NEITHER THE
ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE, NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
CONVERTIBLE, HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
(A) AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR
(B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, OR (II) UNLESS SOLD PURSUANT
TO RULE 144 OR RULE 144A UNDER THE SECURITIES ACT.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITH
ORIGINAL ISSUE DISCOUNT (“OID”) WITHIN THE MEANING OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND CONSTITUTE
CONTINGENT PAYMENT DEBT INSTRUMENTS SUBJECT TO THE RULES SET FORTH
IN TREASURY REGULATION SECTION 1.1275-4(b). THE HOLDER HEREOF MAY
CONTACT THE CHIEF FINANCIAL OFFICER OF THE COMPANY AT THE ADDRESS
OF THE COMPANY SET FORTH HEREIN WHO WILL, BEGINNING NO LATER THAN
10 DAYS AFTER THE ISSUE DATE, PROMPTLY MAKE AVAILABLE TO HOLDERS
UPON REQUEST THE FOLLOWING INFORMATION WITH RESPECT TO THE
SECURITIES: ISSUE PRICE, AMOUNT OF OID, ISSUE DATE, YIELD TO
MATURITY, COMPARABLE YIELD AND PROJECTED PAYMENT
SCHEDULE.
IN ADDITION
TO THE FOREGOING RESTRICTIONS, ANY AND ALL SALES, TRANSFERS,
ASSIGNMENTS OR OTHER DISPOSITIONS OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE (INCLUDING THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE) ARE SUBJECT TO THE RESTRICTIONS SET
FORTH IN SECTION 8 OF THIS CERTIFICATE. ANY PURPORTED SALE,
TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF SUCH SECURITIES THAT
FAILS TO COMPLY WITH SUCH RESTRICTIONS SHALL BE NULL AND
VOID.
6.75% Variable Interest
Senior Convertible Note due 2014
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No. 001
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Issue Date:
May 11, 2009
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Principal: U.S.
$50,000,000
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FOR VALUE
RECEIVED , VECTOR GROUP LTD., a corporation duly organized and
validly existing under the laws of the State of Delaware (the
“ Company ”), HEREBY PROMISES TO PAY to
FROST NEVADA INVESTMENTS TRUST, or registered assigns, (i) the
principal sum of fifty million United States Dollars ($50,000,000)
(such principal sum, as it may be reduced from time to time, in
whole or in part, pursuant to a repurchase or conversion of this
Security, or otherwise in accordance with the definition of
“Outstanding” below, being “ Principal Amount
[Then] Outstanding ” of this Security) on
November 15, 2014 (the “Stated Maturity” ),
and (ii) interest on the Principal Amount Outstanding from
time to time, payable quarterly in arrears on each Interest Payment
Date (such term and certain other capitalized terms being used
herein as defined in Section 11 hereof), in each case at the
rate of 3.75% per annum plus additional amounts, if any (as
provided in Section 2(b) hereof), but, in any event, at a minimum
rate of 6.75% per annum, all as further provided in Section 2
hereof.
This Variable
Interest Senior Convertible Note (including all Securities issued
in exchange, transfer or replacement hereof or any other Security)
is one of an issue of Securities issued pursuant to the Purchase
Agreement, to which reference is made for any additional rights and
obligations of the Holder hereof and the Company.
Reference is also
made to the remaining provisions of this Security, including,
without limitation, provisions giving the Holder the right to
convert this Security into Common Stock of the Company and the
right to require the Company to repurchase this Security upon
certain events, in each case, on the terms and subject to the
limitations hereof.
(a) The
Company shall duly and punctually make, on the Payment Date when
due (determined in accordance with the terms hereof), each payment
on or in respect of this Security (including, without limitation,
payments of all or, as applicable, a portion of the Principal
Amount Outstanding, interest thereon and any Fundamental Change
Repurchase Price) to the Holder of this Security (determined as of
the Record Date for such Payment Date in accordance with the
definition of “Holder”) and otherwise in accordance
with the terms of this Security.
(b) Except
as otherwise specified in this Security, the Company shall make
available each payment hereunder on the Payment Date when due by
wire transfer in immediately available funds to the Holder;
provided that if, within ten days prior to the Applicable Payment
Date, the Company does not receive from a Holder written notice
setting forth wire instructions for such payment, such payment
shall be in cash, at the office or agency of the Company in the
City of Miami, Florida, or in the City of New York maintained for
such purpose or at any other office or agency maintained by the
Company for such purpose. All payments hereunder shall be made in
U.S. dollars.
(c) Any
payments due or made pursuant to this Security shall be considered
paid when due on the applicable Payment Date, if by 12:00 noon (New
York City time) on such Payment Date, the Company has made
available sufficient funds at its office or agency, has mailed the
check or has initiated the wire transfer for such payment, as
required pursuant to Section 1(b).
(d) If
any Interest Payment Date or other Payment Date, Stated Maturity,
or Fundamental Change Settlement Date of any Security shall not be
a Business Day, then, anything in this Security or other Securities
to the contrary notwithstanding, the payments otherwise required to
be made on such date may be made on the next succeeding Business
Day, with the same force and effect as if made on such date;
provided, that no interest shall accrue with respect to such
payment for the period from and after such Interest Payment Date,
other Payment Date, Stated Maturity or Fundamental Change
Settlement Date.
(a) Except
in the circumstances and to the extent otherwise set forth in
Section 6(c), interest on this Security shall accrue at the
rates and in the amounts set forth in Section 2(b), and shall
be payable quarterly in arrears, on each Interest Payment Date, to
the Holder hereof (as determined in accordance with
Section 1(a)). Thirty days prior to each Interest Payment
Date, the Company shall notify the Holders of Securities of the
interest payment due on such Interest Payment Date. Such notice
shall also set forth the Company’s calculation of such
payment, which shall be based in accordance with Sections 2(b) and
2(c).
(b) Interest
on this Security shall accrue at a rate of 3.75% per annum (except
at such other rate, in such circumstances, and for such period as
otherwise set forth in Section 6(c)). On each Interest Payment
Date, an additional sum shall be payable as interest on this
Security equal to the Additional Interest Amount (as defined in the
last sentence of this Section 2(b)). Notwithstanding the
foregoing, interest on this Security shall accrue at the rate of
6.75% per annum if such rate would produce a greater amount of
interest payable on any Interest Payment Date which includes any
portion of such period than would result under the first two
sentences (and the last sentence) of this Section 2(b). As
used herein, the “ Additional Interest Amount ”
for any Interest Payment Date shall equal the product of
(1) the number of shares of Common Stock into which this
Security was convertible on the Record Date for such Interest
Payment Date, and (2) the cash dividends or cash distributions
(whether periodic, special, extraordinary, nonrecurring, or other)
paid by the Company per share of Common Stock during the
three-month period ending on such Record Date (all such
determinations to be appropriately adjusted for any stock dividend,
stock split, stock combination or other transaction during the
applicable calculation period).
2
(c) Interest
on this Security shall be computed on the basis of a 360-day year
comprising twelve 30-day months, and shall accrue from the most
recent Interest Payment Date to which interest hereon has been paid
(or if no interest hereon has been paid, from the Original Issue
Date), until the Principal Amount Outstanding of this Security is
paid in full (together with unpaid interest theretofore accrued
thereon).
(a)
Conversion Privilege . (i) Subject to the further
provisions of this Section 3, at any time or times after the
Issue Date, a Holder of a Security may convert the Principal Amount
Outstanding of such Security (or any portion thereof equal to
$1,000 or any integral multiple of $1,000 in excess thereof) into
shares of Common Stock at any time prior to the close of business
on the Business Day prior to the Stated Maturity.
(ii)
Conversion Period . Notwithstanding the foregoing, if such
Security is presented for repurchase pursuant to Section 4,
such conversion right shall terminate at the close of business on
the last day of the Fundamental Change Conversion/Repurchase Period
for such Security (unless the Company shall default on payment when
due of the Fundamental Change Repurchase Price, in which case the
conversion right shall extend to the close of business on the date
such default is cured and such Security is repurchased).
(iii)
Conversion Rate . The number of shares of Common Stock
issuable upon conversion of any Principal Amount Outstanding
pursuant to Section 3(a) shall be determined by dividing (x) such
Principal Amount Outstanding by (y) the Conversion Price (the
“ Conversion Rate ”).
(iv)
Securities Converted in Whole or in Part . Provisions of
this Security that apply to conversion of all of a Security also
apply to conversion of a portion of a Security.
(v)
Rights of Holders . Unless otherwise provided herein, a
Holder of Securities is not entitled to any rights of a holder of
Common Stock until such Holder has converted its Securities to
Common Stock, and only to the extent such Securities are deemed to
have been converted into Common Stock pursuant to this
Section 3.
(b)
Conversion Procedure .
(i) To
convert a Security (or any portion thereof) into shares of Common
Stock on any date (a “ Conversion Date ”), a
Holder must (A) complete and manually sign the conversion
notice on the back of this Security (or a facsimile of the
conversion notice) specifying the Principal Amount Outstanding of
such Security such Holder seeks to convert and deliver such notice
in the form attached hereto as Exhibit A (the “
Notice of Conversion ”) to the Company,
(B) surrender the Security to the Company, (C) furnish
appropriate endorsements and transfer documents if required by the
Company, and (D) pay any transfer or similar tax in accordance
with Section 3(d), if required.
3
(ii) The
Company will, as soon as practicable after a Conversion Date, but
in no event later than three Trading Days following the delivery of
a Notice of Conversion (the “ Share Delivery Date
”) issue, or cause to be issued, to such Holder, or such
Holder’s nominee or nominees, certificates for the number of
full shares of Common Stock, if any, to which such Holder shall be
entitled. The Person or Persons entitled to receive such Common
Stock upon such conversion shall be treated for all purposes as the
record holder or holders of such Common Stock, as of the close of
business on the applicable Conversion Date; provided ,
however , that no surrender of a Security on any date when
the stock transfer books of the Company shall be closed shall be
effective to constitute the Person or Persons entitled to receive
the shares of Common Stock upon such conversion as the record
holder or holders of such shares of Common Stock on such date, but
such surrender shall be effective to constitute the Person or
Persons entitled to receive such shares of Common Stock as the
record holder or holders thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer
books are open; provided further , that such
conversion shall be at the Conversion Price in effect on the
Conversion Date as if the stock transfer books of the Company had
not been closed. Upon conversion in full of a Security, such Person
shall no longer be a Holder of such Security. Except as otherwise
provided in Section 3(f), no payment or adjustment will be
made for dividends or distributions on shares of Common Stock
issued upon conversion of a Security.
Holders
converting any Securities or portions thereof shall be entitled to
receive any accrued and unpaid interest on the Principal Amount
Outstanding being converted as of a Conversion Date, subject to the
remainder of this paragraph. If the Conversion Date occurs between
the close of business on the Record Date and the opening of
business on the immediately following Interest Payment Date, the
Company shall pay to the applicable Holder in cash, on such
Interest Payment Date, an amount equal to the accrued and unpaid
interest through the Conversion Date on the Principal Amount
Outstanding of Securities such Holder is converting;
provided , however , if the Company pays such Holder
on such Interest Payment Date an amount equal to the interest
otherwise payable to such Holder as if such Holder had not
converted any Security or portion thereof prior to such Interest
Payment Date, such Holder shall promptly pay to the Company an
amount equal to the difference between (1) such interest
payment received and (2) the amount of accrued and unpaid
interest through the Conversion Date for the Principal Amount
Outstanding converted by such Holder. If the Conversion Date occurs
prior to the close of business on the Record Date, the Company
shall pay to the applicable Holder in cash, within three Business
Days of such Conversion Date, an amount equal to the accrued and
unpaid interest through the Conversion Date on the Principal Amount
Outstanding of Securities such Holder is converting.
(iii)
Company’s Failure to Timely Convert . If within three
Trading Days after the delivery by such Holder of a Notice of
Conversion the Company shall, or if following the Company’s
request to deliver Common Stock the Company shall, fail to issue
and deliver or cause to be delivered to such Holder, or such
Holder’s nominee or nominees, such number of shares of Common
Stock to which such Holder is entitled upon such Holder’s
conversion of any Securities, and if on or after such Trading Day
such Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such
Holder of shares of Common Stock issuable upon such conversion that
such Holder anticipated receiving from the Company (a “
Buy-In ”), then the Company shall, within three
Business Days after such Holder’s request and in such
Holder’s discretion, either (A) pay cash to such Holder
in an amount equal to such Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common
Stock so purchased (the “ Buy-In Price ”), at
which point the Company’s obligation to deliver such
certificate (and to issue such Common Stock) shall terminate, or
(B) promptly honor its obligation to deliver to such Holder a
certificate or certificates representing such Common Stock and pay
cash to such Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (1) such number of shares
of Common Stock, times (2) the Closing Price of the Common
Stock on the Conversion Date.
4
(iv) If
a Holder converts more than one Security at the same time, the
number of shares of Common Stock issuable upon the conversion shall
be based on the aggregate Principal Amount Outstanding of
Securities converted.
(v) The
conversion by a Holder following its receipt of the Fundamental
Change Company Notice during the Fundamental Change
Conversion/Repurchase Period shall be a “ Fundamental
Change Conversion .”
(vi) Upon
surrender of a Security that is converted in part, the Company
shall execute and deliver to the applicable Holder, as soon as
practicable but in no event later than ten Business Days after
receipt of such Security, a new Security equal in Principal Amount
Outstanding to the unconverted portion of the Security
surrendered.
(vii) If
the last day on which a Security may be converted is not a Business
Day in a place where the Company is located, the Securities may be
surrendered to the Company on the next succeeding Business
Day.
(viii) Holders
that have already delivered a Fundamental Change Repurchase Notice
with respect to a Security may not surrender such Security for
conversion until the Fundamental Change Repurchase Notice has been
withdrawn in accordance with the procedures set forth in
Section 4(b).
(c)
No Fractional Shares . The Company shall not issue any
fraction of a share of Common Stock upon any conversion. If the
issuance would result in the issuance of a fraction of a share of
Common Stock, the Company shall round such fraction of a share of
Common Stock to the nearest whole share.
(d)
Taxes on Conversion . If a Holder converts a Security, the
Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issuance of shares of Common Stock upon
such conversion. However, a Holder shall pay any such tax which is
due because such Holder requests the shares of Common Stock to be
issued in a name other than such Holder’s name. The Company
may refuse to deliver the certificate representing the shares of
Common Stock being issued in a name other than a Holder’s
name until the Company receives a sum sufficient to pay any tax
which will be due because the shares of Common Stock are to be
issued in a name other than such Holder’s name. Nothing
herein shall preclude any tax withholding required by law or
regulation.
5
(e)
Company to Provide Stock . (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
Common Stock, a sufficient number of shares of Common Stock to
permit the conversion of all Securities then Outstanding into
shares of Common Stock (including after taking into account any
adjustments to the Conversion Price pursuant to Section
3(f).
(ii) All
shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares, shall be duly authorized, validly
issued, fully paid and non-assessable, and shall be free from
preemptive rights and free of any lien or adverse claim.
(iii) The
Company will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of
Common Stock upon conversion of Securities, if any, and will list
or cause to have quoted such shares of Common Stock on the NYSE,
the NYSE Amex, the NASDAQ Global Market, the NASDAQ Capital Market
or other over-the-counter market or such other exchange or market
on which the Common Stock is then listed or quoted. Any Common
Stock issued upon conversion of a Security hereunder which at the
time of conversion was a Transfer Restricted Security shall remain
a Transfer Restricted Security.
(f)
Adjustment of Conversion Price . The Conversion Price shall
be adjusted from time to time by the Company as follows:
(i) In
case the Company shall (A) pay a dividend on its Common Stock
in shares of Common Stock, (B) make a distribution on its
Common Stock in shares of Common Stock, (C) subdivide its
outstanding Common Stock into a greater number of shares, or
(D) combine its outstanding Common Stock into a smaller number
of shares, the Conversion Price in effect immediately prior thereto
shall be adjusted so that the Holder of any Security thereafter
surrendered for conversion shall be entitled to receive that number
of shares of Common Stock which it would have owned had such
Security been converted immediately prior to the happening of such
event. An adjustment made pursuant to this Section 3(f)(i)
shall become effective on the opening of business after the “
record date ” (as defined in Section 3(f)(vi)),
in the case of a dividend or distribution, and shall become
effective on the opening of business after the effective date, in
the case of subdivision or combination.
(ii) In
case the Company shall issue rights, options or warrants (other
than pursuant to a stockholder rights plan) to all or substantially
all holders of its Common Stock entitling them to subscribe for or
purchase shares of Common Stock (or securities convertible into or
exercisable or exchangeable for Common Stock) at a price per share
(or having a conversion, exercise or exchange price per share) less
than the Current Market Price per share of Common Stock on the
record date with respect to such issuance, (or if no such record
date is fixed, the Business Day immediately prior to the date of
announcement of such issuance) (treating the conversion, exercise
or exchange price per share of such securities convertible into or
exercisable or exchangeable for Common Stock as equal to the
quotient of (A) the sum of (x) the price for a unit of
such security convertible into or exercisable or exchangeable for
Common Stock and (y) any additional consideration initially
payable upon the conversion of such security into or exercise or
exchange of such security for Common Stock to (B) the number
of shares of Common Stock initially underlying such security), the
Conversion Price in effect shall be adjusted so that the Conversion
Price shall equal the price determined by multiplying the
Conversion Price in effect at the opening of business on the date
after such record date (or if no such record date is fixed, the
applicable Business Day) by a fraction of which;
6
(A) the
numerator shall be the number of shares of Common Stock outstanding
on the close of business on the record date (or, if no such record
date is fixed, the date of announcement of such issuance), plus the
number of shares which the aggregate subscription or purchase price
for the total number of shares of Common Stock underlying the
rights options, or warrants so issued (or the aggregate conversion,
exercise or exchange price of such securities so offered) would
purchase at such Current Market Price of the Common Stock;
and
(B) the
denominator shall be the number of shares of Common Stock
outstanding at the close of business on the record date with
respect to such issuance (or, if no such record date is fixed, the
date immediately prior to the date of announcement of such
issuance), plus the total number of additional shares of Common
Stock underlying the rights, options or warrants so
issued.
Such
adjustment shall be made successively whenever any such rights,
options or warrants are issued, and shall become effective on the
day following the date of announcement of such issuance.
(iii) (1) In
case the Company shall distribute to all or substantially all
holders of its Common Stock any shares of Capital Stock of the
Company (other than Common Stock), evidences of indebtedness or
other non-cash assets (including securities of any person other
than the Company but excluding (x) the portion of any
dividends or distributions paid in cash, (y) dividends or
distributions referred to in Section 3(f)(i) or
(z) distributions made in connection with the liquidation,
dissolution or winding up of the Company), or shall distribute to
all or substantially all holders of its Common Stock rights,
options or warrants to subscribe for or purchase any of its
securities (excluding those rights, options and warrants referred
to in Section 3(f)(ii) and also excluding the distribution of
rights to all holders of Common Stock pursuant to a Rights Plan or
the detachment of such rights to the extent set forth in
Section 3(f)(iii)(2)), then, in each such case, the Conversion
Price shall be adjusted to equal the price determined by
multiplying the Conversion Price in effect at the opening of
business on the date after the record date for such distribution
(or if no such record date is fixed, the applicable Business Day)
by a fraction of which:
(A) the
numerator shall be the Current Market Price per share of the Common
Stock on such record date, less the fair market value on such
record date (as determined by the Board of Directors, whose
determination shall be conclusive evidence of such fair market
value and which shall be evidenced by an Officers’
Certificate delivered to the Holder) of the portion of the
distributed assets (other than cash) so distributed applicable to
one share of Common Stock (determined on the basis of the number of
shares of Common Stock outstanding on the record date);
and
(B) the
denominator shall be such Current Market Price on such record
date.
7
Such
adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after
the record date for the determination of shareholders entitled to
receive such distribution.
(2) In
the event that the Company has in effect a preferred shares rights
plan (“ Rights Plan ”), then, upon conversion of
the Securities into Common Stock, to the extent that the Rights
Plan is still in effect upon such conversion, the Holders will
receive, in addition to the Common Stock, the rights described
therein (whether or not the rights have separated from the Common
Stock at the time of conversion), subject to the limitations set
forth in the Rights Plan. If the Rights Plan provides that upon
separation of rights under such plan from the Common Stock that the
Holders would not be entitled to receive any such rights in respect
of the Common Stock issuable upon conversion of the Securities, the
Conversion Price will be adjusted as provided in this Section
3(f)(iii) (with such separation deemed to be the distribution of
such rights), subject to readjustment in the event of the
expiration, termination or redemption of the rights. Any
distribution of rights or warrants pursuant to a Rights Plan that
would allow a Holder to receive upon conversion, in addition to the
Common Stock, the rights described therein (whether or not the
rights have separated from the Common Stock at the time of
conversion), shall not constitute a distribution of rights, options
or warrants pursuant to this Section 3.
(3) Rights,
options or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Company’s Capital Stock (either
initially or under certain circumstances), which rights, options or
warrants, until the occurrence of a specified event or events
(“ Trigger Event ”): (A) are deemed to be
transferred with such shares of Common Stock; (B) are not
exercisable; and (C) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 3(f) (and no adjustment to
the Conversion Price under this Section 3(f) will be required)
until the occurrence of the earliest Trigger Event, whereupon such
rights, options and warrants shall be deemed to have been
distributed and an appropriate adjustment (if any is required) to
the Conversion Price shall be made under this
Section 3(f)(iii). If any such right or warrant, including any
such existing rights, options or warrants distributed prior to the
Original Issue Date, are subject to events, upon the occurrence of
which such rights, options or warrants become exercisable to
purchase different securities, evidences of indebtedness or other
assets, then the date of the occurrence of any and each such event
shall be deemed to be the date of distribution and record date with
respect to new rights, options or warrants with such rights (and a
termination or expiration of the existing rights, options or
warrants without exercise by any of the holders thereof). In
addition, in the event of any distribution (or deemed distribution)
of rights, options or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect
thereto that was counted for purposes of calculating a distribution
amount for which an adjustment to the Conversion Price under this
Section 3(f) was made, in the case of any such rights, options or
warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be
readjusted upon such final redemption or repurchase to give effect
to such distribution or Trigger Event, as the case may be, as
though it were a cash distribution, equal to the per share
redemption or repurchase price received by a holder or holders of
Common Stock with respect to such rights, options or warrants
(assuming such holder had retained such rights, options or
warrants), made to all holders of Common Stock as of the date of
such redemption or repurchase.
8
(iv) In
case the Company or any of its Subsidiaries shall purchase any
shares of the Company’s Common Stock by means of a tender
offer, then, effective immediately prior to the opening of business
on the day after the last date (the “ Expiration Date
”) tenders could have been made pursuant to such tender offer
(as it may be amended) (the last time at which such tenders could
have been made on the Expiration Date is hereinafter sometimes
called the “ Expiration Time ”), the Conversion
Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the Expiration Date
by a fraction of which:
(A) the
numerator shall be the product of the number of shares of Common
Stock outstanding (including Purchased Shares, but excluding any
shares held in the treasury of the Company) immediately prior to
the Expiration Time multiplied by the Current Market Price per
share of the Common Stock (as determined in accordance with
Section 3(f)(v)); and
(B) the
denominator shall be the sum of (1) the aggregate
consideration (determined as set forth below) payable to
stockholders of the Company based on the acceptance (up to any
maximum specified in the terms of the tender offer) of all shares
validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred
to as the “ Purchased Shares ”) and (2) the
product of the number of shares of Common Stock outstanding (less
any Purchased Shares and excluding any shares held in the treasury
of the Company) immediately prior to the Expiration Time and the
Current Market Price per share of Common Stock (as determined in
accordance with Section 3(f)(v)).
For
purposes of this Section 3(f)(iv), the aggregate consideration
in any such tender offer shall equal the sum of the aggregate
amount of cash consideration and the aggregate fair market value
(as determined by the Board of Directors, whose determination shall
be conclusive evidence thereof and which shall be evidenced by an
Officers’ Certificate delivered to Holders) of any other
consideration payable in such tender offer. In the event that the
Company is obligated to purchase shares pursuant to any such tender
offer, but the Company is permanently prevented by applicable law
from effecting any or all such purchases or any or all such
purchases are rescinded, the Conversion Price shall again be
adjusted to be the Conversion Price which would have been in effect
based upon the number of shares actually purchased. If the
application of this Section 3(f)(iv) to any tender offer would
result in an increase in the Conversion Price, no adjustment shall
be made for such tender offer under this Section 3(f)(iv). For
purposes of this Section 3(f)(iv), the term “ tender
offer ” shall mean and include both tender offers and
exchange offers, and all references to “ purchases
” of shares in tender offers (and all similar references)
shall mean and include both the purchase of shares in tender offers
and the acquisition of shares pursuant to exchange
offers.
9
(v) For
the purpose of any computation under Sections 3(f)(ii) and
3(f)(iii), the current market price (the “ Current Market
Price ”) per share of Common Stock on any date shall be
deemed to be the average of the daily Closing Prices for the ten
consecutive Trading Days commencing 11 Trading Days before the
record date with respect to distributions, issuances or other
events requiring such computation under Section 3(f). For
purposes of any computation under Section 3(f)(iv), the
Current Market Price per share of Common Stock shall be deemed to
be the arithmetic average of the daily Closing Prices for the ten
consecutive Trading Days commencing on the Trading Day next
succeeding the Expiration Date.
(vi) For
the purpose of this Section 3(f), “ record date
” shall mean, with respect to any dividend, distribution or
other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or
in which the Common Stock (or other applicable security) is
exchanged for or converted into any combination of cash, securities
or other property, the date fixed for determination of stockholders
entitled to receive such cash, securities or other property
(whether such date is fixed by the Board of Directors or by
statute, contract or otherwise).
(vii) In
any case in which this Section 3(f) shall require that an
adjustment be made to the Conversion Price, in lieu of the
foregoing adjustment, the Company may, at its option, distribute,
concurrently with the distribution to the holders of the
outstanding Common Stock, shares of Common Stock, rights, options,
warrants, any shares of Capital Stock of the Company (other than
Common Stock), evidences of indebtedness or other non-cash assets
(or the fair market value, as reasonably determined by the Board of
Directors of the Company, of the foregoing in cash) that such
Holder of Securities would have been entitled to receive, as
applicable, had such Security been converted immediately prior to
the happening of the record date relating to the event that would
have caused such adjustment.
(viii) In
any case in which this Section 3(f) shall require that an
adjustment be made following a record date, an announcement date or
Expiration Date, as the case may be, established for purposes of
this Section 3(f), the Company may elect to defer (but only
until five Business Days following the filing by the Company with
the Holders of the certificate described in Section 3(h)) issuing
to the Holder of any Security converted after such record date,
announcement date or Expiration Date the shares of Common Stock and
other Capital Stock of the Company issuable upon such conversion
over and above the shares of Common Stock and other capital stock
of the Company issuable upon such conversion only on the basis of
the Conversion Rate prior to adjustment; and, in lieu of the shares
the issuance of which is so deferred, the Company shall issue or
cause its transfer agents to issue due bills or other appropriate
evidence prepared by the Company of the right to receive such
shares.
(g)
No Adjustment . (i) No adjustment need be made for
issuances of Common Stock pursuant to a Company plan for
reinvestment of dividends or interest or for a change in the par
value or a change to no par of the Common Stock.
(ii) To
the extent that the Securities become convertible into the right to
receive cash, no adjustment need be made thereafter as to the cash.
Interest will not accrue on the cash due.
(iii) No
adjustment in the Conversion Price shall be made pursuant to
Section 3(f) if the Holders (in their capacity as Holders)
participate in the transaction that would otherwise give rise to an
adjustment pursuant to Section 3(f).
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(iv) No
adjustment in the Conversion Price shall be made for issuances of
cash dividends or cash distributions, whether periodic, special,
extraordinary, non-recurring or other, which the Holder is entitled
to receive and does receive as interest pursuant to
Section 2.
(v) Other
than as described above in Section 3(f), no adjustment to the
Conversion Price shall be required for any issuance of Common Stock
or convertible or exchangeable securities or rights to purchase
Common Stock or convertible or exchangeable securities.
(h)
Notice of Conversion Price Adjustment . Whenever the
Conversion Price is adjusted, the Company shall promptly mail to
Holders of Securities a notice of the adjustment and an
Officers’ Certificate briefly stating the facts requiring the
adjustment and the manner of computing it. Unless and until the
Holders shall receive an Officers’ Certificate setting forth
an adjustment of the Conversion Price, the Holders may assume
without inquiry that the Conversion Price has not been adjusted and
that the last Conversion Price of which it has knowledge remains in
effect.
(i)
Notice of Certain Transactions . In the event
that:
(i) the
Company takes any action which would require an adjustment in the
Conversion Price (other than the issuance of dividends in the form
of Common Stock);
(ii) the
Company consolidates or merges with, or transfers all or
substantially all of its property and assets to, another
corporation and stockholders of the Company must approve the
transaction; or
(iii) there
is a dissolution or liquidation of the Company,
THEN
the Company shall mail to Holders a notice stating the proposed
record or effective date, as the case may be. The Company shall
mail the notice at least 20 days before such date. Failure to
mail such notice or any defect therein shall not affect the
validity of any transaction referred to in clause (i), (ii) or
(iii) of this Section 3(i).
(j)
Effect of Reclassification on Conversion Privilege . If
there is any reclassification or change of shares of Common Stock
issuable upon conversion of the Securities (other than a change in
par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination, or
any other change for which an adjustment is provided in
Section 3(f)); then the Company or its successor, as the case
may be, shall, as a condition precedent to such reclassification,
execute and deliver to the Holders an amended Security providing
that the Holder of each Security then Outstanding shall have the
right to convert such Security into the kind and amount of shares
of stock and other securities and property (including cash)
receivable upon such reclassification by a holder of the number of
shares of Common Stock issuable upon conversion of such Security
immediately prior to such reclassification. Such amended Security
shall provide for adjustments of the Conversion Price which shall
be as nearly equivalent as may be practicable to the adjustments of
the Conversion Price provided for in this Section 3. The
provisions of this Section 3(j) shall similarly apply to successive
reclassifications.
11
Section 4. REPURCHASE UPON A FUNDAMENTAL
CHANGE.
(a)
Repurchase of Securities at the Option of the Holder Upon
Fundamental Change .
(i)
General . If, prior to the Stated Maturity, there shall have
occurred a Fundamental Change, each Holder shall have the option to
require all or a portion (which portion must be in a Principal
Amount Outstanding of $1,000 or integral multiples thereof) of its
Securities to be repurchased (the “ Fundamental Change
Repurchase ”) by the Company at the Fundamental Change
Repurchase Price on the Fundamental Change Settlement Date in
accordance with the following procedures. The “
Fundamental Change Repurchase Price ” means the
Principal Amount Outstanding of the Securities to be repurchased,
together with accrued and unpaid interest to, but excluding, the
Fundamental Change Settlement Date.
(ii)
Company Notice of Fundamental Change . Within five Business
Days after the Company (x) knows or reasonably should know,
actually or constructively, either of the occurrence of a
Fundamental Change or that, but for the passage of time a
Fundamental Change will occur, or (y) enters into an agreement
pursuant to which the Company reasonably believes that a
Fundamental Change will occur, the Company shall deliver a written
notice of Fundamental Change, in the form attached hereto as
Exhibit B (the “ Fundamental Change Company
Notice ”) by first-class mail or by overnight courier to
each Holder (and to beneficial owners as required by applicable
law). The notice shall include a form of Fundamental Change
Repurchase Notice to be completed by the Holder and shall state, to
the extent such information is known by the Company as of the date
of such Fundamental Change Repurchase Notice:
(A) the
events causing a Fundamental Change and the date of such
Fundamental Change;
(B) the
last date of the Fundamental Change Conversion/Repurchase Period by
which a Holder must deliver a Fundamental Change Repurchase Notice
to elect the repurchase option pursuant to this Section 4(a) or
deliver a Notice of Conversion requesting conversion upon a
Fundamental Change in accordance with Section 3(b);
(C) the
Fundamental Change Settlement Date;
(D) the
Fundamental Change Repurchase Price;
(E) the
Conversion Price applicable on the date of the Fundamental Change
Company Notice;
(F) that
Securities may be converted in connection with a Fundamental Change
and any Securities as to which a Fundamental Change Repurchase
Notice has been given may be converted pursuant to Section 3
hereof only if the Fundamental Change Repurchase Notice has been
withdrawn in accordance with the terms of this Security;
12
(G) that
Securities must be surrendered to the Paying Agent for cancellation
to collect payment;
(H) that
the Fundamental Change Repurchase Price for any Security as to
which a Fundamental Change Repurchase Notice has been duly given
and not withdrawn will be paid promptly following the later of the
Fundamental Change Settlement Date and the time of surrender of
such Security as described in clause (G) above;
(I) the
procedures the Holder must follow to exercise rights under this
Section 4(a);
(J) the
procedures for withdrawing a Fundamental Change Repurchase
Notice;
(K) that,
unless the Company defaults in making payment of the Fundamental
Change Repurchase Price, if requested, Securities covered by any
Fundamental Change Repurchase Notice will cease to be outstanding
and interest will cease to accrue on and after the Fundamental
Change Settlement Date; and
(L) the
CUSIP number of the Securities.
The
Company shall promptly, but in no event later than five Business
Days after receiving such information, supplement such Fundamental
Change Repurchase Notice with any information required by this
Section 4(a)(ii) to be included in such Fundamental Change
Repurchase Notice but which information was not known by the
Company as of the original date of such notice.
(iii)
Fundamental Change Repurchase Notice . In order to exercise
its rights under Section 4(a) hereof, a Holder must deliver to the
Paying Agent:
(A) a
written notice of repurchase substantially in the form of
Exhibit B hereto (a “ Fundamental Change Repurchase
Notice ”), at any time during the Fundamental Change
Conversion/Repurchase Period, and include thereon:
(1) the
certificate number of the Security which the Holder will deliver to
be repurchased;
(2) the
portion of the Principal Amount Outstanding of the Security which
the Holder will deliver to be repurchased, which portion must be in
a Principal Amount Outstanding of $1,000 or integral multiples
thereof; and
(3) that
such Security shall be purchased as of the Fundamental Change
Settlement Date pursuant to the terms and conditions specified in
the Securities and in this Security; and
13
(B) the
Security for cancellation prior to, on or after the Fundamental
Change Settlement Date (together with all necessary endorsements)
at the offices of the Paying Agent, such delivery being a condition
to receipt by the Holder of the Fundamental Change Repurchase Price
therefor; provided that such Fundamental Change Repurchase
Price shall be so paid pursuant to this Section 4(a) only if the
Security so delivered to the Paying Agent shall conform in all
respects to the description thereof in the related Fundamental
Change Repurchase Notice.
Provisions
of this Security that apply to the repurchase of all of a Security
also apply to the repurchase of such portion of such
Security.
(iv)
Payment of Fundamental Change Repurchase Price . The
Securities to be repurchased pursuant to this Section 4(a) shall be
paid for by the payment to the Holder of the Fundamental Change
Repurchase Price either in cash or by wire transfer of immediately
available funds, at the option of the Holder; provided that if,
within ten days prior to the applicable Fundamental Change
Settlement Date, the Paying Agent does not receive from a Holder
written notice to the Paying Agent by a Holder requesting wire
transfer of such payment and setting forth wire instructions
therefor, such payment shall be in cash.
(v)
Procedure Upon Repurchase . The Company shall deposit cash
at the time and in the manner as provided in Section 4(d),
sufficient to pay the aggregate Fundamental Change Repurchase Price
of all Securities to be repurchased pursuant to this
Section 4(a).
(b)
Effect of Fundamental Change Repurchase Notice . Upon
receipt by the Paying Agent of the Fundamental Change Repurchase
Notice specified in Section 4(a)(iii), the Holder of the
Security in respect of which such Fundamental Change Repurchase
Notice was given shall (unless such Fundamental Change Repurchase
Notice is withdrawn as specified in the following two paragraphs)
thereafter be entitled to receive solely the Fundamental Change
Repurchase Price with respect to such Security. Such Fundamental
Change Repurchase Price shall be paid to such Holder, subject to
receipt of funds by the Paying Agent, promptly following the later
of (x) the Fundamental Change Settlement Date with respect to
such Security (provided the conditions in Section 4(a)(iii)
have been satisfied) and (y) the time of delivery of such
Security to the Paying Agent by the Holder thereof in the manner
required by Section 4(a)(iii). Securities in respect of which
a Fundamental Change Repurchase Notice has been given by the Holder
thereof may not be converted pursuant to Section 3 on or after
the date of the delivery of such Fundamental Change Repurchase
Notice unless such Fundamental Change Repurchase Notice has first
been validly withdrawn as specified in the following two
paragraphs.
A
Fundamental Change Repurchase Notice may be withdrawn only by means
of a written notice of withdrawal delivered to the office of the
Paying Agent in accordance with the procedures set forth in the
Fundamental Change Company Notice at any time prior to the close of
business on the Business Day prior to the Fundamental Change
Settlement Date specifying:
(i) the
Principal Amount Outstanding of the Security with respect to which
such notice of withdrawal is being submitted;
14
(ii) the
certificate number (if such Security is held in other than global
form) of the Security in respect of which such notice of withdrawal
is being submitted; and
(iii) the
Principal Amount Outstanding, if any, of such Security which
remains subject to the original Fundamental Change Repurchase
Notice and which has been or will be delivered for repurchase by
the Company.
There
shall be no repurchase of any Securities pursuant to Section 4(a)
if there has occurred (prior to, on or after, as the case may be,
the giving, by the Holders of such Securities, of the required
Fundamental Change Repurchase Notice) and is continuing an Event of
Default (other than a default in the payment of the Fundamental
Change Repurchase Price with respect to such Securities);
provided, however, that (1) the Holders of at least 75%
in aggregate Principal Amount Then Outstanding of Securities may,
by notice in writing to the Company, waive the prohibition on
repurchase of Securities contemplated by this paragraph, and
(2) upon delivery of such notice to the Company, such
prohibition on repurchase shall be automatically waived, without
any further notice, consent or other action to or by any Person.
The Paying Agent will promptly return to the respective Holders
thereof any Securities (x) with respect to which a Fundamental
Change Repurchase Notice has been withdrawn in compliance with this
Security, or (y) which are held by it during the continuance
of an Event of Default (other than a default in the payment of the
Fundamental Change Repurchase Price with respect to such
Securities) in which case, upon such return, the Fundamental Change
Repurchase Notice with respect thereto shall be deemed to have been
withdrawn.
(c)
Securities Repurchased in Whole or in Part . Any Security
which is to be repurchased, whether in whole or in part, shall be
surrendered at the office of the Paying Agent (with, if the Company
so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company duly executed by, the
Holder thereof or such Holder’s attorney duly authorized in
writing) and the Company shall execute and deliver to the Holder of
such Security, without service charge, a new Security or
Securities, of any authorized denomination as requested by such
Holder in aggregate Principal Amount Outstanding equal to, and in
exchange for, the portion of the Principal Amount Outstanding of
the Security so surrendered which is not repurchased.
(d)
Deposit of Fundamental Change Repurchase Price . Prior to
12:00 p.m., New York City time, on the Business Day preceding
the Fundamental Change Settlement Date, the Company shall deposit
with the Paying Agent (or, if the Company or a Significant
Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided herein)
an amount of money (in immediately available funds if deposited on
such Business Day), sufficient to pay the Fundamental Change
Repurchase Price of all the Securities or portions thereof which
are to be repurchased or as of the Fundamental Change Settlement
Date. The Company shall promptly notify the Holders of the
Securities which are to be repurchased in writing of the amount of
any deposits of cash made pursuant to this
Section 4(d).
15
(e)
Repayment to the Company . The Paying Agent shall return to
the Company any cash that remains unclaimed, together with interest
or dividends, if any, thereon, held by them for the payment of the
Fundamental Change Repurchase Price; provided that to the extent
that the aggregate amount of cash deposited by the Company pursuant
to Section 4(d) exceeds the aggregate Fundamental Change Repurchase
Price of the Securities or portions thereof which the Company is
obligated to repurchase as of the Fundamental Change Settlement
Date, then as soon as practicable following the Fundamental Change
Settlement Date, the Paying Agent shall return any such excess to
the Company.
4.A.1.
At Maturity . The Company shall redeem this Security (or any
portion thereof then Outstanding) on the Maturity Date.
4.A.2.
Optional Redemption Prior to Maturity . The Company shall
not have the option to redeem this Security at any time prior to
the Maturity Date.
4.A.3.
Mandatory Redemption Prior to Maturity . Notwithstanding
anything to the contrary contained herein, to the extent
as
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