stock, and only to the
extent such Notes are deemed to have been
converted into Common Stock pursuant
to this Article 4.
SECTION 4.2. CONVERSION PROCEDURE.
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To convert a
Note, a Holder must (a) complete and manually sign the
conversion notice on the back of the Note
and deliver such notice to the
Company, (b) surrender the Note to the
Company, (c) furnish appropriate
endorsements and transfer documents if
required by the Company, and (d) pay any
transfer or similar tax, if required. The
date on which the Holder satisfies all
of those requirements is the "Conversion
Date." As soon as practicable after the
Conversion Date applicable to a Note, the
Company shall deliver to the Holder of
such Note (i) a certificate for the number
of whole shares of Common Stock
issuable upon the conversion of such Note,
(ii) cash in lieu of any fractional
shares to be issued upon the conversion of
such Note pursuant to Section 4.3,
(iii) interest accrued, but unpaid, on such
Note to the Conversion Date and (iv)
an amount equal to the total cash dividends
paid from the date of original
issuance of the Note to the Conversion Date
on the number of shares of Common
Stock being converted.
The person in
whose name the Common Stock certificate is registered shall
be deemed to be a stockholder of record at
the close of business on the
Conversion Date; provided, however, that no
surrender of a Note on any date when
the stock transfer books of the Company
shall be closed shall be effective to
constitute the person or persons entitled
to receive the shares of Common Stock
upon such conversion as the record holder
or holders of such shares of Common
Stock on such date, but such surrender
shall be effective to constitute the
person or persons entitled to receive such
shares of Common Stock as the record
holder or holders thereof for all purposes
at the close of business on the next
succeeding day on which such stock transfer
books are open; provided, further,
that such conversion shall be at the
Applicable Conversion Rate in effect on the
Conversion Date as if the stock transfer
books of the Company had not been
closed. Upon conversion of a Note, such
person shall no longer be a Holder of
such Note. No payment or adjustment will be
made for dividends or distributions
on shares of Common Stock issued upon
conversion of a Note except as set forth
in the succeeding paragraph.
If a Holder
converts more than one Note at the same time, the number of
shares of Common Stock issuable upon the
conversion shall be based on the
aggregate principal amount of Notes
converted.
Upon surrender
of a Note that is converted in part, the Company shall
execute and deliver to the Holder a new
Note equal in principal amount to the
unconverted portion of the Note
surrendered. Any such Note shall be dated so
that there shall be no loss of interest on
such Note.
SECTION 4.3. FRACTIONAL SHARES.
The Company will
not issue fractional shares of Common Stock upon
conversion of Notes. In lieu thereof, the
Company will pay an amount in cash for
the current market value of the fractional
shares. The current market value of a
fractional share shall be determined,
(calculated to the nearest 1/1000th of a
share) by multiplying the Closing Price of
the Common Stock on the Trading Day
immediately prior to the Conversion Date by
such fractional share and rounding
the product to the nearest whole cent.
SECTION 4.4. TAXES ON CONVERSION.
If a Holder
converts a Note, the Company shall pay any documentary, stamp
or similar issue or transfer tax due on the
issue of shares of Common Stock upon
such conversion.
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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
Company may refuse to deliver the
certificate representing the Common Stock
being issued in a name other than the
Holder's name until the Company receives a
sum sufficie
