FIRST SUPPLEMENTAL TRUST INDENTURE

Exhibit 4.2

ENVIRONMENTAL POWER CORPORATION

ISSUER

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

TRUSTEE

 

FIRST SUPPLEMENTAL TRUST INDENTURE

Dated as of March 1, 2009

14% Convertible Notes due January 1, 2014

 

TABLE OF CONTENTS

 

 

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FIRST SUPPLEMENTAL TRUST INDENTURE

THIS FIRST SUPPLEMENTAL TRUST INDENTURE (the “Supplemental Indenture”), dated as of March 1, 2009, among Environmental Power Corporation, a Delaware corporation (the “Company”), and Wells Fargo Bank, National Association, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee”):

W I T N E S S E T H:

WHEREAS, the Company has executed the Indenture for Senior Debt Securities on March 1, 2009 (the “Original Indenture”);

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and delivery of this Supplemental Indenture to provide for the issuance of the 14% Convertible Notes due January 1, 2014 (hereinafter referred to as the “2009 Notes”), as a supplement to the Original Indenture in an aggregate principal amount not to exceed $53,000,000, which may be issued from time to time in one or more series as in the Original Indenture provided, as registered 2009 Notes, to be authenticated by the certificate of the Trustee (the Original Indenture, as so supplemented, the “Indenture”);

WHEREAS, to provide the terms and conditions upon which the 2009 Notes are to be authenticated, issued and delivered, the Company has duly authorized the execution of this Supplemental Indenture; and

WHEREAS, all things necessary to make this Supplemental Indenture a valid agreement of the Company, in accordance with its terms, have been done.

NOW, THEREFORE, in consideration of the premises and the purchase of the 2009 Notes by the Holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the Holders of 2009 Notes:

ARTICLE I

DEFINITIONS

The terms defined in this Section 1.01 (except as herein otherwise expressly provided or unless the context otherwise requires) for all purposes of this Supplemental Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01 . All other terms used in this Supplemental Indenture, which are defined in the Trust Indenture Act or which are by reference therein defined in the Securities Act (except as herein otherwise expressly provided or unless the context otherwise requires) shall have the meanings assigned to such terms in the Trust Indenture Act and in said Securities Act as in force at the date of the execution of this Supplemental Indenture. The words “herein,” “hereof,” “hereunder,” and words of similar import refer to this Supplemental Indenture as a whole and not to any particular Article, Section or other Subdivision. The terms defined in this Article include the plural as well as the singular.

“2009 Notes” has the meaning stated in the first recital of this Supplemental Indenture and more particularly means any 2009 Notes authenticated and delivered under this

 

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Supplemental Indenture; provided, however , that if at any time there is more than one Person acting as Trustee under this Supplemental Indenture, “2009 Notes” with respect to the Supplemental Indenture as to which such Person is Trustee shall have the meaning stated in the first recital of this Supplemental Indenture and shall more particularly mean the 2009 Notes authenticated and delivered under this Supplemental Indenture, exclusive, however, of the 2009 Notes as to which such Person is not Trustee.

“Accountant” means a firm of independent certified public accountants, which may be the external auditing firm of the Company.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Certificate, the rules and procedures of the Depositary.

“Asset Sale” means:

(1) the sale, lease, conveyance or other disposition of any assets; provided that the sale, conveyance or other disposition of all or substantially all of the Company’s assets and the assets of its Subsidiaries taken as a whole will be governed by the provisions of the indenture described above; and

(2) the issuance of Equity Interests in any of the Company’s Subsidiaries.

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(1) any single transaction or series of related transactions that involves assets having a Fair Market Value of less than 5% of the Company’s Tangible Assets;

(2) a transfer of assets between or among the Company and any of its Subsidiaries;

 

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(3) an issuance of Equity Interests by a Subsidiary to the Company or to another Subsidiary, or to any other Person, if such issuance to such other Person is in connection with a Project Finance Transaction;

(4) the sale or lease of products (including environmental attributes), services or accounts receivable in the ordinary course of business and any sale or other disposition of damaged, worn out or obsolete assets or assets no longer used or useful in the Company’s or a Subsidiary’s business;

(5) the sale or other disposition of cash, Cash Equivalents or securities held for investment purposes;

(6) a Permitted Investment;

(7) a disposition resulting from any condemnation or other taking, or temporary or permanent requisition of, any property, any interest therein or right appurtenant thereto, or any change of grade affecting any property, in each case, as the result of the exercise of any right of condemnation or eminent domain, including any sale or other transfer to a Governmental Authority in lieu of, or in anticipation of, any of the foregoing events;

(8) a disposition of assets in connection with a foreclosure, transfer or deed in lieu of foreclosure or other exercise of remedial action; and

(9) a disposition of a contract relating to any Hedging Obligation or any collateral delivered under a Hedging Obligation.

“Attributable Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided, however , that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation.”

“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the board of directors of each general partner of the partnership;

(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members or board of directors or managers thereof; and

 

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(4) with respect to any other Person, the board or committee of such Person serving a similar function.

“business day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which the banking institutions in New York, New York or the city in which the Trustee is located are authorized or obligated by law or executive order to close or be closed.

“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Cash Equivalents” means:

(1) United States dollars;

(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government (provided that the full faith and credit of the United States is pledged in support of those securities) having maturities of not more than one year from the date of acquisition;

(3) deposit accounts with any bank, including the Trustee or any of its affiliates, that has a long-term debt rating of A+ or better by S&P and A1 or better by Moody’s (an “Approved Bank”);

(4) time deposits, certificates of deposit, acceptances or prime commercial paper issued by an Approved Bank at the time acquired or issued (as applicable and whichever is latest), in each case, having a maturity of not more than one year from the date of acquisition;

(5) repurchase obligations for underlying securities of the types described in clause (2) entered into with an Approved Bank at the time acquired, issued or entered into (as applicable and whichever is latest), in each case, having a maturity of not more than one year

 

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from the date of acquisition and secured by securities of the type described in clause (2), the market value of which (including accrued interest) is not less than the amount of the applicable repurchase agreement;

(6) commercial paper with a rating of A-1 by S&P and P-1 by Moody’s and, in each case, maturing within one year after the date of acquisition; and

(7) money market funds which invest primarily in Cash Equivalents of the kinds described in clauses (1) through (6) of this definition, including without limitation, one or more money market mutual fund portfolios of the Wells Fargo Advantage Funds or any other mutual fund for which the Trustee or any of its affiliates serve as an investment manager, administrator, servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives fees from such funds for services rendered, (ii) the Trustee charges and collects fees for services rendered pursuant to the Supplemental Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to the Supplemental Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates. The Company has been advised and understands that the funds are not obligations of nor are they endorsed or guaranteed by the Trustee or any of its affiliates. The Company acknowledges that it has received a prospectus relating to the funds.

“Change in Control” shall have the meaning set forth in Section 4.04 .

“close of business” means 5 p.m. (New York City time).

“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the U.S. Securities and Exchange Commission.

“Common Stock” means the Common Stock of the Company.

“Company” means Environmental Power Corporation, a Delaware corporation.

“Consolidated Capitalization” means an amount equal to the sum of:

(1) the Company’s Indebtedness and that of its Subsidiaries on a consolidated basis, minus

(2) an amount equal to the Indebtedness of a Subsidiary that is not wholly owned by the Company or any other Subsidiary and whose Indebtedness is not guaranteed by the Company or any other Subsidiary, multiplied by the percentage of equity ownership of such Subsidiary not owned by the Company and its Subsidiaries on a consolidated basis; plus

(3) the shareholders equity of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP.

“Consolidated Net Worth” means, with respect to a specified Person as of any date, the assets of such Person less the liabilities of such Person all as determined on a consolidated basis in accordance with GAAP.

 

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“Contract Security” means any credit enhancement, collateral agreement or performance guarantee, whether financial or otherwise, with respect to a contract or other obligation, including, without limitation, any escrow, performance bond or letter of credit.

“Debt to Capitalization Ratio” means, for any period, the ratio of the Indebtedness of the Company and its Subsidiaries on a consolidated basis to Consolidated Capitalization.

“Default” shall mean any event that is, or after notice or passage of time, or both, would be, an Event of Default.

“Depositary” means, with respect to the 2009 Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.01 as the Depositary with respect to the 2009 Notes, and any and all successors thereto appointed as Depositary hereunder.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the Holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the Holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the latest date on which any of the 2009 Notes matures. The amount of Disqualified Stock deemed to be outstanding at any time for purposes hereof shall be equal to the maximum amount that the Company and its Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

“DTC” means the Depository Trust Company.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Event of Default” means any event specified in Section 8.01 .

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Exchange Agent” shall mean Wells Fargo Bank, National Association.

“Fair Market Value” means the value that would be paid by a willing buyer to a willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the chief financial officer or Board of Directors of the Company.

“Fiscal Year” means the fiscal year of the Company ending December 31, or any other fiscal year designated from time to time in writing by the Company to the Trustee.

“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 have been approved by a significant segment of the accounting profession, which are in effect from time to time.

 

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“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of, or pertaining to, government.

“guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).

“Hedging Obligations” means the net obligations of the Company or any Subsidiary under:

(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2) other agreements or arrangements designed to manage interest rate risk; and

(3) other agreements or arrangements designed to protect the Company or any Subsidiary against fluctuations in currency exchange rates or fluctuations in the prices of commodities which are inputs to or products of the Facilities, including without limitation any gas or electric price protection arrangements.

“Holder,” “Security Holder” or “Owner” as applied to any 2009 Notes, or other similar terms, shall mean any Person in whose name at the time a particular 2009 Note is registered on the 2009 Notes register.

“Indebtedness” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses or trade payables), whether or not contingent (without duplication):

(1) in respect of borrowed money;

(2) evidenced by bonds, debentures or similar instruments or letters of credit or reimbursement agreements in respect thereof or guarantees thereof;

(3) in respect of banker’s acceptances;

(4) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;

 

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(5) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed; or

(6) representing or entered into in connection with any Hedging Obligations,

if and to the extent any of the preceding items (other than guarantees, letters of credit, Attributable Debt and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by the specified Person of any Indebtedness of any other Person.

The amount of any Indebtedness outstanding as of any date will be:

(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(2) the principal amount of and premium (if any) on the Indebtedness, in the case of any other Indebtedness; and

(3) in respect of Indebtedness of other Persons secured by a Lien on the assets of the specified Person, the lesser of:

(A) the Fair Market Value of such asset at such date of determination, and

(B) the amount of such Indebtedness of such other Persons.

“Indemnitees” shall have the meaning set forth in Section 9.05 .

“Indenture” shall have the meaning set forth in the recitals hereof.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Certificate through a Participant.

“Interest Payment Date” shall mean the dates on which interest on the 2009 Notes is payable.

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including guarantees or similar obligations), advances or capital contributions (excluding payroll, commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. “Investment” shall exclude extensions of trade credit by the Company and its Subsidiaries in the ordinary course of business. If the Company or any of the

 

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Company’s Subsidiaries sells or otherwise disposes of any Equity Interests of any of the Company’s direct or indirect Subsidiaries such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary, the Company will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Company’s Investments in such Subsidiary that were not sold or disposed of. The acquisition by the Company or any of the Company’s Subsidiaries of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person. Except as otherwise provided in the indenture, the amount of an Investment shall be its Fair Market Value at the time the Investment is made and without giving effect to subsequent changes in value.

“Issue Date” means the date of original issuance and delivery of any 2009 Notes.

“IRS” means the Internal Revenue Service.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement and any lease that constitutes a security interest.

“Losses” shall have the meaning set forth in Section 9.05 .

“Mandatory Conversion” shall have the meaning set forth in Section 3.04 .

“Mandatory Conversion Date” shall have the meaning set forth in Section 3.04 .

“Mandatory Redemption in Lieu of Mandatory Conversion” shall have the meaning set forth in Section 4.03 .

“Mandatory Redemption Upon Certain Sales of Assets or Certain Sale and Leaseback Transaction” shall have the meaning set forth in Section 4.02 .

“Moody’s” means Moody’s Investors Service, Inc.

“Net Income” means the net income (loss) of the Company determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

(1) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with: (A) any Asset Sale; or (B) the disposition of any securities by the Company or any of its Subsidiaries or the extinguishment of any Indebtedness of the Company or any of its Subsidiaries; and

(2) any extraordinary gain (or loss), together with any related provision for taxes on such extraordinary gain (or loss).

 

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“Net Proceeds” means the aggregate cash proceeds received by the Company or any of its Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts reserved for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP.

“Notice of Default” means a written notice given to the Company by the Trustee or to the Company and the Trustee by the Holders of not less than 25% in the aggregate principal amount of the 2009 Notes then outstanding stating that a default has occurred and is continuing.

“Obligations” means any principal, interest, premium, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Opinion of Counsel” shall mean an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, or other counsel acceptable to the Trustee, which is delivered to the Trustee.

“outstanding,” when used with reference to 2009 Notes, shall mean, as of any particular time, all 2009 Notes authenticated and delivered by the Trustee under this Supplemental Indenture, except:

(a) 2009 Notes theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

(b) 2009 Notes, or portions thereof, for the payment, or redemption of which monies in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own paying agent); provided that if such 2009 Notes are to be redeemed, as the case may be, prior to the maturity thereof, notice of such redemption shall have been given, or provision satisfactory to the Trustee shall have been made for giving such notice;

(c) 2009 Notes in lieu of which, or in substitution for which, other 2009 Notes shall have been authenticated and delivered unless proof satisfactory to the Trustee is presented that any such 2009 Notes are held by bona fide Holders in due course; and

(d) 2009 Notes converted into Common Stock and 2009 Notes deemed not outstanding.

“Participant” means, with respect to the Depositary, a Person who has an account with the Depositary.

 

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“Permitted Business” means the businesses of developing, construction, owning and/or operating facilities for the production of gas, electricity, energy, potentially tradeable environmental attributes, such as renewable energy credits and carbon sequestration credits and other valuable by-products from renewable sources and providing related services and products in the energy market and any businesses or activities incidental or reasonably related thereto or in support thereof, and such other business as would not be material to the Company and its Subsidiaries, taken as a whole.

“Permitted Debt” shall have the meaning set forth in Section 6.08 .

“Permitted Investment” means

(1) any Investment in the Company or in a Subsidiary;

(2) any Investment in Cash Equivalents;

(3) any Investment by the Company or any Subsidiary in a Person, if as a result of such Investment:

(A) such Person becomes a Subsidiary; or

(B) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Subsidiary;

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale;

(5) any acquisition of assets or Capital Stock solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

(6) any Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Company or any of its Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes with Persons who are not Affiliates;

(7) Investments represented by or entered into in connection with Hedging Obligations;

(8) any Investment acquired by the Company or any of its Subsidiaries on account of any claim against, or interest in, any other Person (A) acquired in good faith in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of such other Person or (B) as a result of a bona fide foreclosure by the Company or any of its Subsidiaries with respect to any claim against any other Person;

(9) repurchases of the 2009 Notes or pari passu Indebtedness;

 

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(10) any Investments arising in connection with, relating to or in furtherance of any Project Finance Transaction;

(11) payment of consolidated taxes;

(12) receivables owing to the Company or a Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or such Subsidiary deems reasonable under the circumstances; and

(13) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (13) that are at the time outstanding not in excess of the Asset Percentage.

“Permitted Liens” means:

(1) Liens securing any Permitted Debt, including, without limitation, Liens granted by the Company or any of its Subsidiaries, or otherwise arising in connection with, a Project Finance Transaction;

(2) Liens on assets of a Subsidiary in existence on the date on which such Person becomes a Subsidiary;

(3) Liens securing obligations under sale leaseback transactions permitted by the covenant described above covering only the assets subject to such transaction;

(4) Liens in favor of the Company or its Subsidiary;

(5) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(6) Liens imposed by or arising under law, such as carriers’, warehousemen’s, landlord’s and mechanics’ Liens, in each case, incurred in the ordinary course of business;

(7) survey exceptions, encumbrances, easements or reservations, including those for licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines, mineral reservations and rights and leases, zoning restrictions and other restrictions as to the use of real property;

(8) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under the indenture if such Permitted Refinancing Indebtedness is incurred by the same obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded (except as provided in the proviso in clause (4) of the definition of Permitted Refinancing Indebtedness);

 

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provided, however , that:

(A) the new Lien shall be limited to all or part of the same categories of property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof), and

(B) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Permitted Refinancing Indebtedness and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such refinancings, refunding, extension, renewal or replacement and (iii) any protective advances with respect to the property and assets that secure such Permitted Refinancing Indebtedness;

(9) financing statements (including precautionary statements) filed in connection with a Capital Lease Obligation or an operating lease, in each case, not prohibited hereunder; provided that no such financing statement extends to, covers or refers to as collateral, any property or assets of the Company’s or of a Subsidiary, other than the property or assets which are subject to such Capital Lease Obligation or such operating lease;

(10) Liens arising out of or in connection with any judgment that does not constitute an Event of Default or in connection with any litigation or other legal proceeding as to which an appeal to contest or review is timely commenced in good faith by appropriate proceedings and as to which adequate reserves have been established in accordance with GAAP; provided that any right to levy, seizure, attachment, sequestration, foreclosure or garnishment of any property and assets of the Company’s or of a Subsidiary thereof arising out of or in connection with any such Lien has been and continues to be enjoined or effectively stayed;

(11) inchoate statutory Liens arising under ERISA;

(12) Liens (A) on cash and short-term investments (i) deposited by the Company or any of its Subsidiaries in margin accounts with or on behalf of futures contract brokers or paid over to other counterparties or (ii) pledged or deposited as collateral to a contract counterparty or issuer of surety bonds by the Company or any of its Subsidiaries, in the case of clause (i) or (ii), to secure obligations with respect to (a) contracts for commercial and trading activities in the ordinary course of business and contracts (including without limitation, physical delivery, option (whether cash or financial), exchange, swap and futures contracts) for the purchase, transmission, distribution, sale, lease or hedge of any energy-related commodity or service or (b) interest rate, commodity price, or currency rate management contracts or derivatives and (B) encumbering assets other than accounts or receivables arising out of contracts or agreements relating to the generation, distribution or transmission of energy; provided that all such agreements or contracts are entered into in the ordinary course of business;

(13) Liens arising by virtue of any statutory or common law provision relating to banker’s liens, rights of set off or similar rights, contractual rights of setoff or netting arrangements entered into in the ordinary course of business and similar rights with respect to deposit accounts, commodity accounts and/or securities accounts;

 

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(14) pledges and deposits to secure the payment of worker’s compensation, unemployment insurance, social security benefits or obligations under similar laws, or to secure the payment or performance of statutory or public obligations (including environmental, municipal and public utility commission obligations and requirements), reimbursement or indemnity obligations arising out of surety, performance, or other similar bonds, and other obligations of a like nature, in each case incurred in the ordinary course of business;

(15) Liens granted by a Person in favor of a commercial trading counterparty pursuant to a netting agreement, which Liens encumber rights under agreements that are subject to such netting agreement and which Liens secure such Person’s obligations to such counterparty under such netting agreement; provided, that any such agreements and netting agreements are entered into in the ordinary course of business; and provided, further, that the Liens are incurred in the ordinary course of business and when granted, do not secure obligations which are past due;

(16) Liens created in connection with the indemnity and contribution obligations in favor of underwriters or note purchasers in connection with the notes;

(17) Liens incurred in the ordinary course of business securing obligations that in the aggregate at any one time outstanding do not exceed the Asset Percentage;

(18) Liens securing any working capital line of credit required by the terms of any Project Finance Transaction; and

(19) Liens granted in support of any Hedging Obligations.

“Permitted Prior Liens” means (1) Liens described in clauses (2), (3), (4), (5), (6), (7), (9), (12), (13), (14), (15) (16) and (18) of the definition of “Permitted Liens,” (2) Liens refinancing or replacing any of the Liens contemplated in clause (1) of this definition and (3) Liens that arise by operation of law and are not voluntarily granted, to the extent entitled by law, to priority over the security interests created by the security documents.

“Permitted Refinancing Indebtedness” means any Indebtedness of the Company or any of its Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of the Company or any of its Subsidiaries (other than intercompany Indebtedness); provided that

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses, costs and fees and premiums incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

 

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(3) such Indebtedness is incurred either by the Company or by the Subsidiary who is the obligor or guarantor of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

(4) if incurred by the Company, such Indebtedness may be guaranteed by the Subsidiaries.

“Permitted Uses of Proceeds” means costs and expenses associated with the construction and operation of projects being developed, constructed or operated by any Subsidiary, which costs and expenses may include, without limitation, costs of materials, equipment and labor, debt service, license fees which may become due to Danish Biogas Technology, A.S., operations and maintenance costs, and reimbursement of the Company or its Affiliates of equity contributions, subordinate debt or other project-related expenses advanced by the Company or such Affiliates in anticipation of receipt of the proceeds of any offering of the 2009 Notes. In addition, the 2009 Notes may be issued hereunder from time to time directly to third parties as payment for any of the foregoing costs and expenses, upon authentication of such 2009 Notes in accordance with Section 2.04 of the Indenture.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“Project Finance Transaction” means a debt, equity or other financing agreement or arrangement, including, without limitation, any financing or capital lease or sale and leaseback transaction, entered into for the principal purpose of financing the development, construction or operation of any facility in furtherance of the Permitted Businesses, including working capital therefor, and any agreement or arrangement entered into by, between or among the Company, any of its Subsidiaries or any other person in connection therewith or in furtherance thereof.

“Responsible Officer” shall mean, when used with respect to the Trustee, any trust officer, assistant trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Supplemental Indenture.

“S&P” means Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Stated Maturity” means, with respect to any installment of interest or principal on any Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the Issue Date, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

 

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“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or shareholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2) any partnership (A) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (B) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

“Supplemental Indenture” or “indenture supplemental hereto” means any indenture amending or supplementing this Indenture which may be entered into in accordance with the provisions of this Indenture.

“Tangible Assets” means, as of any date with respect to a Subsidiary the tangible assets of that Subsidiary, and with respect to the Company, the combined tangible assets of the Company and the Subsidiaries, in each case as determined in accordance with GAAP.

“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this Supplemental Indenture was executed.

“Trustee” means Wells Fargo Bank, National Association and its successors and any corporation or association resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor trustee at the time serving as successor trustee hereunder.

“Voluntary Conversion” shall have the meaning set forth in Section 3.01 .

“Voluntary Conversion Date” shall have the meaning set forth in Section 3.01 .

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (A) the amount of each then remaining installment, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (B) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

“Ziegler” means Ziegler Capital Markets, a division of B.C. Ziegler and Company.

 

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ARTICLE II

ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND

EXCHANGE OF THE 2009 CONVERTIBLE NOTES

Section 2.01 Designation and Terms of 2009 Convertible Notes

(a) Global Certificates . Beginning on March 12, 2009, the Company shall issue and deliver to the Trustee the 2009 Notes in the form of one or more global certificates substantially in the form attached as Exhibit B hereto (collectively, the “Global Certificates”), in each case with appropriate insertions, omissions, substitutions and other variations as are required or permitted by the Indenture and this Supplemental Indenture, and with such letters, numbers, or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of the Commission or as may, consistently herewith, be determined by the Company. As long as the 2009 Notes remain outstanding in book-entry form, the Trustee shall hold such Global Certificates as custodian for the Depositary. The Company initially appoints DTC to act as Depositary with respect to the Global Certificates. Each Global Certificate will represent such of the outstanding 2009 Notes as will be specified therein and each Global Certificate shall provide that it represents the aggregate principal amount of outstanding 2009 Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding 2009 Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect conversions and redemptions. Any endorsement of a Global Certificate to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding 2009 Notes represented thereby will be made by the Trustee or the Depositary, at the direction of the Company, in accordance with Section 2.03(c).

(b) In connection with the issuance of the 2009 Notes, the following conditions are established:

(1) the title of the 2009 Notes is the 14% Convertible Notes due January 1, 2014;

(2) the maximum aggregate original principal amount of the 2009 Notes is $53,000,000;

(3) the 2009 Notes will mature on January 1, 2014;

(4) the 2009 Notes will bear interest at the rate of 14% per year;

(5) the interest on the 2009 Notes will be calculated on the basis of a 360-day year of twelve 30-day months;

(6) the interest on the 2009 Notes will be payable January 1 and July 1 of each year commencing July 1, 2009, and on any date the principal of the 2009 Notes is paid, including at maturity or if such day is not a business day, the immediately succeeding business day, and on any conversion date applicable to the 2009 Notes, each of which is referred to as an Interest Payment Date;

 

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(7) interest will be paid to Holders of the 2009 Notes who are Holders of record at the close of business on the preceding December 15, for payment on January 1, or June 15, for payment on July 1 (each such date, a “Record Date”), except as provided in Section 2.01(c) ;

(8) the 2009 Notes are convertible into shares of the Company’s Common Stock as set forth in Article III;

(9) the 2009 Notes are subject to redemption as set forth in Article IV;

(10) the 2009 Notes shall be issuable in denominations of five thousand U.S. dollars ($5,000) or in whole multiples of $1,000 in excess thereof; and

(11) the proceeds from the issuance and sale of the 2009 Notes by the Company will be used only for Permitted Uses of Proceeds.

(c) In connection with the payment of interest to Holders of record at the close of business on the preceding December 15, for payment on January 1, or June 15, for payment on July 1, of the 2009 Notes, the following exceptions apply:

(1) if a Holder converts the 2009 Notes prior to a record date for an interest payment, the Company will pay such Holder interest accrued through the conversion date;

(2) if a Holder converts the 2009 Notes after a record date for an interest payment but prior to an Interest Payment Date, such Holder shall receive accrued interest through such Interest Payment Date; provided, however , that such Holder shall pay an amount equal to the interest that accrued between the conversion date and the related Interest Payment Date at the time that such 2009 Notes are surrendered for conversion; and

(3) if the Company elects to redeem the 2009 Notes after a record date but on or prior to the corresponding Interest Payment Date, the Company shall pay the Holder accrued interest on the 2009 Notes being redeemed to, but not including, the redemption date.

(d) The Holder of any 2009 Note shall have the right, subject to the terms of this Supplemental Indenture and the limitations applicable to global securities as set forth herein and in the Indenture, including, without limitation, Section 2.11 thereof, to exchange such 2009 Note for other debt securities of the same series, in any authorized denomination and of like tenor and aggregate principal amount. To exchange any 2009 Note, the Holder of such 2009 Note may present such 2009 Note at the office of the security registrar or at the office of any transfer agent designated for this purpose. The Company will not require any payment for any exchange, but may require payment of any taxes or other governmental charges.

Section 2.02 Execution and Authentication of the 2009 Notes.

The 2009 Notes shall be executed and authenticated in accordance with the provisions of Section 2.04 of the Indenture.

 

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Section 2.03 Transfer and Exchange.

(a) Transfer and Exchange of Global Certificates. A Global Certificate may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. The Global Certificates may be exchanged or replaced, in whole or in part, as provided in Section 2.04. Every 2009 Note authenticated and delivered in exchange for, or in lieu of, a Global Certificate or any portion thereof, pursuant to this Section 2.03 or Section 2.04, shall be authenticated and delivered in the form of, and shall be, a Global Certificate. A Global Certificate may not be exchanged for another 2009 Note other than as provided in this Section 2.03(a); however, beneficial interests in a Global Certificate may be transferred and exchanged as provided in Section 2.03(b).

(b) Transfer and Exchange of Beneficial Interests in the Global Certificates . The transfer and exchange of beneficial interests in a Global Certificate will be effected in book entry form only through the Depositary, in accordance with the provisions of this Supplemental Indenture and the Applicable Procedures. Neither the Company, the Trustee, nor any agent of the Company shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Certificate, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Transfers of beneficial interests in a Global Certificate also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(1) Transfer of Beneficial Interests in the Same Global Certificate. Beneficial interests in any Global Certificate may be transferred to Persons who take delivery thereof in the form of a beneficial interest in a Global Certificate. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.03(b)(1).

(2) All Other Transfers and Exchanges of Beneficial Interests in Global Certificates. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.03(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar both: (a) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Certificate in an amount equal to the beneficial interest to be transferred or exchanged; and (b) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase.

(c) Cancellation and/or Adjustment of Global Certificates. At such time as all beneficial interests in a particular Global Certificate have been redeemed, repurchased or canceled in whole and not in part, each such Global Certificate will be returned to or retained and canceled by the Trustee in accordance with Section 2.05. At any time prior to such cancellation, if any beneficial interest in a Global Certificate is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Certificate, the principal amount of 2009 Notes represented by such Global Certificate will be reduced

 

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accordingly and an endorsement will be made on such Global Certificate by the Trustee or by the Depositary at the direction of the Company to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Certificate, such other Global Certificate will be increased accordingly and an endorsement will be made on such Global Certificate by the Trustee or by the Depositary at the direction of the Company to reflect such increase.

(d) General Provisions Relating to Transfers and Exchanges .

(1) To permit registrations of transfers and exchanges, the Company will execute, and the Trustee will authenticate, Global Certificates in accordance with Section 2.04 of the Indenture or at the Registrar’s request.

(2) No service charge will be made to a Holder of a beneficial interest in a Global Certificate for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith.

(3) The Registrar will not be required to register the transfer of or exchange of any 2009 Note selected for redemption in whole or in part, except the unredeemed portion of any 2009 Note being redeemed in part.

(4) All Global Certificates issued upon any registration of transfer or exchange of Global Certificates will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under the Indenture and this Supplemental Indenture, as the Global Certificates surrendered upon such registration of transfer or exchange.

(5) Prior to due presentment for the registration of a transfer of any 2009 Note, the Trustee, the Company and agent of the Company may deem and treat the Person in whose name any 2009 Note is registered as the absolute owner of such 2009 Note for the purpose of receiving payment of principal of and interest on such 2009 Notes and for all other purposes, and none of the Trustee, the Company or the agent of the Company shall be affected by notice to the contrary.

(6) The Trustee will authenticate the Global Certificates in accordance with the provisions of Section 2.04 of the Indenture.

(7) All certifications and certificates required to be submitted to the Registrar pursuant to this Section 2.03 to effect a registration of transfer or exchange may be submitted by facsimile.

Section 2.04 Replacement Notes.

If any mutilated 2009 Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any 2009 Note, the Company will issue and the Trustee, upon receipt of an order for authentication in accordance

 

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with Section 2.04 of the Indenture, will authenticate a replacement 2009 Note. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, and any agent from any loss that any of them may suffer if a 2009 Note is replaced. The Company may charge for their expenses in replacing a 2009 Note. Every replacement 2009 Note is an additional obligation of the Company and will be entitled to all of the benefits of the Indenture and this Supplemental Indenture equally and proportionately with all other 2009 Notes duly issued hereunder.

Section 2.05 Cancellation.

The Company at any time may deliver the 2009 Notes to the Trustee for cancellation. The Registrar and the paying agent will forward to the Trustee any 2009 Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all 2009 Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will dispose of canceled 2009 Notes in accordance with its customary procedures (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled 2009 Notes will be delivered to the Company. The Company may not issue new 2009 Notes to replace 2009 Notes that they have paid or that have been delivered to the Trustee for cancellation.

ARTICLE III

CONVERSION OF 2009 NOTES

Section 3.01 Voluntary Conversion

(a) Subject to and upon compliance with the provisions of this Supplemental Indenture, the Holder of any 2009 Note shall have the right, at the option of the Holder, at any time, to convert the principal amount of any such 2009 Note into that number of fully paid and non-assessable shares of Common Stock as determined by dividing the principal amount by the applicable Conversion Price (a “Voluntary Conversion”) as set forth in Section 3.02 . Holders may effect a Voluntary Conversion in principal amounts of $5,000 of the 2009 Notes and multiples of $1,000 in excess thereof at the applicable Conversion Price, as set forth in Section 3.02 . Holders may effect such Voluntary Conversion by delivering to the Exchange Agent, or its designee, through the broker or bank through which such Holder holds its interest in the 2009 Notes, a duly signed and completed irrevocable notice of conversion, a form of which is attached as Exhibit A , and such other documents as the Exchange Agent or its designee may reasonably require, all of which must be delivered to the Exchange Agent no less than five business days prior to the indicated Voluntary Conversion Date. A Holder of 2009 Notes is not entitled to any rights of a Holder of Common Stock until such Holder has converted such Holder’s 2009 Notes to Common Stock, and only to the extent such 2009 Notes are deemed to have been converted to Common Stock under this Article III.

(b) Each 2009 Note surrendered for conversion shall be duly endorsed by, or be accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the Holder or the duly authorized attorney of the Holder. If unspecified in the notice of conversion, then the conversion date for a Voluntary Conversion (the “Voluntary Conversion Date”) is the date following the date on which the duly signed and completed irrevocable notice of conversion and all other required documents are delivered.

 

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As promptly as practicable after satisfaction of the requirements for conversion set forth above, but no later than three business days after the Voluntary Conversion Date, American Stock Transfer & Trust Company, LLC, as the Company’s transfer agent (the “Transfer Agent”), at the Company’s direction will issue and deliver the number of full shares of the Company’s Common Stock issuable upon conversion, together with any cash payment for fractional shares based on the market price of the Company’s Common Stock on the last business day before the Voluntary Conversion Date.

The Company’s Common Stock issued upon conversion of the 2009 Notes will be credited to the account of the Holder of the 2009 Notes that have been converted. Such Holder will not be required to pay any stamp, transfer, documentary or similar taxes or duties upon conversion.

Section 3.02 The Conversion Price

(a) The number of whole shares of Common Stock to be issued upon any Voluntary Conversion shall be determined by dividing the principal amount of the 2009 Notes to be converted by the applicable Conversion Price set forth below:

 

Section 3.03 Adjustment of Conversion Price

If (i) the Company dividends or distributes shares of Common Stock to the Holders of the Common Stock; (ii) the Company splits, subdivides or combines the Common Stock or (iii) the Company reclassifies or recapitalizes the Common Stock, the Conversion Price shall be proportionately increased or decreased.

 

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Section 3.04 Mandatory Conversion

(a) At any time after the third anniversary of the date of the first issuance of the 2009 Notes, the Company may require the Holders to convert all, but not part, of the 2009 Notes into shares of Common Stock on any date after less than 20% of the aggregate principal amount of the 2009 Notes originally issued remains outstanding (a “Mandatory Conversion”). The number of whole shares of the Company’s Common Stock to be issued in connection with a Mandatory Conversion will be determined by dividing the principal amount of the 2009 Notes being converted by the applicable Conversion Price then in effect.

(b) To effect the Mandatory Conversion, the Company will send a notice of Mandatory Conversion to the Trustee, the Exchange Agent and the Transfer Agent not less than 40 days nor more than 60 days prior to the date fixed for Mandatory Conversion, and the Trustee will send notice of the date fixed for Mandatory Conversion (the “Mandatory Conversion Date”) to the Holders of all 2009 Notes to be converted not less than 30 days prior to such date.

(c) As promptly as practicable on or after the Mandatory Conversion Date, but no later than three business days after such date, the Company will issue and deliver to the Exchange Agent or, at the Company’s election, to the Holders whose 2009 Notes have been converted, the number of full shares of the Company’s Common Stock issuable upon conversion, together with any cash payment for fractional shares based on the market price of the Company’s Common Stock on the last business day before the Mandatory Conversion Date. Holders will not be required to pay any stamp, transfer, documentary or similar taxes or duties upon conversion.

Section 3.05 Effect of Conversion upon Interest Payments

Upon any conversion of the 2009 Notes, any accrued and unpaid interest will be paid through the Depositary, who will then credit Participants’ accounts upon the Depositary’s receipt of funds and corresponding detail information from the Trustee. If a Holder of 2009 Notes converts after a Record Date for an interest payment but prior to the corresponding Interest Payment Date, the Holder of the 2009 Notes as of the Record Date will receive on that Interest Payment Date accrued interest on those notes through the Interest Payment Date, notwithstanding the conversion of such 2009 Notes prior to that Interest Payment Date, because the Holder will have been the Holder of record on the corresponding Record Date. However, at the time that the Holder surrenders the 2009 Notes for conversion, the Holder must pay to the Company an amount equal to the interest that has accrued between the Conversion Date and the related Interest Payment Date.

Section 3.06 Responsibility of Trustee

The Trustee and the Exchange Agent shall not at any time be under any duty or responsibility to any Holder of the 2009 Notes to determine the Conversion Price or whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any other supplemental indenture provided to be employed, in making the same. The Trustee, the Exchange Agent, and any other conversion agent shall not be

 

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accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any 2009 Note; and the Trustee and any other Exchange Agent make no representations with respect thereto. Neither the Trustee nor any Exchange Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any 2009 Note for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article.

Section 3.07 Limitation on Conversion

Holders of the 2009 Notes may not convert such notes to the extent that, as a result of such conversion, such Holder, together with its Affiliates, would beneficially own a number of shares of the Company’s Common Stock in excess of 19.99% of the number of shares of the Company’s Common Stock outstanding immediately prior to such conversion, or would hold more than 19.99% of the voting power of all shares of the Company’s capital stock outstanding immediately prior to such conversion.

ARTICLE IV

REDEMPTION OR TENDER OF THE 2009 CONVERTIBLE NOTES

Section 4.01 Optional Redemption

At any time after the third anniversary of the date of first issuance of the 2009 Notes, the Company has the right to redeem, in whole or in part (and, if in part, by lot), the 2009 Notes at a redemption price equal to 110% of the principal amount of the 2009 Notes to be redeemed plus accrued interest through the business day prior to the redemption date, provided that the Company’s Common Stock has traded at a volume weighted average price of at least $6.40 per share for the 45-day period ending on the date immediately prior to the date on which the Company gives written notice to the Trustee of such redemption. Such determination shall be made by the Company and the Trustee may rely upon such determination without investigation. Such redemption will be made on not less than 30 nor more than 60 days after notice of redemption is given to the owners of the 2009 Notes.

Section 4.02 Mandatory Redemption upon Certain Sales of Assets or certain Sale and Leaseback Transactions

The 2009 Notes are subject to redemption, in whole or in part (and if in part, by lot) at a redemption price equal to 100% of the principal amount of the 2009 Notes to be redeemed plus accrued interest through the day prior to the redemption date, to the extent that the Company or a Subsidiary engages in an Asset Sale pursuant to Section