UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 15, 2006
ALBANY INTERNATIONAL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 0-16214 14-0462060
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1373 Broadway, Albany, New York 12204
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (518) 445-2200
None
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13a-4(c))
1
Explanatory Notes:
In connection with the transactions described in Albany International Corp.'s
(the "Company") Form 8-K dated March 15, 2006, namely, the issuance of $150
million aggregate principal amount of 2.25% Convertible Senior Notes due 2026,
the convertible note hedge transactions, the warrant transactions and the
registration rights agreement, the Company is hereby furnishing the exhibits
listed below in Item 9.01(d).
2
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished herewith:
4.1 Indenture, dated as of March 13, 2006, between the Company and JPMorgan
Chase Bank, N.A.
4.2 Form of 2.25% convertible senior subordinated note due 2026
4.3 Registration Rights Agreement, dated as of March 13, 2006, between J.P.
Morgan Securities Inc., Banc of America Securities LLC, other initial
purchasers and the Company
10.1 Convertible note hedge transaction confirmations, dated as of March 7,
2006, by and between JPMorgan Chase Bank, N.A., Bank of America, N.A. and
the Company
10.2 Warrant transaction confirmations, dated as of March 7, 2006, by and
between JPMorgan Chase Bank, N.A., Bank of America, N.A. and the Company
3
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALBANY INTERNATIONAL CORP.
By: /s/ Michael C. Nahl
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Name: Michael C. Nahl
Title: Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
Date: March 15, 2006
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Index to Exhibits
Exhibit Number Description of Document
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4.1 Indenture, dated as of March 13, 2006, between the Company
and JPMorgan Chase Bank, N.A.
4.2 Form of 2.25% convertible senior subordinated note due 2026
4.3 Registration Rights Agreement, dated as of March 13, 2006,
between J.P. Morgan Securities Inc., Banc of America
Securities LLC, other initial purchasers and the Company
10.1 Convertible note hedge transaction confirmations, dated as
of March 7, 2006, by and between JPMorgan Chase Bank, N.A.,
Bank of America, N.A. and the Company
10.2 Warrant transaction confirmations, dated as of March 7, 2006,
by and between JPMorgan Chase Bank, N.A., Bank of America,
N.A. and the Company
5
================================================================================
ALBANY INTERNATIONAL CORP.
as Issuer
AND
JPMORGAN CHASE BANK, N.A.
as Trustee
INDENTURE
Dated as of March 13, 2006
2.25% Convertible Senior Notes due 2026
================================================================================
1
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS
Section 1.01. Definitions................................................ 2
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section 2.01. Designation and Amount..................................... 16
Section 2.02. Form of Notes.............................................. 16
Section 2.03. Date and Denomination of Notes; Payments of Interest....... 17
Section 2.04. Payments of Additional Interest............................ 19
Section 2.05. Execution, Authentication and Delivery of Notes............ 19
Section 2.06. Exchange and Registration of Transfer of Notes;
Restrictions on Transfer; Depositary..................... 20
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes................. 27
Section 2.08. Temporary Notes............................................ 28
Section 2.09. Cancellation of Notes Paid, Etc............................ 29
Section 2.10. CUSIP Numbers.............................................. 29
Section 2.11. Additional Notes; Repurchases.............................. 29
ARTICLE 3
REDEMPTION OF NOTES
Section 3.01. Company's Right to Redeem; Notices to Trustee.............. 30
Section 3.02. Selection of Notes to Be Redeemed.......................... 30
Section 3.03. Notice of Redemption....................................... 31
Section 3.04. Effect of Notice of Redemption............................. 32
Section 3.05. Deposit of Redemption Price................................ 32
Section 3.06. Notes Redeemed in Part..................................... 33
Section 3.07. No Redemption Upon Acceleration............................ 33
ARTICLE 4
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction And Discharge................................. 33
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ARTICLE 5
PARTICULAR COVENANTS OF THE COMPANY
Section 5.01. Payment of Principal, Premium Interest, and
Additional Interest...................................... 34
Section 5.02. Maintenance of Office or Agency............................ 34
Section 5.03. Appointments to Fill Vacancies in Trustee's Office......... 35
Section 5.04. Provisions as to Paying Agent.............................. 35
Section 5.05. Existence.................................................. 37
Section 5.06. Rule 144A Information Requirement and Annual Reports....... 37
Section 5.07. Stay, Extension and Usury Laws............................. 38
Section 5.08. Compliance Certificate; Statements as to Defaults.......... 38
Section 5.09. Additional Interest........................................ 39
Section 5.10. Further Instruments and Acts............................... 39
Section 5.11. Resale of the Notes........................................ 39
ARTICLE 6
LISTS OF NOTEHOLDERS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 6.01. Lists of Noteholders....................................... 39
Section 6.02. Preservation and Disclosure of Lists....................... 40
Section 6.03. Reports by Trustee......................................... 40
ARTICLE 7
DEFAULTS AND REMEDIES
Section 7.01. Events of Default.......................................... 41
Section 7.02. Payments of Notes on Default; Suit Therefor................ 44
Section 7.03. Application of Monies Collected by Trustee................. 46
Section 7.04. Proceedings by Noteholders................................. 46
Section 7.05. Proceedings by Trustee..................................... 48
Section 7.06. Remedies Cumulative and Continuing......................... 48
Section 7.07. Direction of Proceedings and Waiver of Defaults by
Majority of Noteholders.................................. 48
Section 7.08. Notice of Defaults......................................... 49
Section 7.09. Undertaking to Pay Costs................................... 49
ARTICLE 8
CONCERNING THE TRUSTEE
Section 8.01. Duties and Responsibilities of Trustee..................... 50
Section 8.02. Reliance on Documents, Opinions, Etc....................... 52
Section 8.03. No Responsibility for Recitals, Etc........................ 53
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Section 8.04. Trustee, Paying Agents, Conversion Agents or
Registrar May Own Notes.................................. 54
Section 8.05. Monies to Be Held in Trust................................. 54
Section 8.06. Compensation and Expenses of Trustee....................... 54
Section 8.07. Officers' Certificate as Evidence.......................... 55
Section 8.08. Conflicting Interests of Trustee........................... 55
Section 8.09. Eligibility of Trustee..................................... 55
Section 8.10. Resignation or Removal of Trustee.......................... 56
Section 8.11. Acceptance by Successor Trustee............................ 57
Section 8.12. Succession by Merger, Etc.................................. 58
Section 8.13. Limitation on Rights of Trustee as Creditor................ 59
Section 8.14. Trustee's Application for Instructions from the Company.... 59
ARTICLE 9
CONCERNING THE NOTEHOLDERS
Section 9.01. Action by Noteholders...................................... 59
Section 9.02. Proof of Execution by Noteholders.......................... 60
Section 9.03. Who Are Deemed Absolute Owners............................. 60
Section 9.04. Company-Owned Notes Disregarded............................ 60
Section 9.05. Revocation of Consents; Future Holders Bound............... 61
ARTICLE 10
NOTEHOLDERS' MEETINGS
Section 10.01. Purpose of Meetings....................................... 62
Section 10.02. Call of Meetings by Trustee............................... 62
Section 10.03. Call of Meetings by Company or Noteholders................ 62
Section 10.04. Qualifications for Voting................................. 63
Section 10.05. Regulations............................................... 63
Section 10.06. Voting.................................................... 64
Section 10.07. No Delay of Rights by Meeting............................. 64
ARTICLE 11
SUPPLEMENTAL INDENTURES
Section 11.01. Supplemental Indentures Without Consent of Noteholders.... 64
Section 11.02. Supplemental Indentures With Consent of Noteholders....... 66
Section 11.03. Effect of Supplemental Indentures......................... 67
Section 11.04. Notation on Notes......................................... 68
Section 11.05. Evidence of Compliance of Supplemental Indenture to
Be Furnished Trustee.................................... 68
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ARTICLE 12
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.01. Company May Consolidate, Etc. on Certain Terms............ 68
Section 12.02. Successor Corporation to Be Substituted................... 69
Section 12.03. Opinion of Counsel to Be Given Trustee.................... 70
ARTICLE 13
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 13.01. Indenture and Notes Solely Corporate Obligations.......... 70
ARTICLE 14
[INTENTIONALLY OMITTED]
ARTICLE 15
CONVERSION OF NOTES
Section 15.01. Conversion Privilege...................................... 71
Section 15.02. Conversion Procedure...................................... 73
Section 15.03. Increased Conversion Rate Applicable to Certain Notes
Surrendered in Connection With Make-Whole
Fundamental Changes...................................... 77
Section 15.04. Adjustment of Conversion Rate............................. 82
Section 15.05. Shares to Be Fully Paid................................... 95
Section 15.06. Effect of Reclassification, Consolidation, Merger or
Sale.................................................... 95
Section 15.07. Certain Covenants......................................... 98
Section 15.08. Responsibility of Trustee................................. 99
Section 15.09. Notice to Holders Prior to Certain Actions................ 100
Section 15.10. Shareholder Rights Plans.................................. 101
ARTICLE 16
REPURCHASE OF NOTES AT OPTION OF HOLDERS
Section 16.01. Repurchase at Option of Holders........................... 101
Section 16.02. Repurchase at Option of Holders Upon a Fundamental
Change.................................................. 104
Section 16.03. Withdrawal of Repurchase Notice or Fundamental Change
Repurchase Notice....................................... 108
Section 16.04. Deposit of Repurchase Price or Fundamental Change
Repurchase Price........................................ 108
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ARTICLE 17
MISCELLANEOUS PROVISIONS
Section 17.01. Provisions Binding on Company's Successors................ 110
Section 17.02. Official Acts by Successor Corporation.................... 110
Section 17.03. Addresses for Notices, Etc................................ 110
Section 17.04. Governing Law............................................. 111
Section 17.05. Evidence of Compliance with Conditions Precedent;
Certificates and Opinions of Counsel to Trustee......... 111
Section 17.06. Legal Holidays............................................ 111
Section 17.07. No Security Interest Created.............................. 112
Section 17.08. Trust Indenture Act....................................... 112
Section 17.09. Benefits of Indenture..................................... 112
Section 17.10. Table of Contents, Headings, Etc.......................... 112
Section 17.11. Authenticating Agent...................................... 112
Section 17.12. Execution in Counterparts................................. 114
Section 17.13. Severability.............................................. 114
Exhibit A Form of Note
Exhibit B Form of Notice of Conversion
Exhibit C Form of Fundamental Change Repurchase Notice
Exhibit D Form of Repurchase Notice
Exhibit E Form of Assignment and Transfer
Schedule A Schedule of Changes to Principal Amount
v
INDENTURE dated as of March 13, 2006 between Albany International Corp., a
Delaware corporation, as issuer (hereinafter sometimes called the "Company", as
more fully set forth in Section 1.01), and JPMorgan Chase Bank, N.A., a national
banking association organized under the laws of the United States, as trustee
(hereinafter sometimes called the "Trustee", as more fully set forth in Section
1.01).
W I T N E S S E T H:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 2.25% Convertible Senior Notes due 2026 (hereinafter
sometimes called the "Notes"), initially in an aggregate principal amount not to
exceed $150,000,000 (or $180,000,000 if the Initial Purchasers exercise their
option to purchase additional Notes in full as set forth in the Purchase
Agreement), and in order to provide the terms and conditions upon which the
Notes are to be authenticated, issued and delivered, the Company has duly
authorized the execution and delivery of this Indenture; and
WHEREAS, the Form of Note, the certificate of authentication to be borne
by each Note, the Form of Notice of Conversion, the Form of Fundamental Change
Repurchase Notice, the Form of Repurchase Notice and the Form of Assignment and
Transfer to be borne by the Notes are to be substantially in the forms
hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when executed by
the Company and authenticated and delivered by the Trustee or a duly authorized
authenticating agent, as in this Indenture provided, the valid, binding and
legal obligations of the Company, and to constitute these presents a valid
agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the Notes
are, and are to be, authenticated, issued and delivered, and in consideration of
the premises and of the purchase and acceptance of the Notes by the holders
thereof, the Company covenants and agrees with the Trustee for the equal and
proportionate benefit of the respective holders from time to time of the Notes
(except as otherwise provided below), as follows:
1
ARTICLE 1
DEFINITIONS
Section 1.01. 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 Indenture and of any indenture supplemental hereto
shall have the respective meanings specified in this Section 1.01. All other
terms used in this Indenture that are defined in the Trust Indenture Act or that
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 said Trust Indenture Act and in said
Securities Act as in force at the date of the execution of this Indenture. The
words "herein," "hereof," "hereunder," and words of similar import refer to this
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.
"Acquiror Stock Conversion Right Adjustment" shall have the meaning
specified in Section 15.03(c).
"Additional Interest" means all Additional Interest as defined in the
Registration Rights Agreement.
"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 the purposes of this definition,
"control," when used with respect to any specified Person means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Applicable Increase" shall have the meaning specified in Section 15.03.
"Board of Directors" means the board of directors of the Company or a
committee of such board duly authorized to act for it hereunder.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
2
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which the banking institutions in The City of New York are
authorized or obligated by law or executive order to close or be closed.
"Capital Stock" means, for any entity, any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) stock issued by that entity.
"Cash Settlement Averaging Period" means, with respect to any Note
surrendered for conversion, the twenty-five consecutive Trading Day period
beginning on and including the second Trading Day after the relevant holder has
delivered a Notice of Conversion with respect to such Note to the Conversion
Agent; provided that with respect to any Notice of Conversion received after the
date of issuance of a notice of redemption as described under Section 3.03 and
prior to the applicable Redemption Date, the "Cash Settlement Averaging Period"
shall be the twenty-five consecutive Trading Days beginning on and including the
twenty-eighth Scheduled Trading Day prior to the applicable Redemption Date.
"close of business" means 5:00 p.m. (New York City time).
"Commission" means the Securities and Exchange Commission.
"Common Equity" of any Person means Capital Stock of such Person that is
generally entitled to (1) vote in the election of directors of such Person or
(2) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management or policies of such Person.
"Common Stock" means, subject to Section 15.06, Section 15.03(c) and
Section 15.03(d), shares of Class A common stock of the Company, par value
$0.001 per share, at the date of this Indenture or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
that have no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and that are not subject to redemption by the Company; provided that
if at any time there shall be more than one such resulting class, the shares of
each such class then so issuable shall be substantially in the proportion that
the total number of shares of such class resulting from all such
reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
3
"Company" means Albany International Corp., a Delaware corporation, and
subject to the provisions of Article 12, shall include its successors and
assigns.
"Company Notice" shall have the meaning specified in Section 16.01(a).
"Company Order" means a written order of the Company, signed by (a) the
Company's Chief Executive Officer, President, Executive or Senior Vice
President, Managing Director or any Vice President (whether or not designated by
a number or numbers or word or words added before or after the title "Vice
President") and (b) any such other officer designated in clause (a) of this
definition or the Company's Treasurer or Assistant Treasurer or Secretary or any
Assistant Secretary, and delivered to the Trustee.
"Conversion Agent" shall have the meaning specified in Section 5.02.
"Conversion Date" shall have the meaning specified in Section 15.02(e).
"Conversion Obligation" shall have the meaning specified in Section
15.01(a).
"Conversion Price" means as of any date $1,000 divided by the Conversion
Rate as of such date.
"Conversion Rate" shall have the meaning specified in Section 15.01(a).
"Corporate Trust Office" or other similar term means the office of the
Trustee at which at any particular time its corporate trust business relating to
this Indenture shall be principally administered, which office is, at the date
as of which this Indenture is dated, located at JPMorgan Chase Bank, N.A., 4 New
York Plaza (15th Floor), New York, New York, 10004, Attention: Worldwide
Securities Services.
"Custodian" means JPMorgan Chase Bank, N.A., as custodian for The
Depository Trust Company, with respect to the Notes in global form, or any
successor entity thereto.
"Daily Conversion Value" means, for each of the 25 consecutive Trading
Days during the Cash Settlement Averaging Period, one-twenty-fifth (1/25th) of
the product of (a) the applicable Conversion Rate on such Trading Day (subject
to increase, if any, pursuant to Section 15.03) and (b) the Daily VWAP of the
Common Stock (or the consideration into which the Common Stock has been
4
converted in connection with certain corporate transactions contemplated hereby)
on such Trading Day.
"Daily Settlement Amount," for each of the 25 Trading Days during the Cash
Settlement Averaging Period, shall consist of:
(i) cash equal to the lesser of $40 and the Daily Conversion Value
relating to such Trading Day; and
(ii) to the extent such Daily Conversion Value exceeds $40, a number
of shares of Common Stock equal to (A) the difference between such Daily
Conversion Value and $40, divided by (B) the Daily VWAP of the Common
Stock (or the consideration into which the Common Stock has been converted
in connection with certain corporate transactions contemplated hereby) for
such Trading Day.
"Daily VWAP" for the Common Stock means, for each of the twenty-five
consecutive Trading Days during the Cash Settlement Averaging Period, the per
share volume-weighted average price as displayed under the heading "Bloomberg
VWAP" on Bloomberg page "AIN {equity} AQR" (or any successor page thereto) in
respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such
Trading Day (or if such volume-weighted average price is unavailable, the market
value of one share of the Common Stock on such Trading Day as the Board of
Directors determines in good faith using a volume-weighted method).
"Default" means any event that is, or after notice or passage of time, or
both, would be, an Event of Default.
"Defaulted Interest" means any interest on any Note that is payable, but
is not punctually paid or duly provided for, on any March 15 or September 15.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.06(d) as the
Depositary with respect to such Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
"Distributed Property" shall have the meaning specified in Section
15.04(c).
"Effective Date" shall have the meaning specified in Section 15.03(a).
5
"Event of Default" shall have the meaning specified in Section 7.01.
"Ex-Dividend Date" means, with respect to any dividend, distribution or
other transaction or event in which the holders of Common Stock (or other
security) have the right to receive any cash, securities or other property or in
which the Common Stock (or other security) is exchanged for or converted into
any combination of cash, securities or other property, the first date on which
the shares of the Common Stock (or other security) trade on the applicable
exchange or in the applicable market, regular way, without the right to receive
the issuance, dividend or distribution in question.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Fundamental Change" means the occurrence after the original issuance of
the Notes of any of the following events:
(i) any "person" or "group" (within the meaning of Section 13(d) of
the Exchange Act) other than a Standish Holder, the Company, its
Subsidiaries or the employee benefit plans of the Company or any such
Subsidiary, files a Schedule TO or any schedule, form or report under the
Exchange Act disclosing that such person or group has become the direct or
indirect "beneficial owner," as defined in Rule 13d-3 under the Exchange
Act, of the Company's Common Equity representing more than 50% of the
voting power of the Company's Common Equity;
(ii) consummation of any share exchange, exchange offer, tender
offer, consolidation, merger or binding share exchange of the Company
pursuant to which the Common Stock will be converted into cash, securities
or other property or any sale, lease or other transfer in one transaction
or a series of transactions of all or substantially all of the
consolidated assets of the Company and its Subsidiaries, taken as a whole,
to any Person other than one of the Company's Subsidiaries; provided,
however, that (A) a transaction where the holders of more than 50% of all
classes of the Company's Common Equity immediately prior to such
transaction own, directly or indirectly, more than 50% of all classes of
Common Equity of the continuing or surviving corporation or transferee
immediately after such event shall not be a Fundamental Change, or (B) if
at least 90% of the consideration, excluding cash payments for fractional
shares, in the share exchange, exchange offer, tender offer,
consolidation, merger, binding share exchange, sale, lease or other
transfer consists of shares of Publicly Traded Securities, and as a result
of such share
6
exchange, exchange offer, tender offer, consolidation, merger, binding
share exchange sale, lease or other transfer, the Notes become convertible
into such Publicly Traded Securities, excluding cash payments for
fractional shares, such event shall not be a Fundamental Change;
(iii) the stockholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company;
(iv) (A) the Common Stock ceases to be listed on a national
securities exchange or quoted on the Nasdaq National Market (at a time
when the Nasdaq National Market is not a U.S. national securities
exchange) other than in connection with a transaction or series of
transactions described in clause (iv)(B) of this definition; or (B) the
Common Stock ceases to be listed on a national securities exchange or
quoted on the Nasdaq National Market (at a time when the Nasdaq National
Market is not a U.S. national securities exchange) in connection with any
transaction or series of transactions in which one or more Standish
Holders acquires all or substantially all of the shares of Common Stock.
For purposes of this definition, whether a "person" is a "beneficial owner"
shall be determined in accordance with Rule 13d-3 under the Exchange Act and
"person" includes any syndicate or group that would be deemed to be a "person"
under Section 13(d)(3) of the Exchange Act.
"Fundamental Change Company Notice" shall have the meaning specified in
Section 16.02(b).
"Fundamental Change Expiration Time" shall have the meaning specified in
Section 16.02(b)(ix).
"Fundamental Change Repurchase Date" shall have the meaning specified in
Section 16.02(a).
"Fundamental Change Repurchase Notice" shall have the meaning specified in
Section 16.02(a)(i).
"Fundamental Change Repurchase Price" shall have the meaning specified in
Section 16.02(a).
"Global Note" shall have the meaning specified in Section 2.06(b).
7
"Indenture" means this instrument as originally executed or, if amended or
supplemented as herein provided, as so amended or supplemented.
"Initial Dividend Threshold" means $0.09 per share (subject to adjustment
as described in Section 15.04(h)).
"Initial Purchasers" means J.P. Morgan Securities Inc., Banc of America
Securities LLC, LaSalle Financial Services, Inc., Daiwa Securities America Inc.,
HSBC Securities (USA) Inc., Mitsubishi UFJ Securities International plc,
Greenwich Capital Markets, Inc. and Scotia Capital (USA) Inc.
"Interest Payment Date" means each March 15 and September 15 of each year,
beginning on September 15, 2006.
"Last Reported Sale Price" of the Common Stock or Public Acquiror Common
Stock, as the case may be, on any date means, as determined by the Company, the
closing sale price per share (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on that date as reported
in composite transactions for the principal U.S. national or regional securities
exchange on which the Common Stock or Public Acquiror Common Stock, as the case
may be, is listed for trading or quoted or, if the Common Stock or Public
Acquiror Common Stock, as the case may be, is not listed for trading or quoted
on a U.S. national or regional securities exchange and the Nasdaq Market is not
a U.S. national securities exchange, as reported by the Nasdaq Market. If the
Common Stock or Public Acquiror Common Stock, as the case may be, is not listed
for trading on a U.S. national or regional securities exchange or reported by
the Nasdaq Market on the relevant date, then the "Last Reported Sale Price" will
be the last quoted bid price for the Common Stock or Public Acquiror Common
Stock, as the case may be, in the over-the-counter market on the relevant date
as reported by the National Quotation Bureau or similar organization. If the
Common Stock or Public Acquiror Common Stock, as the case may be, is not so
quoted, the "Last Reported Sale Price" will be the average of the mid-point of
the last bid and ask prices for the Common Stock or Public Acquiror Common
Stock, as the case may be, on the relevant date from each of at least three
nationally recognized independent investment banking firms selected by the
Company for this purpose.
"Majority Owned" means having "beneficial ownership" (as defined in Rule
13d-3 under the Exchange Act) of more than 50% of the total voting power of all
shares of an entity's Capital Stock that are entitled to vote generally in the
election of directors.
8
"Make-Whole Conversion Rate Adjustment" shall have the meaning specified
in Section 15.03(a).
"Make-Whole Fundamental Change" means any transaction or event that
constitutes a Fundamental Change as described in clause (i), (ii), (iii) or
(iv)(B) of the definition thereof, the effective date of which occurs on or
prior to March 15, 2013.
"Market Disruption Event" means (i) a failure by the primary exchange or
quotation system on which the Common Stock trades or is quoted, as the case may
be, to open for trading during its regular trading session or (ii) the
occurrence or existence prior to 1:00 p.m. on any Trading Day for the Common
Stock for an aggregate one-half hour period of any suspension or limitation
imposed on trading (by reason of movements in price exceeding limits permitted
by the stock exchange or otherwise) in the Common Stock or in any options,
contracts or future contracts relating to the Common Stock.
"Maturity Date" means March 15, 2026.
"Measurement Period" shall have the meaning specified in Section
15.01(b)(i).
"Merger Event" shall have the meaning specified in Section 15.06.
"Note" or "Notes" shall mean any note or notes, as the case may be,
authenticated and delivered under this Indenture.
"Noteholder" or "holder," as applied to any Note, or other similar terms
(but excluding the term "beneficial holder"), shall mean any person in whose
name at the time a particular Note is registered on the Note register.
"Note register" shall have the meaning specified in Section 2.06(a).
"Note registrar" shall have the meaning specified in Section 2.06(a).
"Notice of Conversion" shall have the meaning specified in Section
15.02(d).
"Officers' Certificate," when used with respect to the Company, means a
certificate signed by (a) one of the President, the Chief Executive Officer, any
Executive or Senior Vice President, Managing Director or any Vice President
9
(whether or not designated by a number or numbers or word added before or after
the title "Vice President") and (b) by any such other officer designated in (a)
or by one of the Treasurer or any Assistant Treasurer, Secretary or any
Assistant Secretary or Controller of the Company that is delivered to the
Trustee. Each such certificate shall include the statements provided for in
Section 17.05 if and to the extent required by the provisions of such Section.
One of the officers giving an Officers' Certificate pursuant to Section 5.08
shall be the principal executive, financial or accounting officer of the
Company.
"Opinion of Counsel" means 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 that is delivered to the Trustee. Each such opinion shall include
the statements provided for in Section 17.05 if and to the extent required by
the provisions of such Section.
"outstanding," when used with reference to Notes, shall, subject to the
provisions of Section 9.04, mean, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except:
(i) Notes theretofore canceled by the Trustee or accepted by the Trustee
for cancellation;
(ii) Notes, or portions thereof, for the payment or repurchase 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 Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made, or if any such Note is be
repurchased, the holder thereof shall have delivered a Repurchase Notice or a
Fundamental Change Repurchase Notice in accordance with Section 16.01 or 16.02,
as applicable;
(iii) Notes that have been paid pursuant to Section 2.07 or Notes in lieu
of which, or in substitution for which, other Notes shall have been
authenticated and delivered pursuant to the terms of Section 2.07 unless proof
satisfactory to the Trustee is presented that any such Notes are held by
protected purchasers in due course; and
(iv) Notes converted pursuant to Article 15.
"Paying Agent" shall have the meaning specified in Section 5.02.
10
"Permitted Beneficiary" means, as to any natural person, such person's
spouse, such person's issue, a spouse of such person's issue, a whole or half
brother or sister of such person and/or a cousin of such person.
"Permitted Transfer" means (1) a transfer of Class B common stock of the
Company by the holder thereof to another holder of Class B common stock of the
Company; (2) a transfer of Class B common stock of the Company resulting from
the death of the holder thereof to another holder of Class B common stock of the
Company; (3) if Class B common stock of the Company is held by a trust, (i) a
transfer pursuant to the terms of the governing trust instrument as in effect
when the transferred Class B common stock of the Company was acquired by that
trust or (ii) a transfer to another trust that was established by the same
settlor or by a parent, grandparent or Permitted Beneficiary of said settlor and
that has as its Primary Beneficiaries the settlor and/or one or more of the
parents, grandparents or Permitted Beneficiaries of the settlor; (4) a bona fide
pledge of Class B common stock of the Company; provided that any action by the
pledgee (other than a Person described in clause (1) or clause (2) of the
definition of Standish Holder or in clause (1), (2), (3), (5), (6) or (7) of
this definition) in the nature of a foreclosure or other transfer shall not
constitute a Permitted Transfer; (5) a transfer of Class B common stock of the
Company by a holder who is a natural person to a Permitted Beneficiary of such
holder or to a trust that has as its Primary Beneficiaries such holder and/or
one or more Permitted Beneficiaries of such holder or to a trust having one or
more organizations described in Section 170(2) of the Internal Revenue Code of
1986 (or any successor provision thereto) as an income beneficiary for a fixed
period of years and having as its other Primary Beneficiaries such holder and/or
one or more Permitted Beneficiaries of such holder; (6) a transfer of Class B
common stock of the Company by the holder thereof to a nominee for such holder,
or by a nominee for a holder of such shares to such holder or to another nominee
for such holder; or (7) a transfer of Class B common stock of the Company by the
corporation which is the holder thereof to another corporation (i) which owns
all of the capital stock of such holder or all of the capital stock of a
corporation which owns all of the capital stock of such holder, (ii) all of the
capital stock of which is owned by such holder or by a corporation all of the
capital stock of which is owned by such holder, or (iii) all of the capital
stock of which is owned by a corporation which owns all of the capital stock of
such holder or all of the capital stock of a corporation which owns all of the
capital stock of such holder.
"Person" means an individual, a corporation, a limited liability company,
an association, a partnership, a joint venture, a joint stock company, a trust,
an
11
unincorporated organization or a government or an agency or a political
subdivision thereof.
"Portal Market" means The Portal Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.07 in lieu of or in exchange for a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note that it replaces.
"Primary Beneficiaries" shall mean beneficiaries of a trust, other than
contingent remaindermen, who have, in the aggregate, a beneficial interest in at
least 85% of the income and principal of the trust.
"Public Acquiror Change of Control" means a Fundamental Change described
in clause (ii) of the definition of Fundamental Change in which the acquiror has
Public Acquiror Common Stock. If an acquiror does not itself have Public
Acquiror Common Stock, it will be deemed to have Public Acquiror Common Stock if
it is Majority Owned by a corporation that has Public Acquiror Common Stock.
"Public Acquiror Common Stock" means, in connection with a Public Acquiror
Change of Control, a class of common stock traded on a U.S. national securities
exchange or quoted on the Nasdaq National Market (at a time when the Nasdaq
National Market is not a U.S. national securities exchange) or that will be so
traded or quoted when issued or exchanged in connection with such Public
Acquiror Change of Control and the issuer of which is the acquiror in such
Public Acquiror Change of Control or the corporation referred to in the
definition of Public Acquiror Change of Control of which such acquiror is a
Majority Owned Subsidiary.
"Publicly Traded Securities" means shares of common stock traded on a
national securities exchange or quoted on the Nasdaq National Market (at a time
when the Nasdaq National Market is not a U.S. national securities exchange) or
that will be so traded or quoted when issued or exchanged in connection with a
Fundamental Change described in clause (ii) of the definition thereof.
"Purchase Agreement" means that certain Purchase Agreement, dated as of
March 8, 2006, among the Company and the Initial Purchasers.
12
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"record date," with respect to any Interest Payment Date, shall mean the
March 1 or September 1 (whether or not such day is a Business Day) preceding the
applicable March 15 or September 15 Interest Payment Date, respectively.
"Redemption Date" means the date specified for redemption of the Notes in
accordance with the terms of the Notes and this Indenture.
"Redemption Price" shall have the meaning set forth in Section 3.01.
"Reference Property" shall have the meaning specified in Section 15.06(b).
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of March 13, 2006, among the Company and the Initial
Purchasers.
"Repurchase Date" shall have the meaning specified in Section 16.01(a).
"Repurchase Notice" shall have the meaning specified in Section 16.01(a).
"Repurchase Price" shall have the meaning specified in Section 16.01(a).
"Resale Restriction Termination Date" shall have the meaning specified in
Section 2.06(d).
"Responsible Officer," shall mean an officer of the Trustee in the
Corporate Trust Office, having direct responsibility for the administration of
this Indenture, and also, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restricted Securities" shall have the meaning specified in Section
2.06(d).
"Rule 144A" means Rule 144A as promulgated under the Securities Act.
"Scheduled Trading Day" means any day on which The New York Stock Exchange
is scheduled to be open for trading for its regular trading session; provided,
however, that if at any time during the period from and including March 7, 2006,
to and including March 15, 2013, the Common Stock ceases to be listed or quoted
on The New York Stock Exchange for any reason (other than a Merger Event as a
result of which the common stock underlying the Notes is listed
13
or quoted on The New York Stock Exchange, The American Stock Exchange or the
Nasdaq National Market (or their respective successors) (the "Successor
Exchange")), but the Common Stock is immediately re-listed on a Successor
Exchange upon ceasing to be listed or quoted on The New York Stock Exchange,
"Scheduled Trading Day" shall mean any day on which the Successor Exchange is
scheduled to be open for trading for its regular trading session. The foregoing
proviso shall similarly apply if the Common Stock ceases to be listed or quoted
on a Successor Exchange but is immediately re-listed on a different Successor
Exchange.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Spin-Off" shall have the meaning specified in Section 15.04(c).
"Standish Holder" means (1) any of the five Persons who were listed as
"Reporting Persons" on the Schedule 13D/A (with respect to which the Company was
the issuer) filed with the Commission on December 3, 2004, namely: J.S. Standish
Company (a Delaware corporation), J. Spencer Standish, Thomas R. Beecher Jr. as
sole trustee of trusts for the benefit of John C. Standish and Christine L.
Standish, and of the Standish Delta Trust, John C. Standish or Christine L.
Standish (all individuals); (2) any of the trusts identified in Item 5 of such
Schedule 13D/A as holding shares of common stock of the Company that are deemed
for the purposes of such Schedule to be beneficially owned by such Reporting
Persons; and (3) any Person to whom one of the five Persons or trusts described
above transfers any of his, her or its shares of Class B common stock of the
Company, so long as such transfer is a Permitted Transfer.
"Stock Price" means (i) in the case of a Make-Whole Fundamental Change
described in clause (ii) of the definition of Fundamental Change in which
holders of the Common Stock receive only cash as consideration for their share
of Common Stock, the amount of cash paid per share of the Common Stock in such
Make-Whole Fundamental Change, or (ii) in the case of all other Make-Whole
Fundamental Changes, the average of the Last Reported Sale Prices per share of
Common Stock for the five (5) consecutive Trading Days immediately preceding the
Effective Date of the relevant Make-Whole Fundamental Change. The Board of
Directors will make appropriate adjustments, in its good faith determination, to
account for any adjustment to the Conversion Rate that becomes effective, or any
event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date
of the event occurs, during such five consecutive Trading Days.
14
"Subsidiary" of the Company means (i) a corporation a majority of whose
Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by the Company, by the
Company and one or more Subsidiaries of the Company or by one or more
Subsidiaries of the Company or (ii) any other Person (other than a corporation)
in which the Company, one or more Subsidiaries of the Company or the Company and
one or more Subsidiaries of the Company, directly or indirectly, at the date of
determination thereof, has greater than a 50% ownership interest.
"Successor Company" shall have the meaning specified in Section 12.01(a).
"Trading Day" means a day during which (a) trading in the Common Stock
generally occurs, (b) there is no Market Disruption Event and (c) a Last
Reported Sale Price for the Common Stock (other than a Last Reported Sale Price
referred to in the last sentence of the definition thereof) is available for
such day.
"Trading Price" with respect to the Notes, on any date of determination
means the average of the secondary market bid quotations obtained by the Trustee
for $3.0 million principal amount of Notes at approximately 3:30 p.m., New York
City time, on such determination date from three independent nationally
recognized securities dealers selected by the Company; provided that if three
such bids cannot reasonably be obtained by the Trustee, but two such bids are
obtained, then the average of the two bids shall be used, and if only one such
bid can reasonably be obtained by the Trustee, that one bid shall be used. If
the Trustee cannot reasonably obtain at least one bid for $3.0 million principal
amount of Notes from any such nationally recognized securities dealer, then the
Trading Price per $1,000 principal amount of Notes will be deemed to be less
than 103% of the product of the Last Reported Sale Price of the Common Stock and
the Conversion Rate.
"transfer" shall have the meaning specified in Section 2.06(d).
"Trigger Event" shall have the meaning specified in Section 15.04(c).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
as it was in force at the date of execution of this Indenture, except as
provided in Section 11.03 and Section 15.06; provided, however, that in the
event the Trust Indenture Act of 1939 is amended after the date hereof, the term
"Trust Indenture Act" shall mean, to the extent required by such amendment, the
Trust Indenture Act of 1939, as so amended.
15
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this Indenture until a successor Trustee shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Trustee" shall mean
or include each Person who is then a Trustee hereunder.
ARTICLE 2
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
Section 2.01. Designation and Amount. The Notes shall be designated as
the "2.25% Convertible Senior Notes due 2026." The aggregate principal amount of
Notes that may be authenticated and delivered under this Indenture is initially
limited to $150,000,000 (or $180,000,000 if the Initial Purchasers exercise
their option to purchase additional Notes in full as set forth in the Purchase
Agreement), subject to Section 2.11 and except for Notes authenticated and
delivered upon registration or transfer of, or in exchange for, or in lieu of
other Notes pursuant to Section 2.06, Section 2.07, Section 3.06, Section 11.04,
Section 15.02, Section 16.01 and Section 16.04 hereof.
Section 2.02. Form of Notes. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the
respective forms set forth in Exhibit A, which are incorporated in and made a
part of this Indenture.
Any Global Note may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the provisions
of this Indenture as may be required by the Custodian, the Depositary or by the
National Association of Securities Dealers, Inc. in order for the Notes to be
tradable on The Portal Market or as may be required for the Notes to be tradable
on any other market developed for trading of securities pursuant to Rule 144A or
required to comply with any applicable law or any regulation thereunder or with
the rules and regulations of any securities exchange or automated quotation
system upon which the Notes may be listed or traded or designated for issuance
or to conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Notes are subject.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends or endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made
16
pursuant thereto or with any rule or regulation of any securities exchange or
automated quotation system on which the Notes may be listed or designated for
issuance, or to conform to usage or to indicate any special limitations or
restrictions to which any particular Notes are subject.
The Global Note shall represent such principal amount of the outstanding
Notes as shall be specified therein and shall provide that it shall represent
the aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be increased or reduced to reflect repurchases,
redemptions, conversions, transfers or exchanges permitted hereby. Any
endorsement of the Global Note to reflect the amount of any increase or decrease
in the amount of outstanding Notes represented thereby shall be made by the
Trustee or the Custodian, at the direction of the Trustee, in such manner and
upon instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal, accrued and unpaid interest, and Additional
Interest, if any, and premium, if any (including any Redemption Price,
Repurchase Price or Fundamental Change Repurchase Price), on the Global Note
shall be made to the holder of such Note on the date of payment, unless a record
date or other means of determining holders eligible to receive payment is
provided for herein.
The terms and provisions contained in the form of Note attached as Exhibit
A hereto shall constitute, and are hereby expressly made, a part of this
Indenture and, to the extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby.
Section 2.03. Date and Denomination of Notes; Payments of Interest. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and integral multiples thereof. Each Note shall be dated
the date of its authentication and shall bear interest from the date specified
on the face of the form of Note attached as Exhibit A hereto. Interest on the
Notes shall be computed on the basis of a 360-day year comprised of twelve
30-day months.
The Person in whose name any Note (or its Predecessor Note) is registered
on the Note register at the close of business on any record date with respect to
any Interest Payment Date shall be entitled to receive the interest payable on
such Interest Payment Date. Interest (including Additional Interest, if any)
shall be payable at the office or agency of the Company maintained by the
Company for such purposes in The Borough of Manhattan, City of New York, which
shall initially be the Corporate Trust Office of the Trustee. The Company shall
pay
17
interest (including Additional Interest, if any) (i) on any Notes in
certificated form by check mailed to the address of the Person entitled thereto
as it appears in the Note register (or upon written application by such Person
to the Trustee and Paying Agent not later than the relevant record date, by wire
transfer in immediately available funds to such Person's account within the
United States, if such Person is entitled to interest on an aggregate principal
in excess of $1,000,000) or (ii) on any Global Note by wire transfer of
immediately available funds to the account of the Depositary or its nominee. The
term "record date" with respect to any Interest Payment Date shall mean the
March 1 or September 1 (whether or not such day is a Business Day) preceding the
applicable March 15 or September 15 Interest Payment Date, respectively.
Any interest on any Note that is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Noteholder on the relevant
record date by virtue of its having been such Noteholder, and such Defaulted
Interest shall be paid by the Company, at its election in each case, as provided
in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on a special record date for the payment of
such Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Note and the date of the proposed payment (which
shall be not less than twenty-five (25) days after the receipt by the Trustee of
such notice, unless the Trustee shall consent to an earlier date), and at the
same time the Company shall deposit with the Trustee an amount of money equal to
the aggregate amount to be paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for such deposit on or prior to
the date of the proposed payment, such money when deposited to be held in trust
for the benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Company shall fix a special record date for the
payment of such Defaulted Interest which shall be not more than fifteen (15)
days and not less than ten (10) days prior to the date of the proposed payment,
and not less than ten (10) days after the receipt by the Trustee of the notice
of the proposed payment. The Company shall promptly notify the Trustee of such
special record date and the Trustee, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the special record date therefor to be mailed, first-class postage prepaid,
to each holder at its address as it appears in the Note Register, not less than
ten (10) days prior to such special
18
record date. Notice of the proposed payment of such Defaulted Interest and the
special record date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on such special
record date and shall no longer be payable pursuant to the following clause (2)
of this Section 2.03.
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
or automated quotation system on which the Notes may be listed or designated for
issuance, and upon such notice as may be required by such exchange or automated
quotation system, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Section 2.04. Payments of Additional Interest. If required by the
Registration Rights Agreement, each Note shall pay Additional Interest in the
manner and to the Persons set forth in the Registration Rights Agreement.
Whenever in this Indenture there is mentioned, in any context, the payment of
the principal of, premium, if any, or interest on, or in respect of, any Note,
such mention shall be deemed to include mention of the payment of "Additional
Interest" provided for in the Registration Rights Agreement to the extent that,
in such context, Additional Interest is, was or would be payable in respect
thereof pursuant to the provisions of the Registration Rights Agreement and
express mention of the payment of Additional Interest (if applicable) in any
provisions hereof shall not be construed as excluding Additional Interest in
those provisions hereof where such express mention is not made.
Section 2.05. Execution, Authentication and Delivery of Notes. The Notes
shall be signed in the name and on behalf of the Company by the manual or
facsimile signature of its Chief Executive Officer, President or any of its
Executive or Senior Vice Presidents.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Notes executed by the Company to the Trustee
for authentication, together with a Company Order for the authentication and
delivery of such Notes, and the Trustee in accordance with such Company Order
shall authenticate and deliver such Notes, without any further action by the
Company hereunder.
Only such Notes as shall bear thereon a certificate of authentication
substantially in the form set forth on the form of Note attached as Exhibit A
hereto, manually executed by an authorized officer of the Trustee (or an
19
authenticating agent appointed by the Trustee as provided by Section 17.11),
shall be entitled to the benefits of this Indenture or be valid or obligatory
for any purpose. Such certificate by the Trustee (or such an authenticating
agent) upon any Note executed by the Company shall be conclusive evidence that
the Note so authenticated has been duly authenticated and delivered hereunder
and that the holder is entitled to the benefits of this Indenture.
In case any officer of the Company who shall have signed any of the Notes
shall cease to be such officer before the Notes so signed shall have been
authenticated and delivered by the Trustee, or disposed of by the Company, such
Notes nevertheless may be authenticated and delivered or disposed of as though
the person who signed such Notes had not ceased to be such officer of the
Company; and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.06. Exchange and Registration of Transfer of Notes; Restrictions
on Transfer; Depositary.
(a) The Company shall cause to be kept at the Corporate Trust Office a
register (the register maintained in such office or in any other office or
agency of the Company designated pursuant to Section 5.02 being herein sometimes
collectively referred to as the "Note register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Notes and of transfers of Notes. Such register shall be in
written form or in any form capable of being converted into written form within
a reasonable period of time. The Trustee is hereby appointed "Note registrar"
for the purpose of registering Notes and transfers of Notes as herein provided.
The Company may appoint one or more co-registrars in accordance with Section
5.02.
Upon surrender for registration of transfer of any Note to the Note
registrar or any co-registrar, and satisfaction of the requirements for such
transfer set forth in this Section 2.06, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
Notes may be exchanged for other Notes of any authorized denominations and
of a like aggregate principal amount, upon surrender of the Notes to be
exchanged at any such office or agency maintained by the Company pursuant to
20
Section 5.02. Whenever any Notes are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Notes that
the Noteholder making the exchange is entitled to receive, bearing registration
numbers not contemporaneously outstanding.
All Notes presented or surrendered for registration of transfer or for
exchange, redemption, repurchase or conversion shall (if so required by the
Company, the Trustee, the Note registrar or any co-registrar) be duly endorsed,
or be accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company and duly executed, by the Noteholder thereof or its
attorney-in-fact duly authorized in writing.
No service charge shall be charged to the Noteholder for any exchange or
registration of transfer of Notes, but the Company or the Trustee may require
payment of a sum sufficient to cover any tax, assessments or other governmental
charges that may be imposed in connection therewith.
None of the Company, the Trustee, the Note registrar or any co-registrar
shall be required to exchange or register a transfer of (a) any Notes
surrendered for conversion or, if a portion of any Note is surrendered for
conversion, such portion thereof surrendered for conversion or (b) any Notes, or
a portion of any Note, surrendered for repurchase (and not withdrawn) in
accordance with Article 16 hereof. In addition, in the event of any redemption
in part, the Company will not be required to (i) issue, register the transfer of
or exchange any Note during a period beginning at the opening of business 15
days before any notice of redemption is given to all holders of any Notes to be
redeemed, or (ii) register the transfer of or exchange any Note so selected for
redemption, in whole or in part, except the unredeemed portion of any Note being
redeemed in part.
All Notes issued upon any registration of transfer or exchange of Notes in
accordance with this Indenture shall be the valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this Indenture
as the Notes surrendered upon such registration of transfer or exchange.
(b) So long as the Notes are eligible for book-entry settlement with the
Depositary, unless otherwise required by law, all Notes shall be represented by
one or more Notes in global form (each, a "Global Note") registered in the name
of the Depositary or the nominee of the Depositary. The transfer and exchange of
beneficial interests in a Global Note that does not involve the issuance of a
definitive Note, shall be effected through the Depositary (but not the Trustee
or the Custodian) in accordance with this Indenture (including the restrictions
on transfer set forth herein) and the procedures of the Depositary therefor.
21
(c) [Reserved.]
(d) Every Note that bears or is required under this Section 2.06(d) to
bear the legend set forth in this Section 2.06(d) (together with any Common
Stock issued upon conversion of the Notes and required to bear the legend set
forth in Section 2.06(e), collectively, the "Restricted Securities") shall be
subject to the restrictions on transfer set forth in this Section 2.06(d)
(including the legend set forth below), unless such restrictions on transfer
shall be waived by written consent of the Company, and the holder of each such
Restricted Security, by such holder's acceptance thereof, agrees to be bound by
all such restrictions on transfer. As used in Section 2.06(d) and Section
2.06(e), the term "transfer" encompasses any sale, pledge, transfer or other
disposition whatsoever of any Restricted Security.
Until the date (the "Resale Restriction Termination Date") that is two
years after the last original issue date of the Notes, any certificate
evidencing such Note (and all securities issued in exchange therefor or
substitution thereof, other than Common Stock, if any, issued upon conversion
thereof which shall bear the legend set forth in Section 2.06(e), if applicable)
shall bear a legend in substantially the following form (unless such Notes have
been transferred pursuant to a registration statement that has become or been
declared effective under the Securities Act and that continues to be effective
at the time of such transfer, pursuant to the exemption from registration
provided by Rule 144 or any similar provision then in force under the Securities
Act, or unless otherwise agreed by the Company in writing, with notice thereof
to the Trustee):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER AGREES (1) THAT IT WILL NOT WITHIN TWO
YEARS AFTER THE LAST ORIGINAL ISSUE DATE OF THIS SECURITY, RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK
ISSUABLE UPON CONVERSION OF SUCH SECURITY, EXCEPT (A) TO THE ISSUER OR A
SUBSIDIARY THEREOF; (B) UNDER A REGISTRATION STATEMENT THAT HAS BECOME OR
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (C) TO A PERSON THE
SELLER REASONABLY
22
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, ALL IN
COMPLIANCE WITH RULE 144A (IF AVAILABLE); OR (D) UNDER ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND
(2) THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS
AFTER THE LAST ORIGINAL ISSUE DATE OF THIS SECURITY PURSUANT TO CLAUSE (D)
ABOVE FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED PURSUANT TO THE INDENTURE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
No transfer of any Note prior to the Resale Restriction Termination Date
will be registered by the Note registrar unless the applicable box on the Form
of Assignment and Transfer has been checked.
Any Note (or security issued in exchange or substitution therefor) as to
which such restrictions on transfer shall have expired in accordance with their
terms may, upon surrender of such Note for exchange to the Note registrar in
accordance with the provisions of this Section 2.06, be exchanged for a new Note
or Notes, of like tenor and aggregate principal amount, which shall not bear the
restrictive legend required by this Section 2.06(d). The Company shall notify
the Trustee upon the occurrence of the Resale Restriction Termination Date and
promptly after a Registration Statement with respect to the Notes or the Common
Stock has been declared effective under the Securities Act.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.06(d)), a Global Note may not be
transferred as a whole or in part except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the
23
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Global Note. Initially, the Global Note shall be
issued to the Depositary, registered in the name of Cede & Co., as the nominee
of the Depositary, and deposited with the Trustee as custodian for Cede & Co.
If at any time the Depositary for a Global Note (i) notifies the Company
that it is unwilling or unable to continue as Depositary for such Note or (ii)
ceases to be registered as a clearing agency under the Exchange Act, the Company
may appoint a successor Depositary with respect to such Note. If (1) a successor
Depositary for such Global Note is not appointed by the Company within ninety
(90) days after the Company receives such notice or the Depositary ceasing to be
a registered clearing agency, (2) the Company, at its option, notifies the
Trustee that it elects to cause the issuance of Notes in definitive form in
exchange for all or any part of the Notes represented by a Global Notes, subject
to the procedures of the Depositary, or (3) an Event of Default has occurred and
is continuing and the Note registrar has received a request from the Depositary
for the issuance of Notes in definitive form in exchange for a Global Note, the
Company will execute, and the Trustee, upon receipt of an Officers' Certificate
and a Company Order for the authentication and delivery of Notes, will
authenticate and deliver Notes in definitive form in an aggregate principal
amount equal to the principal amount of such Global Note, in exchange for such
Global Note, and upon delivery of the Global Note to the Trustee such Global
Note shall be canceled.
Definitive Notes issued in exchange for all or a part of the Global Note
pursuant to this Section 2.06(d) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions from its
direct or indirect participants or otherwise, shall instruct the Trustee. Upon
execution and authentication, the Trustee shall deliver such definitive Notes to
the Persons in whose names such definitive Notes are so registered.
At such time as all interests in a Global Note have been converted,
canceled, repurchased, redeemed or transferred, such Global Note shall be, upon
receipt thereof, canceled by the Trustee in accordance with standing procedures
and instructions existing between the Depositary and the Custodian. At any time
prior to such cancellation, if any interest in a Global Note is exchanged for
definitive Notes, converted, canceled, redeemed, repurchased or transferred to a
transferee who receives definitive Notes therefor or any definitive Note is
exchanged or transferred for part of such Global Note, the principal amount of
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such Global Note shall, in accordance with the standing procedures and
instructions existing between the Depositary and the Custodian, be appropriately
reduced or increased, as the case may be, and an endorsement shall be made on
such Global Note, by the Trustee or the Custodian, at the direction of the
Trustee, to reflect such reduction or increase.
None of the Company, the Trustee nor any agent of the Company or the
Trustee will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of a
Global Note or maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
(e) Until the Resale Restriction Termination Date, any stock certificate
representing Common Stock issued upon conversion of such Note shall bear a
legend in substantially the following form (unless the Note or such Common Stock
has been transferred pursuant to a registration statement that has become or
been declared effective under the Securities Act and that continues to be
effective at the time of such transfer or pursuant to the exemption from
registration provided by Rule 144 under the Securities Act or any similar
provision then in force under the Securities Act, or such Common Stock has been
issued upon conversion of Notes that have been transferred pursuant to a
registration statement that has become or been declared effective under the
Securities Act and that continues to be effective at the time of such transfer
or pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, or unless otherwise agreed by the Company with written notice
thereof to the Trustee and any transfer agent for the Common Stock):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES (1)
THAT IT WILL NOT WITHIN TWO YEARS AFTER THE LAST ORIGINAL ISSUE DATE OF
THE NOTES UPON THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED, RESELL
OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY, EXCEPT (A) TO THE
ISSUER OR A SUBSIDIARY THEREOF; (B) UNDER A REGISTRATION STATEMENT THAT
HAS BECOME OR BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (C) TO
A
25
PERSON THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL
BUYER AND TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, ALL IN COMPLIANCE WITH RULE 144A (IF AVAILABLE); OR
(D) UNDER ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT; AND (2) THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS
SECURITY WITHIN TWO YEARS AFTER THE LAST ORIGINAL ISSUE DATE OF THE NOTES
UPON THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED PURSUANT TO CLAUSE
(D) ABOVE FURNISH TO THE TRANSFER AGENT AND THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer shall have
expired in accordance with their terms may, upon surrender of the certificates
representing such shares of Common Stock for exchange in accordance with the
procedures of the transfer agent for the Common Stock, be exchanged for a new
certificate or certificates for a like aggregate number of shares of Common
Stock, which shall not bear the restrictive legend required by this Section
2.06(e).
(f) Any Note or Common Stock issued upon the conversion or exchange of a
Note that, prior to the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
is purchased or owned by the Company or any Affiliate thereof may not be resold
by the Company or such Affiliate unless registered under the Securities Act or
resold pursuant to an exemption from the registration requirements of the
Securities Act in a transaction that results in such Notes or Common Stock, as
the case may be, no longer being "restricted securities" (as defined under Rule
144).
26
(g) Notwithstanding any provision of Section 2.06 to the contrary, in the
event Rule 144(k) as promulgated under the Securities Act (or any successor
rule) is amended to change the two-year period under Rule 144(k) (or the
corresponding period under any successor rule), from and after receipt by the
Trustee of the Officers' Certificate and Opinion of Counsel provided for in this
Section 2.06(g), (i) each reference in Section 2.06(d) to "two years" and in the
restrictive legend set forth in such paragraph to "TWO YEARS" shall be deemed
for all purposes hereof to be references to such changed period, (ii) each
reference in Section 2.06(e) to "two years" and in the restrictive legend set
forth in such paragraph to "TWO YEARS" shall be deemed for all purposes hereof
to be references to such changed period and (iii) all corresponding references
in the Notes (including the definition of Resale Restriction Termination Date)
and the restrictive legends thereon shall be deemed for all purposes hereof to
be references to such changed period, provided that such changes shall not
become effective if they are otherwise prohibited by, or would otherwise cause a
violation of, the then-applicable federal securities laws. The provisions of
this Section 2.06(g) will not be effective until such time as the Opinion of
Counsel and Officers' Certificate have been received by the Trustee hereunder.
This Section 2.06(g) shall apply to successive amendments to Rule 144(k) (or any
successor rule) changing the holding period thereunder.
Section 2.07. Mutilated, Destroyed, Lost or Stolen Notes. In case any Note
shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its written request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and deliver, a
new Note, bearing a number not contemporaneously outstanding, in exchange and
substitution for the mutilated Note, or in lieu of and in substitution for the
Note so destroyed, lost or stolen. In every case the applicant for a substituted
Note shall furnish to the Company, to the Trustee and, if applicable, to such
authenticating agent such security or indemnity as may be required by them to
save each of them harmless from any loss, liability, cost or expense caused by
or connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, to the Trustee and, if
applicable, to such authenticating agent evidence to their satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.
The Trustee or such authenticating agent may authenticate any such
substituted Note and deliver the same upon the receipt of such security or
indemnity as the Trustee, the Company and, if applicable, such authenticating
agent may require. Upon the issuance of any substituted Note, the Company or the
Trustee may require the payment by the holder of a sum sufficient to cover
27
any tax, assessment or other governmental charge that may be imposed in relation
thereto and any other expenses connected therewith. In case any Note that has
matured or is about to mature or has been tendered for repurchase upon a
Fundamental Change or on a Repurchase Date or is about to be redeemed or
converted into cash and shares of Common Stock (if any) shall become mutilated
or be destroyed, lost or stolen, the Company may, in its sole discretion,
instead of issuing a substitute Note, pay or authorize the payment of or convert
or authorize the conversion of the same (without surrender thereof except in the
case of a mutilated Note), as the case may be, if the applicant for such payment
or conversion shall furnish to the Company, to the Trustee and, if applicable,
to such authenticating agent such security or indemnity as may be required by
them to save each of them harmless for any loss, liability, cost or expense
caused by or connected with such substitution, and, in every case of
destruction, loss or theft, evidence satisfactory to the Company, the Trustee
and, if applicable, any Paying Agent or Conversion Agent evidence of their
satisfaction of the destruction, loss or theft of such Note and of the ownership
thereof.
Every substitute Note issued pursuant to the provisions of this Section
2.07 by virtue of the fact that any Note is destroyed, lost or stolen shall
constitute an additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion or redemption
or repurchase of mutilated, destroyed, lost or stolen Notes and shall preclude
any and all other rights or remedies notwithstanding any law or statute existing
or hereafter enacted to the contrary with respect to the replacement or payment
or conversion of negotiable instruments or other securities without their
surrender.
Section 2.08. Temporary Notes. Pending the preparation of Notes in
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the Notes in certificated form but with such omissions, insertions and
variations as may be appropriate for temporary Notes, all as may be determined
by the Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the
28
Notes in certificated form. Without unreasonable delay the Company will execute
and deliver to the Trustee or such authenticating agent Notes in certificated
form (other than in the case of Notes in global form) and thereupon any or all
temporary Notes (other than any Global Note) may be surrendered in exchange
therefor, at each office or agency maintained by the Company pursuant to Section
5.02 and the Trustee or such authenticating agent shall authenticate and deliver
in exchange for such temporary Notes an equal aggregate principal amount of
Notes in certificated form. Such exchange shall be made by the Company at its
own expense and without any charge therefor. Until so exchanged, the temporary
Notes shall in all respects be entitled to the same benefits and subject to the
same limitations under this Indenture as Notes in certificated form
authenticated and delivered hereunder.
Section 2.09. Cancellation of Notes Paid, Etc. All Notes surrendered for
the purpose of payment, repurchase, redemption, conversion, exchange or
registration of transfer, shall, if surrendered to the Company or any Paying
Agent or any Note registrar or any Conversion Agent, be surrendered to the
Trustee and promptly canceled by it, or, if surrendered to the Trustee, shall be
promptly canceled by it, and no Notes shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. The Trustee
shall dispose of canceled Notes in accordance with its customary procedures and,
after such disposition, shall deliver a certificate of such disposition to the
Company, at the Company's written request. If the Company shall acquire any of
the Notes, such acquisition shall not operate as satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.
Section 2.10. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in all notices issued to Noteholders as a convenience to holders
of the Notes; provided, that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Notes or on
such notice and that reliance may be placed only on the other identification
numbers printed on the Notes. The Company will promptly notify the Trustee in
writing of any change in the "CUSIP" numbers.
Section 2.11. Additional Notes; Repurchases. The Company may, without the
consent of the Noteholders and notwithstanding Section 2.01, reopen the Notes
and issue additional Notes hereunder with the same terms and with the same CUSIP
number as the Notes initially issued hereunder in an unlimited aggregate
principal amount, which will form the same series with the Notes initially
issued hereunder. Prior to the issuance of any such additional Notes, the
29
Company shall deliver to the Trustee a Company Order, an Officers' Certificate
and an Opinion of Counsel, such Officers' Certificate and Opinion of Counsel to
cover such matters, in addition to those required by Section 17.05, as the
Trustee shall reasonably request. The Company may also from time to time
repurchase the Notes in open market purchases or negotiated transactions without
prior notice to Noteholders.
ARTICLE 3
REDEMPTION OF NOTES
Section 3.01. Company's Right to Redeem; Notices to Trustee. Prior to
March 15, 2013, the Notes will not be redeemable at the Company's option. On or
after March 15, 2013, the Company, at its option, may redeem the Notes for cash
at any time as a whole, or from time to time in part, at a price (the
"Redemption Price") equal to 100% of the principal amount of the Notes to be
redeemed plus accrued and unpaid interest, including Additional Interest, if
any, on the Notes to be redeemed to (but excluding) the Redemption Date;
provided, however, that, if the Redemption Date falls after a record date and on
or prior to the succeeding Interest Payment Date, the Redemption Price shall be
equal to 100% of the principal amount of the Notes to be redeemed and the full
amount of interest due on such Interest Payment Date shall be payable on such
Interest Payment Date to the record holder of the Note on the record date
relating to such Interest Payment Date. If the Company elects to redeem Notes,
it shall notify the Trustee in writing of the Redemption Date, the principal
amount of Notes to be redeemed and the Redemption Price.
Section 3.02. Selection of Notes to Be Redeemed. If fewer than all the
Notes are to be redeemed, the Trustee shall, upon 15 days' prior notice from the
Company (unless the Trustee consents to a shorter period), select the Notes to
be redeemed by lot, on a pro rata basis or by another method that the Trustee
considers fair and appropriate. Notes and portions of Notes the Trustee selects
shall be in principal amounts of $1,000 or a whole multiple of $1,000. No
sinking fund is provided for the Notes. Provisions of this Indenture that apply
to Notes called for redemption also apply to portions of Notes called for
redemption. The Trustee shall notify the Company as promptly as practicable of
the Notes or portions of Notes to be redeemed.
Notes and portions of Notes that are to be redeemed, pursuant to this
Article 3, are convertible by the holder thereof until the close of business on
the second Business Day prior to the Redemption Date, as set forth in Section
15.02.
30
If any Note selected for partial redemption is converted in part before
termination of the conversion right with respect to the portion of the Note so
selected, the converted portion of such Note shall be deemed (so far as may be)
to be from the portion selected for redemption. Notes that have been converted
subsequent to the Trustee commencing selection of Notes to be redeemed, but
prior to the redemption of such Notes shall be treated by the Trustee as
outstanding for the purpose of such selection.
Section 3.03. Notice of Redemption. At least 45 days but not more than 60
days before a Redemption Date, the Company or, at the Company's request, the
Trustee shall mail or caused to be mailed a notice of redemption by first-class
mail, postage prepaid, to the holders of each Note to be redeemed, the Paying
Agent, the Conversion Agent and the Trustee (if such notice is mailed by the
Company).
The notice shall identify the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the applicable Conversion Rate;
(4) the name and address of the Paying Agent and the Conversion Agent;
(5) that Notes called for redemption may be converted at any time before
the close of business on the second Business Day immediately prior to the
Redemption Date;
(6) that holders who want to convert their Notes must satisfy the
requirements for conversion set forth in the Notes and this Indenture;
(7) that Notes called for redemption must be surrendered to the Paying
Agent to collect the Redemption Price;
(8) if the Trustee (or other Paying Agent appointed by the Company) holds
money sufficient to redeem on the Redemption Date all the Notes or portions
thereof that are to be redeemed as of the Redemption Date, then on and after the
Redemption Date (i) such Notes will cease to be outstanding, (ii) interest,
including Additional Interest, if any, will cease to accrue on such Notes, and
(iii) all other rights of the holders of such Notes will terminate (whether or
not book-
31
entry transfer of the Notes has been made or the Notes have been delivered to
the Trustee or Paying Agent) other than the right to receive the Redemption
Price upon delivery of the Notes;
(9) if fewer than all of the outstanding Notes are to be redeemed, the
certificate numbers, if any, and principal amounts of the particular Notes to be
redeemed; and
(10) the CUSIP number(s) of the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense, provided that the Company
makes such request at least five Business Days prior to the date by which such
notice of redemption must be given to holders in accordance with this Section
3.03.
Section 3.04. Effect of Notice of Redemption. Once notice of redemption is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price stated in the notice except for Notes that are
converted in accordance with the terms of this Indenture. Upon surrender to the
Paying Agent, such Notes shall be paid at the Redemption Price stated in the
notice.
Section 3.05. Deposit of Redemption Price. Prior to 11:00 a.m. (New York
City time) on the Redemption Date, the Company shall deposit with the Paying
Agent (or if the Company or a Subsidiary thereof is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the Redemption Price of all
Notes to be redeemed on that date other than Notes or portions of Notes called
for redemption that on or prior thereto have been delivered by the Company to
the Trustee for cancellation or have been converted. Subject to receipt of funds
and/or Notes by the Paying Agent, payment for Notes surrendered for redemption
will be made promptly after the later of (x) the Redemption Date with respect to
such Note and (y) the time of delivery of such Note to the Paying Agent by the
holder thereof, by mailing checks for the amount payable to the holders of such
Notes entitled thereto as they shall appear in the Note Register; provided,
however, that payments to the Depositary shall be made by wire transfer of
immediately available funds to the account of the Depositary or its nominee. The
Paying Agent shall as promptly as practicable return to the Company any money
not required to redeem the Notes because of conversion of Notes pursuant to
Section 15.01. If such money is then held by the Company in trust and is not
required for such purpose it shall be discharged from such trust.
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If the Trustee (or other Paying Agent appointed by the Company) holds
money sufficient to redeem on the Redemption Date all the Notes or portions
thereof that are to be redeemed as of the Redemption Date, then on and after the
Redemption Date (i) such Notes will cease to be outstanding, (ii) interest,
including Additional Interest, if any, will cease to accrue on such Notes, and
(iii) all other rights of the holders of such Notes will terminate (whether or
not book-entry transfer of the Notes has been made or the Notes have been
delivered to the Trustee or Paying Agent) other than the right to receive the
Redemption Price upon delivery of the Notes.
Section 3.06. Notes Redeemed in Part. Upon surrender of a Note that is
redeemed in part, the Company shall execute and the Trustee shall authenticate
and deliver to the holder a new Note in an authorized denomination equal in
principal amount to the unredeemed portion of the Note surrendered. In the event
of any redemption in part, the Company will not be required to (i) issue,
register the transfer of or exchange any Note during a period beginning at the
opening of business 15 days before any notice of redemption is given to all
holders of any Notes to be redeemed, or (ii) register the transfer of or
exchange any Note so selected for redemption, in whole or in part, except the
unredeemed portion of any Note being redeemed in part.
Section 3.07. No Redemption Upon Acceleration. Notwithstanding the
foregoing, the Company may not redeem the Notes if the principal amount of the
Notes has been accelerated, and such acceleration has not been rescinded, on or
prior to such Redemption Date (except in the case of an acceleration resulting
from a default by the Company in the payment of the Redemption Price with
respect to such Notes).
ARTICLE 4
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction And Discharge. This Indenture shall upon
request of the Company contained in an Officers' Certificate cease to be of
further effect, and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when (i) all Notes theretofore authenticated and delivered (other than (x) Notes
which have been destroyed, lost or stolen and which have been replaced or paid
as provided in Section 2.07 and (y) Notes for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust, as
provided in Section
33
5.04(d)) have been delivered to the Trustee for cancellation; (ii) the Company
has paid or caused to be paid, or delivered or caused to be delivered, all other
sums payable and consideration to be delivered hereunder by the Company; and
(iii) the Company has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of this Indenture have been
complied with. Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 8.06 shall survive.
ARTICLE 5
PARTICULAR COVENANTS OF THE COMPANY
Section 5.01. Payment of Principal, Premium Interest, and Additional
Interest. The Company covenants and agrees that it will cause to be paid the
principal of and premium, if any (including the Redemption Price, Repurchase
Price or Fundamental Change Repurchase Price, as the case may be), and accrued
and unpaid interest and Additional Interest, if any, on each of the Notes at the
places, at the respective times and in the manner provided herein and in the
Notes. Each installment of accrued and unpaid interest and Additional Interest,
if any, on the Notes due on any Additional Interest Payment Date (as defined in
the Registration Rights Agreement) may be paid by mailing checks for the amount
payable to or upon the written order of the Noteholders entitled thereto as they
shall appear on the registry books of the Company; provided that, with respect
to any Noteholder with an aggregate principal amount in excess of $1,000,000, at
the application of such holder in writing to the Note registrar not later than
the relevant record date, accrued and unpaid interest and Additional Interest,
if any, on such holder's Notes shall be paid by wire transfer in immediately
available funds to such holder's account in the United States supplied by such
holder from time to time to the Trustee and Paying Agent (if different from
Trustee); provided further that payment of accrued and unpaid interest and
Additional Interest, if any, made to the Depositary shall be paid by wire
transfer in immediately available funds in accordance with such wire transfer
instructions and other procedures provided by the Depositary from time to time.
Section 5.02. Maintenance of Office or Agency. The Company will maintain
in the Borough of Manhattan, The City of New York, an office or agency where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment, redemptions or repurchase ("Paying Agent") or for
conversion ("Conversion Agent") and where notices and demands to or upon the
Company in respect of the Notes and this Indenture may be served.
34
The Company will give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office or the
office or agency of the Trustee in the Borough of Manhattan, The City of New
York.
The Company may also from time to time designate co-registrars one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency. The terms "Paying
Agent" and "Conversion Agent" include any such additional or other offices or
agencies, as applicable.
The Company hereby initially designates the Trustee as the Paying Agent,
Note registrar, Custodian and Conversion Agent and the Corporate Trust Office
and the office or agency of the Trustee in the Borough of Manhattan shall be
considered as one such office or agency of the Company for each of the aforesaid
purposes.
Section 5.03. Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.04. Provisions as to Paying Agent.
(a) If the Company shall appoint a Paying Agent other than the Trustee,
the Company will cause such Paying Agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section 5.04:
(i) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, and accrued and unpaid
interest and Additional Interest, if any, on the Notes (whether such sums
have been paid to it by the Company or by any other obligor on the Notes)
in trust for the benefit of the holders of the Notes;
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(ii) that it will give the Trustee prompt notice of any failure by
the Company (or by any other obligor on the Notes) to make any payment of
the principal of and premium, if any, and accrued and unpaid interest and
Additional Interest, if any, on the Notes when the same shall be due and
payable; and
(iii) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the Trustee
all sums so held in trust.
The Company shall, on or before each due date of the principal of, or
premium, if any, or accrued and unpaid interest or Additional Interest, if any,
on the Notes, deposit with the Paying Agent a sum sufficient to pay such
principal, premium, if any, or accrued and unpaid interest or Additional
Interest, if any, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of any failure to take such action, provided that if
such deposit is made on the due date, such deposit must be received by the
Paying Agent by 11:00 a.m., New York City time, on such date.
(b) If the Company shall act as its own Paying Agent, it will, on or
before each due date of the principal of, premium, if any, accrued and unpaid
interest and Additional Interest, if any, on the Notes, set aside, segregate and
hold in trust for the benefit of the holders of the Notes a sum sufficient to
pay such principal, premium, if any, accrued and unpaid interest and Additional
Interest, if any, so becoming due and will promptly notify the Trustee in
writing of any failure to take such action and of any failure by the Company (or
any other obligor under the Notes) to make any payment of the principal of,
premium, if any, accrued and unpaid interest and Additional Interest, if any, on
the Notes when the same shall become due and payable.
(c) Anything in this Section 5.04 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company or any Paying Agent hereunder
as required by this Section 5.04, such sums to be held by the Trustee upon the
trusts herein contained and upon such payment by the Company or any Paying Agent
to the Trustee, the Company or such Paying Agent shall be released from all
further liability with respect to such sums.
(d) Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or any premium or
interest on any Note and remaining unclaimed for two years after such
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principal, premium or interest has become due and payable shall be paid to the
Company on request of the Company contained in an Officers' Certificate, or (if
then held by the Company) shall be discharged from such trust; and the holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in The Borough of Manhattan, The City of New York, New York, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
Section 5.05. Existence. Subject to Article 12, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence.
Section 5.06. Rule 144A Information Requirement and Annual Reports. (a) At
any time the Company is not subject to Sections 13 or 15(d) of the Exchange Act,
the Company shall, so long as any of the Notes or any shares of Common Stock
issuable upon conversion thereof shall, at such time, constitute "restricted
securities" within the meaning of Rule 144(a)(3) under the Securities Act,
promptly provide to the Trustee and shall, upon written request, provide to any
holder, beneficial owner or prospective purchaser of such Notes or any shares of
Common Stock issued upon conversion of such Notes, the information required to
be delivered pursuant to Rule 144A(d)(4) under the Securities Act to facilitate
the resale of such Notes or shares of Common Stock pursuant to Rule 144A under
the Securities Act. The Company shall take such further action as any holder or
beneficial owner of such Notes or such Common Stock may reasonably request to
the extent required from time to time to enable such holder or beneficial holder
to sell such Notes or shares of Common Stock in accordance with Rule 144A under
the Securities Act, as such rule may be amended from time to time.
(b) The Company shall deliver to the Trustee, such annual reports,
information, documents and other reports required to be filed with the
Commission and copies of the Company's annual reports (which shall contain
audited financial statements of the Company) and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that the Company is required
37
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; provided that any such information, documents or reports required
to be filed with the Commission shall be delivered to the Trustee within thirty
calendar days after the same is so required to be filed with the Commission. In
the event the Company is at any time no longer subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act, the Company
shall continue to provide the Trustee and, upon written request, to each holder,
within thirty calendar days after the date the Company would have been required
to file such reports with the Commission, annual and quarterly consolidated
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission if the Company were
subject to the reporting requirements of Section 13 or Section 15(d) of the
Exchange Act, including, with respect to annual information only, a report
thereon by the Company's certified independent public accountants as such would
be required in such reports filed with the Commission and, in each case,
together with a management's discussion and analysis of financial condition and
results of operations that would be so required.
(c) Delivery of such reports, information and documents to the Trustee is
for informational purposes only, and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to conclusively rely exclusively on an Officers' Certificate).
Section 5.07. Stay, Extension and Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law that would prohibit or forgive
the Company from paying all or any portion of the principal of or interest on
the Notes as contemplated herein, wherever enacted, now or at any time hereafter
in force, or that may affect the covenants or the performance of this Indenture;
and the Company (to the extent it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not, by
resort to any such law, hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
Section 5.08. Compliance Certificate; Statements as to Defaults. The
Company shall deliver to the Trustee within 120 days after the end of each
fiscal year of the Company (beginning with the fiscal year ending on
December 31,
38
2006) an Officers' Certificate stating whether or not the signer thereof has
knowledge of any failure by the Company to comply with all conditions and
covenants then required to be performed under this Indenture and, if so,
specifying each such failure and the nature thereof.
In addition, the Company shall deliver to the Trustee, as soon as possible
and in any event within 30 days after the Company becomes aware of the
occurrence of any Event of Default or Default, an Officers' Certificate setting
forth the details of such Event of Default or Default, its status and the action
that the Company proposes to take with respect thereto.
Section 5.09. Additional Interest. If Additional Interest is payable by
the Company pursuant to the Registration Rights Agreement, the Company shall
deliver to the Trustee an Officers' Certificate to that effect stating (i) the
amount of such Additional Interest that is payable and (ii) the date on which
such interest is payable. Unless and until a Responsible Officer of the Trustee
receives at the Corporate Trust Office such a certificate, the Trustee may
assume without inquiry that no such Additional Interest is payable. If the
Company has paid Additional Interest directly to the Persons entitled to them,
the Company shall deliver to the Trustee an Officers' Certificate setting forth
the particulars of such payment.
Section 5.10. Further Instruments and Acts. Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
Section 5.11. Resale of the Notes. During the period of two years after
the last original issuance of the Notes the Company shall not, and shall not
permit any of its Affiliates to, resell any of the Notes or the shares of Common
Stock, if any, issued upon conversion of the Notes, that constitute "restricted
securities" under Rule 144 under the Securities Act that have been reacquired by
any of them.
ARTICLE 6
LISTS OF NOTEHOLDERS AND REPORTS BY THE COMPANY AND THE TRUSTEE
Section 6.01. Lists of Noteholders. The Company covenants and agrees that
it will furnish or cause to be furnished to the Trustee, semi-annually, not more
than fifteen (15) days after each March 1 and September 1 in each year beginning
with September 1, 2006, and at such other times as the Trustee may request in
39
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the Noteholders as of a date not more than fifteen (15) days (or such other date
as the Trustee may reasonably request in order to so provide any such notices)
prior to the time such information is furnished, except that no such list need
be furnished so long as the Trustee is acting as Note registrar.
Section 6.02. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Noteholders
contained in the most recent list furnished to it as provided in Section 6.01 or
maintained by the Trustee in its capacity as Note registrar, if so acting. The
Trustee may destroy any list furnished to it as provided in Section 6.01 upon
receipt of a new list so furnished.
(b) The rights of Noteholders to communicate with other Noteholders with
respect to their rights under this Indenture or under the Notes and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Noteholders made pursuant to the Trust
Indenture Act.
Section 6.03. Reports by Trustee.
(a) The Trustee shall transmit to holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
60 days after each May 15 following the date of this Indenture, deliver to
holders a brief report, dated as of such May 15, that complies with the
provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such transmission to
Noteholders, be filed by the Trustee with each stock exchange and automated
quotation system upon which the Notes are listed and with the Company. The
40
Company will notify the Trustee in writing within a reasonable time when the
Notes are listed on any stock exchange or automated quotation system and when
any such listing is discontinued.
ARTICLE 7
DEFAULTS AND REMEDIES
Section 7.01. Events of Default. The following events shall be "Events of
Default" with respect to the Notes:
(a) default in any payment of interest, including any Additional Interest,
on any Note when due and payable and the default continues for a period of
thirty days;
(b) default in the payment of principal of any Note when due and payable
at its Maturity Date, upon redemption, upon required repurchase, upon
declaration of acceleration or otherwise;
(c) failure by the Company to comply with its obligation to convert the
Notes into cash or a combination of cash and Common Stock, as applicable, upon
exercise of a holder's conversion right and such failure continues for a period
of five days;
(d) failure by the Company to issue a Fundamental Change Company Notice in
accordance with Section 16.02 when due;
(e) failure by the Company for 60 days after written notice from the
Trustee or the holders of at least 25% in principal amount of the Notes then
outstanding (a copy of which notice, if given by holders, also to be given to
the Trustee) has been received by the Company to comply with any of its other
agreements contained in the Notes or this Indenture, which notice shall state
that it is a "Notice of Default" hereunder;
(f) default by the Company or any Subsidiary of the Company in the payment
of the principal or interest on any mortgage, agreement or other instrument
under which there may be outstanding, or by which there may be secured or
evidenced, any debt for money borrowed in excess of $25 million in the aggregate
of the Company and/or any such Subsidiary, whether such debt now exists or shall
hereafter be created, resulting in such debt becoming or being declared due and
payable, and such acceleration shall not have been rescinded or
41
annulled within 30 days after written notice of such acceleration has been
received by the Company or such Subsidiary;
(g) a final judgment for the payment of $25 million or more rendered
against the Company or any Subsidiary of the Company, which judgment is not
fully covered by insurance or not discharged or stayed within 90 days after (i)
the date on which the right to appeal thereof has expired if no such appeal has
commenced, or (ii) the date on which all rights to appeal have been
extinguished;
(h) the Company or any Subsidiary of the Company that is a "significant
subsidiary" (as defined in Regulation S-X under the Exchange Act) or any group
of Subsidiaries of the Company that in the aggregate would constitute a
"significant subsidiary" shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to the Company
or any such Subsidiary or group of Subsidiaries or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official of the Company or any such Subsidiary or group of Subsidiaries
or any substantial part of its property, or shall consent to any such relief or
to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall make a
general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due; or
(i) an involuntary case or other proceeding shall be commenced against the
Company or any Subsidiary of the Company that is a "significant subsidiary" (as
defined in Regulation S-X under the Exchange Act) or any group of Subsidiaries
of the Company that in the aggregate would constitute a "significant subsidiary"
seeking liquidation, reorganization or other relief with respect to the Company
or such Subsidiary or group of Subsidiaries or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of the Company or such Subsidiary or group of Subsidiaries or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of ninety consecutive days.
In case one or more Events of Default shall have occurred and be
continuing (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body), then, and in each and every such case
(other than an Event of Default specified in Section 7.01(h) or Section 7.01(i)
with respect to the Company), unless the principal of all of the Notes shall
have
42
already become due and payable, either the Trustee or the holders of at least
25% in aggregate principal amount of the Notes then outstanding determined in
accordance with Section 9.04, by notice in writing to the Company (and to the
Trustee if given by Noteholders), may declare 100% of the principal of and
premium, if any, and accrued and unpaid interest and accrued and unpaid
Additional Interest, if any, on all the Notes to be due and payable immediately,
and upon any such declaration the same shall become and shall be immediately due
and payable, anything in this Indenture or in the Notes contained to the
contrary notwithstanding. If an Event of Default specified in Section 7.01(h) or
Section 7.01(i) occurs and is continuing with respect to the Company, the
principal of all the Notes and accrued and unpaid interest and accrued and
unpaid Additional Interest, if any, shall be immediately due and payable. This
provision, however, is subject to the conditions that if, at any time after the
principal of the Notes shall have been so declared due and payable, and before
any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay installments of accrued and
unpaid interest and accrued and unpaid Additional Interest, if any, upon all
Notes and the principal of and premium, if any, on any and all Notes that shall
have become due otherwise than by acceleration (with interest on overdue
installments of accrued and unpaid interest and accrued and unpaid Additional
Interest, if any, (to the extent that payment of such interest is enforceable
under applicable law) and on such principal and premium, if any, at the rate
borne by the Notes at such time) and amounts due to the Trustee pursuant to
Section 8.06, and if (1) rescission would not conflict with any judgment or
decree of a court of competent jurisdiction and (2) any and all Events of
Defaults under this Indenture, other than the nonpayment of principal of and
premium, if any, and accrued and unpaid interest and accrued and unpaid
Additional Interest, if any, on Notes that shall have become due solely by such
acceleration, shall have been cured or waived pursuant to Section 7.07, then and
in every such case the holders of a majority in aggregate principal amount of
the Notes then outstanding, by written notice to the Company and to the Trustee,
may waive all Defaults or Events of Default with respect to the Notes and
rescind and annul such declaration and its consequences and such Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Indenture; but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent Default
or Event of Default, or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned because
of such waiver or rescission and annulment or for any other reason or
43
shall have been determined adversely to the Trustee, then and in every such case
the Company, the Noteholders, and the Trustee shall, subject to any
determination in such proceeding, be restored respectively to their several
positions and rights hereunder, and all rights, remedies and powers of the
Company, the Noteholders, and the Trustee shall continue as though no such
proceeding had been instituted.
Section 7.02. Payments of Notes on Default; Suit Therefor. If an Event of
Default described in clause (a) or (b) of Section 7.01 shall have occurred, the
Company shall, upon demand of the Trustee, pay to it, for the benefit of the
holders of the Notes, the whole amount then due and payable on the Notes for
principal, premium, if any, and interest and Additional Interest, if any, with
interest on any overdue principal, premium, if any, interest and Additional
Interest, if any, at the rate borne by the Notes at such time, and, in addition
thereto, such further amount as shall be sufficient to cover any amounts due to
the Trustee under Section 8.06. If the Company shall fail to pay such amounts
forthwith upon such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Company or any other obligor upon
the Notes and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon the
Notes, wherever situated.
In the event there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Notes under title
11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Company or such other obligor, the property of the Company or
such other obligor, or in the event of any other judicial proceedings relative
to the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.02,
shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of principal
premium, if any, and accrued and unpaid interest and accrued and unpaid
Additional Interest, if any, in respect of the Notes, and, in case of any
judicial proceedings, to file such proofs of claim and other papers or documents
and to take such other actions as it may deem necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
44
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Noteholders allowed in such judicial proceedings
relative to the Company or any other obligor on the Notes, its or their
creditors, or its or their property, and to collect and receive any monies or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of any amounts due the Trustee under Section 8.06; and
any receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
custodian or similar official is hereby authorized by each of the Noteholders to
make such payments to the Trustee, as administrative expenses, and, in the event
that the Trustee shall consent to the making of such payments directly to the
Noteholders, to pay to the Trustee any amount due it for reasonable
compensation, expenses, advances and disbursements, including agents and counsel
fees, and including any other amounts due to the Trustee under Section 8.06
hereof, incurred by it up to the date of such distribution. To the extent that
such payment of reasonable compensation, expenses, advances and disbursements
out of the estate in any such proceedings shall be denied for any reason,
payment of the same shall be secured by a lien on, and shall be paid out of, any
and all distributions, dividends, monies, securities and other property that the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
of reorganization, arrangement, adjustment or composition affecting the
Noteholder or the rights of any Noteholder thereof, or to authorize the Trustee
to vote in respect of the claim of any Noteholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes, or the production thereof at any trial or other proceeding
relative thereto, and any such suit or proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.
45
Section 7.03. Application of Monies Collected by Trustee. Any monies
collected by the Trustee pursuant to this Article 7 with respect to the Notes
shall be applied in the order following, at the date or dates fixed by the
Trustee for the distribution of such monies, upon presentation of the several
Notes, and stamping thereon the payment, if only partially paid, and upon
surrender thereof, if fully paid:
First, to the payment of all amounts due the Trustee under Section 8.06;
Second, in case the principal of the outstanding Notes shall not have
become due and be unpaid, to the payment of interest on the Notes, including
Additional Interest, if any, in default in the order of the maturity date of the
installments of such interest, with interest (to the extent that such interest
has been collected by the Trustee) upon the overdue installments of interest at
the rate borne by the Notes at such time, such payments to be made ratably to
the Persons entitled thereto;
Third, in case the principal of the outstanding Notes shall have become
due, by declaration or otherwise, and be unpaid to the payment of the whole
amount including the payment of the Fundamental Change Repurchase Price, the
Repurchase Price, the Redemption Price and the cash component of the Conversion
Obligation, if any, then owing and unpaid upon the Notes for principal and
premium, if any, and interest, including Additional Interest, if any, with
interest on the overdue principal and premium, if any, and (to the extent that
such interest has been collected by the Trustee) upon overdue installments of
interest at the rate borne by the Notes at such time, and in case such monies
shall be insufficient to pay in full the whole amounts so due and unpaid upon
the Notes, then to the payment of such principal and premium, if any, and
interest without preference or priority of principal and premium, if any, over
interest, or of interest over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of any Note
over any other Note, ratably to the aggregate of such principal and premium, if
any, and accrued and unpaid interest; and
Fourth, to the payment of the remainder, if any, to the Company or any
other Person lawfully entitled thereto.
Section 7.04. Proceedings by Noteholders. No holder of any Note shall have
any right by virtue of or by availing of any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such
46
holder previously shall have given to the Trustee written notice of an Event of
Default and of the continuance thereof, as hereinbefore provided, and unless
also the holders of not less than 25% in aggregate principal amount of the Notes
then outstanding shall have made written request upon the Trustee to institute
such action, suit or proceeding in its own name as Trustee hereunder and shall
have offered to the Trustee such security or indemnity reasonably satisfactory
to it against any loss, liability or expense to be incurred therein or thereby,
and the Trustee for sixty (60) days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding and no direction that, in the opinion of the Trustee,
is inconsistent with such written request shall have been given to the Trustee
by the holders of a majority in principal amount of the Notes outstanding within
such 60-day period pursuant to Section 7.07; it being understood and intended,
and being expressly covenanted by the taker and holder of every Note with every
other taker and holder and the Trustee that no one or more Noteholders shall
have any right in any manner whatever by virtue of or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Noteholder, or to obtain or seek to obtain priority over or preference to
any other such holder, or to enforce any right under this Indenture, except in
the manner herein provided and for the equal, ratable and common benefit of all
Noteholders (except as otherwise provided herein). For the protection and
enforcement of this Section 7.04, each and every Noteholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provision of this Indenture and any provision of
any Note, the right of any Noteholder to receive payment of the principal of and
premium, if any (including the Redemption Price upon redemption pursuant to
Article 3, the Repurchase Price upon repurchase pursuant to Section 16.01 and
the Fundamental Change Repurchase Price upon repurchase pursuant to Section
16.02), and accrued and unpaid interest and accrued and unpaid Additional
Interest, if any, on such Note, on or after the respective due dates expressed
or provided for in such Note, in this Indenture or in the notice of redemption,
or to institute suit for the enforcement of any such payment on or after such
respective dates against the Company shall not be impaired or affected without
the consent of such Noteholder.
Anything in this Indenture or the Notes to the contrary notwithstanding,
the holder of any Note, without the consent of either the Trustee or the holder
of any other Note, in its own behalf and for its own benefit, may enforce, and
may institute and maintain any proceeding suitable to enforce, its rights of
conversion as provided herein.
47
Section 7.05. Proceedings by Trustee. In case of an Event of Default the
Trustee may in its discretion proceed to protect and enforce the rights vested
in it by this Indenture by such appropriate judicial proceedings as are
necessary to protect and enforce any of such rights, either by suit in equity or
by action at law or by proceeding in bankruptcy or otherwise, whether for the
specific enforcement of any covenant or agreement contained in this Indenture or
in aid of the exercise of any power granted in this Indenture, or to enforce any
other legal or equitable right vested in the Trustee by this Indenture or by
law.
Section 7.06. Remedies Cumulative and Continuing. Except as provided in
the last paragraph of Section 2.07, all powers and remedies given by this
Article 7 to the Trustee or to the Noteholders shall, to the extent permitted by
law, be deemed cumulative and not exclusive of any thereof or of any other
powers and remedies available to the Trustee or the holders of the Notes, by
judicial proceedings or otherwise, to enforce the performance or observance of
the covenants and agreements contained in this Indenture, and no delay or
omission of the Trustee or of any holder of any of the Notes to exercise any
right or power accruing upon any Default or Event of Default shall impair any
such right or power, or shall be construed to be a waiver of any such Default or
any acquiescence therein; and, subject to the provisions of Section 7.04, every
power and remedy given by this Article 7 or by law to the Trustee or to the
Noteholders may be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Noteholders.
Section 7.07. Direction of Proceedings and Waiver of Defaults by Majority
of Noteholders. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.04 shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee with respect to Notes; provided, however, that (a) such
direction shall not be in conflict with any rule of law or with this Indenture,
and (b) the Trustee may take any other action deemed proper by the Trustee that
is not inconsistent with such direction. The Trustee may refuse to follow any
direction that it determines is unduly prejudicial to the rights of any other
holder or that would involve the Trustee in personal liability. The holders of a
majority in aggregate principal amount of the Notes at the time outstanding
determined in accordance with Section 9.04 may on behalf of the holders of all
of the Notes waive any past Default or Event of Default hereunder and its
consequences except (i) a default in the payment of premium, accrued and unpaid
interest or accrued and unpaid Additional Interest, if any, on, or the principal
(including any Redemption Price, Repurchase Price and Fundamental Change
Repurchase Price)
48
of, the Notes when due that has not been cured pursuant to the provisions of
Section 7.01, (ii) a failure by the Company to deliver cash and shares of Common
Stock (or cash in lieu of fractional shares) upon conversion of the Notes or
(iii) a default in respect of a covenant or provision hereof which under Article
11 cannot be modified or amended without the consent of each holder of an
outstanding Note affected. Upon any such waiver the Company, the Trustee and the
holders of the Notes shall be restored to their former positions and rights
hereunder; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon. Whenever any Default or
Event of Default hereunder shall have been waived as permitted by this Section
7.07, said Default or Event of Default shall for all purposes of the Notes and
this Indenture be deemed to have been cured and to be not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default
or impair any right consequent thereon.
Section 7.08. Notice of Defaults. The Trustee shall, within ninety (90)
days after the occurrence and continuance of a Default of which a Responsible
Officer has actual knowledge, mail to all Noteholders as the names and addresses
of such holders appear upon the Note register, notice of all Defaults known to a
Responsible Officer, unless such Defaults shall have been cured or waived before
the giving of such notice; and provided that, except in the case of a Default in
the payment of the principal of, or premium, if any, accrued and unpaid interest
or accrued and unpaid Additional Interest, if any, on any of the Notes,
including without limiting the generality of the foregoing any Default in the
payment of any Fundamental Change Repurchase Price, then in any such event the
Trustee shall be protected in withholding such notice if and so long as a
committee of trust officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the Noteholders.
Section 7.09. Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Note by its acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; provided that the provisions of this Section 7.09 (to the extent
permitted by law) shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Noteholder, or group of Noteholders, holding in the
aggregate more than 10% in principal
49
amount of the Notes at the time outstanding determined in accordance with
Section 9.04, or to any suit instituted by any Noteholder for the enforcement of
the payment of the principal of or premium, if any, accrued and unpaid interest
or accrued and unpaid Additional Interest, if any, on any Note (including, but
not limited to, the Redemption Price, the Repurchase Price or the Fundamental
Change Repurchase Price with respect to the Notes being repurchased as provided
in this Indenture) on or after the due date expressed or provided for in such
Note or to any suit for the enforcement of the right to convert any Note in
accordance with the provisions of Article 15.
ARTICLE 8
CONCERNING THE TRUSTEE
Section 8.01. Duties and Responsibilities of Trustee. The Trustee, prior
to the occurrence of an Event of Default and after the curing or waiver of all
Events of Default that may have occurred, undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture. In case an
Event of Default has occurred (which has not been cured or waived) the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs; provided that if an Event of Default occurs and is continuing, the
Trustee will be under no obligation to exercise any of the rights or powers
under this Indenture at the request or direction of any of the holders unless
such holders have offered to the Trustee reasonable indemnity or security
against the costs, expenses and liabilities that might be incurred by it in
compliance with such request or direction.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after the curing or
waiving of all Events of Default that may have occurred:
(i) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Indenture and, after it has been
qualified thereunder, the Trust Indenture Act, and the Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Indenture and no implied
50
covenants or obligations shall be read into this Indenture and the Trust
Indenture Act against the Trustee; and
(ii) in the absence of bad faith and willful misconduct on the part
of the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but, in the case of any such certificates
or opinions that by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer or Officers of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
holders of not less than a majority in principal amount of the Notes at the time
outstanding determined as provided in Section 9.04 relating to the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Indenture;
(d) whether or not therein provided, every provision of this Indenture
relating to the conduct or affecting the liability of, or affording protection
to, the Trustee shall be subject to the provisions of this Section;
(e) the Trustee shall not be liable in respect of any payment (as to the
correctness of amount, entitlement to receive or any other matters relating to
payment) or notice effected by the Company or any Paying Agent or any records
maintained by any co-registrar with respect to the Notes;
(f) if any party fails to deliver a notice relating to an event the fact
of which, pursuant to this Indenture, requires notice to be sent to the Trustee,
the Trustee may conclusively rely on its failure to receive such notice as
reason to act as if no such event occurred, unless such Responsible Officer of
the Trustee had actual knowledge of such event;
(g) in the absence of written investment direction from the Company, all
cash received by the Trustee shall be placed in a non-interest bearing trust
account. In no event shall the Trustee be liable for the selection of
investments or
51
for investment losses incurred thereon or for losses incurred as a result of the
liquidation of any such investment prior to its maturity date or the failure of
the party directing such investments prior to its maturity date or the failure
of the party directing such investment to provide timely written investment
direction, and the Trustee shall have no obligation to invest or reinvest any
amounts held hereunder in the absence of such written investment direction from
the Company; and
(h) in the event that the Trustee is also acting as Custodian, Note
registrar, Paying Agent, Conversion Agent or transfer agent hereunder, the
rights and protections afforded to the Trustee pursuant to this Article 8 shall
also be afforded to such Custodian, Note registrar, Paying Agent, Conversion
Agent or transfer agent.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers.
Section 8.02. Reliance on Documents, Opinions, Etc. Except as otherwise
provided in Section 8.01:
(a) the Trustee may conclusively rely and shall be fully protected in
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, Note, coupon or other paper or document
believed by it in good faith to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel and require an opinion of counsel
and any advice of such counsel or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or omitted by it
hereunder in good faith and in accordance with such advice or Opinion of
Counsel;
(d) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request, order or direction of
any of
52
the Noteholders pursuant to the provisions of this Indenture, unless such
Noteholders shall have offered to the Trustee security or indemnity satisfactory
to it against the costs, expenses and liabilities that may be incurred therein
or thereby;
(e) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture or
other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
custodians, nominees or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent, custodian, nominee or
attorney appointed by it with due care hereunder; and
(g) the permissive rights of the Trustee enumerated herein shall not be
construed as duties.
In no event shall the Trustee be liable for any consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action other than any such loss or damage caused by
the Trustee's willful misconduct or gross negligence. The Trustee shall not be
charged with knowledge of any Default or Event of Default with respect to the
Notes, unless either (1) a Responsible Officer shall have actual knowledge of
such Default or Event of Default or (2) written notice of such Default or Event
of Default shall have been given to the Trustee by the Company or by any holder
of the Notes.
Section 8.03. No Responsibility for Recitals, Etc. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
53
Section 8.04. Trustee, Paying Agents, Conversion Agents or Registrar May
Own Notes. The Trustee, any Paying Agent, any Conversion Agent or Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not the Trustee,
Paying Agent, Conversion Agent or Note registrar.
Section 8.05. Monies to Be Held in Trust. All monies received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received. Money held by the Trustee in trust
hereunder need not be segregated from other funds except to the extent required
by law. The Trustee shall be under no liability for interest on any money
received by it hereunder except as may be agreed from time to time by the
Company and the Trustee.
Section 8.06. Compensation and Expenses of Trustee. The Company covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation for all services rendered by it hereunder
in any capacity (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) as mutually agreed to in
writing between the Trustee and the Company, and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustee in
accordance with any of the provisions of this Indenture in any capacity
thereunder (including the reasonable compensation and the expenses and
disbursements of its agents and counsel and of all Persons not regularly in its
employ) except any such expense, disbursement or advance as may arise from its
negligence, willful misconduct or bad faith. The Company also covenants to
indemnify the Trustee in any capacity under this Indenture and any other
document or transaction entered into in connection herewith and its agents and
any authenticating agent for, and to hold them harmless against, any loss,
liability or expense incurred without negligence, willful misconduct or bad
faith on the part of the Trustee, its officers, directors, agents or employees,
or such agent or authenticating agent, as the case may be, and arising out of or
in connection with the acceptance or administration of this trust or in any
other capacity hereunder, including the costs and expenses of defending
themselves against any claim of liability in the premises. The obligations of
the Company under this Section 8.06 to compensate or indemnify the Trustee and
to pay or reimburse the Trustee for expenses, disbursements and advances shall
be secured by a lien prior to that of the Notes upon all property and funds held
or collected by the Trustee as such, except, subject to the effect of Section
7.03, funds held in trust herewith for the benefit of the holders of particular
Notes. The Trustee's right to receive payment of any amounts due
54
under this Section 8.06 shall not be subordinate to any other liability or
indebtedness of the Company (even though the Notes may be so subordinated). The
obligation of the Company under this Section 8.06 shall survive the satisfaction
and discharge of this Indenture and the earlier resignation or removal or the
Trustee. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld. The indemnification provided
in this Section 8.06 shall extend to the officers, directors, agents and
employees of the Trustee.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee and its agents and any authenticating agent
incur expenses or render services after an Event of Default specified in Section
7.01(h) or Section 7.01(i) occurs, the expenses and the compensation for the
services are intended to constitute expenses of administration under any
bankruptcy, insolvency or similar laws.
Section 8.07. Officers' Certificate as Evidence. Except as otherwise
provided in Section 8.01, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence, willful misconduct, recklessness
and bad faith on the part of the Trustee, be deemed to be conclusively proved
and established by an Officers' Certificate delivered to the Trustee, and such
Officers' Certificate, in the absence of negligence, willful misconduct,
recklessness and bad faith on the part of the Trustee, shall be full warrant to
the Trustee for any action taken or omitted by it under the provisions of this
Indenture upon the faith thereof.
Section 8.08. Conflicting Interests of Trustee. After qualification of
this Indenture under the Trust Indenture Act, if the Trustee has or shall
acquire a conflicting interest within the meaning of the Trust Indenture Act,
the Trustee shall either (i) eliminate such interest within 90 days, (ii) apply
to the Commission for permission to continue as Trustee or (iii) resign, to the
extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Indenture.
Section 8.09. Eligibility of Trustee. There shall at all times be a
Trustee hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000. If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of any supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such Person shall be
55
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 8.10. Resignation or Removal of Trustee.
(a) The Trustee may at any time resign by giving written notice of such
resignation to the Company and by mailing notice thereof to the Noteholders at
their addresses as they shall appear on the Note register. Upon receiving such
notice of resignation, the Company shall promptly appoint a successor trustee by
written instrument, in duplicate, executed by order of the Board of Directors,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within sixty (60) days after the mailing
of such notice of resignation to the Noteholders, the resigning Trustee may,
upon ten (10) Business Days' notice to the Company and the Noteholders, petition
any court of competent jurisdiction for the appointment of a successor trustee,
or any Noteholder who has been a bona fide holder of a Note or Notes for at
least six months may, subject to the provisions of Section 7.09, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with Section 8.08 within a
reasonable time after written request therefor by the Company or by any
Noteholder who has been a bona fide holder of a Note or Notes for at least
six (6) months, or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 8.09 and shall fail to resign after written request
therefor by the Company or by any such Noteholder, or
(iii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
56
then, in any such case, the Company may by a Board Resolution remove the Trustee
and appoint a successor trustee by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be delivered
to the Trustee so removed and one copy to the successor trustee, or, subject to
the provisions of Section 7.09, any Noteholder who has been a bona fide holder
of a Note or Notes for at least six (6) months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the Notes
at the time outstanding, as determined in accordance with Section 9.04, may at
any time remove the Trustee and nominate a successor trustee that shall be
deemed appointed as successor trustee unless within ten (10) days after notice
to the Company of such nomination the Company objects thereto, in which case the
Trustee so removed or any Noteholder, upon the terms and conditions and
otherwise as in Section 8.10(a) provided, may petition any court of competent
jurisdiction for an appointment of a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.
Section 8.11. Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amounts then due it pursuant to the provisions of Section
8.06, execute and deliver an instrument transferring to such successor trustee
all the rights and powers of the trustee so ceasing to act. Upon request of any
such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property and funds held or collected by
such trustee as such, except for
57
funds held in trust for the benefit of holders of particular Notes, to secure
any amounts then due it pursuant to the provisions of Section 8.06.
No successor trustee shall accept appointment as provided in this Section
8.11 unless at the time of such acceptance such successor trustee shall be
qualified under the provisions of Section 8.08 and be eligible under the
provisions of Section 8.09.
Upon acceptance of appointment by a successor trustee as provided in this
Section 8.11, each of the Company and the successor trustee, at the written
direction and at the expense of the Company shall mail or cause to be mailed
notice of the succession of such trustee hereunder to the Noteholders at their
addresses as they shall appear on the Note register. If the Company fails to
mail such notice within ten (10) days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Company.
Section 8.12. Succession by Merger, Etc. Any corporation or other entity
into which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or other entity succeeding to all or substantially all of the
corporate trust business of the Trustee (including the administration of this
Indenture), shall be the successor to the Trustee hereunder without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that in the case of any corporation or other entity
succeeding to all or substantially all of the corporate trust business of the
Trustee such corporation or other entity shall be qualified under the provisions
of Section 8.08 and eligible under the provisions of Section 8.09.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture, any of the Notes shall have been authenticated
but not delivered, any such successor to the Trustee may adopt the certificate
of authentication of any predecessor trustee or authenticating agent appointed
by such predecessor trustee, and deliver such Notes so authenticated; and in
case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or an authenticating agent appointed by such successor
trustee may authenticate such Notes either in the name of any predecessor
trustee hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or to
58
authenticate Notes in the name of any predecessor Trustee shall apply only to
its successor or successors by merger, conversion or consolidation.
Section 8.13. Limitation on Rights of Trustee as Creditor. If and when the
Trustee shall be or become a creditor of the Company (or any other obligor upon
the Notes), after qualification under the Trust Indenture Act, the Trustee shall
be subject to the provisions of the Trust Indenture Act regarding the collection
of the claims against the Company (or any such other obligor).
Section 8.14. Trustee's Application for Instructions from the Company. Any
application by the Trustee for written instructions from the Company (other than
with regard to any action proposed to be taken or omitted to be taken by the
Trustee that affects the rights of the holders of the Notes under this
Indenture) may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Indenture and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Trustee shall not be liable for any action taken by, or omission
of, the Trustee in accordance with a proposal included in such application on or
after the date specified in such application (which date shall not be less than
three Business Days after the date any officer that the Company has indicated to
the Trustee should receive such application actually receives such application,
unless any such officer shall have consented in writing to any earlier date),
unless, prior to taking any such action (or the effective date in the case of
any omission), the Trustee shall have received written instructions in response
to such application specifying the action to be taken or omitted.
ARTICLE 9
CONCERNING THE NOTEHOLDERS
Section 9.01. Action by Noteholders. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by Noteholders
in person or by agent or proxy appointed in writing, or (b) by the record of the
Noteholders voting in favor thereof at any meeting of Noteholders duly called
and held in accordance with the provisions of Article 10, or (c) by a
combination of such instrument or instruments and any such record of such a
meeting of Noteholders. Whenever the
59
Company or the Trustee solicits the taking of any action by the holders of the
Notes, the Company or the Trustee may fix, but shall not be required to, in
advance of such solicitation, a date as the record date for determining
Noteholders entitled to take such action. The record date if one is selected
shall be not more than fifteen (15) days prior to the date of commencement of
solicitation of such action.
Section 9.02. Proof of Execution by Noteholders. Subject to the provisions
of Section 8.01, Section 8.02 and Section 10.05, proof of the execution of any
instrument by a Noteholder or its agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the Note register or by a certificate of the
Note registrar. The record of any Noteholders' meeting shall be proved in the
manner provided in Section 10.06.
Section 9.03. Who Are Deemed Absolute Owners. The Company, the Trustee,
any authenticating agent, any Paying Agent, any Conversion Agent and any Note
registrar may deem the Person in whose name a Note shall be registered upon the
Note register to be, and may treat it as, the absolute owner of such Note
(whether or not such Note shall be overdue and notwithstanding any notation of
ownership or other writing thereon made by any Person other than the Company or
any Note registrar) for the purpose of receiving payment of or on account of the
principal of, premium, if any, and (subject to Section 2.03) accrued and unpaid
interest and accrued and unpaid Additional Interest, if any, on such Note, for
conversion of such Note and for all other purposes; and neither the Company nor
the Trustee nor any Paying Agent nor any Conversion Agent nor any Note registrar
shall be affected by any notice to the contrary. All such payments so made to
any holder for the time being, or upon its order, shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for monies payable upon any such Note. Notwithstanding anything to the
contrary in this Indenture or the Notes following a Default, any holder of a
beneficial interest in a Global Note may directly enforce against the Company,
without the consent, solicitation, proxy, authorization or any other action of
the Depositary or any other Person, such holder's right to exchange such
beneficial interest for a Note in certificated form in accordance with the
provisions of this Indenture.
Section 9.04. Company-Owned Notes Disregarded. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture,
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Notes that are owned by the Company or any other obligor on the Notes or by any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company or any other obligor on such Notes
shall be disregarded and deemed not to be outstanding for the purpose of any
such determination; provided that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, consent, waiver or
other action only Notes that a Responsible Officer knows are so owned shall be
so disregarded. Notes so owned that have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.04 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to so act
with respect to such Notes and that the pledgee is not the Company, any other
obligor on the Notes or a Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company or any
such other obligor. In the case of a dispute as to such right, any decision by
the Trustee taken upon the advice of counsel shall be full protection to the
Trustee. Upon request of the Trustee, the Company shall furnish to the Trustee
promptly an Officers' Certificate listing and identifying all Notes, if any,
known by the Company to be owned or held by or for the account of any of the
above described Persons; and, subject to Section 8.01, the Trustee shall be
entitled to accept such Officers' Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Notes not listed therein are
outstanding for the purpose of any such determination.
Section 9.05. Revocation of Consents; Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.01, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note that is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.02, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution therefor
or upon registration of transfer thereof, irrespective of whether any notation
in regard thereto is made upon such Note or any Note issued in exchange or
substitution therefor or upon registration of transfer thereof.
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ARTICLE 10
NOTEHOLDERS' MEETINGS
Section 10.01. Purpose of Meetings. A meeting of Noteholders may be called
at any time and from time to time pursuant to the provisions of this Article 10
for any of the following purposes:
(a) to give any notice to the Company or to the Trustee or to give any
directions to the Trustee permitted under this Indenture, or to consent to
the waiving of any Default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Noteholders pursuant to any of the provisions of Article 7;
(b) to remove the Trustee and nominate a successor trustee pursuant to the
provisions of Article 8;
(c) to consent to the execution of an indenture or indentures supplemental
hereto pursuant to the provisions of Section 11.02; or
(d) to take any other action authorized to be taken by or on behalf of the
holders of any specified aggregate principal amount of the Notes under any
other provision of this Indenture or under applicable law.
Section 10.02. Call of Meetings by Trustee. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.01, to
be held at such time and at such place as the Trustee shall determine. Notice of
every meeting of the Noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting and
the establishment of any record date pursuant to Section 9.01, shall be mailed
to holders of such Notes at their addresses as they shall appear on the Note
register. Such notice shall also be mailed to the Company. Such notices shall be
mailed not less than twenty (20) nor more than ninety (90) days prior to the
date fixed for the meeting.
Any meeting of Noteholders shall be valid without notice if the holders of
all Notes then outstanding are present in person or by proxy or if notice is
waived before or after the meeting by the holders of all Notes outstanding, and
if the Company and the Trustee are either present by duly authorized
representatives or have, before or after the meeting, waived notice.
Section 10.03. Call of Meetings by Company or Noteholders. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
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holders of at least 10% in aggregate principal amount of the Notes then
outstanding, shall have requested the Trustee to call a meeting of Noteholders,
by written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within twenty (20) days after receipt of such request, then the Company
or such Noteholders may determine the time and the place for such meeting and
may call such meeting to take any action authorized in Section 10.01, by mailing
notice thereof as provided in Section 10.02.
Section 10.04. Qualifications for Voting. To be entitled to vote at any
meeting of Noteholders a Person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a Person appointed by an
instrument in writing as proxy by a holder of one or more Notes on the record
date pertaining to such meeting. The only Persons who shall be entitled to be
present or to speak at any meeting of Noteholders shall be the Persons entitled
to vote at such meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its counsel.
Section 10.05. Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Noteholders as provided in Section 10.03, in which case the
Company or the Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the holders of a majority
in principal amount of the Notes represented at the meeting and entitled to vote
at the meeting.
Subject to the provisions of Section 9.04, at any meeting of Noteholders
each Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by it or instruments in writing as aforesaid duly
designating it as the
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proxy to vote on behalf of other Noteholders. Any meeting of Noteholders duly
called pursuant to the provisions of Section 10.02 or Section 10.03 may be
adjourned from time to time by the holders of a majority of the aggregate
principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
Section 10.06. Voting. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the Noteholders or of their representatives by proxy and the
outstanding principal amount of the Notes held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record in duplicate of
the proceedings of each meeting of Noteholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more Persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 10.02. The record shall show the principal amount of the
Notes voting in favor of or against any resolution. The record shall be signed
and verified by the affidavits of the permanent chairman and secretary of the
meeting and one of the duplicates shall be delivered to the Company and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 10.07. No Delay of Rights by Meeting. Nothing contained in this
Article 10 shall be deemed or construed to authorize or permit, by reason of any
call of a meeting of Noteholders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or delay in the exercise of any right
or rights conferred upon or reserved to the Trustee or to the Noteholders under
any of the provisions of this Indenture or of the Notes.
ARTICLE 11
SUPPLEMENTAL INDENTURES
Section 11.01. Supplemental Indentures Without Consent of Noteholders. The
Company, when authorized by the resolutions of the Board of Directors, and
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the Trustee, at the Company's expense, may from time to time and at any time
enter into an indenture or indentures supplemental hereto for one or more of the
following purposes:
(a) to cure any ambiguity, defect, omission or inconsistency in this
Indenture in a manner that does not individually or in the aggregate
adversely affect the rights of any holder of Notes in any material
respect;
(b) to provide for the assumption by a Successor Company of the
obligations of the Company under this Indenture pursuant to Article 12;
(c) to add guarantees with respect to the Notes;
(d) to secure the Notes;
(e) to add to the covenants of the Company such further covenants,
restrictions or conditions for the benefit of the Noteholders or surrender
any right or power conferred upon the Company;
(f) to comply with any requirements of the Commission in connection with
the qualification of this Indenture under the Trust Indenture Act;
(g) to make provisions with respect to the conversion of the Notes as
required by Section 15.03(d) or Section 15.06; or
(h) to make any other change that does not adversely affect the rights of
any holder.
Upon the written request of the Company, accompanied by a Board Resolution
authorizing the execution of such supplemental indenture, the Trustee is hereby
authorized to join with the Company in the execution of any such supplemental
indenture, to make any further appropriate agreements and stipulations that may
be therein contained and to accept the conveyance, transfer and assignment of
any property thereunder, but the Trustee shall not be obligated to, but may in
its discretion, enter into any supplemental indenture that affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
11.01 may be executed by the Company and the Trustee without the consent of the
holders of any of the Notes at the time outstanding, notwithstanding any of the
provisions of Section 11.02.
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Section 11.02. Supplemental Indentures With Consent of Noteholders. With
the consent (evidenced as provided in Article 9) of the holders of at least a
majority in aggregate principal amount of the Notes at the time outstanding
(determined in accordance with Article 9 and including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, Notes), the Company, when authorized by the resolutions of the Board
of Directors, and the Trustee, at the Company's expense, may from time to time
and at any time enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or any supplemental indenture or of
modifying in any manner the rights of the holders of the Notes; provided,
however, that no such supplemental indenture shall:
(a) reduce the percentage in aggregate principal amount of Notes
outstanding necessary to modify or amend this Indenture or to waive any past
default;
(b) reduce the rate or extend the stated time for payment of interest,
including Additional Interest, on any Note;
(c) reduce the principal of, or extend the Maturity Date of, any Note;
(d) make any change that impairs or adversely affects the conversion
rights of any Notes;
(e) reduce the Redemption Price, the Repurchase Price or the Fundamental
Change Repurchase Price of any Note or amend or modify in any manner adverse to
the holders of the Notes the Company's obligation to make such payments, whether
through an amendment or waiver of provisions in the covenants, definitions or
otherwise;
(f) make any Note payable in a currency other than that stated in the
Note;
(g) impair the right of any holder to receive payment of principal of and
interest, including Additional Interest, if any, on such holder's Notes on or
after the due dates therefor (including, for avoidance of doubt, on any date on
which holders have the option to require the Company to purchase their Notes) or
to institute suit for the enforcement of any payment on or with respect to such
holder's Note;
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(h) modify the ranking provisions of this Indenture in a manner that is
adverse to the holder of the Notes; or
(i) make any change in this Article 11 that requires each holder's consent
or in the waiver provisions in Section 7.01 or Section 7.07;
in each case without the consent of each holder of an outstanding Note affected.
Upon the written request of the Company, accompanied by a copy of the
Board Resolutions authorizing the execution of any such supplemental indenture,
and upon the filing with the Trustee of evidence of the consent of Noteholders
as aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders under this
Section 11.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof. After an amendment under this Indenture becomes effective,
the Company shall mail to the holders a notice briefly describing such
amendment. However, the failure to give such notice to all the holders, or any
defect in the notice, will not impair or affect the validity of the amendment.
Section 11.03. Effect of Supplemental Indentures. Any supplemental
indenture executed pursuant to the provisions of this Article 11 shall comply
with the Trust Indenture Act, as then in effect, provided that this Section
11.03 shall not require such supplemental indenture to be qualified under the
Trust Indenture Act prior to the time such qualification is in fact required
under the terms of the Trust Indenture Act or this Indenture has been qualified
under the Trust Indenture Act, nor shall any such qualification constitute any
admission or acknowledgment by any party to such supplemental indenture that any
such qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or this Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article 11, this Indenture shall be
and be deemed to be modified and amended in accordance therewith and the
respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the Noteholders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and
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be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
Section 11.04. Notation on Notes. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article 11 may, at the Company's expense, bear a notation in form approved by
the Trustee as to any matter provided for in such supplemental indenture. If the
Company or the Trustee shall so determine, new Notes so modified as to conform,
in the opinion of the Trustee and the Board of Directors, to any modification of
this Indenture contained in any such supplemental indenture may, at the
Company's expense, be prepared and executed by the Company, authenticated by the
Trustee (or an authenticating agent duly appointed by the Trustee pursuant to
Section 17.11) and delivered in exchange for the Notes then outstanding, upon
surrender of such Notes then outstanding.
Section 11.05. Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. In addition to the documents required by Section 17.05, the
Trustee shall receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article 11.
ARTICLE 12
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.01. Company May Consolidate, Etc. on Certain Terms.
Subject to the provisions of Section 12.02, the Company shall not
consolidate with, merge with or into, or convey, transfer or lease all or
substantially all of its assets and properties to another Person, unless:
(a) the resulting, surviving or transferee Person (the "Successor
Company") if not the Company shall be a business entity organized and existing
under the laws of the United States of America, any State thereof or the
District of Columbia, and the Successor Company (if not the Company) shall
expressly assume, by supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the Company
under the Notes, this Indenture and, to the extent that it is otherwise still
operative, the Registration Rights Agreement;
(b) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing under this Indenture; and
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(c) if such Person is not a corporation, the Company has received an
opinion of nationally recognized counsel experienced in such matters to the
effect that investors in the Notes will be subject to tax for U.S. federal
income tax purposes with respect to their investment in the Notes after such
transaction in the same amount, at the same time and otherwise in the same
manner as prior to such transaction.
Upon any such consolidation, merger, conveyance, transfer or lease, the
resulting, surviving or transferee (by conveyance, lease or otherwise) Person
(if not the Company) shall succeed to, and may exercise every right and power
of, the Company under this Indenture.
For purposes of this Section 12.01, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
Section 12.02. Successor Corporation to Be Substituted. In case of any
such consolidation, merger, conveyance, transfer or lease and upon the
assumption by the Successor Company, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any, accrued and unpaid
interest and accrued and unpaid Additional Interest, if any, on all of the
Notes, the due and punctual conversion of the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Company, such Successor Company shall succeed to and be
substituted for the Company, with the same effect as if it had been named herein
as the party of the first part. Such Successor Company thereupon may cause to be
signed, and may issue either in its own name or in the name of the Company any
or all of the Notes issuable hereunder which theretofore shall not have been
signed by the Company and delivered to the Trustee; and, upon the order of such
Successor Company instead of the Company and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver, or cause to be authenticated and delivered, any
Notes that previously shall have been signed and delivered by the officers of
the Company to the Trustee for authentication, and any Notes that such Successor
Company thereafter shall cause to be signed and delivered to the Trustee for
that purpose. All the Notes so issued shall in all respects have the same legal
rank and benefit under this Indenture as
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the Notes theretofore or thereafter issued in accordance with the terms of this
Indenture as though all of such Notes had been issued at the date of the
execution hereof. In the event of any such consolidation, merger, conveyance or
transfer (but not in the case of a lease), the Person named as the "Company" in
the first paragraph of this Indenture or any successor that shall thereafter
have become such in the manner prescribed in this Article 12 may be dissolved,
wound up and liquidated at any time thereafter and, except in the case of a
lease, such Person shall be released from its liabilities as obligor and maker
of the Notes and from its obligations under this Indenture.
In case of any such consolidation, merger, conveyance, transfer or lease,
such changes in phraseology and form (but not in substance) may be made in the
Notes thereafter to be issued as may be appropriate.
Section 12.03. Opinion of Counsel to Be Given Trustee. No merger,
consolidation, conveyance, transfer or lease shall be effective unless the
Trustee shall receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any such consolidation, merger, conveyance, transfer or
lease and any such assumption complies with the provisions of this Article 12.
ARTICLE 13
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 13.01. Indenture and Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or accrued and
unpaid interest and accrued and unpaid Additional Interest, if any, on any Note,
or for any claim based thereon or otherwise in respect thereof, and no recourse
under or upon any obligation, covenant or agreement of the Company in this
Indenture or in any supplemental indenture or in any Note, or because of the
creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer or director or Subsidiary,
as such, past, present or future, of the Company or of any successor corporation
or entity, either directly or through the Company or any successor corporation
or entity, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Notes.
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ARTICLE 14
[INTENTIONALLY OMITTED]
ARTICLE 15
CONVERSION OF NOTES
Section 15.01. Conversion Privilege.
(a) Upon compliance with the provisions of this Article 15, a Noteholder
shall have the right, at such holder's option, to convert all or any portion (if
the portion to be converted is $1,000 principal amount or an integral multiple
thereof) of such Note (i) subject to satisfaction of the conditions described in
Section 15.01(b) below, at any time prior to the close of business on the
Business Day immediately preceding February 15, 2013 under the circumstances and
during the periods set forth in Section 15.01(b) below, and (ii) irrespective of
the conditions described in Section 15.01(b) below, on or after February 15,
2013 and prior to the close of business on the Business Day immediately
preceding the Maturity Date, in each case, at an initial conversion rate (the
"Conversion Rate") of 22.4618 shares of the Common Stock (subject to adjustment
as provided in Section 15.04 of this Indenture) per $1,000 principal amount Note
(the "Conversion Obligation").
(b) The Notes shall be convertible prior to the close of business on
the Business Day immediately preceding February 15, 2013, during the five
Business Day period immediately after any five consecutive Trading Day
period (the "Measurement Period") in which the Trading Price per $1,000
principal amount of Notes for each day of such Measurement Period was less
than 103% of the product of the Last Reported Sale Price of the Common
Stock on such Trading Day and the then-applicable Conversion Rate on such
Trading Day, as such Trading Prices shall be determined by the Trustee,
pursuant to this clause and the definition of Trading Price set forth in
this Indenture. The Trustee shall have no obligation to determine the
Trading Price of the Notes unless requested by the Company and unless the
Company shall have selected the three independent nationally recognized
securities dealers referred to in such definition of Trading Price and
provided the Trustee with the names of and contact information for such
dealers, and the Company shall have no obligation to make such request
unless a Noteholder provides the Company with reasonable evidence that the
Trading Price per $1,000 principal amount of the Notes would be less than
103% of the product of
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(a) the then-applicable Conversion Rate of the Notes and (b) the Last
Reported Sale Price of the Common Stock at such time, at which time the
Company shall instruct the Trustee to determine the Trading Price of the
Notes beginning on the next Trading Day and on each successive Trading Day
until the Trading Price per Note is greater than or equal to 103% of the
product of (a) the then-applicable Conversion Rate of the Notes and (b)
the Last Reported Sale Price of the Common Stock on such Trading Day. If
the Trading Price condition set forth above has been met, the Company
shall so notify the Noteholders, the Trustee and the Conversion Agent. If,
at any time after the Trading Price condition set forth above has been
met, the Trading Price per $1,000 principal amount of Notes is greater
than 103% of the product of (a) the then-applicable Conversion Rate of the
Notes and (b) the Last Reported Sale Price of the Common Stock on such
Trading Day, the Company shall so notify the holders of the Notes, the
Trustee and the Conversion Agent. In either case, the Company shall
promptly publish a notice indicating that the Trading Price condition set
forth above has been met or, at any time after the Trading Price condition
set forth above has been met, that the Trading Price per $1,000 principal
amount of Notes is greater than 103% of the product of (a) the
then-applicable Conversion Rate of the Notes and (b) the Last Reported
Sale Price of the Common Stock on the relevant Trading Day, as the case
may be, in a newspaper of general circulation in The City of New York or
publish such information on its website or through such other public
medium as the Company may use at that time.
(ii) Prior to the close of business on the Business Day immediately
preceding February 15, 2013, in the event that the Company elects to:
(A) distribute to all or substantially all holders of its
Common Stock rights or warrants, entitling them, for a period
expiring within 60 days after the record date for such distribution,
to subscribe for or purchase its Common Stock at a price less than
the Last Reported Sale Price of the Common Stock for the Trading Day
immediately preceding the declaration date for such distribution; or
(B) distribute to all or substantially all holders of its
Common Stock the Company's assets, its debt securities, or rights to
purchase securities of the Company, which distribution has a per
share value (as determined by the Board of Directors)
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exceeding 15% of the Last Reported Sale Price of the Common Stock on
the Trading Day immediately preceding the date of declaration for
such distribution,
then, in each case, the Company shall notify all holders of the Notes, the
Trustee and the Conversion Agent not less than 35 Business Days prior to
the Ex-Dividend Date for such distribution. Once the Company has given
such notice, the Notes may be surrendered for conversion at any time until
the earlier of (i) the close of business on the Business Day immediately
prior to such Ex-Dividend Date and (ii) the Company's announcement that
such distribution will not take place, even if the Notes are not otherwise
convertible at such time.
(iii) In the event of a Fundamental Change, a Noteholder may
surrender Notes for conversion at any time from, and including, the
effective date of such Fundamental Change until, and including, the close
of business on the Fundamental Change Repurchase Date corresponding to
such Fundamental Change. The Company shall give notice of the effective
date of the Fundamental Change in accordance with Section Section 16.02(b)
as promptly as practicable after the occurrence of such date, but in any
event, within five Business Days of such effective date.
Section 15.02. Conversion Procedure.
(a) [Reserved].
(b) Subject to this Section 15.02, the Company will satisfy the Conversion
Obligation with respect to each $1,000 principal amount of Notes tendered for
conversion in cash and shares of fully paid Common Stock, if applicable, as
follows:
(i) The Company will deliver to each converting Noteholder, on the
third Business Day immediately following the last day of the related Cash
Settlement Averaging Period, cash and shares of Common Stock, if any,
equal to the sum of the Daily Settlement Amounts for each of the
twenty-five (25) Trading Days during the related Cash Settlement Averaging
Period.
(ii) The Company will also deliver to each converting Noteholder
cash in lieu of fractional shares of Common Stock as set forth pursuant to
clause (l) below, as the amount of such cash shall be determined by the
Company.
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(iii) The Daily Settlement Amounts shall be determined by the
Company promptly following the last day of the Cash Settlement Averaging
Period. Promptly after such determination of the Daily Settlement Amounts
and the amount of cash deliverable in lieu of fractional shares, the
Company shall notify the Trustee and the Conversion Agent of the Daily
Settlement Amounts and the amount of such cash. The Trustee and the
Conversion Agents shall have no responsibility for any such determination.
(c) [Reserved]
(d) Before any holder of a Note shall be entitled to convert the same as
set forth above, such holder shall (1) in the case of a Global Note, comply with
the procedures of the Depositary in effect at that time and, if required, pay
funds equal to interest payable on the next Interest Payment Date to which such
holder is not entitled as set forth in Section 15.02(j) and, if required, all
transfer or similar taxes, if any, and (2) in the case of a Note issued in
certificated form, (A) complete and manually sign and deliver an irrevocable
notice to the Conversion Agent in the form on the reverse of such certificated
Note (or a facsimile thereof) (Exhibit B hereto) (a "Notice of Conversion") at
the office of the Conversion Agent and shall state in writing therein the
principal amount of Notes to be converted and the name or names (with addresses)
in which such holder wishes the certificate or certificates for any shares of
Common Stock, if any, to be delivered upon settlement of the Conversion
Obligation to be registered, (B) surrender such Notes, duly endorsed to the
Company or in blank (and accompanied by appropriate endorsement and transfer
documents), at the office of the Conversion Agent, (C) if required, pay funds
equal to interest payable on the next Interest Payment Date to which such holder
is not entitled as set forth in Section 15.02(j), (D) if required, furnish
appropriate endorsements and transfer documents, and (E) if required, pay all
transfer or similar taxes, if any. The Trustee (and if different, the relevant
Conversion Agent) shall notify the Company of any conversion pursuant to this
Article 15 on the date of such conversion. No Notice of Conversion with respect
to any Notes may be tendered by a holder thereof if such holder has also
tendered a Fundamental Change Repurchase Notice or Repurchase Notice, as the
case may be, and not validly withdrawn such Fundamental Change Repurchase Notice
or Repurchase Notice, as the case may be, in accordance with Section 16.03.
If more than one Note shall be surrendered for conversion at one time by
the same holder, the Conversion Obligation with respect to such Notes, if any,
that shall be payable upon conversion shall be computed on the basis of the
74
aggregate principal amount of the Notes (or specified portions thereof to the
extent permitted thereby) so surrendered.
(e) A Note shall be deemed to have been converted immediately prior to the
close of business on the date (the "Conversion Date") that the holder has
complied with the requirements set forth in clause (d). Payment of the shares of
Common Stock in cash and shares of Common Stock, if any, pursuant to Section
15.02(b) in satisfaction of the Conversion Obligation shall be made by the
Company in no event later than the date specified in Section 15.02(b) by paying
such cash and delivering shares of such Common Stock, if any (in each case,
together with any cash in lieu of fractional shares), to the holder of a Note
surrendered for conversion, or such holder's nominee or nominees, and issuing or
causing to be issued, and delivering to the Conversion Agent or to such holder,
or such holder's nominee or nominees, certificates or a book-entry transfer
through the Depositary for the number of full shares of Common Stock to which
such holder shall be entitled as part of such Conversion Obligation (together
with any cash in lieu of fractional shares).
(f) In case any Note shall be surrendered for partial conversion, the
Company shall execute and the Trustee shall authenticate and deliver to or upon
the written order of the holder of the Note so surrendered, without charge to
such holder, a new Note or Notes in authorized denominations in an aggregate
principal amount equal to the unconverted portion of the surrendered Note.
(g) If a holder submits a Note for conversion, the Company shall pay all
stamp and other duties, if any, that may be imposed by the United States or any
political subdivision thereof or taxing authority thereof or therein with
respect to the issuance of shares of Common Stock, if any, upon the conversion.
However, the holder shall pay any such tax that is due because the holder
requests any shares of Common Stock to be issued in a name other than the
holder's name. The Conversion Agent may refuse to deliver the certificates
representing the shares of Common Stock being issued in a name other than the
holder's name until the Trustee receives a sum sufficient to pay any tax that
will be due because the shares are to be issued in a name other than the
holder's name. Nothing herein shall preclude any tax withholding required by law
or regulations.
(h) Except as provided in Section 15.04, no adjustment shall be made for
dividends on any shares issued upon the conversion of any Note as provided in
this Article.
(i) Upon the conversion of an interest in a Global Note, the Trustee, or
the Custodian at the direction of the Trustee, shall make a notation on such
Global
75
Note as to the reduction in the principal amount represented thereby. The
Company shall notify the Trustee in writing of any conversion of Notes effected
through any Conversion Agent other than the Trustee.
(j) Upon conversion, a Noteholder shall not receive any separate cash
payment for accrued and unpaid interest and Additional Interest, if any, except
as set forth below. The Company's settlement of the Conversion Obligations as
described above shall be deemed to satisfy its obligation to pay the principal
amount of the Note and accrued and unpaid interest and Additional Interest, if
any, to, but not including, the Conversion Date. As a result, accrued and unpaid
interest and Additional Interest, if any, to, but not including, the Conversion
Date shall be deemed to be paid in full rather than cancelled, extinguished or
forfeited. Notwithstanding the preceding sentence, if Notes are converted after
the close of business on a record date, holders of such Notes as of the close of
business on the record date will receive the interest and Additional Interest,
if any, payable on such Notes on the corresponding Interest Payment Date
notwithstanding the conversion. Notes surrendered for conversion during the
period from the close of business on any regular record date to the opening of
business on the corresponding Interest Payment Date must be accompanied by
payment of an amount equal to the interest and Additional Interest, if any,
payable on the Notes so converted; provided, however, that no such payment need
be made (1) if the Company has specified a Fundamental Change Repurchase Date
that is after a record date but on or prior to the next succeeding Interest
Payment Date, (2) if the Company has specified a Redemption Date that is after a
record date and on or prior to the Business Day immediately following the next
Interest Payment Date or (3) to the extent of any overdue interest, if any,
existing at the time of conversion with respect to such Note. Except as
described above, no payment or adjustment will be made for accrued interest on
converted Notes.
(k) The Person in whose name the certificate for such shares of Common
Stock is registered shall be treated as a stockholder of record as of the close
of business on the last day of the Cash Settlement Averaging Period; provided,
however, if the last day of the Cash Settlement Averaging Period occurs on any
date when the stock transfer books of the Company shall be closed, such
occurrence shall not 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 occurrence
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. Upon conversion of Notes, such Person shall no longer be a
Noteholder.
76
(l) No fractional shares of Common Stock shall be issued upon conversion
of any Note or Notes. If more than one Note shall be surrendered for conversion
at one time by the same holder, the number of full shares that shall be issued
upon conversion thereof shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof) so surrendered.
Instead of any fractional share of Common Stock that would otherwise be issued
upon conversion of any Note or Notes (or specified portions thereof), the
Company shall pay a cash adjustment in respect of such fraction (calculated to
the nearest one-100th of a share), as determined by the Company, in an amount
equal to the same fraction of the Last Reported Sale Price of the Common Stock
on the last day of the applicable Cash Settlement Averaging Period.
Section 15.03. Increased Conversion Rate Applicable to Certain Notes
Surrendered in Connection With Make-Whole Fundamental Changes.
(a) Notwithstanding anything herein to the contrary, the Conversion Rate
applicable to each Note that is surrendered for conversion, in accordance with
this Article 15, at any time from, and including, the effective date of a
Make-Whole Fundamental Change until, and including, the close of business on the
Fundamental Change Repurchase Date corresponding to such Make-Whole Fundamental
Change, shall be increased to an amount equal to the Conversion Rate that would,
but for this Section 15.03, otherwise apply to such Note pursuant to this
Article 15, plus an amount equal to the Make-Whole Conversion Rate Adjustment;
provided, however, that such increase to the Conversion Rate shall not apply if
such Make-Whole Fundamental Change constitutes a Public Acquiror Change of
Control with respect to which the Company shall have duly made, and given full
effect to, an election, pursuant to and in accordance with Section 15.03(c), to
make an Acquiror Stock Conversion Right Adjustment.
As used herein, "Make-Whole Conversion Rate Adjustment" shall mean, with
respect to each Make-Whole Fundamental Change and each applicable Note, an
amount equal to the Applicable Increase. As used herein, "Applicable Increase"
shall mean, with respect to a Make-Whole Fundamental Change, the amount set
forth in the following table that corresponds to the effective date of such
Make-Whole Fundamental Change (the "Effective Date") and the Stock Price of such
Make-Whole Fundamental Change, all as determined by the Company:
Applicable Increase
(per $1,000 principal amount of Notes)
77
- -------------------------------------------------------------------------------------------------------------
Stock price
- -------------------------------------------------------------------------------------------------------------
Effective Date $37.10 $48.00 $58.00 $68.00 $78.00 $88.00 $98.00 $108.00 $118.00
- -------------------------------------------------------------------------------------------------------------
March 8, 2006 4.4923 2.2848 1.3491 0.8472 0.5538 0.3703 0.2494 0.1667 0.1089
- -------------------------------------------------------------------------------------------------------------
March 15, 2007 4.4923 2.2453 1.2866 0.7877 0.5049 0.3324 0.2209 0.1457 0.0934
- -------------------------------------------------------------------------------------------------------------
March 15, 2008 4.4923 2.1491 1.1833 0.7021 0.4403 0.2854 0.1872 0.1219 0.0769
- -------------------------------------------------------------------------------------------------------------
March 15, 2009 4.4923 2.0283 1.0547 0.5994 0.3655 0.2332 0.1517 0.0981 0.0613
- -------------------------------------------------------------------------------------------------------------
March 15, 2010 4.4923 1.8233 0.8681 0.4630 0.2729 0.1720 0.1115 0.0717 0.0441
- -------------------------------------------------------------------------------------------------------------
March 15, 2011 4.4923 1.5258 0.6154 0.2970 0.1702 0.1086 0.0719 0.0466 0.0282
- -------------------------------------------------------------------------------------------------------------
March 15, 2012 4.4923 1.0214 0.2826 0.1182 0.0723 0.0500 0.0344 0.0222 0.0125
- -------------------------------------------------------------------------------------------------------------
March 15, 2013 4.4923 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
- -------------------------------------------------------------------------------------------------------------
provided, however, that:
(i) if the actual Stock Price of such Make-Whole Fundamental Change
is between two Stock Prices listed in the table above under the column
titled "Stock Price," or if the actual Effective Date of such Make-Whole
Fundamental Change is between two Effective Dates listed in the table
above in the row immediately below the title "Effective Date," then the
Applicable Increase for such Make-Whole Fundamental Change shall be
determined by the Company by linear interpolation between the Applicable
Increases set forth for such two Stock Prices, or for such two Effective
Dates based on a three hundred and sixty-five day year, as applicable;
(ii) if the actual Stock Price of such Make-Whole Fundamental Change
is greater than $118.00 per share (subject to adjustment as provided in
Section 15.04), or if the actual Stock Price of such Make-Whole
Fundamental Change is less than $37.10 per share (subject to adjustment as
provided in Section 15.04), then the Applicable Increase shall be equal to
zero (0) and this Section 15.03 shall not require the Company to increase
the Conversion Rate with respect to such Make-Whole Fundamental Change;
(iii) if an event occurs that requires, pursuant to this Article 15
(other than solely pursuant to this Section 15.03), an adjustment to the
Conversion Rate, then, on the date and at the time such adjustment is so
required to be made, each price set forth in the table above under the
column titled "Stock Price" shall be deemed to be adjusted so that such
Stock Price, at and after such time, shall be equal to the product of (1)
such Stock Price as in effect immediately before such adjustment to such
Stock Price and (2) a fraction whose numerator is the Conversion Rate in
effect immediately before such adjustment to the Conversion Rate and whose
denominator is the Conversion Rate to be in effect, in accordance
78
with this Article 15, immediately after such adjustment to the Conversion
Rate;
(iv) In the case of a Make-Whole Fundamental Change that is a
Fundamental Change pursuant to clause (ii) of the definition thereof, upon
effectiveness of such Make-Whole Fundamental Change, the Notes will be
convertible into cash and Reference Property as described in Section
15.06;
(v) Each Applicable Increase amount set forth in the table above
shall be adjusted in the same manner in which, and for the same events for
which, the Conversion Rate is to be adjusted pursuant to Section 15.03
through Section 15.04; and
(vi) in no event will the total number of shares of Common Stock
issuable upon conversion of the Notes exceed 26.9541 per $1,000 principal
amount of Notes, subject to adjustment in the same manner as the
Conversion Rate pursuant to Section 15.04.
(b) At least fifteen (15) Business Days before the anticipated effective
date of any proposed Make-Whole Fundamental Change, the Company shall mail to
each Holder, the Trustee and the Conversion Agent written notice of, and shall
publicly announce, through a public medium that is customary for such
announcements, and publish on the Company's website, the anticipated effective
date of such proposed Make-Whole Fundamental Change. Each such notice,
announcement and publication shall also state (i) that the Company either (a)
has elected, in accordance with Section 15.03(c), to make an Acquiror Stock
Conversion Right Adjustment with respect to such Make-Whole Fundamental Change
in lieu of increasing the Conversion Rate pursuant to Section 15.04 or (b) has
elected not to make an Acquiror Stock Conversion Right Adjustment with respect
to such Make-Whole Fundamental Change; and (ii) if the Company has elected not
to make such Acquiror Stock Conversion Right Adjustment with respect to such
Make-Whole Fundamental Change, that, in connection with such Make-Whole
Fundamental Change, the Company shall increase, in accordance herewith, the
Conversion Rate applicable to Notes entitled as provided herein to such increase
(along with a description of how such increase shall be calculated and the time
periods during which Notes must be surrendered in order to be entitled to such
increase). No later than the actual Effective Date of each Make-Whole
Fundamental Change, the Company shall mail to each Noteholder, the Trustee and
the Conversion Agent written notice of, and shall publicly announce, through a
public medium that is customary for such announcements, and publish
79
on the Company's website, such Effective Date and the amount by which the
Conversion Rate has been so increased.
(c) Notwithstanding anything to the contrary in this Section 15.03, in the
case of a Make-Whole Fundamental Change constituting a public Acquiror Change of
Control, the Company shall have the right at its sole option to, in lieu of
increasing the Conversion Rate as described in Section 15.03(a), elect to adjust
the Conversion Rate and the related Conversion Obligation such that from and
after the Effective Date of such Public Acquiror Change of Control, holders of
the Notes will be entitled to convert their Notes (subject to the satisfaction
of the conditions to conversions described in Section 15.01) into cash and
shares of Public Acquiror Common Stock, at the adjusted Conversion Rate as
provided in this Section 15.03(c), but will not be entitled to an increased
Conversion Rate upon conversion as described in Section 15.03(a), such that,
from and after the effective time of such Public Acquiror Change of Control, the
right of each Holder of any Note to convert such Note into cash, shares of the
Common Stock, if any, and cash for fractional shares shall be changed into the
right to convert such Note into cash and shares of Public Acquiror Common Stock
applicable to such Public Acquiror Change of Control, if any, at an initial
Conversion Rate (which shall take effect at such effective time, but that shall
thereafter be subject to adjustment in the same manner in which, and for the
same events for which, the Conversion Rate is to be adjusted pursuant to this
Article 15) equal to the Conversion Rate in effect immediately before such
effective time multiplied by a fraction:
(i) the numerator of which will be (i) in the case of a share
exchange, exchange offer, tender offer, consolidation, merger or binding
share exchange pursuant to which the Common Stock is converted into cash,
securities or other property, the average value of all cash and any other
consideration (as determined by the Company's Board of Directors) paid or
payable per share of Common Stock or (ii) in the case of any other Public
Acquiror Change of Control, the average of the Last Reported Sale Prices
of the Common Stock for the five consecutive Trading Days prior to but
excluding the effective date of such Public Acquiror Change of Control, as
determined by the Company, and
(ii) the denominator of which will be the average of the Last
Reported Sale Prices of the Public Acquiror Common Stock for the five
consecutive Trading Days commencing on the Trading Day next succeeding the
effective date of such Public Acquiror Change of Control, as determined by
the Company.
80
Any such change in the right to convert the Notes in accordance with this
Section 15.03 is herein referred to as an "Acquiror Stock Conversion Right
Adjustment." In addition, upon a Public Acquiror Change of Control, in lieu of
converting Notes, the holder may, subject to certain conditions, require the
Company to repurchase all or a portion of its Notes as provided in Article 16.
(d) If the Company shall have elected, in accordance with this Section
15.03, to make an Acquiror Stock Conversion Right Adjustment with respect to a
Public Acquiror Change of Control, then:
(i) holders may convert their Notes (subject to the satisfaction of
the conditions under Section 15.01) into cash and shares of Public
Acquiror Common Stock, if any, as described in Section 15.02 as if all
references therein to "Common Stock" were instead references to "Public
Acquiror Common Stock" at the adjusted Conversion Rate described in
subsection (c) of this Section 15.03 but will not be entitled to an
increased Conversion Rate upon conversion as described under Section
15.03(a) in connection with such Public Acquiror Change of Control;
(ii) the Company shall cause there to be executed and delivered to
the Trustee a supplemental indenture in form reasonably satisfactory to
the Trustee, which supplemental indenture shall (A) give due effect to
such election in accordance with this Section 15.03, including, without
limitation, evidencing a binding and enforceable obligation of the issuer
of the applicable Public Acquiror Common Stock to satisfy the right of
Holders to convert Notes in accordance with this Article 15 and this
Section 15.03; (B) be executed by, without limitation, such issuer; (C)
contain such additional provisions, if any, necessary to protect the
interests of the Holders of the Notes as the Board of Directors in good
faith shall reasonably determine (which determination shall be described
in a Board Resolution); and (D) be in full force and effect no later than
the effective time of such Public Acquiror Change of Control;
(iii) the Company shall promptly file with the Trustee an Officers'
Certificate briefly stating the reasons for such supplemental indenture,
the nature of the change in the conversion right pursuant to such Acquiror
Stock Conversion Right Adjustment and the Conversion Rate as adjusted
therefor; and
(iv) such election shall be irrevocable with respect to such Public
Acquiror Change of Control and shall be deemed to have been made at the
time the Company shall, with respect to such Public Acquiror
81
Change of Control, mail the first notice, or make the first public
announcement or publication, whichever shall occur earlier, referred to in
Section 15.03(b) (it being understood that the Company shall discharge its
obligations hereunder in good faith in determining whether an announced
transaction and a completed transaction are deemed, for purposes of this
clause (iv), to be the same Public Acquiror Change of Control despite
differences in the announced terms and the terms as such transaction was
consummated);
provided, however, that the Company shall not be required to give effect to such
election to make an Acquiror Stock Conversion Right Adjustment with respect to
such Public Acquiror Change of Control if such Public Acquiror Change of Control
is not consummated.
For avoidance of doubt, (x) any change, pursuant to this Section 15.03, in
the right of Holders to convert Notes shall apply to all holders and (y) the
provisions of this Section 15.03 shall not affect or diminish the Company's
obligations, if any, pursuant to Article 12 with respect to a Public Acquiror
Change of Control or Make-Whole Fundamental Change.
Nothing in this Section 15.03 shall prevent an adjustment to the
Conversion Rate pursuant to Section 15.04 in respect of a Make-Whole Fundamental
Change or a Public Acquiror Change of Control.
Section 15.04. Adjustment of Conversion Rate. The Conversion Rate shall be
adjusted from time to time by the Company as follows:
(a) In case the Company shall issue shares of Common Stock as a dividend
or distribution to all holders of the outstanding Common Stock, on shares of
Common Stock, or if the Company effects a share split or share combination, the
Conversion Rate will be adjusted based on the following formula:
CR(1)=CR(0)X OS(1)/OS(O)
where
CR(0) = the Conversion Rate in effect immediately prior to
the Ex-Dividend Date for such dividend or
distribution, or the effective date of such share
split or share combination, as the case may be;
82
CR(1) = the Conversion Rate in effect immediately after such
event;
OS(0) = the number of shares of Common Stock outstanding
immediately prior to the Ex-Dividend Date for such
dividend or distribution, or the effective date of
such share split or share combination, as the case
may be; and
OS(1) = the number of shares of Common Stock outstanding
immediately after such dividend, distribution, share
split or share combination, as the case may be.
Such adjustment shall become effective immediately after 9:00 a.m., New York
City time, on the Ex-Dividend Date fixed for such dividend. If any dividend or
distribution of the type described in this Section 15.04(a) is declared but not
so paid or made, or the outstanding shares of Common Stock are not subdivided or
combined, as the case may be, the Conversion Rate shall be immediately
readjusted, effective as of the date the Board of Directors determines not to
pay such dividend or distribution, or subdivide or combine the outstanding
shares of Common Stock, as the case may be, to the Conversion Rate that would
then be in effect if such dividend, distribution, subdivision or combination had
not been declared.
(b) In case the Company shall distribute to all or substantially all
holders of its Common Stock any rights or warrants entitling them for a period
expiring within sixty (60) calendar days after the date of distribution to
subscribe for or purchase shares of the Common Stock, at a price per share less
than the Last Reported Sale Price of the Common Stock on the Trading Day
immediately preceding the declaration date for such distribution, the Conversion
Rate shall be adjusted based on the following formula:
CR(1)=CR(0) x OS(0) + X / OS(0) + Y
where
CR(0) = the Conversion Rate in effect immediately prior to
the Ex-Dividend Date for such distribution;
CR(1) = the Conversion Rate in effect immediately after the
Ex-Dividend Date for such distribution;
83
OS(0) = the number of shares of the Common Stock that are
outstanding immediately prior to the Ex-Dividend Date
for such distribution;
X = the total number of shares of the Common Stock
issuable pursuant to such rights or warrants; and
Y = the number of shares of the Common Stock equal to
the aggregate price payable to exercise such rights
or warrants, divided by the average of the Last
Reported Sale Prices of Common Stock over the ten
consecutive Trading Day period ending on the Trading
Day immediately preceding the Ex-Dividend Date
relating to such distribution of such rights or
warrants.
Such adjustment shall be successively made whenever any such rights or warrants
are distributed and shall become effective immediately after 9:00 a.m., New York
City time, on the Ex-Dividend Date for such distribution. The Company shall not
issue any such rights or warrants in respect of shares of the Common Stock held
in treasury by the Company. To the extent that shares of the Common Stock are
not delivered after the expiration of such rights or warrants, the Conversion
Rate shall be readjusted to the Conversion Rate that would then be in effect had
the adjustments made upon the issuance of such rights or warrants been made on
the basis of delivery of only the number of shares of Common Stock actually
delivered. If such rights or warrants are not so issued, the Conversion Rate
shall again be adjusted to be the Conversion Rate that would then be in effect
if such Ex-Dividend Date for such distribution had not been fixed.
In determining whether any rights or warrants entitle the holders to subscribe
for or purchase shares of the Common Stock at less than such Last Reported Sale
Price of the Common Stock, and in determining the aggregate offering price of
such shares of the Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants and any amount
payable on exercise or conversion thereof, the value of such consideration, if
other than cash, to be determined by the Board of Directors.
(c) In case the Company shall distribute shares of its Capital Stock,
evidences of its indebtedness or other of its assets or property other than (x)
dividends or distributions and rights or warrants as covered by Section 15.04(a)
and Section 15.04(b), (y) dividends or distributions paid exclusively in cash,
and (z) Spin-Offs to which the provisions set forth below in this Section
15.04(c) shall apply (any of such shares of Capital Stock, indebtedness, or
other asset or
84
property hereinafter in this Section 15.04(c) called the "Distributed
Property"), to all or substantially all holders of its Common Stock, then, in
each such case the Conversion Rate shall be adjusted based on the following
formula:
CR(1)=CR(0) x SP(0)/SP(0) - FMV
where
CR(0) = the Conversion Rate in effect immediately prior to
the Ex-Dividend Date for such distribution;
CR(1) = the Conversion Rate in effect immediately after the
Ex-Dividend Date for such distribution;
SP(0) = the average of the Last Reported Sale Prices of the
Common Stock over the ten consecutive Trading Day
period ending on the Trading Day immediately
preceding the Ex-Dividend Date for such distribution;
and
FMV = the fair market value (as determined by the Board of
Directors) of the shares of Capital Stock, evidences
of indebtedness, assets or property distributed with
respect to each outstanding share of the Common Stock
on the Ex-Dividend Date for such distribution.
Such adjustment shall become effective immediately prior to 9:00 a.m., New York
City time, on the Ex-Dividend Date for such distribution; provided that if the
then fair market value (as so determined) of the portion of the Distributed
Property so distributed applicable to one share of Common Stock is equal to or
greater than SP0 as set forth above, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Noteholder shall have the right to
receive on the date on which the Distributed Property is distributed to holders
of Common Stock, for each $1,000 principal amount of Notes upon conversion, the
amount of Distributed Property such holder would have received had such holder
owned a number of shares of Common Stock equal to the Conversion Rate on the
Record Date for such distribution. If such distribution is not so paid or made,
the Conversion Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such dividend or distribution had not been declared. If the
Board of Directors determines the fair market value of any distribution for
purposes of this Section 15.04(c) by reference to the actual or when issued
trading
85
market for any securities, it must in doing so consider the prices in such
market over the same period used in computing the Last Reported Sale Prices of
the Common Stock over the ten consecutive Trading Day period ending on the
Trading Day immediately preceding the Ex-Dividend Date for such distribution.
With respect to an adjustment pursuant to this Section 15.04(c) where there has
been a payment of a dividend or other distribution on the Common Stock of shares
of Capital Stock of any class or series, or similar equity interest, of or
relating to a Subsidiary or other business unit (a "Spin-Off"), the Conversion
Rate in effect immediately before 5:00 p.m., New York City time, on the tenth
Trading Day immediately following, and including, the effective date of the
Spin-Off will be increased based on the following formula:
CR(1)=CR(0) x FMV(0) + MP(0)/MP(0)
where
CR(00 = the Conversion Rate in effect immediately prior to
the tenth Trading Day immediately following, and
including, the effective date of the Spin-Off;
CR(1) = the Conversion Rate in effect immediately after the
tenth Trading Day immediately following, and
including, the effective date of the Spin-Off;
FMV(0) = the average of the Last Reported Sale Prices of the
Capital Stock or similar equity interest distributed
to holders of the Common Stock applicable to one
share of the Common Stock over the first ten
consecutive Trading Day period after (and including)
the effective date of the Spin-Off; and
MP(0) = the average of the Last Reported Sale Prices of the
Common Stock over the first ten consecutive Trading
Day period after (and including) the effective date
of the Spin-Off.
The adjustment to the Conversion Rate under the preceding paragraph shall occur
on the tenth Trading Day immediately following, and including, the effective
date of the Spin-Off.
86
Rights or warrants distributed by the Company to all holders of its Common
Stock entitling the holders thereof to subscribe for or purchase shares of the
Company's Capital Stock, including Common Stock, (either initially or under
certain circumstances), which rights or warrants, until the occurrence of a
specified event or events ("Trigger Event"): (i) are deemed to be transferred
with such shares of the Common Stock; (ii) are not exercisable; and (iii) are
also issued in respect of future issuances of the Common Stock, shall be deemed
not to have been distributed for purposes of this Section 15.04 (and no
adjustment to the Conversion Rate under this Section 15.04 will be required)
until the occurrence of the earliest Trigger Event, whereupon such rights and
warrants shall be deemed to have been distributed and an appropriate adjustment
(if any is required) to the Conversion Rate shall be made under this Section
15.04(c). If any such right or warrant, including any such existing rights or
warrants distributed prior to the date of this Indenture, are subject to events,
upon the occurrence of which such rights 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 Ex-Dividend Date with respect to new rights or warrants
with such rights (and a termination or expiration of the existing rights or
warrants without exercise by any of the holders thereof). In addition, in the
event of any distribution (or deemed distribution) of rights 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 Rate under this Section 15.04
was made, (1) in the case of any such rights or warrants that shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Rate 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 or warrants (assuming such holder had retained such rights or warrants),
made to all holders of Common Stock as of the date of such redemption or
repurchase, and (2) in the case of such rights or warrants that shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Rate shall be readjusted as if such rights and warrants had not been
issued.
For purposes of this Section 15.04(c), Section 15.04(a), and Section
15.04(b), any dividend or distribution to which this Section 15.04(c) is
applicable that also includes shares of Common Stock, or rights or warrants to
subscribe for or purchase shares of Common Stock to which Section 15.04(b)
applies (or both), shall be deemed instead to be (1) a dividend or distribution
of the evidences of
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indebtedness, assets or shares of capital stock other than such shares of Common
Stock or rights or warrants to which Section 15.04(b) applies (and any
Conversion Rate adjustment required by this Section 15.04(c) with respect to
such dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such shares of Common Stock or such rights or
warrants (and any further Conversion Rate adjustment required by Section
15.04(a) and Section 15.04(b) with respect to such dividend or distribution
shall then be made), except (A) the Ex-Dividend Date of such dividend or
distribution shall be substituted as "the Ex-Dividend Date," "the Ex-Dividend
Date relating to such distribution of such rights or warrants" and "the
Ex-Dividend Date for such distribution" within the meaning of Section 15.04(a)
and Section 15.04(b) and (B) any shares of Common Stock included in such
dividend or distribution shall not be deemed "outstanding immediately prior to
the Ex-Dividend Date for such dividend or distribution, or the effective date of
such share split or share combination, as the case may be" within the meaning of
Section 15.04(a) or "outstanding immediately prior to the Ex-Dividend Date for
such dividend or distribution" within the meaning of Section 15.04(b).
(d) (i) If any regular, quarterly cash dividend or distribution made
to all or substantially all holders of its Common Stock during any
quarterly fiscal period does not equal the Initial Dividend Threshold, the
Conversion Rate shall be adjusted based on the following formulas:
(A) If the per share amount of such regular, quarterly cash
dividend or distribution is greater than the Initial Dividend
Threshold, the Conversion Rate will be adjusted based on the
following formula:
CR(1)=CR(0) x SP(0)/SP(0)-C
where
CR0 = the Conversion Rate in effect immediately prior to
the Ex-Dividend Date for such dividend or
distribution;
CR(1) = the Conversion Rate in effect immediately after the
Ex-Dividend Date for such dividend or distribution;
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SP(0) = the Last Reported Sale Price of the Common Stock on
the Trading Day immediately preceding the Ex-Dividend
Date for such dividend or distribution; and
C = the amount in cash per share the Company distributes
to holders of its Common Stock in excess of the
Initial Dividend Threshold.
Such adjustment shall become effective immediately after 9:00 a.m.,
New York City time, on the Ex-Dividend Date for such dividend or
distribution; provided that if the portion of the cash so
distributed applicable to one share of the Common Stock is equal to
or greater than SP0 as above, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Noteholder shall have
the right to receive on the date on which the Distributed Property
is distributed to holders of Common Stock, for each $1,000 principal
amount of Notes upon conversion, the amount of cash such holder
would have received had such holder owned a number of shares equal
to the Conversion Rate on the Record Date for such distribution. If
such dividend or distribution is not so paid or made, the Conversion
Rate shall again be adjusted to be the Conversion Rate that would
then be in effect if such dividend or distribution had not been
declared.
(B) If the per share amount of such regular, quarterly cash
dividend or distribution is less than the Initial Dividend
Threshold, the Conversion Rate will be adjusted based on the
following formula:
CR(1)=CR(0) x SP(0)/SP(0)+C
where
CR(0) = the Conversion Rate in effect immediately prior to
the Ex-Dividend Date for such dividend or
distribution;
CR(1) = the Conversion Rate in effect immediately after the
Ex-Dividend Date for such dividend or distribution;
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SP(0) = the Last Reported Sale Price of the Common Stock on
the Trading Day immediately preceding the Ex-Dividend
Date for such dividend or distribution; and
C = the Initial Dividend Threshold minus the amount in
cash per share the Company distributes to holders of
its Common Stock.
Such adjustment shall become effective immediately after 9:00 a.m.,
New York City time, on the Ex-Dividend Date for such dividend or
distribution. If such dividend or distribution is not so paid or
made, the Conversion Rate shall again be adjusted to be the
Conversion Rate that would then be in effect if such dividend or
distribution had not been declared.
(ii) If the Company pays any cash dividend or distribution that is
not a regular, quarterly cash dividend or distribution to all or
substantially all holders of the Common Stock, the Conversion Rate will be
adjusted based on the following formula:
CR(1)=CR(0) x SP(0)/SP(0)-C
where
CR(0) = the Conversion Rate in effect immediately prior
to the Ex-Dividend Date for such dividend or
distribution;
CR(1) = the Conversion Rate in effect immediately after the
Ex-Dividend Date for such dividend or distribution;
SP(0) = the Last Reported Sale Price of the Common Stock on
the Trading Day immediately preceding the Ex-Dividend
Date for such dividend or distribution; and
C = the amount in cash per share the Company distributes
to holders of its Common Stock.
Such adjustment shall become effective immediately after 9:00 a.m.,
New York City time, on the Ex-Dividend Date for such dividend or
distribution; provided that if the portion of the cash so
distributed applicable to one share of the Common Stock is equal to
or greater than SP0 as above, in lieu of the foregoing adjustment,
adequate provision shall
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be made so that each Noteholder shall have the right to receive on
the date on which the Distributed Property is distributed to holders
of Common Stock, for each $1,000 principal amount of Notes upon
conversion, the amount of cash such holder would have received had
such holder owned a number of shares equal to the Conversion Rate on
the Record Date for such distribution. If such dividend or
distribution is not so paid or made, the Conversion Rate shall again
be adjusted to be the Conversion Rate that would then be in effect
if such dividend or distribution had not been declared.
(iii) For the avoidance of doubt, for purposes of this Section
15.04(d), in the event of any reclassification of the Common Stock, as a
result of which the Notes become convertible into more than one class of
Common Stock, if an adjustment to the Conversion Rate is required pursuant
to this Section 15.04(d), references in this Section to one share of
Common Stock or Last Reported Sale Price of one share of Common Stock
shall be deemed to refer to a unit or to the price of a unit consisting of
the number of shares of each class of Common Stock into which the Notes
are then convertible equal to the numbers of shares of such class issued
in respect of one share of Common Stock in such reclassification. The
above provisions of this paragraph shall similarly apply to successive
reclassifications.
(e) If the Company or any of its Subsidiaries makes a payment in respect
of a tender offer or exchange offer that is subject to the tender offer rules,
then, to the extent that the cash and value of any other consideration included
in the payment per share of the Common Stock exceeds the Last Reported Sale
Price of the Common Stock on the Trading Day next succeeding the last date on
which tenders or exchanges may be made pursuant to such tender or exchange
offer, the Conversion Rate shall be increased based on the following formula:
CR(1)=CR(0) x AC + (SP(1) x OS(1))/OS(0) x SP(1)
where
CR(0) = the Conversion Rate in effect on the date such tender
or exchange offer expires;
CR(1) = the Conversion Rate in effect on the day next
succeeding the date such tender or exchange offer
expires;
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AC = the aggregate value of all cash and any other
consideration (as determined by the Board of
Directors) paid or payable for shares of Common Stock
purchased in such tender or exchange offer;
OS(0) = the number of shares of Common Stock outstanding
immediately prior to the date such tender or exchange
offer expires;
OS(1) = the number of shares of Common Stock outstanding
immediately after the date such tender or exchange
offer expires; and
SP(1) = the average of the Last Reported Sale Prices of
Common Stock over the ten consecutive Trading Day
period commencing on the Trading Day next succeeding
the date such tender or exchange offer expires,
such adjustment to become effective immediately prior to the opening of business
on the day following the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer. If the Company is obligated to
purchase shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any or all or any
portion of such purchases or all such purchases are rescinded, the Conversion
Rate shall again be adjusted to be the Conversion Rate that would then be in
effect if such tender or exchange offer had not been made or had been made only
in respect of the purchases that had been effected.
(f) No adjustment to the Conversion Rate (other than an adjustment (i) in
connection with a share combination as described in Section 15.04(a) or (ii)
pursuant to Section 15.04(d)(i)(B)) will be made if the application of the
foregoing formulae would result in a decrease in the Conversion Rate. In
addition, no adjustment to the Conversion Rate shall be made to the extent that
the adjustment would reduce the Conversion Price below the par value per share
of the Common Stock. For purposes of this Section 15.04, the term "Record Date"
shall mean, with respect to any dividend, distribution or other transaction or
event in which the holders of Common Stock (or other security) 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).
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(g) Except as stated herein, the Company shall not adjust the Conversion
Rate for the issuance of shares of its Common Stock or any securities
convertible into or exchangeable for shares of its Common Stock or the right to
purchase shares of its Common Stock or such convertible or exchangeable
securities.
(h) The Initial Dividend Threshold shall be subject to adjustment in a
manner inversely proportional to adjustments to the Conversion Rate made
pursuant to this Section 15.04; provided that no adjustment will be made to the
Initial Dividend Threshold for any adjustment made to the Conversion Rate
pursuant to Section 15.04(d)(i).
(i) In addition to those required by clauses (a), (b), (c), (d) and (e) of
this Section 15.04, and to the extent permitted by applicable law and subject to
the applicable rules of the New York Stock Exchange, the Company from time to
time may increase the Conversion Rate by any amount for a period of at least
twenty (20) Business Days if the Board of Directors determines that such
increase would be in the Company's best interest. In addition, the Company may
also (but is not required to) increase the Conversion Rate to avoid or diminish
any income tax to holders of Common Stock or rights to purchase Common Stock in
connection with any dividend or distribution of shares (or rights to acquire
shares) or similar event. Whenever the Conversion Rate is increased pursuant to
the preceding sentence, the Company shall mail to the holder of each Note at its
last address appearing on the Note register provided for in Section 2.06 a
notice of the increase at least fifteen days prior to the date the increased
Conversion Rate takes effect, and such notice shall state the increased
Conversion Rate and the period during which it will be in effect.
(j) The applicable Conversion Rate will not be adjusted:
(i) upon the issuance of any shares of the Common Stock pursuant to
any present or future plan providing for the reinvestment of dividends or
interest payable on the Company's securities and the investment of
additional optional amounts in shares of the Common Stock under any plan;
(ii) upon the issuance of any shares of the Common Stock or options
or rights to purchase those shares pursuant to any present or future
employee, director or consultant benefit plan or program of or assumed by
the Company or any of the Company's subsidiaries;
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(iii) upon the issuance of any shares of the Common Stock pursuant
to any option, warrant, right or exercisable, exchangeable or convertible
security not described in clause (ii) of this subsection and outstanding
as of the date the Notes were first issued;
(iv) for a change in the par value of the Common Stock;
(v) for accrued and unpaid interest, including Additional Interest,
if any; or
(vi) if Noteholders participate, as a result of holding the Notes,
at the same time and in the same manner as holders of the Common Stock, as
if such Noteholders held a number of shares of Common Stock equal to the
then-applicable Conversion Rate, in any of the transactions described in
clause (a), (b), (c), (d) or (e) of this Section 15.04 without having to
convert their Notes.
(k) All calculations and other determinations under this Article 15 shall
be made by the Company and shall be made to the nearest one-ten thousandth
(1/10,000) of a share. No adjustment pursuant to this Section 15.04 shall be
made to the Conversion Rate unless such adjustment would require a change of at
least 1% in the Conversion Rate then in effect at such time. However, any
adjustments that are less than 1% of the Conversion Rate shall be carried
forward and taken into account in any subsequent adjustment, regardless of
whether the aggregate adjustment is less than 1% within one year of the first
adjustment carried forward, upon redemption, upon a Fundamental Change or at the
Maturity Date.
(l) Whenever the Conversion Rate is adjusted as herein provided, the
Company shall promptly file with the Trustee and any Conversion Agent other than
the Trustee an Officers' Certificate setting forth the Conversion Rate after
such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Unless and until a Responsible Officer of the Trustee shall have
received such Officers' Certificate, the Trustee shall not be deemed to have
knowledge of any adjustment of the Conversion Rate and may assume without
inquiry that the last Conversion Rate of which it has knowledge is still in
effect. Promptly after delivery of such certificate, the Company shall prepare a
notice of such adjustment of the Conversion Rate setting forth the adjusted
Conversion Rate and the date on which each adjustment becomes effective and
shall mail such notice of such adjustment of the Conversion Rate to the holder
of each Note at its last address appearing on the Note register provided for in
Section 2.06 of this Indenture, within twenty (20) days of the effective date of
such adjustment. Failure to deliver such notice shall not affect the legality or
validity of any such adjustment.
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(m) For purposes of this Section 15.04, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The Company will not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
Section 15.05. Shares to Be Fully Paid. The Company shall provide, free
from preemptive rights, out of its authorized but unissued shares or shares held
in treasury, sufficient shares of Common Stock to provide for conversion of the
Notes from time to time as such Notes are presented for conversion.
Section 15.06. Effect of Reclassification, Consolidation, Merger or Sale.
If any of the following events occur, namely (i) any reclassification or
change of the outstanding shares of Common Stock (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 split, subdivision or combination), (ii) any consolidation,
merger or combination of the Company with another Person, or (iii) any sale or
conveyance of all or substantially all of the property and assets of the Company
to any other Person, in each case as a result of which holders of Common Stock
shall be entitled to receive cash, securities or other property or assets with
respect to or in exchange for such Common Stock (any such event a "Merger
Event"), then:
(a) the Company or the successor or purchasing Person, as the case may be,
shall execute with the Trustee a supplemental indenture (which shall comply with
the Trust Indenture Act as in force at the date of execution of such
supplemental indenture if such supplemental indenture is then required to so
comply) permitted under Section 11.01(h) providing for the conversion and
settlement of the Notes as set forth in this Indenture. Such supplemental
indenture shall provide for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article 15. If, in
the case of any Merger Event, the Reference Property includes shares of stock or
other securities and assets of a corporation other than the successor or
purchasing corporation, as the case may be, in such reclassification, change,
consolidation, merger, combination, sale or conveyance, then such supplemental
indenture shall also be executed by such other corporation and shall contain
such additional provisions to protect the interests of the holders of the Notes
as the Board of Directors shall reasonably consider necessary by reason of the
foregoing,
95
including to the extent required by the Board of Directors and practicable the
provisions providing for the repurchase rights set forth in Article 16 herein.
In the event the Company shall execute a supplemental indenture pursuant
to this Section 15.06, the Company shall promptly file with the Trustee an
Officers' Certificate briefly stating the reasons therefore, the kind or amount
of cash, securities or property or asset that will constitute the Reference
Property after any such Merger Event, any adjustment to be made with respect
thereto and that all conditions precedent have been complied with, and shall
promptly mail notice thereof to all Noteholders. The Company shall cause notice
of the execution of such supplemental indenture to be mailed to each Noteholder,
at its address appearing on the Note register provided for in this Indenture,
within twenty (20) days after execution thereof. Failure to deliver such notice
shall not affect the legality or validity of such supplemental indenture.
(b) Notwithstanding the provisions of Section 15.02(b), and subject to the
provisions of Section 15.01 and Section 15.03, at the effective time of such
Merger Event, (i) the right to convert each $1,000 principal amount of Notes
will be changed to a right to convert such Note into the kind and amount of
shares of stock, securities or other property or assets (including cash or any
combination thereof) that a holder of a number of shares of Common Stock equal
to the Conversion Rate immediately prior to such transaction would have owned or
been entitled to receive (the "Reference Property") and (ii) the related
Conversion Obligation shall be settled as set forth under clause (c) below. In
the event holders of the Common Stock have the opportunity to elect the form of
consideration to be received in such Merger Event, the Company shall make
adequate provision whereby the holders of the Notes shall have a reasonable
opportunity to determine the form of consideration into which all of the Notes,
treated as a single class, shall be convertible from and after the effective
date of such Merger Event. Such determination shall be as set forth in Section
9.01 and shall be subject to any limitations to which all of the holders of the
Common Stock are subject, such as pro-rata reductions applicable to any portion
of the consideration payable in such Merger Event and shall be conducted in such
a manner as to be completed by the date that is the earliest of (x) the deadline
for elections to be made by holders of the Common Stock in connection with such
Merger Event, and (y) two Scheduled Trading Days prior to the anticipated
effective date of such Merger Event. The Company shall provide notice of the
opportunity to determine the form of such consideration, as well as notice of
the determination made by holders of the Notes by issuing a press release and
providing a copy of each such notice to the Trustee. Notwithstanding anything
herein to the contrary, any such determination by the holders of the Notes shall
be
96
based solely on the elections of Holders received by the Trustee on or prior to
the date of completion referred to in the second preceding sentence and the form
or forms of consideration so determined shall be in the same proportion as the
proportion in principal amount of Notes so electing each such form of
consideration. The Company shall not become a party to any Merger Event unless
its terms are consistent with this Section 15.06. None of the foregoing
provisions shall affect the right of a holder of Notes to convert its Notes into
cash and shares of Common Stock, as set forth in Section 15.01 and Section 15.02
prior to the effective date of such Merger Event.
(c) If the Notes are convertible into cash and Reference Property as set
forth above, the related Conversion Obligation, with respect to each $1,000
principal amount of Notes tendered for conversion after the effective date of
any such Merger Event, shall be settled in cash and units of Reference Property
in accordance with Section 15.02(b) as follows:
(i) The Company shall deliver, on the third Business Day immediately
following the last day of the related Cash Settlement Averaging Period,
cash and shares of Common Stock, if any, equal to the sum of the Daily
Settlement Amounts for each of the twenty-five Trading Days during the
related Cash Settlement Averaging Period (provided that (x) such Daily
Settlement Amounts, and the Daily Conversion Value, will be determined as
if references in such definitions to "the Daily VWAP of the Common Stock"
were references instead "the Daily VWAP of a unit of Reference Property
composed of the kind and amount of shares of stock, securities or other
property or assets (including cash or any combination thereof) that a
holder of one share of Common Stock immediately prior to such transaction
would have owned or been entitled to receive" (subject to the Noteholder's
right to determine the form of consideration into which all of the Notes,
treated as a single class, shall be convertible from and after the
effective date of such Merger Event as described above in this Section
15.06) and (y) the Daily VWAP shall be determined with respect to such a
unit of Reference Property).
(ii) The Company will deliver the cash in lieu of fractional units
of Reference Property as set forth pursuant to Section 15.02(l) (provided
that the amount of such cash shall be determined as if references in such
Section to "the Last Reported Sale Price of the Common Stock" were a
reference instead to "the Last Reported Sale Price of a unit of Reference
Property composed of the kind and amount of shares of stock, securities or
other property or assets (including cash or any combination
97
thereof) that a holder of one share of Common Stock immediately prior to
such transaction would have owned or been entitled to receive" (subject to
the Noteholder's right to determine the form of consideration into which
all of the Notes, treated as a single class, shall be convertible from and
after the effective date of such Merger Event as described above in this
Section 15.06).
(iii) The Daily Settlement Amounts shall be determined by the
Company promptly following the last day of the Cash Settlement Averaging
Period.
(d) Notwithstanding clause (c) above, if the Notes are tendered for
conversion prior to the effective date of any such Merger Event pursuant to
Section 15.03 above, and the Company shall be obligated to deliver any
additional consideration (other than cash) as a result of an increase in the
Conversion Rate pursuant to Section 15.03 following the effective date of such
Merger Event, such additional consideration shall be delivered in the kind and
amount of Reference Property as a holder of the relevant number of shares of
Common Stock would have received in such Merger Event (subject to the
Noteholder's right to determine the form of consideration into which all of the
Notes, treated as a single class, shall be convertible from and after the
effective date of such Merger Event as described above in this Section 15.06).
(e) The above provisions of this Section shall similarly apply to
successive Merger Events.
Section 15.07. Certain Covenants.
(a) The Company covenants that all shares of Common Stock issued upon
conversion of Notes will be fully paid and non-assessable by the Company and
free from all taxes, liens and charges with respect to the issue thereof.
(b) The Company covenants that, if any shares of Common Stock to be
provided for the purpose of conversion of Notes hereunder require registration
with or approval of any governmental authority under any federal or state law
before such shares may be validly issued upon conversion, the Company will in
good faith and as expeditiously as possible, to the extent then permitted by the
rules and interpretations of the Commission (or any successor thereto), endeavor
to secure such registration or approval, as the case may be.
(c) The Company further covenants that if at any time the Common Stock
shall be listed on any national securities exchange or automated quotation
98
system the Company will, if permitted and required by the rules of such exchange
or automated quotation system, list and keep listed, so long as the Common Stock
shall be so listed on such exchange or automated quotation system, all Common
Stock issuable upon conversion of the Notes.
Section 15.08. Responsibility of Trustee. The Trustee and any other
Conversion Agent shall not at any time be under any duty or responsibility to
any Noteholder to determine the Conversion Rate or whether any facts exist that
may require any adjustment (including any increase) of the Conversion Rate, or
with respect to the nature or extent or calculation of any such adjustment when
made, or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. The Trustee and any other
Conversion Agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities,
property or cash that may at any time be issued or delivered upon the conversion
of any Note; and the Trustee and any other Conversion Agent make no
representations with respect thereto. Neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to issue, transfer or
deliver any shares of Common Stock or stock certificates or other securities or
property or cash upon the surrender of any Note for the purpose of conversion or
to comply with any of the duties, responsibilities or covenants of the Company
contained in this Article. Without limiting the generality of the foregoing,
neither the Trustee nor any Conversion Agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.03(d) or Section 15.06 relating
either to the kind or amount of shares of stock or securities or property
(including cash) receivable by Noteholders upon the conversion of their Notes
after any event referred to in such Section 15.03(d) or Section 15.06 or to any
adjustment to be made with respect thereto, but, subject to the provisions of
Section 8.01, may accept as conclusive evidence of the correctness of any such
provisions, and shall be protected in relying upon, the Officers' Certificate
(which the Company shall be obligated to file with the Trustee prior to the
execution of any such supplemental indenture) with respect thereto. Neither the
Trustee nor the Conversion Agent shall be responsible for determining whether
any event contemplated by Section 15.01(b) has occurred that makes the Notes
eligible for conversion or no longer eligible therefor until the Company has
delivered to the Trustee and the Conversion Agent the notices referred to in
Section 15.01(b) with respect to the commencement or termination of such
conversion rights, on which notices the Trustee and the Conversion Agent may
conclusively rely, and the Company agrees to deliver such notices to the Trustee
and the Conversion Agent
99
immediately after the occurrence of any such event or at such other times as
shall be provided for in Section 15.01(b).
Section 15.09. Notice to Holders Prior to Certain Actions. In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock that would require an adjustment in the Conversion
Rate pursuant to Section 15.04; or
(b) the Company shall authorize the granting to all of the holders
of its Common Stock of rights or warrants to subscribe for or purchase any
share of any class or any other rights or warrants; or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock,
or a change in par value, or from par value to no par value, or from no
par value to par value), or of any consolidation or merger to which the
Company is a party and for which approval of any shareholders of the
Company is required, or of the sale or transfer of all or substantially
all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
the Company shall cause to be filed with the Trustee and to be mailed to each
Noteholder at its address appearing on the Note register, provided for in
Section 2.06 of this Indenture, as promptly as possible but in any event at
least twenty days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined, or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up is expected to become effective or occur,
and the date as of which it is expected that holders of Common Stock of record
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding-up. Failure to give such notice,
or any defect therein, shall not affect the legality or validity of such
dividend, distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding-up.
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Section 15.10. Shareholder Rights Plans. Each share of Common Stock issued
upon conversion of Notes pursuant to this Article 15 shall be entitled to
receive the appropriate number of rights, if any, and the certificates
representing the Common Stock issued upon such conversion shall bear such
legends, if any, in each case as may be provided by the terms of any shareholder
rights plan adopted by the Company, as the same may be amended from time to
time. If at the time of conversion, however, the rights have separated from the
shares of Common Stock in accordance with the provisions of the applicable
shareholder rights agreement so that the holders of the Notes would not be
entitled to receive any rights in respect of Common Stock issuable upon
conversion of the Notes, the Conversion Rate will be adjusted at the time of
separation as if the Company has distributed to all holders of Common Stock,
shares of Capital Stock of the Company, evidence of indebtedness or assets as
provided in Section 15.04(c), subject to readjustment in the event of the
expiration, termination or redemption of such rights.
ARTICLE 16
REPURCHASE OF NOTES AT OPTION OF HOLDERS
Section 16.01. Repurchase at Option of Holders.
(a) Notes or portions thereof shall be purchased by the Company at the
option of the holder for cash on March 15, 2013 and March 15, 2021 (each, a
"Repurchase Date"), at a purchase price (the "Repurchase Price") equal to 100%
of the principal amount of the Notes to be repurchased. The Company shall pay
any accrued and unpaid interest, including Additional Interest, if any, thereon
to (but excluding) such Repurchase Date to the holders of such Notes at the
close of business on the record date immediately preceding such Repurchase Date.
Not later than 20 Business Days prior to any Repurchase Date, the Company shall
mail a notice (the "Company Notice") by first class mail to the Trustee, to the
Paying Agent and to each holder (and to beneficial owners as required by
applicable law). The notice shall include a form of repurchase notice to be
completed by a holder and shall state:
(i) the last date on which a Noteholder may exercise its repurchase
right pursuant to this Section 16.01;
(ii) the Repurchase Price and the Conversion Rate;
101
(iii) the name and address of the Trustee, the Paying Agent and the
Conversion Agent;
(iv) that Notes as to which a Repurchase Notice has been given may
be converted only in accordance with Article 15 hereof and the terms of
the Notes if the applicable Repurchase Notice has been withdrawn in
accordance with the terms of this Indenture;
(v) that Notes must be surrendered to the Paying Agent to collect
payment;
(vi) that the Repurchase Price for any Note as to which a Repurchase
Notice has been given and not withdrawn will be paid promptly following
the later of the Repurchase Date and the time of surrender of such Note as
described in (v);
(vii) the procedures the holder must follow to exercise its
repurchase rights under this Section 16.01 and a brief description of
those rights;
(viii) briefly, the conversion rights with respect to the Notes;
(ix) the procedures for withdrawing a Repurchase Notice; and
(x) the CUSIP number of the Notes.
At the Company's request, the Trustee shall give such notice in the
Company's name and at the Company's expense; provided, however, that, in all
cases, the text of such Company Notice shall be prepared by the Company.
The Company will promptly publish a notice containing the information
included in the Company Notice in a newspaper of general circulation in The City
of New York or publish such information on the Company's website or through such
other public medium as the Company may use at that time.
Purchases of Notes hereunder shall be made, at the option of the holder
thereof, upon:
(A) delivery to the Paying Agent by the holder of a written
notice of repurchase substantially in the form set forth on the
reverse of the Note as Exhibit D thereto (a "Repurchase Notice")
during the period beginning at any time from the
102
opening of business on the date that is 20 Business Days prior to
the relevant Repurchase Date until the close of business on the
second Business Day prior to the Repurchase Date stating:
(1) if certificated Notes have been issued, the
certificate number of the Notes that the holder will deliver
to be purchased,
(2) the portion of the principal amount of the Notes to
be purchased, which portion must be in principal amounts of
$1,000 or an integral multiple of $1,000, and
(3) that such Notes shall be purchased by the Company as
of the Repurchase Date pursuant to the terms and conditions
specified in the Notes and in this Indenture;
provided, however, that if the Notes are not in certificated form,
the Repurchase Notice must comply with appropriate Depositary
procedures; and
(B) book-entry transfer or delivery of such Note to the Paying
Agent at any time after delivery of the Repurchase Notice (together
with all necessary endorsements) at the offices of the Paying Agent,
such delivery being a condition to receipt by the holder of the
Repurchase Price therefor; provided, however, that such Repurchase
Price shall be so paid pursuant to this Section 16.01 only if the
Note so delivered to the Paying Agent shall conform in all respects
to the description thereof in the related Repurchase Notice.
No Repurchase Notice with respect to any Notes may be tendered by a holder
thereof if such holder has also tendered a Fundamental Change Repurchase Notice
and not validly withdrawn such Fundamental Change Repurchase Notice in
accordance with Section 16.03.
The Company shall purchase from the holder thereof, pursuant to this
Section 16.01, a portion of a Note, if the principal amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Note also apply to the purchase of such
portion of such Note.
103
Any purchase by the Company contemplated pursuant to the provisions of
this Section 16.01 shall be consummated by the delivery of the consideration to
be received by the holder promptly following the later of the Repurchase Date
and the time of delivery of the Note.
Notwithstanding anything herein to the contrary, any holder delivering to
the Paying Agent the Repurchase Notice contemplated by this Section 16.01 shall
have the right to withdraw, in whole or in part, such Repurchase Notice at any
time prior to the close of business on the second Business Day prior to the
Repurchase Date by delivery of a written notice of withdrawal to the Paying
Agent in accordance with Section 16.03 below.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Repurchase Notice or written notice of withdrawal thereof.
(b) Notwithstanding the foregoing, no Notes may be repurchased by the
Company at the option of the holders if the principal amount of the Notes has
been accelerated, and such acceleration has not been rescinded, on or prior to
the Repurchase Date (except in the case of an acceleration resulting from a
default by the Company in the payment of the Repurchase Price with respect to
such Notes).
(c) In connection with any purchase offer, the Company will:
(i) comply with the provisions of Rule 13e-4, Rule 14e-1 and any
other tender offer rules under the Exchange Act,
(ii) file a Schedule TO or any successor or similar schedule, if
required under the Exchange Act, and
(iii) otherwise comply with all federal and state securities laws in
connection with any offer by the Company to purchase the Notes.
Section 16.02. Repurchase at Option of Holders Upon a Fundamental Change.
(a) If there shall occur a Fundamental Change at any time prior to
maturity of the Notes, then each Noteholder shall have the right, at such
holder's option, to require the Company to repurchase all of such holder's Notes
for cash, or any portion thereof that is an integral multiple of $1,000
principal amount, on the date (the "Fundamental Change Repurchase Date")
specified by the Company that is not less than twenty (20) Business Days and not
more than thirty five (35) Business Days after the date of the Fundamental
Change Company
104
Notice (as defined below) at a repurchase price equal to 100% of the principal
amount thereof, together with accrued and unpaid interest, including unpaid
Additional Interest, if any, thereon to, but excluding, the Fundamental Change
Repurchase Date (the "Fundamental Change Repurchase Price"). If such Fundamental
Change Repurchase Date falls after a record date for the payment of interest,
and on or prior to the corresponding Interest Payment Date, the Company shall
instead pay the principal amount to the Noteholders surrendering the Notes for
repurchase pursuant to this Section 16.02, and pay the full amount of accrued
and unpaid interest, including accrued and unpaid Additional Interest, if any,
payable on such Interest Payment Date to the holder of record on the close of
business on the corresponding record date. Repurchases of Notes under this
Section 16.02 shall be made, at the option of the holder thereof, upon:
(i) delivery to the Paying Agent by a holder of a duly completed
notice (the "Fundamental Change Repurchase Notice") in the form set forth
on the reverse of the Note as Exhibit C thereto prior to the close of
business on the second Business Day prior to the Fundamental Change
Repurchase Date; and
(ii) delivery or book-entry transfer of the Notes to the Paying
Agent at any time after delivery of the Fundamental Change Repurchase
Notice (together with all necessary endorsements) at the Corporate Trust
Office of the Paying Agent in The Borough of Manhattan, 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 16.02 only if
the Note so delivered to the Paying Agent shall conform in all respects to
the description thereof in the related Fundamental Change Repurchase
Notice.
The Fundamental Change Repurchase Notice shall state:
(A) if certificated, the certificate numbers of Notes to be
delivered for purchase;
(B) the portion of the principal amount of Notes to be
repurchased, which must be $1,000 or an integral multiple thereof;
and
(C) that the Notes are to be repurchased by the Company
pursuant to the applicable provisions of the Notes and the
Indenture;
105
provided, however, that if the Notes are not in certificated form,
the Fundamental Change Repurchase Notice must comply with
appropriate Depositary procedures
Any purchase by the Company contemplated pursuant to the provisions of
this Section 16.02 shall be consummated by the delivery of the consideration to
be received by the holder promptly following the later of the Fundamental Change
Repurchase Date and the time of the book-entry transfer or delivery of the Note.
Notwithstanding anything herein to the contrary, any holder delivering to
the Paying Agent the Fundamental Change Repurchase Notice contemplated by this
Section 16.02 shall have the right to withdraw, in whole or in part, such
Fundamental Change Repurchase Notice at any time prior to the close of business
on the second Business Day prior to the Fundamental Change Repurchase Date by
delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 16.03 below.
The Paying Agent shall promptly notify the Company of the receipt by it of
any Fundamental Change Repurchase Notice or written notice of withdrawal
thereof.
(b) As promptly as practicable after the occurrence of the effective date
for a Fundamental Change, and in no event more than five Business Days after the
effective date of the Fundamental Change, the Company shall mail or cause to be
mailed to all holders of record of the Notes a notice (the "Fundamental Change
Company Notice") of the effective date of the Fundamental Change and of the
repurchase right at the option of the holders arising as a result thereof. Such
mailing shall be by first class mail. The Company shall also deliver a copy of
the Fundamental Change Company Notice to the Trustee, the Paying Agent and the
Conversion Agent within five Business Days after the Effective Date of the
Fundamental Change. The Company will also promptly publish a notice containing
the information set forth in the Fundamental Change Company Notice in a
newspaper of general circulation in The City of New York or publish such
information on the Company's website or through such other public medium as the
Company may use at that time.
Each Fundamental Change Company Notice shall specify:
(i) the events causing the Fundamental Change;
(ii) the effective date of the Fundamental Change;
106
(iii) the last date on which a holder may exercise the repurchase
right;
(iv) the Fundamental Change Repurchase Price;
(v) the name and address of the Paying Agent and the Conversion
Agent, if applicable;
(vi) the Fundamental Change Repurchase Date;
(vii) that the Notes are eligible to be converted, the applicable
Conversion Rate, any adjustments to the applicable Conversion Rate and, in
the case of a Fundamental Change prior to February 15, 2013, that the
conversion right with respect to the Notes terminates as of the relevant
Fundamental Change Repurchase Date;
(viii) that the Notes with respect to which a Fundamental Change
Repurchase Notice has been delivered by a holder may be converted only if
the holder withdraws the Fundamental Change Repurchase Notice in
accordance with the terms of the Indenture;
(ix) that the holder must exercise the repurchase right on or prior
to the close of business on the Fundamental Change Repurchase Date (the
"Fundamental Change Expiration Time");
(x) that the holder shall have the right to withdraw any Notes
surrendered prior to the Fundamental Change Expiration Time; and
(xi) the procedures that holders must follow to require the Company
to repurchase their Notes.
No failure of the Company to give the foregoing notices and no defect
therein shall limit the Noteholders' repurchase rights or affect the validity of
the proceedings for the repurchase of the Notes pursuant to this Section 16.02.
(c) Notwithstanding the foregoing, no Notes may be repurchased by the
Company at the option of the holders upon a Fundamental Change if the principal
amount of the Notes has been accelerated, and such acceleration has not been
rescinded, on or prior to the Fundamental Change Repurchase Date (except in the
case of an acceleration resulting from a default by the Company in the payment
of the Fundamental Change Repurchase Price with respect to such Notes).
107
(d) In connection with any purchase offer, the Company will:
(i) comply with the provisions of Rule 13e-4, Rule 14e-1 and any
other tender offer rules under the Exchange Act,
(ii) file a Schedule TO or any successor or similar schedule, if
required under the Exchange Act, and
(iii) otherwise comply with all federal and state securities laws in
connection with any offer by the Company to purchase the Notes.
Section 16.03. Withdrawal of Repurchase Notice or Fundamental Change
Repurchase Notice.
(a) A Repurchase Notice or Fundamental Change Repurchase Notice, as the
case may be, may be withdrawn by means of a written notice of withdrawal
delivered to the Corporate Trust Office of the Paying Agent in accordance with
the Repurchase Notice or Fundamental Change Repurchase Notice, as the case may
be, at any time prior to the close of business on the second Business Day prior
to the Repurchase Date or prior to the close of business on the second Business
Day prior to the Fundamental Change Repurchase Date, as the case may be,
specifying:
(i) the certificate number, if any, of the Note in respect of which
such notice of withdrawal is being submitted, or the appropriate
Depositary information if the Note in respect of which such notice of
withdrawal is being submitted is represented by a Global Note,
(ii) the principal amount of the Note with respect to which such
notice of withdrawal is being submitted, and
(iii) the principal amount, if any, of such Note that remains
subject to the original Repurchase Notice or Fundamental Change Repurchase
Notice, as the case may be, which portion must be in principal amounts of
$1,000 or an integral multiple of $1,000;
provided, however, that if the Notes are not in certificated form, the notice
must comply with appropriate procedures of the Depositary.
Section 16.04. Deposit of Repurchase Price or Fundamental Change
Repurchase Price.
108
(a) On or prior to the Repurchase Date or Fundamental Change Repurchase
Date, as the case may be, the Company will deposit with the Trustee (or other
Paying Agent appointed by the Company or if the Company is acting as its own
Paying Agent, set aside, segregate and hold in trust as provided in Section
5.04) an amount of money sufficient to repurchase on the Repurchase Date or the
Fundamental Change Repurchase Date, as the case may be, all of the Notes to be
repurchased on such date at the appropriate Repurchase Price or Fundamental
Change Repurchase Price, as the case may be; provided that if such payment is
made on the Repurchase Date or Fundamental Change Repurchase Date, as the case
may be, it must be received by the Trustee or Paying Agent, as the case may be,
by 11:00 a.m. New York City time, on such date. Subject to receipt of funds
and/or Notes by the Trustee (or other Paying Agent appointed by the Company),
payment for Notes surrendered for repurchase (and not withdrawn) prior to the
Repurchase Date or Fundamental Change Expiration Time will be made promptly
after the later of (x) the Repurchase Date or Fundamental Change Repurchase
Date, as the case may be, with respect to such Note (provided the holder has
satisfied the conditions in Section 16.01 or Section 16.02, as applicable) and
(y) the time of book-entry transfer or the delivery of such Note to the Trustee
(or other Paying Agent appointed by the Company) by the holder thereof in the
manner required by Section 16.01 or Section 16.02, as applicable, by mailing
checks for the amount payable to the holders of such Notes entitled thereto as
they shall appear in the Note Register, provided, however, that payments to the
Depositary shall be made by wire transfer of immediately available funds to the
account of the Depositary or its nominee. The Trustee shall, promptly after such
payment and upon written demand by the Company, return to the Company any funds
in excess of the Repurchase Price or Fundamental Change Repurchase Price, as the
case may be.
(b) If the Trustee (or other Paying Agent appointed by the Company) holds
money sufficient to repurchase on the Repurchase Date or Fundamental Change
Repurchase Date, as the case may be, all the Notes or portions thereof that are
to be purchased on the Business Day following the Repurchase Date or Fundamental
Change Repurchase Date, as the case may be, then (i) such Notes will cease to be
outstanding, (ii) interest, including Additional Interest, if any, will cease to
accrue on such Notes, and (iii) all other rights of the holders of such Notes
will terminate (other than the right to receive the Repurchase Price or
Fundamental Change Repurchase Price, as the case may be, and previously accrued
but unpaid interest, including Additional Interest, if any, upon delivery of the
Notes), whether or not book-entry transfer of the Notes has been made or the
Notes have been delivered to the Trustee or Paying Agent.
109
(c) Upon surrender of a Note that is to be repurchased in part pursuant to
Section 16.01 or 16.02, the Company shall execute and the Trustee shall
authenticate and deliver to the holder a new Note in an authorized denomination
equal in principal amount to the unrepurchased portion of the Note surrendered.
ARTICLE 17
MISCELLANEOUS PROVISIONS
Section 17.01. Provisions Binding on Company's Successors. All the
covenants, stipulations, promises and agreements of the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
Section 17.02. Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation or other entity that shall at the time be the lawful
sole successor of the Company.
Section 17.03. Addresses for Notices, Etc. Any notice or demand that by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the Noteholders on the Company shall be deemed to have been
sufficiently given or made, for all purposes if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Albany International Corp., 1373 Broadway, Albany, NY 12204,
Attention: General Counsel. Any notice, direction, request or demand hereunder
to or upon the Trustee shall be deemed to have been sufficiently given or made,
for all purposes, if given or served by being deposited postage prepaid by
registered or certified mail in a post office letter box addressed to the
Corporate Trust Office.
The Trustee, by notice to the Company, may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Noteholder shall be mailed to it
by first class mail, postage prepaid, at its address as it appears on the Note
register and shall be sufficiently given to it if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders. If a
notice or
110
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice to holders by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
Section 17.04. Governing Law. THIS INDENTURE AND EACH NOTE SHALL BE DEEMED
TO BE A CONTRACT MADE UNDER THE LAWS OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK (WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF).
Section 17.05. Evidence of Compliance with Conditions Precedent;
Certificates and Opinions of Counsel to Trustee. Upon any application or demand
by the Company to the Trustee to take any action under any of the provisions of
this Indenture, the Company shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with, and an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Each certificate or opinion provided for by or on behalf of the Company in
this Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant provided for in this Indenture (other than the Officers'
Certificates provided for in Section 5.08) shall include (1) a statement that
the Person making such certificate or opinion has read such covenant or
condition; (2) a brief statement as to the nature and scope of the examination
or investigation upon which the statement or opinion contained in such
certificate or opinion is based; (3) a statement that, in the opinion of such
person, he or she has made such examination or investigation as is necessary to
enable him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to whether
or not, in the opinion of such Person, such condition or covenant has been
complied with.
Section 17.06. Legal Holidays. In any case where any Interest Payment
Date, Redemption Date, Repurchase Date, Fundamental Change Repurchase Date,
Conversion Date or Maturity Date is not be a Business Day, then any action to be
taken on such date need not be taken on such date, but may be taken on the next
succeeding Business Day with the same force and effect as if taken on such date,
and no interest shall accrue for the period from and after such date.
111
Section 17.07. No Security Interest Created. Nothing in this Indenture or
in the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction.
Section 17.08. Trust Indenture Act. This Indenture is hereby made subject
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act;
provided that this Section 17.08 shall not require that this Indenture or the
Trustee be qualified under the Trust Indenture Act prior to the time such
qualification is in fact required under the terms of the Trust Indenture Act,
nor shall it constitute any admission or acknowledgment by any party hereto that
any such qualification is required prior to the time such qualification is in
fact required under the terms of the Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in an indenture qualified under the Trust Indenture Act,
such required provision shall control.
Section 17.09. Benefits of Indenture. Nothing in this Indenture or in the
Notes, expressed or implied, shall give to any Person, other than the parties
hereto, any Paying Agent, any Conversion Agent, any authenticating agent, any
Note registrar and their successors hereunder or the Noteholders, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
Section 17.10. Table of Contents, Headings, Etc. The table of contents and
the titles and headings of the articles and sections of this Indenture have been
inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 17.11. Authenticating Agent. The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf and subject
to its direction in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Section 2.05, Section 2.06, Section 2.07, Section 2.08, Section
3.06, Section 11.04 and Section 16.04 as fully to all intents and purposes as
though the authenticating agent had been expressly authorized by this Indenture
and those Sections to authenticate and deliver Notes. For all purposes of this
Indenture, the authentication and delivery of Notes by the authenticating agent
shall be deemed to be authentication and delivery of such Notes "by the Trustee"
and a certificate of authentication executed on behalf of the Trustee by an
authenticating agent shall be deemed to satisfy any requirement hereunder or in
the Notes for the Trustee's certificate of authentication. Such authenticating
agent
112
shall at all times be a Person eligible to serve as trustee hereunder pursuant
to Section 8.09.
Any corporation or other entity into which any authenticating agent may be
merged or converted or with which it may be consolidated, or any corporation or
other entity resulting from any merger, consolidation or conversion to which any
authenticating agent shall be a party, or any corporation or other entity
succeeding to the corporate trust business of any authenticating agent, shall be
the successor of the authenticating agent hereunder, if such successor
corporation or other entity is otherwise eligible under this Section, without
the execution or filing of any paper or any further act on the part of the
parties hereto or the authenticating agent or such successor corporation or
other entity.
Any authenticating agent may at any time resign by giving written notice
of resignation to the Trustee and to the Company. The Trustee may at any time
terminate the agency of any authenticating agent by giving written notice of
termination to such authenticating agent and to the Company. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time any
authenticating agent shall cease to be eligible under this Section, the Trustee
may appoint a successor authenticating agent (which may be the Trustee), shall
give written notice of such appointment to the Company and shall mail notice of
such appointment to all Noteholders as the names and addresses of such holders
appear on the Note register.
The Company agrees to pay to the authenticating agent from time to time
reasonable compensation for its services although the Company may terminate the
authenticating agent, if it determines such agent's fees to be unreasonable.
The provisions of Section 8.02, Section 8.03, Section 8.04, Section 9.03
and this Section 17.11 shall be applicable to any authenticating agent.
If an authenticating agent is appointed pursuant to this Section, the
Notes may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
- --------------------------,
as Authenticating Agent, certifies that this is one of the Notes described
in the within-named Indenture.
By:
------------------------
Authorized Officer
113
Section 17.12. Execution in Counterparts. This Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 17.13. Severability. In the event any provision of this Indenture
or in the Notes shall be invalid, illegal or unenforceable, then (to the extent
permitted by law) the validity, legality or enforceability of the remaining
provisions shall not in any way be affected or impaired.
114
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
ALBANY INTERNATIONAL CORP.
By: /s/ David C. Michaels
-------------------------------------
Name: David C. Michaels
Title: Vice President, Treasury & Tax
JPMORGAN CHASE BANK, N.A.,
as Trustee
By: /s/ Michael A. Smith
-------------------------------------
Name: Michael A. Smith
Title: Vice President
1
EXHIBIT A
[FORM OF FACE OF NOTE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER AGREES (1) THAT IT WILL NOT WITHIN TWO YEARS AFTER THE LAST ORIGINAL
ISSUE DATE OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED
HEREBY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY, EXCEPT (A)
TO THE ISSUER OR A SUBSIDIARY THEREOF; (B) UNDER A REGISTRATION STATEMENT THAT
HAS BECOME OR BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (C) TO A PERSON
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, ALL IN
COMPLIANCE WITH RULE 144A (IF AVAILABLE); OR (D) UNDER ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (2) THAT
IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE LAST
ORIGINAL ISSUE DATE OF THIS SECURITY PURSUANT TO CLAUSE (D) ABOVE FURNISH TO THE
TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS MAY BE REQUIRED PURSUANT TO THE
A-1
INDENTURE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
A-2
ALBANY INTERNATIONAL CORP.
2.25% Convertible Senior Note due 2026
No. __ $_______
CUSIP No. 012348 AB 4
Albany International Corp., a corporation duly organized and validly
existing under the laws of the State of Delaware (herein called the "Company,"
which term includes any successor corporation or other entity under the
Indenture referred to on the reverse hereof), for value received hereby promises
to pay to [CEDE & CO.](1), or registered assigns, the principal sum of Dollars
[(which amount may from time to time be increased or decreased to such other
principal amounts (which, taken together with the principal amounts of all other
outstanding Notes, shall not, unless permitted by the Indenture, exceed
$150,000,000 in aggregate at any time (or $180,000,000 if the Initial Purchasers
exercise their option to purchase additional Notes in full as set forth in the
Purchase Agreement)) by adjustments made on the records of the Trustee or the
Custodian of the Depositary as set forth in Schedule A hereto, in accordance
with the rules and procedures of the Depositary)](2) on March 15, 2026, and
interest thereon as set forth below and Additional Interest in the manner, at
the rates and to the Persons set forth in the Registration Rights Agreement.
This Note shall bear interest at the rate of 2.25% per year from March 13,
2006, or from the most recent date to which interest had been paid or provided
for to, but excluding, the next scheduled Interest Payment Date until March 15,
2013. As of March 15, 2013, this Note shall bear interest at the rate of 3.25%
per year from March 15, 2013, to, but excluding, the next scheduled Interest
Payment Date until the principal hereof shall have been paid or made available
for payment. Interest is payable semi-annually in arrears on each March 15 and
September 15, commencing September 15, 2006, to holders of record at the close
of business on the preceding March 1 and September 1 (whether or not such day is
a Business Day), respectively.
- ----------
(1) Insert in Global Note Only.
(2) Insert in Global Note Only.
A-3
Payment of the principal of, interest, including any Additional Interest,
accrued on this Note shall be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
in such lawful money of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts; provided,
however, interest, including Additional Interest, if any, may be paid by check
mailed to such holder's address as it appears in the Note register; provided
further, however, that, with respect to any Noteholder with an aggregate
principal amount in excess of $1,000,000, at the request of such holder in
writing to the Trustee and the Paying Agent (if different than the Trustee),
interest, including Additional Interest, if any, on such holder's Notes shall be
paid by wire transfer in immediately available funds in accordance with the
written wire transfer instruction supplied by such holder from time to time to
the Trustee and Paying Agent (if different from the Trustee) not later than the
applicable record date; provided that any payment to the Depositary or its
nominee shall be paid by wire transfer in immediately available funds in
accordance with the wire transfer instruction supplied by the Depositary or its
nominee from time to time to the Trustee and Paying Agent (if different from
Trustee).
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions giving the holder of
this Note the right to convert this Note into cash and Common Stock of the
Company on the terms and subject to the limitations referred to on the reverse
hereof and as more fully specified in the Indenture. Such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State (without regard to the conflicts of laws
provisions thereof).
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
[Remainder of page intentionally left blank]
A-4
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
ALBANY INTERNATIONAL CORP.
By:
--------------------------------------
Name:
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
JPMORGAN CHASE BANK, N.A.,
as Trustee, certifies that this is one of the Notes described
in the within-named Indenture.
By:
-------------------------------
Authorized Officer
1
[FORM OF REVERSE OF NOTE]
ALBANY INTERNATIONAL CORP.
2.25% Convertible Senior Note due 2026
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 2.25% Convertible Senior Notes due 2026 (herein called the
"Notes"), limited to the aggregate principal amount of $150,000,000 (or
$180,000,000 if the Initial Purchasers exercise their option to purchase
additional Notes in full as set forth in the Purchase Agreement) all issued or
to be issued under and pursuant to an Indenture dated as of March 13, 2006
(herein called the "Indenture"), between the Company and JPMorgan Chase Bank,
N.A. (herein called the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Notes. Additional Notes may be
issued in an unlimited aggregate principal amount, subject to certain conditions
specified in the Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and interest,
including Additional Interest, if any, on all Notes may be declared, by either
the Trustee or Noteholders of not less than 25% in aggregate principal amount of
Notes then outstanding, and upon said declaration shall become, due and payable,
in the manner, with the effect and subject to the conditions provided in the
Indenture.
Subject to the terms and conditions of the Indenture, the Company will
make all payments and deliveries in respect of the Redemption Price, Repurchase
Price, the Fundamental Change Repurchase Price, and the principal amount on the
Maturity Date, as the case may be, to the holder who surrenders a Note to a
Paying Agent to collect such payments in respect of the Note. The Company will
pay cash amounts in money of the United States that at the time of payment is
legal tender for payment of public and private debts.
The Indenture contains provisions permitting the Company and the Trustee
in certain circumstances, without the consent of the holders of the Notes, and
in other circumstances, with the consent of the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
evidenced as in the Indenture provided, to execute supplemental indentures
modifying the terms of the Indenture and the Notes as described therein. It is
also provided in the Indenture that the holders of a majority in aggregate
principal amount of the Notes at the time outstanding may on behalf of the
holders of all of
A-6
the Notes waive any past Default or Event of Default under the Indenture and its
consequences except as provided in the Indenture. Any such consent or waiver by
the holder of this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Note and any Notes that may be issued in exchange or substitution hereof
or upon registration of transfer hereof, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
accrued and unpaid interest, and Additional Interest, if any, on this Note at
the place, at the respective times, at the rate and in the lawful money herein
prescribed.
The Notes are issuable in registered form without coupons in denominations
of $1,000 principal amount and integral multiples thereof. At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of other authorized denominations.
The Notes are not subject to redemption through the operation of any
sinking fund. Prior to March 15, 2013, the Notes will not be redeemable at the
Company's option. Subject to the terms and conditions of the Indenture,
beginning on March 15, 2013, the Company, at its option, may redeem the Notes
for cash at any time as a whole, or from time to time in part, at a price equal
to the principal amount of the Notes redeemed plus accrued and unpaid interest,
and Additional Interest, if any, on the Notes redeemed to (but excluding) the
Redemption Date.
Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the holder, all or any portion of
Notes held by such holder on March 15, 2013 and March 15, 2021, in integral
multiples of $1,000 at a Repurchase Price equal to the principal amount of the
Notes repurchased.
Upon the occurrence of a Fundamental Change, the holder has the right, at
such holder's option, to require the Company to repurchase all of such holder's
Notes or any portion thereof (in principal amounts of $1,000 or integral
multiples
A-7
thereof) on the Fundamental Change Repurchase Date at a price equal to 100% of
the principal amount of the Notes such holder elects to require the Company to
repurchase, together with accrued and unpaid interest, including accrued and
unpaid Additional Interest, if any, to but excluding the Fundamental Change
Repurchase Date. The Company or, at the written request of the Company, the
Trustee shall mail to all holders of record of the Notes a notice of the
occurrence of a Fundamental Change and of the repurchase right arising as a
result thereof on or before the fifth Business Day after the occurrence of such
Fundamental Change.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, during certain periods and upon the occurrence of certain
conditions specified in the Indenture and prior to the close of business on the
Business Day immediately preceding the Maturity Date, to convert any Notes or
portion thereof that is $1,000 or an integral multiple thereof, into cash and,
if applicable, shares of Common Stock, at a Conversion Rate specified in the
Indenture, as adjusted from time to time as provided in the Indenture, upon
surrender of this Note, together with a conversion notice as provided in the
Indenture and this Note, to the Company at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
and, unless the shares issuable on conversion are to be issued in the same name
as this Note, duly endorsed by, or accompanied by instruments of transfer in
form satisfactory to the Company duly executed by, the holder or by its duly
authorized attorney. The initial Conversion Rate shall be 22.4618 shares for
each $1,000 principal amount of Notes. No fractional shares of Common Stock will
be issued upon any conversion, but an adjustment in cash will be paid to the
holder, as provided in the Indenture, in respect of any fraction of a share that
would otherwise be issuable upon the surrender of any Note or Notes for
conversion. No adjustment shall be made for dividends or any shares issued upon
conversion of such Note except as provided in the Indenture.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange thereof, subject
to the limitations provided in the Indenture, without charge except for any tax,
assessments or other governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any Paying Agent, any
Conversion Agent and any Note registrar may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
A-8
overdue and notwithstanding any notation of ownership or other writing hereon),
for the purpose of receiving payment hereof, or on account hereof, for the
conversion hereof and for all other purposes, and neither the Company nor the
Trustee nor any other authenticating agent nor any Paying Agent nor any other
Conversion Agent nor any Note registrar shall be affected by any notice to the
contrary. Notwithstanding the foregoing, the Indenture provides that following a
Default, owners of beneficial interests in a Global Note may directly enforce
against the Company such owners' right to exchange such beneficial interest for
Notes in certificated form. All payments made to or upon the order of such
registered holder shall, to the extent of the sum or sums paid, satisfy and
discharge liability for monies payable on this Note.
No recourse for the payment of the principal of or any premium or accrued
and unpaid interest, including Additional Interest, if any, on this Note, or for
any claim based hereon or otherwise in respect hereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in the Indenture or
any indenture supplemental thereto or in any Note, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, agent, officer, director or subsidiary, as such, past,
present or future, of the Company or of any successor corporation or other
entity, either directly or through the Company or any successor corporation or
other entity, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
A-9
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of this
Note, shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT
Custodian
----------------------
(Cust)
TEN ENT - as tenants by the entireties
----------------------
(Minor)
JT TEN - as joint tenants with right of
survivorship and not as tenants in common Uniform Gifts to Minors
Act ________ (State)
Additional abbreviations may also be used though not
in the above list.
A-10
EXHIBIT B
[FORM OF NOTICE OF CONVERSION]
To: Albany International Corp.
The undersigned registered owner of this Note hereby exercises the option
to convert this Note, or the portion hereof (that is $1,000 principal amount or
an integral multiple thereof) below designated, into cash and shares of Common
Stock, if any, in accordance with the terms of the Indenture referred to in this
Note, and directs that the shares issuable and deliverable upon such conversion,
if any, together with any cash comprising a portion of the Daily Settlement
Amounts for each of the twenty-five Trading Days during the Cash Settlement
Averaging Period and for fractional shares and any Notes representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. If shares or any
portion of this Note not converted are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto. Any amount required to be paid to the undersigned on
account of interest accompanies this Note.
Dated:
----------------------- -----------------------------------------
-----------------------------------------
Signature(s)
Signature Guarantee
- -----------------------------
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks,
stock brokers, savings and loan
associations and credit unions) with
membership in an approved signature
guarantee medallion program pursuant to
Securities and Exchange Commission Rule
17Ad-15 if shares of Common Stock are to
be issued,
B-1
or Notes to be delivered, other than to
and in the name of the registered
holder.
B-2
Fill in for registration of shares if to be issued, and Notes if to be
delivered, other than to and in the name of the registered holder:
- --------------------------------------
(Name)
- --------------------------------------
(Street Address)
- --------------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less
than all): $______,000
NOTICE: The above signature(s) of the
holder(s) hereof must correspond with the
name as written upon the face of the Note
in every particular without alteration or
enlargement or any change whatever.
-----------------------------------------
Social Security or Other Taxpayer
Identification Number
B-3
EXHIBIT C
[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]
To: Albany International Corp.
The undersigned registered owner of this Note hereby acknowledges receipt of a
notice from Albany International Corp. (the "Company") as to the occurrence of a
Fundamental Change with respect to the Company and requests and instructs the
Company to repay the entire principal amount of this Note, or the portion
thereof (that is $1,000 principal amount or an integral multiple thereof) below
designated, in accordance with the applicable provisions of the Indenture
referred to in this Note, together with accrued and unpaid interest, including
Additional Interest, if any, to, but excluding, such date, to the registered
holder hereof.
In the case of certificated Notes, the certificate numbers of the Notes to be
repurchased are as set forth below:
Dated:
------------------------------ -----------------------------------------
Signature(s)
-----------------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less
than all): $______,000
NOTICE: The above signature(s) of the
holder(s) hereof must correspond with the
name as written upon the face of the
Note in every particular without
alteration or enlargement or any change
whatever.
C-1
EXHIBIT D
[FORM OF REPURCHASE NOTICE]
To: Albany International Corp.
The undersigned registered owner of this Note hereby requests and instructs
Albany International Corp. to repay the entire principal amount of this Note, or
the portion thereof (that is $1,000 principal amount or an integral multiple
thereof) below designated, in accordance with the terms and conditions of the
Indenture referred to in this Note at the Repurchase Price to the registered
holder hereof.
In the case of certificated Notes, the certificate numbers of the Notes to be
repurchased are as set forth below:
Dated:
------------------------------ -----------------------------------------
Signature(s)
-----------------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less
than all): $______,000
NOTICE: The above signature(s) of the
holder(s) hereof must correspond with the
name as written upon the face of the
Note in every particular without
alteration or enlargement or any change
whatever.
D-1
EXHIBIT E
[FORM OF ASSIGNMENT AND TRANSFER]
For value received ____________________________ hereby sell(s), assign(s) and
transfer(s) unto _________________ (Please insert social security or Taxpayer
Identification Number of assignee) the within Note, and hereby irrevocably
constitutes and appoints ________ _____________ attorney to transfer the said
Note on the books of the Company, with full power of substitution in the
premises.
In connection with any transfer of the within Note occurring prior to the Resale
Restriction Termination Date, as defined in the Indenture governing such Note,
the undersigned confirms that such Note is being transferred:
|_| To Albany International Corp. or a subsidiary thereof; or
|_| Pursuant to the registration statement that has become or been declared
effective under the Securities Act of 1933, as amended; or
|_| Pursuant to and in compliance with Rule 144A under the Securities Act of
1933, as amended; or
|_| Pursuant to and in compliance with Rule 144 under the Securities Act of
1933, as amended; or
|_| Pursuant to another available exemption from registration under the
Securities Act of 1933, as amended.
E-1
Dated:
---------------------------------
- ---------------------------------------
- ---------------------------------------
Signature(s)
- ---------------------------------------
Signature Guarantee
Signature(s) must be guaranteed by an
eligible Guarantor Institution (banks,
stock brokers, savings and loan
associations and credit unions) with
membership in an approved signature
guarantee medallion program pursuant to
Securities and Exchange Commission Rule
17Ad-15 Notes are to be delivered, other
than to and in the name of the
registered holder.
NOTICE: The signature on the assignment must correspond with the name as written
upon the face of the Note in every particular without alteration or enlargement
or any change whatever.
E-2
SCHEDULE A(3)
ALBANY INTERNATIONAL CORP.
2.25% Convertible Senior Notes Due 2026
The following increases or decreases in this Global Note have been made:
Signature of
authorized
Amount of decrease in Amount of increase in Principal Amount of this signatory of
Principal Amount of Principal Amount of this Global Note following Trustee or
Date of Exchange this Global Note Global Note such decrease or increase Custodian
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ---------------- ------------------------ ------------------------- ------------------------- ------------------
- ----------
(3) Insert in Global Note Only.
1
Exhibit 4.2
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF,
THE HOLDER AGREES (1) THAT IT WILL NOT WITHIN TWO YEARS AFTER THE LAST ORIGINAL
ISSUE DATE OF THIS SECURITY, RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED
HEREBY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY, EXCEPT (A)
TO THE ISSUER OR A SUBSIDIARY THEREOF; (B) UNDER A REGISTRATION STATEMENT THAT
HAS BECOME OR BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (C) TO A PERSON
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) THAT IS PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER AND TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, ALL IN
COMPLIANCE WITH RULE 144A (IF AVAILABLE); OR (D) UNDER ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (2) THAT
IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER THE LAST
ORIGINAL ISSUE DATE OF THIS SECURITY PURSUANT TO CLAUSE (D) ABOVE FURNISH TO THE
TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS MAY BE REQUIRED PURSUANT TO THE INDENTURE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
1
ALBANY INTERNATIONAL CORP.
2.25% Convertible Senior Note due 2026
No. 1 $150,000,000
CUSIP No. 012348 AB 4
Albany International Corp., a corporation duly organized and validly
existing under the laws of the State of Delaware (herein called the "Company,"
which term includes any successor corporation or other entity under the
Indenture referred to on the reverse hereof), for value received hereby promises
to pay to CEDE & CO., or registered assigns, the principal sum of ONE HUNDRED
FIFTY MILLION DOLLARS (which amount may from time to time be increased or
decreased to such other principal amounts (which, taken together with the
principal amounts of all other outstanding Notes, shall not, unless permitted by
the Indenture, exceed $150,000,000 in aggregate at any time (or $180,000,000 if
the Initial Purchasers exercise their option to purchase additional Notes in
full as set forth in the Purchase Agreement)) by adjustments made on the records
of the Trustee or the Custodian of the Depositary as set forth in Schedule A
hereto, in accordance with the rules and procedures of the Depositary) on March
15, 2026, and interest thereon as set forth below and Additional Interest in the
manner, at the rates and to the Persons set forth in the Registration Rights
Agreement.
This Note shall bear interest at the rate of 2.25% per year from the date
of original issuance of the Notes, or from the most recent date to which
interest had been paid or provided for to, but excluding, the next scheduled
Interest Payment Date until March 15, 2013. As of March 15, 2013, this Note
shall bear interest at the rate of 3.25% per year from March 15, 2013, to, but
excluding, the next scheduled Interest Payment Date until the principal hereof
shall have been paid or made available for payment. Interest is payable
semi-annually in arrears on each March 15 and September 15, commencing September
15, 2006, to holders of record at the close of business on the preceding March 1
and September 1 (whether or not such day is a Business Day), respectively.
Payment of the principal of, interest, including any Additional Interest,
accrued on this Note shall be made at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
in such lawful money of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts; provided,
however, interest, including Additional Interest, if any, may be paid by check
mailed to such holder's address as it appears in the Note register; provided
further, however, that, with respect to any Noteholder with an aggregate
principal
2
amount in excess of $1,000,000, at the request of such holder in writing to the
Trustee and the Paying Agent (if different than the Trustee), interest,
including Additional Interest, if any, on such holder's Notes shall be paid by
wire transfer in immediately available funds in accordance with the written wire
transfer instruction supplied by such holder from time to time to the Trustee
and Paying Agent (if different from the Trustee) not later than the applicable
record date; provided that any payment to the Depositary or its nominee shall be
paid by wire transfer in immediately available funds in accordance with the wire
transfer instruction supplied by the Depositary or its nominee from time to time
to the Trustee and Paying Agent (if different from Trustee).
Reference is made to the further provisions of this Note set forth on the
reverse hereof, including, without limitation, provisions giving the holder of
this Note the right to convert this Note into cash and Common Stock of the
Company on the terms and subject to the limitations referred to on the reverse
hereof and as more fully specified in the Indenture. Such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Note shall be deemed to be a contract made under the laws of the
State of New York, and for all purposes shall be construed in accordance with
and governed by the laws of said State (without regard to the conflicts of laws
provisions thereof).
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been manually signed by the
Trustee or a duly authorized authenticating agent under the Indenture.
[Remainder of page intentionally left blank]
3
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.
ALBANY INTERNATIONAL CORP.
By: /s/ Michael C. Nahl
---------------------------------------
Name: Michael C. Nahl
Title: Executive Vice President & Chief
Financial Officer
Dated: March 13, 2006
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
JPMORGAN CHASE BANK, N.A.,
as Trustee, certifies that this is one of the Notes described
in the within-named Indenture.
By: /s/ Michael A. Smith
--------------------------------
Authorized Officer
4
REVERSE OF NOTE
ALBANY INTERNATIONAL CORP.
2.25% Convertible Senior Note due 2026
This Note is one of a duly authorized issue of Notes of the Company,
designated as its 2.25% Convertible Senior Notes due 2026 (herein called the
"Notes"), limited to the aggregate principal amount of $150,000,000 (or
$180,000,000 if the Initial Purchasers exercise their option to purchase
additional Notes in full as set forth in the Purchase Agreement) all issued or
to be issued under and pursuant to an Indenture dated as of March 13, 2006
(herein called the "Indenture"), between the Company and JPMorgan Chase Bank,
N.A. (herein called the "Trustee"), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Notes. Additional Notes may be
issued in an unlimited aggregate principal amount, subject to certain conditions
specified in the Indenture.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of, premium, if any, and interest,
including Additional Interest, if any, on all Notes may be declared, by either
the Trustee or Noteholders of not less than 25% in aggregate principal amount of
Notes then outstanding, and upon said declaration shall become, due and payable,
in the manner, with the effect and subject to the conditions provided in the
Indenture.
Subject to the terms and conditions of the Indenture, the Company will
make all payments and deliveries in respect of the Redemption Price, Repurchase
Price, the Fundamental Change Repurchase Price, and the principal amount on the
Maturity Date, as the case may be, to the holder who surrenders a Note to a
Paying Agent to collect such payments in respect of the Note. The Company will
pay cash amounts in money of the United States that at the time of payment is
legal tender for payment of public and private debts.
The Indenture contains provisions permitting the Company and the Trustee
in certain circumstances, without the consent of the holders of the Notes, and
in other circumstances, with the consent of the holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
evidenced as in the Indenture provided, to execute supplemental indentures
modifying the terms of the Indenture and the Notes as described therein. It is
also provided in the Indenture that the holders of a majority in aggregate
principal amount of the Notes at the time outstanding may on behalf of the
holders of all of the Notes waive any past Default or Event of Default under the
Indenture and its
5
consequences except as provided in the Indenture. Any such consent or waiver by
the holder of this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Note and any Notes that may be issued in exchange or substitution hereof
or upon registration of transfer hereof, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, premium, if any, and
accrued and unpaid interest, and Additional Interest, if any, on this Note at
the place, at the respective times, at the rate and in the lawful money herein
prescribed.
The Notes are issuable in registered form without coupons in denominations
of $1,000 principal amount and integral multiples thereof. At the office or
agency of the Company referred to on the face hereof, and in the manner and
subject to the limitations provided in the Indenture, without payment of any
service charge but with payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration or
exchange of Notes, Notes may be exchanged for a like aggregate principal amount
of Notes of other authorized denominations.
The Notes are not subject to redemption through the operation of any
sinking fund. Prior to March 15, 2013, the Notes will not be redeemable at the
Company's option. Subject to the terms and conditions of the Indenture,
beginning on March 15, 2013, the Company, at its option, may redeem the Notes
for cash at any time as a whole, or from time to time in part, at a price equal
to the principal amount of the Notes redeemed plus accrued and unpaid interest,
and Additional Interest, if any, on the Notes redeemed to (but excluding) the
Redemption Date.
Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the holder, all or any portion of
Notes held by such holder on March 15, 2013 and March 15, 2021, in integral
multiples of $1,000 at a Repurchase Price equal to the principal amount of the
Notes repurchased.
Upon the occurrence of a Fundamental Change, the holder has the right, at
such holder's option, to require the Company to repurchase all of such holder's
Notes or any portion thereof (in principal amounts of $1,000 or integral
multiples thereof) on the Fundamental Change Repurchase Date at a price equal to
100% of the principal amount of the Notes such holder elects to require the
Company to repurchase, together with accrued and unpaid interest, including
accrued and
6
unpaid Additional Interest, if any, to but excluding the Fundamental Change
Repurchase Date. The Company or, at the written request of the Company, the
Trustee shall mail to all holders of record of the Notes a notice of the
occurrence of a Fundamental Change and of the repurchase right arising as a
result thereof on or before the fifth Business Day after the occurrence of such
Fundamental Change.
Subject to the provisions of the Indenture, the holder hereof has the
right, at its option, during certain periods and upon the occurrence of certain
conditions specified in the Indenture and prior to the close of business on the
Business Day immediately preceding the Maturity Date, to convert any Notes or
portion thereof that is $1,000 or an integral multiple thereof, into cash and,
if applicable, shares of Common Stock, at a Conversion Rate specified in the
Indenture, as adjusted from time to time as provided in the Indenture, upon
surrender of this Note, together with a conversion notice as provided in the
Indenture and this Note, to the Company at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York,
and, unless the shares issuable on conversion are to be issued in the same name
as this Note, duly endorsed by, or accompanied by instruments of transfer in
form satisfactory to the Company duly executed by, the holder or by its duly
authorized attorney. The initial Conversion Rate shall be 22.4618 shares for
each $1,000 principal amount of Notes. No fractional shares of Common Stock will
be issued upon any conversion, but an adjustment in cash will be paid to the
holder, as provided in the Indenture, in respect of any fraction of a share that
would otherwise be issuable upon the surrender of any Note or Notes for
conversion. No adjustment shall be made for dividends or any shares issued upon
conversion of such Note except as provided in the Indenture.
Upon due presentment for registration of transfer of this Note at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, a new Note or Notes of authorized denominations for an equal aggregate
principal amount will be issued to the transferee in exchange thereof, subject
to the limitations provided in the Indenture, without charge except for any tax,
assessments or other governmental charge imposed in connection therewith.
The Company, the Trustee, any authenticating agent, any Paying Agent, any
Conversion Agent and any Note registrar may deem and treat the registered holder
hereof as the absolute owner of this Note (whether or not this Note shall be
overdue and notwithstanding any notation of ownership or other writing hereon),
for the purpose of receiving payment hereof, or on account hereof, for the
conversion hereof and for all other purposes, and neither the Company nor the
Trustee nor any other authenticating agent nor any Paying Agent nor any other
Conversion Agent nor any Note registrar shall be affected by any notice to the
7
contrary. Notwithstanding the foregoing, the Indenture provides that following a
Default, owners of beneficial interests in a Global Note may directly enforce
against the Company such owners' right to exchange such beneficial interest for
Notes in certificated form. All payments made to or upon the order of such
registered holder shall, to the extent of the sum or sums paid, satisfy and
discharge liability for monies payable on this Note.
No recourse for the payment of the principal of or any premium or accrued
and unpaid interest, including Additional Interest, if any, on this Note, or for
any claim based hereon or otherwise in respect hereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in the Indenture or
any indenture supplemental thereto or in any Note, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator,
stockholder, employee, agent, officer, director or subsidiary, as such, past,
present or future, of the Company or of any successor corporation or other
entity, either directly or through the Company or any successor corporation or
other entity, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
Terms used in this Note and defined in the Indenture are used herein as
therein defined.
8
ABBREVIATIONS
The following abbreviations, when used in the inscription of the face of this
Note, shall be construed as though they were written out in full according to
applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT
Custodian
-----------------
(Cust)
TEN ENT - as tenants by the entireties
-----------------
(Minor)
JT TEN - as joint tenants with right of
survivorship and not as tenants in common Uniform Gifts to Minors
Act ________ (State)
Additional abbreviations may also be used
though not in the above list.
9
[FORM OF NOTICE OF CONVERSION]
To: Albany International Corp.
The undersigned registered owner of this Note hereby exercises the option
to convert this Note, or the portion hereof (that is $1,000 principal amount or
an integral multiple thereof) below designated, into cash and shares of Common
Stock, if any, in accordance with the terms of the Indenture referred to in this
Note, and directs that the shares issuable and deliverable upon such conversion,
if any, together with any cash comprising a portion of the Daily Settlement
Amounts for each of the twenty-five Trading Days during the Cash Settlement
Averaging Period and for fractional shares and any Notes representing any
unconverted principal amount hereof, be issued and delivered to the registered
holder hereof unless a different name has been indicated below. If shares or any
portion of this Note not converted are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer taxes payable
with respect thereto. Any amount required to be paid to the undersigned on
account of interest accompanies this Note.
Dated:
-------------------------- -----------------------------------------
-----------------------------------------
Signature(s)
- --------------------------------
Signature Guarantee
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions)
with membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 if shares of
Common Stock are to be issued, or Notes to be
delivered, other than to and in the name of the
registered holder.
1
Fill in for registration of shares if to be
issued, and Notes if to be delivered, other than
to and in the name of the registered holder:
- ---------------------------------
(Name)
- ---------------------------------
(Street Address)
- ---------------------------------
(City, State and Zip Code)
Please print name and address
Principal amount to be converted (if less
than all): $______,000
NOTICE: The above signature(s) of the
holder(s) hereof must correspond with the
name as written upon the face of the Note
in every particular without alteration or
enlargement or any change whatever.
-----------------------------------------
Social Security or Other Taxpayer
Identification Number
2
[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]
To: Albany International Corp.
The undersigned registered owner of this Note hereby acknowledges receipt of a
notice from Albany International Corp. (the "Company") as to the occurrence of a
Fundamental Change with respect to the Company and requests and instructs the
Company to repay the entire principal amount of this Note, or the portion
thereof (that is $1,000 principal amount or an integral multiple thereof) below
designated, in accordance with the applicable provisions of the Indenture
referred to in this Note, together with accrued and unpaid interest, including
Additional Interest, if any, to, but excluding, such date, to the registered
holder hereof.
In the case of certificated Notes, the certificate numbers of the Notes to be
repurchased are as set forth below:
Dated:
-------------------------- -----------------------------------------
-----------------------------------------
Signature(s)
-----------------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less
than all): $______,000
NOTICE: The above signature(s) of the
holder(s) hereof must correspond with the
name as written upon the face of the Note
in every particular without alteration or
enlargement or any change whatever.
1
[FORM OF REPURCHASE NOTICE]
To: Albany International Corp.
The undersigned registered owner of this Note hereby requests and instructs
Albany International Corp. to repay the entire principal amount of this Note, or
the portion thereof (that is $1,000 principal amount or an integral multiple
thereof) below designated, in accordance with the terms and conditions of the
Indenture referred to in this Note at the Repurchase Price to the registered
holder hereof.
In the case of certificated Notes, the certificate numbers of the Notes to be
repurchased are as set forth below:
Dated:
-------------------------- -----------------------------------------
-----------------------------------------
Signature(s)
-----------------------------------------
Social Security or Other Taxpayer
Identification Number
Principal amount to be repaid (if less
than all): $______,000
NOTICE: The above signature(s) of the
holder(s) hereof must correspond with the
name as written upon the face of the Note
in every particular without alteration or
enlargement or any change whatever.
1
[FORM OF ASSIGNMENT AND TRANSFER]
For value received ____________________________ hereby sell(s), assign(s) and
transfer(s) unto _________________ (Please insert social security or Taxpayer
Identification Number of assignee) the within Note, and hereby irrevocably
constitutes and appoints ________ _____________ attorney to transfer the said
Note on the books of the Company, with full power of substitution in the
premises.
In connection with any transfer of the within Note occurring prior to the Resale
Restriction Termination Date, as defined in the Indenture governing such Note,
the undersigned confirms that such Note is being transferred:
|_| To Albany International Corp. or a subsidiary thereof; or
|_| Pursuant to the registration statement that has become or been declared
effective under the Securities Act of 1933, as amended; or
|_| Pursuant to and in compliance with Rule 144A under the Securities Act of
1933, as amended; or
|_| Pursuant to and in compliance with Rule 144 under the Securities Act of
1933, as amended; or
|_| Pursuant to another available exemption from registration under the
Securities Act of 1933, as amended.
1
Dated:
---------------------------------
- ---------------------------------------
Signature(s)
- ---------------------------------------
Signature Guarantee
- ---------------------------------------
Signature(s) must be guaranteed by an eligible
Guarantor Institution (banks, stock brokers,
savings and loan associations and credit unions)
with membership in an approved signature guarantee
medallion program pursuant to Securities and
Exchange Commission Rule 17Ad-15 Notes are to be
delivered, other than to and in the name of the
registered holder.
NOTICE: The signature on the assignment must correspond with the name as written
upon the face of the Note in every particular without alteration or enlargement
or any change whatever.
2
SCHEDULE A
ALBANY INTERNATIONAL CORP.
2.25% Convertible Senior Notes Due 2026
The following increases or decreases in this Global Note have been made:
Signature of
authorized
Amount of decrease in Amount of increase in Principal Amount of this signatory of
Principal Amount of Principal Amount of this Global Note following Trustee or
Date of Exchange this Global Note Global Note such decrease or increase Custodian
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3
Exhibit 4.3
EXECUTION COPY
Albany International Corp.
2.25% Convertible Senior Notes Due 2026
Registration Rights Agreement
March 13, 2006
J.P. Morgan Securities Inc.
277 Park Avenue
9th Floor
New York, New York 10172
Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Ladies and Gentlemen:
Albany International Corp., a Delaware corporation (the "Company"),
proposes to issue and sell to the initial purchasers (the "Initial Purchasers")
listed on Schedule I to the purchase agreement dated March 8, 2006 (the
"Purchase Agreement"), for whom J.P. Morgan Securities Inc. ("JPMorgan") and
Banc of America Securities LLC ("Banc of America") are acting as
representatives, up to $180,000,000 aggregate principal amount of its 2.25%
Convertible Senior Notes due 2026 (the "Notes"). Capitalized terms used but not
defined herein shall have the meanings given to such terms in the Purchase
Agreement.
As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company agrees with the Initial Purchasers,
for the benefit of the holders (including the Initial Purchasers) of the Notes
and the Shares (as defined below) (collectively, the "Holders"), as follows:
1. Certain Definitions.
For purposes of this Registration Rights Agreement, the following terms
shall have the following meanings:
(a) "Additional Interest" has the meaning assigned thereto in
Section 2(d).
(b) "Additional Interest Payment Date" has the meaning assigned
thereto in Section 2(d).
1
(c) "Affiliate" has the meaning set forth in Rule 405 under the
Securities Act, except where otherwise expressly provided.
(d) "Agreement" means this Registration Rights Agreement, as the
same may be amended from time to time pursuant to the terms hereof.
(e) "Business Day" means any day on which The New York Stock
Exchange, Inc. is open for trading.
(f) "Closing Date" means the date on which any Notes are initially
issued.
(g) "Commission" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Exchange Act or the
Securities Act, whichever is the relevant statute for the particular
purpose.
(h) "Company" has the meaning specified in the first paragraph of
this Agreement.
(i) "Deferral Notice" has the meaning assigned thereto in Section
3(b).
(j) "Deferral Period" has the meaning assigned thereto in Section
3(b).
(k) "Effective Period" has the meaning assigned thereto in Section
2(a).
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
(m) "Holder" means each holder, from time to time, of Registrable
Securities (including the Initial Purchasers).
(n) "Indenture" means the Indenture dated as of March 13, 2006,
among the Company and JPMorgan Chase Bank, N.A., as Trustee pursuant to
which the Notes are being issued.
(o) "Initial Placement" means the initial placement of the Notes
pursuant to the terms of the Purchase Agreement.
(p) "Initial Purchasers" has the meaning specified in the first
paragraph of this Agreement.
(q) "Material Event" has the meaning assigned thereto in Section
3(a)(iii).
(r) "Majority Holders" shall mean, on any date, holders of the
majority of the Shares constituting Registrable Securities; for the
purposes of this definition, Holders of Notes constituting Registrable
Securities shall be deemed to be the Holders of
2
the number of Shares into which such Notes are or would be convertible as
of such date.
(s) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(t) "NASD Rules" shall mean the Conduct Rules and the By-Laws of the
NASD.
(u) "Notes" means the 2.25% Convertible Senior Notes Due 2026 to be
issued under the Indenture and sold by the Company to the Initial
Purchasers.
(v) "Notice and Questionnaire" means a written notice delivered to
the Company containing substantially the information called for by the
Form of Selling Securityholder Notice and Questionnaire attached as Annex
A to the Offering Memorandum.
(w) "Notice Holder" means, on any date, any Holder that has
delivered a Notice and Questionnaire to the Company on or prior to such
date.
(x) "Offering Memorandum" means the Offering Memorandum dated March
8, 2006 relating to the offer and sale of the Securities.
(y) "Person" means a corporation, limited liability company,
association, partnership, organization, business, individual, government
or political subdivision thereof or governmental agency.
(z) "Prospectus" means the prospectus included in any Shelf
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part
of a registration statement in reliance upon Rule 430A under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all materials
incorporated by reference or explicitly deemed to be incorporated by
reference in such Prospectus.
(aa) "Purchase Agreement" has the meaning specified in the first
paragraph of this Agreement.
(bb) "Registrable Securities" means the Securities; provided,
however, that such Securities shall cease to be Registrable Securities
when (i) in the circumstances contemplated by Section 2(a), a registration
statement registering such Securities under the Securities Act has been
declared or becomes effective and such Securities have been sold or
otherwise transferred by the Holder thereof pursuant to such effective
registration statement; (ii) such Securities are sold pursuant to Rule 144
under circumstances in which any legend borne by such Securities relating
to restrictions on transferability
3
thereof, under the Securities Act or otherwise, is removed or such
Securities are eligible to be sold pursuant to Rule 144(k) or any
successor provision; or (iii) such Securities shall cease to be
outstanding (including, in the case of the Notes, upon conversion into
Shares).
(cc) "Registration Default" has the meaning assigned thereto in
Section 2(e).
(dd) "Registration Expenses" has the meaning assigned thereto in
Section 5.
(ee) "Rules" refers to the rules promulgated under the Securities
Act.
(ff) "Securities" means, collectively, the Notes and the Shares.
(gg) "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
(hh) "Shares" means the shares of Class A common stock of the
Company, par value $0.001 per share, into which the Notes are convertible
or that have been issued upon any conversion from Notes into Class A
common stock of the Company.
(ii) "Shelf Registration Statement" means the shelf registration
statement referred to in Section 2(a), as amended or supplemented by any
amendment or supplement, including post-effective amendments and any
additional information contained in a form of prospectus or prospectus
supplement that is deemed retroactively to be a part of the shelf
registration statement pursuant to Rules 430A, 430B or 430C, and all
materials incorporated by reference or explicitly deemed to be
incorporated by reference in such Shelf Registration Statement.
(jj) "Special Counsel" shall have the meaning assigned thereto in
Section 5.
(kk) "Trustee" shall have the meaning assigned such term in the
Indenture.
(ll) "Trust Indenture Act" means the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a "Section"
or "clause" refers to a Section or clause, as the case may be, of this
Agreement, and the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision. Unless the context otherwise requires, any
reference to a statute, rule or regulation refers to the same (including any
successor statute, rule or regulation thereto) as it may be amended from time to
time.
4
2. Registration Under the Securities Act.
(a) The Company agrees to file under the Securities Act as promptly
as practicable, but in any event within 90 days after the Closing Date, a
shelf registration statement providing for the registration of, and the
sale on a continuous or delayed basis by the Holders of, all of the
Registrable Securities pursuant to Rule 415 under the Securities Act or
any similar rule that may be adopted by the Commission; provided, that
such registration statement shall be an "automatic shelf registration
statement," as such term is defined in Rule 405 under the Securities Act,
if the Company is then eligible to use automatic shelf registration
statements. If the Shelf Registration Statement is not an automatic shelf
registration statement, the Company agrees to use its reasonable best
efforts to cause the Shelf Registration Statement to be declared effective
as promptly as possible, but in any event no later than 180 days after the
Closing Date. The Company agrees to use reasonable efforts to keep the
Shelf Registration Statement continuously effective until the earlier of
(i) the second anniversary of the Closing Date or (ii) such time as there
are no longer any Registrable Securities outstanding (the "Effective
Period"). None of the Company's securityholders (other than Holders of
Registrable Securities) shall have the right to include any of the
Company's securities in the Shelf Registration Statement.
(b) The Company further agrees that it shall cause the Shelf
Registration Statement, the related Prospectus and any amendment or
supplement thereto, as of the effective date of the Shelf Registration
Statement, as of the time of sale of any Securities under such Shelf
Registration Statement, and as of the date of any such amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act; and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein (in
the case of the Prospectus, in the light of the circumstances under which
they were made) not misleading, and the Company agrees to furnish to the
Holders of the Registrable Securities seeking to sell Securities pursuant
to such amendment or supplement, and to any other Holder upon such
Holder's request, copies of any supplement or amendment prior to its being
used or promptly following its filing with the Commission; provided,
however, that the Company shall have no obligation to deliver to the
Holders of the Registrable Securities copies of any amendment consisting
exclusively of an Exchange Act report or other Exchange Act filing
otherwise publicly available on the Company's website. If the Shelf
Registration Statement, as amended or supplemented from time to time,
ceases to be effective for any reason at any time during the Effective
Period (other than because all Registrable Securities registered
thereunder shall have been sold pursuant thereto or shall have otherwise
ceased to be Registrable Securities), the Company shall use its reasonable
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof.
5
(c) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell Registrable Securities pursuant to the Shelf Registration
Statement and related Prospectus, it will do so only in accordance with
this Section 2(c) and with Section 3(b). From and after the date the Shelf
Registration Statement is initially effective, the Company shall, as
promptly as is practicable after the date a Notice and Questionnaire is
delivered, and in any event within the later of (x) fifteen (15) Business
Days after the date such Notice and Questionnaire is delivered, or (y) if
a Notice and Questionnaire is delivered during a Deferral Period, the
fifth Business Day after the expiration of such Deferral Period,
(i) file with the Commission a post-effective amendment to the
Shelf Registration Statement or prepare and file a supplement to the
related Prospectus or a supplement or amendment to any document
incorporated therein by reference or file any other required
document so that the Holder delivering such Notice and Questionnaire
is named as a selling security holder in the Shelf Registration
Statement and the related Prospectus in such a manner as to permit
such Holder to deliver such Prospectus to purchasers of the
Registrable Securities if required by applicable law and, if the
Company shall file a post-effective amendment to the Shelf
Registration Statement and such amendment is not automatically
effective, use its reasonable efforts to cause such post-effective
amendment to be declared effective under the Securities Act as
promptly as is practicable;
(ii) provide such Holder copies of any documents filed
pursuant to Section 2(c)(i); and
(iii) notify such Holder as promptly as practicable after the
effectiveness under the Securities Act of any post-effective
amendment filed pursuant to Section 2(c)(i);
provided that in no event shall the Company be required to make more than
one such filing during any 15 Business Day period and, in addition, if the
Shelf Registration Statement is not an automatic shelf registration
statement, the Company shall not be required to make more than one such
filing in any calendar quarter in the form of a post-effective amendment
to the Shelf Registration Statement; provided, further, that if such
Notice and Questionnaire is delivered during a Deferral Period, the
Company shall so inform the Holder delivering such Notice and
Questionnaire and shall take the actions set forth in clauses (i), (ii)
and (iii) above upon expiration of the Deferral Period in accordance with
Section 3(b). Notwithstanding anything contained herein to the contrary,
the Company shall be under no obligation to name any Holder that is not a
Notice Holder as a selling securityholder in any Shelf Registration
Statement or related Prospectus.
6
(d) If any of the following events (any such event a "Registration
Default") shall occur, then additional interest (the "Additional
Interest") shall become payable by the Company to Holders in respect of
the Notes as follows:
(i) if the Shelf Registration Statement is not filed with the
Commission within 90 days following the Closing Date, then
commencing on the 91st day after the Closing Date, Additional
Interest shall accrue on the principal amount of the outstanding
Notes that are Registrable Securities at a rate of 0.25% per annum
for the first 90 days following such 91st day and at a rate of 0.5%
per annum thereafter; or
(ii) if the Shelf Registration Statement has not become or is
not declared effective by the Commission within 180 days following
the Closing Date, then commencing on the 181st day after the Closing
Date, Additional Interest shall accrue on the principal amount of
the outstanding Notes that are Registrable Securities at a rate of
0.25% per annum for the first 90 days following such 181st day and
at a rate of 0.5% per annum thereafter; or
(iii) if the Shelf Registration Statement has become or been
declared effective but such Shelf Registration Statement ceases to
be effective at any time during the Effective Period (other than
pursuant to Section 3(b) hereof), then commencing on the day such
Shelf Registration Statement ceases to be effective, Additional
Interest shall accrue on the principal amount of the outstanding
Notes that are Registrable Securities at a rate of 0.25% per annum
for the first 90 days following such date on which the Shelf
Registration Statement ceases to be effective and at a rate of 0.5%
per annum thereafter; or
(iv) if the aggregate duration of Deferral Periods in any
period exceeds the number of days permitted in respect of such
period pursuant to Section 3(b) hereof, then commencing on the day
the aggregate duration of Deferral Periods in any period exceeds the
number of days permitted in respect of such period (and again on the
first day of any subsequent Deferral Period during such period),
Additional Interest shall accrue on the principal amount of the
outstanding Notes that are Registrable Securities at a rate of 0.25%
per annum for the first 90 days and at a rate of 0.5% per annum
thereafter;
provided, however, that the Additional Interest rate on the Notes shall
not exceed in the aggregate 0.5% per annum and shall not be payable under
more than one clause above for any given period of time, except that if
Additional Interest would be payable under more than one clause above, but
at a rate of 0.25% per annum under one clause and at a rate of 0.5% per
annum under the other, then the Additional Interest rate shall be the
higher rate of 0.5% per annum; provided further, however, that (1) upon
the filing of the Shelf Registration Statement (in the case of clause (i)
above), (2) upon the effectiveness of the Shelf Registration Statement (in
the case of clause (ii) above), (3) upon the effectiveness
7
of the Shelf Registration Statement which had ceased to remain effective
(in the case of clause (iii) above), (4) upon the termination of the
Deferral Period that caused the limit on the aggregate duration of
Deferral Periods in a period set forth in Section 3(b) to be exceeded (in
the case of clause (iv) above) or (5) upon the termination of certain
transfer restrictions on the Securities as a result of the application of
Rule 144(k) or any successor provision, Additional Interest on the Notes
as a result of such clause, as the case may be, shall cease to accrue;
provided, further that in no event will Additional Interest be payable in
connection with a Registration Default relating to a failure to register
the Class A common stock deliverable upon conversion of the Notes. For the
avoidance of doubt, if the Company fails to register both the Notes and
the Class A common stock deliverable upon conversion of the Notes, then
Additional Interest will be payable in connection with the Registration
Default relating to the failure to register the Notes.
Additional Interest on the Notes, if any, will be payable in cash on
March 15 and September 15 of each year (the "Additional Interest Payment
Date") to holders of record of outstanding Notes that are Registrable
Securities at the close of business on March 1 or September 1 (whether or
not a Business Day), as the case may be, immediately preceding the
relevant interest payment date, provided that any Additional Interest
accrued with respect to any Notes or portion thereof called for redemption
on a redemption date or converted into Shares on a conversion date prior
to the Registration Default shall, in any such event, be paid instead to
the Holder who submitted such Notes or portion thereof for redemption or
conversion on the applicable redemption date or conversion date, as the
case may be, on such date (or promptly following the conversion date, in
the case of conversion). Following the cure of all Registration Defaults
requiring the payment of Additional Interest to the Holders of Notes that
are Registrable Securities pursuant to this Section, the accrual of
Additional Interest will cease (without in any way limiting the effect of
any subsequent Registration Default requiring the payment of Additional
Interest).
The Company shall notify the Trustee immediately upon the happening
of each and every Registration Default. Notwithstanding the foregoing, the
parties agree that the sole monetary damages payable for a violation of
the terms of this Agreement with respect to which additional monetary
amounts are expressly provided shall be as set forth in this Section 2(d).
Nothing shall preclude a Notice Holder or Holder of Registrable Securities
from pursuing or obtaining specific performance or other equitable relief
with respect to this Agreement.
3. Registration Procedures.
The following provisions shall apply to the Shelf Registration Statement
filed pursuant to Section 2:
(a) The Company shall:
8
(i) furnish to the Initial Purchasers copies of any Shelf
Registration Statement or Prospectus or any amendments or
supplements thereto proposed to be filed with the Commission
relating to the Registrable Securities within three (3) Business
Days prior to filing any such Shelf Registration Statement or
Prospectus or any amendments or supplements thereto with the
Commission;
(ii) use its reasonable efforts to prepare and file with the
Commission such amendments and post-effective amendments to the
Shelf Registration Statement and file with the Commission any other
required document as may be necessary to keep such Shelf
Registration Statement continuously effective until the expiration
of the Effective Period; use reasonable efforts to cause the related
Prospectus to be supplemented by any required prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act applicable to it
with respect to the disposition of all Securities covered by such
Shelf Registration Statement during the Effective Period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such Shelf Registration Statement as so amended
or such Prospectus as so supplemented;
(iii) as promptly as practicable, notify the Notice Holders of
Registrable Securities (A) when such Shelf Registration Statement or
the Prospectus included therein or any amendment or supplement to
the Prospectus or post-effective amendment has been filed with the
Commission, and, with respect to such Shelf Registration Statement
or any post-effective amendment, when the same is declared or has
become effective, (B) of any request, following the effectiveness of
the Shelf Registration Statement, by the Commission or any other
Federal or state governmental authority for amendments or
supplements to the Shelf Registration Statement or related
Prospectus or for additional information, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of such
Shelf Registration Statement or the initiation or written threat of
any proceedings for that purpose, (D) of the receipt by the Company
of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any
jurisdiction or the initiation or written threat of any proceeding
for such purpose, (E) of the occurrence of (but not the nature of or
details concerning) any event or the existence of any fact as a
result of which any Shelf Registration Statement shall contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading, or any Prospectus shall contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading (a "Material Event") (provided,
however, that no notice by the Company shall be required pursuant to
this clause (E) in the event that the Company either promptly files
a prospectus
9
supplement to update the Prospectus or a Form 8-K or other
appropriate Exchange Act report that is incorporated by reference
into the Shelf Registration Statement, which, in either case,
contains the requisite information with respect to such Material
Event that results in such Shelf Registration Statement or
Prospectus, as the case may be, no longer containing any untrue
statement of material fact or omitting to state a material fact
necessary to make the statements contained therein, in the case of
the Prospectus, in light of the circumstances under which they were
made, not misleading), (F) of the determination by the Company that
a post-effective amendment to the Shelf Registration Statement will
be filed with the Commission, which notice may, at the discretion of
the Company (or as required pursuant to Section 3(b)), state that it
constitutes a Deferral Notice, in which event the provisions of
Section 3(b) shall apply or (G) at any time when a Prospectus is
required (or but for the exemption contained in Rule 172 would be
required) to be delivered under the Securities Act, that the Shelf
Registration Statement, Prospectus, or any amendment, supplement or
post-effective amendment thereto does not conform in all material
respects to the applicable requirements of the Securities Act and
the Trust Indenture Act and the rules and regulations of the
Commission thereunder;
(iv) prior to any public offering of the Registrable
Securities pursuant to the Shelf Registration Statement, use its
reasonable best efforts to register or qualify, or cooperate with
the Notice Holders of Securities included therein in connection with
the registration or qualification of, such Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as
any such Notice Holders reasonably requests in writing; prior to any
public offering of the Registrable Securities pursuant to the Shelf
Registration Statement, use its reasonable efforts to keep each such
registration or qualification (or exemption therefrom) effective
during the Effective Period in connection with such Notice Holder's
offer and sale of Registrable Securities pursuant to such
registration or qualification (or exemption therefrom) and do any
and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of such Registrable
Securities in the manner set forth in the Shelf Registration
Statement and the related Prospectus; provided that the Company will
not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action
which would subject it to general service of process or to taxation
in any such jurisdiction where it is not then so subject;
(v) use its reasonable best efforts to prevent the issuance
of, and if issued, to obtain the withdrawal of any order suspending
the effectiveness of the Shelf Registration Statement or any
post-effective amendment thereto, and to lift any suspension of the
qualification of any of the Registrable Securities for sale in any
jurisdiction in which they have been qualified for sale, in each
case at the earliest practicable date;
10
(vi) upon reasonable notice, for a reasonable period prior to
the filing of the Shelf Registration Statement, and throughout the
Effective Period, (i) make reasonably available for inspection
during normal business hours by a representative of, and Special
Counsel acting for, Majority Holders of the Securities being sold,
all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries and
(ii) use reasonable best efforts to have their officers, directors,
employees, accountants and counsel supply all relevant information
reasonably requested by such representative or Special Counsel in
connection with such Shelf Registration Statement, in each case as
is customary for similar "due diligence" examinations; provided that
such persons shall first agree in writing with the Company that any
non-public information shall be kept confidential by such persons
and shall be used solely in connection with the exercise of rights
under this Agreement or in connection with such disposition, unless
(i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of
regulatory authorities, (ii) disclosure of such information is
required by law, (iii) such information becomes generally available
to the public, other than as a result of a disclosure or failure to
safeguard by any such person in violation of any obligation
described herein or (iv) such information becomes available to any
such person from a source other than the Company and such source is
not shown to be bound by a confidentiality agreement with respect to
such information, and provided further that in connection with such
disposition, nothing in this Agreement shall (a) prevent such person
from complying with all applicable disclosure laws and regulations
in connection with such disposition, (b) restrict the ability of
such person to consider such information for due diligence purposes
or to share such information with other initial purchasers,
underwriters, agents, dealers, selling holders or similar
participants in such disposition, subject to the execution by such
other persons of reasonable non-disclosure agreements with the
Company, (c) prevent such persons from retaining documents or other
information in connection with their due diligence efforts or (d)
prevent such persons from using any such information in
investigating or defending themselves against claims made or
threatened by purchasers, regulatory authorities or others in
connection with such disposition. The foregoing inspection and
information gathering shall, to the greatest extent possible, be
coordinated on behalf of all the Notice Holders and the other
parties entitled thereto by Special Counsel. Any person legally
compelled to disclose any such confidential information made
available for inspection shall, to the extent not prohibited by law,
rule or regulation, provide the Company with prompt prior written
notice of such requirement so that the Company may seek a protective
order or other appropriate remedy;
(vii) if reasonably requested by the Initial Purchasers or any
Notice Holder, promptly incorporate in a prospectus supplement or
post-effective
11
amendment to the Shelf Registration Statement such information as
the Initial Purchasers or such Notice Holder shall, on the basis of
a written opinion of nationally-recognized counsel experienced in
such matters, determine to be required to be included therein by
applicable law and make any required filings of such prospectus
supplement or such post-effective amendment; provided, that the
Company shall not be required to take any actions under this Section
3(a)(vii) that are not, in the reasonable opinion of counsel for the
Company, required under applicable law;
(viii) as promptly as practicable, furnish to each Notice
Holder and the Initial Purchasers, upon their request and without
charge, at least one (1) conformed copy of the Shelf Registration
Statement and any amendments thereto, including financial statements
but excluding schedules, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits; provided,
however, that the Company shall have no obligation to deliver to
Notice Holders or Initial Purchasers a copy of any amendment
consisting exclusively of an Exchange Act report or other Exchange
Act filing otherwise publicly available on the Company's website;
(ix) during the Effective Period, deliver to each Notice
Holder in connection with any sale of Registrable Securities
pursuant to the Shelf Registration Statement, without charge, as
many copies of the Prospectus relating to such Registrable
Securities (including each preliminary prospectus) and any amendment
or supplement thereto as such Notice Holder may reasonably request;
and the Company hereby consents (except during such periods that a
Deferral Notice is outstanding and has not been revoked) to the use
of such Prospectus or each amendment or supplement thereto by each
Notice Holder in connection with any offering and sale of the
Registrable Securities covered by such Prospectus or any amendment
or supplement thereto in the manner set forth therein;
(x) cooperate with the Notice Holders to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be sold pursuant to the Shelf Registration Statement
free of any restrictive legends and in such denominations as
permitted by the Indenture and registered in such names as the
Holders thereof may request in writing at least two business days
prior to sales of Securities pursuant to such Shelf Registration
Statement; and
(xi) not use, authorize the use of, refer to, or participate
in the planning for use of, any "free writing prospectus", as
defined in Rule 405 under the Securities Act, in connection with the
offering or sale of the Securities, without the consent of Holders
of Registrable Securities who are seeking to sell Securities
pursuant to the Shelf Registration Statement or relevant supplement
or amendment thereto.
12
(b) Upon (A) the issuance by the Commission of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of or the existence of any
Material Event, or (C) the occurrence or existence of any corporate development
that, in the discretion of the Company, makes it appropriate to suspend the
availability of the Shelf Registration Statement and the related Prospectus, the
Company will (i) in the case of clause (B) above, subject to the next sentence
of this provision, as promptly as practicable prepare and file an amendment to
such Shelf Registration Statement or a supplement to the related Prospectus or
any document incorporated therein by reference or file any other required
document that would be incorporated by reference into such Shelf Registration
Statement and Prospectus so that such Shelf Registration Statement does not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and such Prospectus does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, as thereafter delivered or made
available to the purchasers of the Registrable Securities being sold thereunder,
and, in the case of a post-effective amendment to the Shelf Registration
Statement, subject to the next sentence of this provision, use reasonable
efforts to cause it to be declared effective as promptly as is practicable, and
(ii) give notice to the Notice Holders that the availability of the Shelf
Registration Statement is suspended (a "Deferral Notice"). The Company will use
its reasonable best efforts to ensure that the use of the Prospectus may be
resumed (x) in the case of clause (A) above, as promptly as practicable, (y) in
the case of clause (B) above, as soon as, in the sole judgment of the Company,
public disclosure of such Material Event would not be prejudicial to or contrary
to the interests of the Company or, if necessary to avoid unreasonable burden or
expense, as soon as practicable thereafter and (z) in the case of clause (C)
above, as soon as, in the discretion of the Company, such suspension is no
longer appropriate; provided that the period during which the availability of
the Shelf Registration Statement and any Prospectus is suspended (the "Deferral
Period"), without the Company incurring any obligation to pay Additional
Interest pursuant to Section 2(d), shall not exceed one hundred and twenty (120)
days in the aggregate in any twelve (12) month period.
(c) Each Notice Holder agrees that upon receipt of any Deferral Notice
from the Company, such Notice Holder shall forthwith discontinue (and cause any
placement or sales agent acting on its behalf to discontinue) the disposition of
Registrable Securities pursuant to the Shelf Registration Statement until such
Notice Holder (i) shall have received copies of such amended or supplemented
Prospectus (including copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in such Prospectus) and, if so
directed by the Company, such Holder shall deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Holder's possession of the Prospectus covering such Registrable
13
Securities at the time of receipt of such notice or (ii) shall have received
notice from the Company that the disposition of Registrable Securities pursuant
to the Shelf Registration may continue.
(d) The Company may require each Holder of Registrable Securities as to
which any registration pursuant to Section 2(a) is being effected to furnish to
the Company such information regarding such Holder and such Holder's intended
method of distribution of such Registrable Securities as the Company may from
time to time reasonably request in writing, but only to the extent that such
information is required in order to comply with the Securities Act.
(e) The Company shall comply with all applicable rules and regulations of
the Commission and make generally available to its securityholders earning
statements (which need not be audited) satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company commencing after the effective date of the Shelf Registration Statement,
which statements shall cover said 12-month periods.
(f) The Company shall provide a CUSIP number for all Registrable
Securities covered by the Shelf Registration Statement not later than the
initial effective date of such Shelf Registration Statement and provide the
Trustee and the transfer agent for the Shares with printed certificates for the
Registrable Securities that are in a form eligible for deposit with The
Depository Trust Company.
(g) The Company shall use its reasonable efforts to provide such
information as is required for any filings required to be made with the National
Association of Securities Dealers, Inc.
(h) Until the expiration of two years after the Closing Date, the Company
will not, and will not permit any of its "affiliates" (as defined in Rule 144)
to, resell any of the Securities that have been reacquired by any of them except
pursuant to an effective registration statement under the Securities Act.
(i) The Company shall cause the Indenture to be qualified under the Trust
Indenture Act in a timely manner and shall enter into any necessary supplemental
indentures in connection therewith.
(j) The Company shall enter into such customary agreements and take all
such other reasonable and lawful actions in connection therewith (including
those requested by the Majority Holders of the Registrable Securities being
sold) in order to expedite or facilitate disposition of such Registrable
Securities.
14
4. Holder's Obligations.
(a) Each Holder agrees, by acquisition of the Registrable
Securities, that no Holder of Registrable Securities shall be entitled to
sell any of such Registrable Securities pursuant to the Shelf Registration
Statement or to receive a Prospectus relating thereto, unless such Holder
has furnished the Company with a Notice and Questionnaire as required
pursuant to Section 2(c) hereof (including the information required to be
included in such Notice and Questionnaire) and the information set forth
in the next sentence. Each Notice Holder agrees to notify the Company as
promptly as practicable of any inaccuracy or change in information
previously furnished by such Notice Holder to the Company or of the
occurrence of any event in either case as a result of which any Prospectus
relating to such registration contains or would contain an untrue
statement of a material fact regarding such Notice Holder or such Notice
Holder's intended method of disposition of such Registrable Securities or
omits to state any material fact regarding such Notice Holder or such
Notice Holder's intended method of disposition of such Registrable
Securities required to be stated therein or necessary to make the
statements therein not misleading, and promptly to furnish to the Company
(i) any additional information required to correct and update any
previously furnished information or required so that such Prospectus shall
not contain, with respect to such Notice Holder or the disposition of such
Registrable Securities, an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading and (ii) any other information
regarding such Notice Holder and the distribution of such Registrable
Securities as may be required to be disclosed in the Shelf Registration
Statement under applicable law or pursuant to Commission comments. Each
Holder further agrees not to sell any Registrable Securities pursuant to
the Shelf Registration Statement without delivering, causing to be
delivered, or, if permitted by applicable law, making available, a
Prospectus to the purchaser thereof and, following termination of the
Effective Period, to notify the Company, within 10 Business Days of a
request by the Company, of the amount of Registrable Securities sold
pursuant to the Shelf Registration Statement and, in the absence of a
response, the Company may assume that all of the Holder's Registrable
Securities were so sold.
(b) Any sale of any Registrable Securities by any Holder shall
constitute a representation and warranty by such Holder that the
information relating to such Holder and its plan of distribution is as set
forth in the Prospectus delivered by such Holder in connection with such
disposition, that such Prospectus does not as of the time of such sale
contain any untrue statement of a material fact relating to or provided by
such Holder or its plan of distribution and that such Prospectus does not
as of the time of such sale omit to state any material fact relating to or
provided by such Holder or its plan of distribution necessary to make the
statements in such Prospectus, in the light of the circumstances under
which they were made, not misleading. Each Holder further agrees that such
Holder will not make any offer relating to the Registrable Securities that
would constitute an "issuer free writing prospectus" (as defined in Rule
433 under the Securities Act) or that would otherwise constitute a "free
writing prospectus" (as defined in Rule 405 under the Securities Act)
required to be filed by the Company with the Commission or
15
retained by the Company under Rule 433 of the Securities Act, unless it
has obtained the prior written consent of the Company.
5. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid all fees and
expenses incident to the Company's performance of or compliance with this
Agreement, including, but not limited to, (a) all Commission and any NASD
registration and filing fees and expenses, (b) all fees and expenses in
connection with the qualification of the Securities for offering and sale under
the State securities and Blue Sky laws referred to in Section 3(a)(v) hereof,
including reasonable fees and disbursements of one counsel for the placement
agent, if any, in connection with such qualifications, (c) all expenses relating
to the preparation, printing, distribution and reproduction of the Shelf
Registration Statement, the related Prospectus, each amendment or supplement to
each of the foregoing, the certificates representing the Securities and all
other documents relating hereto, (d) fees and expenses of the Trustee under the
Indenture, any escrow agent or custodian, and of the registrar and transfer
agent for the Shares, (e) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company (including the expenses
of any opinions or "cold comfort" letters required by or incident to such
performance and compliance) and (f) reasonable fees, disbursements and expenses
of one counsel for the Holders of Registrable Securities retained in connection
with the Shelf Registration Statement, as selected by the Company (unless
reasonably objected to by the Majority Holders of the Registrable Securities
being registered, in which case the Majority Holders shall select such counsel
for the Holders) ("Special Counsel"), and fees, expenses and disbursements of
any other Persons, including special experts, retained by the Company in
connection with such registration (collectively, the "Registration Expenses").
To the extent that any Registration Expenses are incurred, assumed or paid by
any Holder of Registrable Securities or any underwriter or placement agent
therefor, the Company shall reimburse such Person for the full amount of the
Registration Expenses so incurred, assumed or paid promptly after receipt of a
documented request therefor. Notwithstanding the foregoing, the Holders of the
Registrable Securities being registered shall pay all underwriting discounts and
commissions and placement agent fees and brokers' and other commissions
attributable to the sale of such Registrable Securities and the fees and
disbursements of any counsel or other advisors or experts retained by such
Holders (severally or jointly), other than the counsel and experts specifically
referred to above.
6. Indemnification.
(a) The Company shall indemnify and hold harmless each Notice Holder
(including, without limitation, any such Initial Purchaser), its
affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls such
Notice Holder within the meaning of the Securities Act or the Exchange Act
(collectively referred to for purposes of this Section 6 and Section 7 as
an Indemnified Holder) from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim,
16
damage, liability or action relating to purchases and sales of
Securities), to which that Indemnified Holder may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any
other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises
out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any such Shelf Registration
Statement or any Prospectus forming part thereof, or (ii) the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and shall
reimburse each Indemnified Holder promptly upon demand for any legal or
other expenses reasonably incurred by that Indemnified Holder in
connection with investigating or defending or preparing to defend against
or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with any information provided by such
Indemnified Holder in writing to the Company expressly for use therein.
This indemnity agreement shall be in addition to any liability that the
Company may otherwise have.
(b) Each Notice Holder shall indemnify and hold harmless the
Company, its officers, directors, employees, representatives and agents,
and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act (collectively referred to for
purposes of this Section 6(b) and Section 7 as the Company), from and
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject,
whether commenced or threatened, under the Securities Act, the Exchange
Act, any other federal or state statutory law or regulation, at common law
or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any such Shelf
Registration Statement or any Prospectus forming part thereof, or (ii) the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
but in each case only to the extent that the untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon
and in conformity with any information furnished to the Company in writing
by such Notice Holder expressly for use therein, and shall reimburse the
Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such
loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that no such Notice Holder shall be liable for any
indemnity claims hereunder in excess of the amount of net proceeds
received by such Notice Holder from the sale of Securities pursuant to
such Shelf Registration Statement. This indemnity
17
agreement will be in addition to any liability which any such Notice
Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party pursuant to Section 6(a) or 6(b), notify
the indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 6 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such
failure; and provided, further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it
shall notify the indemnifying party thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified
party under this Section 6 for any legal or other expenses subsequently
incurred by the indemnified party in connection with the defense thereof
other than the reasonable costs of investigation; provided, however, that
an indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel for
the indemnified party will be at the expense of such indemnified party
unless (1) the employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the indemnified party
has reasonably concluded (based upon advice of counsel to the indemnified
party) that there may be legal defenses available to it or other
indemnified parties that are different from or in addition to those
available to the indemnifying party, (3) a conflict or potential conflict
exists (based upon advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such
action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of
which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees, disbursements and other charges of more
than one separate firm of attorneys (in addition to any local counsel) at
any one time for all such indemnified party or parties. Each indemnified
party, as a condition of the indemnity agreements contained in Sections
6(a) and 6(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No
18
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if
there be a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement
or judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by
this section, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by
such indemnifying party of a request in writing setting forth proposed
settlement terms from the indemnified party and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with
the aforesaid request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement (i) includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such
proceeding and (ii) does not include a statement or admission of fault,
culpability or a failure to act, by or on behalf of the indemnified party.
(d) The provisions of this Section 6 and Section 7 shall remain in
full force and effect, regardless of any investigation made by or on
behalf of any Notice Holder, the Company, or any of the indemnified
Persons referred to in this Section 6 and Section 7, and shall survive the
sale by a Notice Holder of Securities covered by the Shelf Registration
Statement.
7. Contribution.
If the indemnification provided for in Section 6 is unavailable or
insufficient to hold harmless an indemnified party under Section 6(a) or 6(b),
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company from the offering and sale of the Notes, on the one
hand, and a Holder with respect to the sale by such Notice Holder of Securities,
on the other, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and such Notice Holder on the other with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material
19
fact or the omission or alleged omission to state a material fact relates to the
Company or information supplied by the Company on the one hand or to any
information contained in the relevant Notice and Questionnaire supplied by such
Notice Holder on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Notice Holders' respective obligations to
contribute pursuant to this Section 7 are several in proportion to the
respective number of Registrable Securities they have sold pursuant to the Shelf
Registration Statement and not joint.
The parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 7 were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 7 shall be deemed
to include, for purposes of this Section 7, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending or preparing to defend any such action or claim. Notwithstanding
the provisions of this Section 7, an indemnifying party that is a Holder of
Securities shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities sold by such
indemnifying party to any purchaser exceeds the amount of any damages which such
indemnifying party has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
8. Information Requirements.
The Company covenants that, if at any time before the end of the Effective
Period the Company is not subject to the reporting requirements of the Exchange
Act, it will cooperate with any Holder and take such further action as any
Holder may reasonably request in writing (including, without limitation, making
such representations as any such Holder may reasonably request), all to the
extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 and Rule 144A under the Securities Act
and customarily taken in connection with sales pursuant to such exemptions. Upon
the written request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such filing requirements,
unless such a statement has been included in the Company's most recent report
filed pursuant to Section 13 or Section 15(d) of Exchange Act. Notwithstanding
the foregoing, nothing in this Section 8 shall be deemed to require the Company
to register any of its securities under any section of the Exchange Act.
20
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the Company
has obtained the written consent of Majority Holders. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders
whose Registrable Securities are being sold pursuant to the Shelf
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
amount of the Registrable Securities being sold by such Holders pursuant
to the Shelf Registration Statement. Notwithstanding the foregoing
sentence, (i) this Agreement may be amended by written agreement signed by
the Company and the Initial Purchasers, without the consent of the Holders
of Registrable Securities, to cure any ambiguity or to correct or
supplement any provision contained herein that may be defective or
inconsistent with any other provision contained herein, or to make such
other provisions in regard to matters or questions arising under this
Agreement that shall not adversely affect the interests of the Holders of
Registrable Securities. Each Holder of Registrable Securities outstanding
at the time of any such amendment, modification, supplement, waiver or
consent or thereafter shall be bound by any such amendment, modification,
supplement, waiver or consent effected pursuant to this Section 8(a),
whether or not any notice, writing or marking indicating such amendment,
modification, supplement, waiver or consent appears on the Registrable
Securities or is delivered to such Holder.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:
(1) If to the Company, initially at the address set forth in
the Purchase Agreement;
(2) If to the Initial Purchasers, initially at their
respective addresses set forth in the Purchase Agreement; and
(3) If to a Holder, to the address of such Holder set forth in
the security register, the Notice and Questionnaire or other records
of the Company.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail, if being delivered by first-class mail; and when receipt
is acknowledged by the recipient's telecopier machine, if sent by telecopier.
(c) Successors And Assigns. Any person who purchases any Registrable
Securities from the Initial Purchasers shall be deemed, for purposes of
this Agreement, to be an
21
assignee of the Initial Purchasers. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties and shall inure to the benefit of and be binding upon each Holder
of any Registrable Securities, provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Indenture. If any
transferee of any Holder shall acquire Registrable Securities, in any
manner, whether by operation of law or otherwise, such Registrable
Securities shall be held subject to all of the terms of this Agreement,
and by taking and holding such Registrable Securities, such person shall
be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such person shall be
entitled to receive the benefits hereof.
(d) Counterparts. This Agreement may be executed in any number of
counterparts (which may be delivered in original form or by telecopier)
and by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together
shall constitute one and the same agreement.
(e) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(f) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
(g) Remedies. In the event of a breach by the Company or by any
Holder of any of their respective obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled
to exercise all rights granted by law, including recovery of damages
(other than the recovery of damages for a breach by the Company of its
obligations under Section 2 hereof for which Additional Interest have been
paid pursuant to Section 3 hereof), will be entitled to specific
performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agree that, in the event of any action
for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(h) No Inconsistent Agreements. The Company represents, warrants and
agrees that it has not entered into, and shall not on or after the date of
this Agreement enter into, any agreement that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof.
(i) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
best efforts to find and employ an alternative means
22
to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated
and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions
without including any term, provision, covenant or restriction that may be
hereafter declared invalid, illegal, void or unenforceable.
(j) Survival. The respective indemnities, agreements,
representations, warranties and each other provision set forth in this
Agreement or made pursuant hereto shall remain in full force and effect
regardless of any investigation (or statement as to the results thereof)
made by or on behalf of any Holder of Registrable Securities, any
director, officer or partner of such Holder, any agent or underwriter or
any director, officer or partner thereof, or any controlling person of any
of the foregoing, and shall survive delivery of and payment for the
Registrable Securities pursuant to the Purchase Agreement and the transfer
and registration of Registrable Securities by such Holder.
(k) Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of Registrable Securities is
required hereunder, such Securities held by the Company or its affiliates
(other than subsequent Holders of Securities if such subsequent Holders
are deemed to be affiliates solely by reason of their holdings of such
Securities) shall not be counted in determining whether such consent or
approval was given by the Holders of such required percentage.
(l) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effective Period, except for
any liabilities or obligations under Sections 3(e), 3(h), 4, 5, 6 and 7
hereof and the obligations to make payments of and provide for Additional
Interest under Section 2(d) hereof to the extent such damages accrue prior
to the end of the Effective Period, each of which shall remain in effect
in accordance with its terms.
23
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
ALBANY INTERNATIONAL CORP.
By: /s/ Christopher J. Connally
--------------------------------------
Name: Christopher J. Connally
Title: Corporate Treasurer
Accepted: March 13, 2006
By: J.P. MORGAN SECURITIES INC.
By: /s/ Paul J. Donnally
----------------------------------------
Authorized Signatory
By: BANC OF AMERICA SECURITIES LLC
By: /s/ Harris Winters
----------------------------------------
Authorized Signatory
24
Exhibit 10.1
- --------------------------------------------------------------------------------
Bank of America [LOGO]
EQUITY FINANCIAL PRODUCTS GROUP
- --------------------------------------------------------------------------------
Bank of America, N.A.
c/o Banc of America Securities LLC
9 West 57th Street, 40th Floor
New York, NY 10019
March 7, 2006
To: Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Christopher J. Connally, Corporate Treasurer
Telephone No.: (518) 445-2235
Facsimile No.: (518) 447-6305
Re: Call Option Transaction
Ref. No.: NY-21551
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between Bank of America, N.A.
("BofA"), and Albany International Corp., a Delaware corporation (the
"Counterparty"), on the Trade Date specified below (the "Transaction"). This
letter agreement constitutes a "Confirmation" as referred to in the ISDA Master
Agreement specified below. This Confirmation shall replace any previous
agreements and serve as the final documentation for this Transaction.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. Certain
defined terms used herein have the meanings assigned to them in the Offering
Memorandum dated March 7, 2006 (the "Offering Memorandum") relating to the USD
150,000,000 principal amount of 2.25% Convertible Senior Notes due 2026, (the
"Convertible Notes" and each USD 1,000 principal amount of Convertible Notes, a
"Convertible Note") issued by the Counterparty pursuant to an Indenture to be
dated on or about March 13, 2006 between the Counterparty and JPMorgan Chase
Bank, N.A., as trustee (the "Indenture"). In the event of any inconsistency
between the terms defined in the Offering Memorandum and this Confirmation, this
Confirmation shall govern.
Each party is hereby advised, and each such party acknowledges, that the
other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties'
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between BofA and
the Counterparty as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall supplement, form a part of, and be subject to
an agreement in the form of the 2002 ISDA Master Agreement (the "Agreement") as
if BofA and the Counterparty had executed an agreement in such form (but without
any Schedule except for the election of the laws of the State of New York as the
governing law) on the Trade Date. In the event of any inconsistency between
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which
this Confirmation relates shall be governed by the Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: March 7, 2006
Option Style: "Modified American", as described under
"Exercise and Valuation" below
Option Type: Call
Buyer: Counterparty
Seller: BofA
Shares: The Class A common stock of the
Counterparty, par value USD 0.001 per
Share (Exchange symbol "AIN")
Number of Options: 60,000
Option Entitlement: As of any date, a number equal to the
Conversion Rate as of such date (as
defined in the Indenture, but without
regard to any adjustments to the
Conversion Rate pursuant to Section
15.04(i), Section 15.03(a) or Section
15.03(d) of the Indenture), for each
Convertible Note.
Strike Price: USD 44.52
Premium: USD 15,939,541.64
Premium Payment Date: March 13, 2006
Exchange: The New York Stock Exchange
Related Exchange(s): None
Exercise and Valuation:
Exercise Period(s): Notwithstanding the Equity Definitions,
in respect of Exercisable Options
relating to Convertible Notes with a
particular Conversion Date (each as
defined below), the Exercise Period shall
be the period commencing on and including
the Conversion Date for the Convertible
Notes corresponding to such Exercisable
Options and ending at 7:30 a.m. New York
City time on the first day of the
relevant Cash Settlement Averaging
Period; provided that if the Counterparty
has validly designated March 15, 2013 as
a redemption date for the Convertible
Notes pursuant to the terms of the
Indenture, there shall be a single
Exercise Period for Exercisable Options
relating to the Convertible
2
Notes with a Conversion Date following
the day on which the Counterparty gives
notice of such redemption and that
Exercise Period shall terminate at 7:30
a.m. New York City time on the redemption
date; provided further that if the
Counterparty has not validly designated
March 15, 2013 as a redemption date for
the Convertible Notes pursuant to the
terms of the Indenture, Conversion Dates
occurring after the date that is
twenty-seven (27) Scheduled Trading Days
prior to March 15, 2013 shall not result
in the commencement of an Exercise Period
and no Exercisable Options will be
exercised or deemed exercised in respect
thereof.
"Scheduled Trading Day" means any day on
which the Exchange is scheduled to be
open for trading for its regular trading
session.
Exercisable Options: In respect of any date on which a holder
of Convertible Notes properly surrenders,
or is deemed to surrender, to the
Counterparty a Convertible Note for
conversion (a "Conversion Date"), a
number of Options equal to 40% of the
number of Convertible Notes properly
surrendered, or deemed surrendered, for
conversion on such Conversion Date
(which, for the avoidance of doubt, may
be rounded up or down by the Company to
account for any conversions which may
result in fractional Exercisable Options
and may not exceed the Number of
Options).
Expiration Date: For any Exercisable Option, the earlier
of (i) the final day of the Exercise
Period for such Exercisable Option, and
(ii) the Final Expiration Date.
Final Expiration Date: March 15, 2013
Multiple Exercise: Applicable, as described under
Exercisable Options above.
Automatic Exercise: Applicable, subject to the provisions of
"Notice of Exercise" below.
Notice of Exercise: Notwithstanding anything to the contrary
in the Equity Definitions, in order to
exercise any Exercisable Option, the
Counterparty must notify BofA, which
notification shall be irrevocable after
7:30 a.m. New York City time on the first
day of the relevant Cash Settlement
Averaging Period and shall not be subject
to subsequent amendments, in writing or
orally (and, if such Notice of Exercise
is delivered by the Counterparty after
the close of business in New York City on
the Scheduled Trading Day immediately
preceding the Expiration Date, via e-mail
to: dg.efp_doc_group@bofasecurities.com),
by 7:30 a.m. New York City time on the
first day of the
3
relevant Cash Settlement Averaging Period
for such Exercisable Option of (i) the
number of Convertible Notes properly
submitted for conversion on the relevant
Conversion Date and the number of
Exercisable Options corresponding to such
Convertible Notes, (ii) the first day of
the applicable Cash Settlement Averaging
Period and (iii) the scheduled Settlement
Date; provided that if the Counterparty
has validly designated March 15, 2013 as
a redemption date for the Convertible
Notes pursuant to the terms of the
Indenture, such notice may be given on or
prior to the Expiration Date for such
Exercisable Options and need only specify
the number of Convertible Notes submitted
for conversion during the final Exercise
Period and the number of Exercisable
Options corresponding to such Convertible
Notes.
Exchange Business Day: Section 1.20 of the Equity Definitions is
hereby replaced in its entirety by the
following:
"'Exchange Business Day' means a day
during which (i) trading in the Shares
generally occurs and (ii) there is no
Market Disruption Event and (iii) the
Last Reported Sale Price (as defined in
the Indenture) for the Shares is
available for such day."
Market Disruption Event: Section 4.3(a) of the Equity Definitions
is hereby replaced in its entirety by the
following:
"'Market Disruption Event' means, in
respect of the Shares, (i) a failure by
the Exchange to open for trading during
its regular trading session or (ii) the
occurrence or existence prior to 1:00
p.m. New York City time on any Exchange
Business Day for the Shares for an
aggregate one half-hour period of any
suspension or limitation imposed on
trading (by reason of movements in price
exceeding limits permitted by the
Exchange or otherwise) in the Shares or
in any options, contracts or future
contracts relating to the Shares."
Settlement Terms:
Settlement Method: Net Share Settlement
Net Share Settlement: For each Exercisable
Option that is exercised or deemed
exercised, BofA will deliver to the
Counterparty, on the related Settlement
Date, a number of Shares equal to the Net
Shares in respect of such Exercisable
Option. In no event will the Net Shares
be less than zero.
Net Shares: In respect of each Exercisable Option
exercised or deemed exercised, a number
of Shares equal to (i) the
4
Option Entitlement multiplied by (ii) the
sum, for each Exchange Business Day
during the relevant Cash Settlement
Averaging Period, of (A) the Relevant
Price on such Exchange Business Day, less
the Strike Price, divided by (B) the
Relevant Price on such Exchange Business
Day, divided by (iii) twenty-five (25);
provided, however, that if the
calculation contained in clause (A) above
results in a negative number, such number
shall be replaced with the number "zero".
BofA will deliver cash in lieu of any
fractional Share with respect to any Net
Shares to be delivered with respect to
all Exercisable Options having the same
Settlement Date based on the Last
Reported Sale Price (as defined in the
Indenture) for the Shares on the final
Exchange Business Day of the relevant
Cash Settlement Averaging Period.
Relevant Price: For each Exchange Business Day during a
Cash Settlement Averaging Period, the per
Share volume-weighted average price for
such day as displayed under the heading
"Bloomberg VWAP" on Bloomberg page AIN
[equity] AQR (or any successor thereto)
in respect of the period from 9:30 a.m.
to 4:00 p.m. (New York City time) on such
Exchange Business Day (or if such
volume-weighted average price is
unavailable, the market value of one
Share on such Exchange Business Day, as
determined by the Calculation Agent,
using a volume-weighted method).
Cash Settlement For each Exercisable Option, the
Averaging Period: twenty-five (25) consecutive Exchange
Business Days commencing on and including
the second Exchange Business Day
following the Conversion Date for the
Convertible Note relating to such
Exercisable Option; provided that if the
Counterparty has validly designated March
15, 2013 as a redemption date for the
Convertible Notes pursuant to the terms
of the Indenture, the Cash Settlement
Averaging Period for any Exercisable
Options relating to the Convertible Notes
with a Conversion Date following the date
on which the Counterparty gives notice of
such redemption, the twenty-five (25)
consecutive Exchange Business Days
commencing on and including the
twenty-eighth (28th) Scheduled Trading
Day preceding such redemption date.
Settlement Date: For each Exercisable Option, the
settlement date for Shares to be
delivered with respect to the related
Convertible Notes under the terms of the
Indenture.
Other Applicable Provisions: The provisions of Sections 6.6, 6.7, 6.8,
6.9 and 6.10 of the Equity Definitions
will be applicable, except that all
5
references in such provisions to
"Physically-Settled" shall be read as
references to "Net Share Settled". "Net
Share Settled" in relation to any Option
means that Net Share Settlement is
applicable to that Option.
Failure to Deliver: Applicable
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Transaction:
Potential Adjustment Events: Notwithstanding Section 9.1(e) of the
Equity Definitions, a "Potential
Adjustment Event" means any occurrence of
any event or condition, as set forth in
Section 15.04 of the Indenture resulting
in an adjustment to the Conversion Rate
of the Convertible Notes, excluding
adjustments or conditions that result
from an adjustment to the Conversion Rate
pursuant to Section 15.04(i) or Section
15.03(a) of the Indenture.
Method of Adjustment: Calculation Agent Adjustment, and means
that, notwithstanding Section 9.1(c) of
the Equity Definitions, upon any
adjustment to the Conversion Rate of the
Convertible Notes pursuant to the
Indenture (other than Section 15.04(i)
and Section 15.03(a) of the Indenture)
and an equivalent adjustment to the
Option Entitlement hereunder, the
Calculation Agent, in order to reflect
the effect of the event or condition
relating to such adjustment on this
Transaction, will make a corresponding
adjustment to any one or more of the
Strike Price, Number of Options and any
other variable relevant to the exercise,
settlement or payment for the
Transaction.
Extraordinary Events applicable to the Transaction:
Merger Events: Notwithstanding Section 9.2(a) of the
Equity Definitions, a "Merger Event"
means the occurrence of any event or
condition set forth in Section 15.06 of
the Indenture.
Consequence of Merger Events: Notwithstanding Section 9.3 of the Equity
Definitions, upon the occurrence of a
Merger Event, the Calculation Agent shall
make a corresponding adjustment in
respect of any adjustment under the
Indenture to any one or more of the
nature of the Shares, Strike Price,
Number of Options, Option Entitlement and
any other variable relevant to the
exercise, settlement or payment for the
Transaction; provided, however, that such
adjustment (i) shall be made without
regard to any adjustment to the
Conversion Rate for the issuance of
additional shares as set forth in Section
15.03(a) of the Indenture, and (ii) shall
assume that, in the case of a "Public
Acquirer Change of Control" (as defined
6
in the Indenture), the Counterparty does
not make an election provided in Section
15.03(d) of the Indenture.
Additional Termination Events: If an event of default with respect to
the Counterparty shall occur under the
terms of the Convertible Notes as set
forth in Section 7.01 of the Indenture
and such event of default results in the
declaration of principal and interest
immediately due and payable pursuant to
the terms of the Indenture, such event
shall constitute an Additional
Termination Event applicable to this
Transaction, with respect to which the
Counterparty shall be deemed to be the
sole Affected Party and this Transaction
shall be the sole Affected Transaction;
provided that, notwithstanding Section
6(b)(iv)(1) of the Agreement, BofA will
be required, if the Counterparty makes
itself promptly available upon request,
to consult with the Counterparty and to
reasonably consider whether it is
advisable to designate an Early
Termination Date pursuant to Section 6(b)
of the Agreement.
Whenever the Counterparty is required to
deliver to the Trustee an officer's
certificate with respect to a default or
an event of default pursuant to Section
5.08 of the Indenture, the Counterparty
shall also be required to deliver a copy
of such certificate to BofA hereunder.
4. Calculation Agent: BofA. Whenever the Calculation Agent is
required to act or to exercise judgment
in any way, it will do so in good faith
and in a commercially reasonable manner
to achieve a commercially reasonable
result.
The Calculation Agent shall, not later
than the third Currency Business Day
following receipt of a written request of
the Counterparty, provide the
Counterparty with a written explanation
of the basis of any determination,
adjustment or calculation made hereunder;
provided that if, after reviewing such
written explanation, the Counterparty
objects to such determination, adjustment
or calculation, then the Counterparty,
BofA and the Calculation Agent shall make
reasonable good faith efforts to agree
upon an appropriate determination,
adjustment or calculation.
5. Account Details:
(a) Account for payments from the Counterparty:
JPMorgan, New York
ABA: 021-000-021
Acct: CHASUS33
Acct No.: 910-1010-693
Account for delivery of Shares to the Counterparty:
DTC 50108 (Computershare)
7
Note: the shares cannot be sent electronically. They must be
DWACed.
(b) Account for payments to BofA:
Bank of America, N.A.
San Francisco, CA
SWIFT: BOFAUS65
Bank Routing: 121-000-358
Account Name: Bank of America
Account No.: 12333-34172
Account for delivery of Shares from BofA:
DTC 0733
Acct Name: Bank of America NA
Acct #: 116-0077
6. Offices:
The Office of the Counterparty for the Transaction is: Inapplicable, the
Counterparty is not a Multibranch Party.
The Office of BofA for the Transaction is: New York
Bank of America, N.A.
c/o Banc of America Securities LLC
9 West 57th Street, 40th Floor
New York, NY 10019
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to the Counterparty:
Albany International Corp. 1373 Broadway
Albany, New York 12204
Attention: Christopher J. Connally
Telephone No.: (518) 445-2235
Facsimile No.: (518) 447-6305
With a copy to:
Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Charles J. Silva, Jr.
Telephone No.: (518) 445-2277
Facsimile No.: (518) 447-6575
(b) Address for notices or communications to BofA:
Bank of America, N.A.
c/o Banc of America Securities LLC
Equity Financial Products
8
Attention: Legal Department
9 West 57th
Street, 40th Floor
New York, NY 10019
Facsimile No.: (212) 326-8610
8. Representations and Warranties of the Counterparty
The representations and warranties of the Counterparty set forth in Section 4 of
the Purchase Agreement (the "Purchase Agreement") dated as of the Trade Date
between the Counterparty and J.P. Morgan Securities Inc. and Banc of America
Securities LLC, as Initial Purchasers, are true and correct and are hereby
deemed to be repeated to BofA as if set forth herein. The Counterparty hereby
further represents and warrants to BofA that:
(a) The Counterparty has all necessary corporate power and authority to
execute, deliver and perform its obligations in respect of this
Transaction; such execution, delivery and performance have been duly
authorized by all necessary corporate action on the Counterparty's
part; and this Confirmation has been duly and validly executed and
delivered by the Counterparty and constitutes its valid and binding
obligation, enforceable against the Counterparty in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law
or in equity) and except that rights to indemnification and
contribution hereunder may be limited by federal or state securities
laws or public policy relating thereto.
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of the Counterparty
hereunder will conflict with or result in a breach of the
certificate of incorporation or by-laws (or any equivalent
documents) of the Counterparty, or any applicable law or regulation,
or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to
which the Counterparty or any of its Significant Subsidiaries is a
party or by which the Counterparty or any of its Significant
Subsidiaries is bound or to which the Counterparty or any of its
Significant Subsidiaries is subject, or constitute a default under,
or result in the creation of any lien under, any such agreement or
instrument, or breach or constitute a default under any agreements
and contracts of the Counterparty and its Significant Subsidiaries
filed as exhibits to the Counterparty's Annual Report on Form 10-K
for the year ended December 31, 2004, incorporated by reference in
the Offering Memorandum.
(c) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required in
connection with the execution, delivery or performance by the
Counterparty of this Confirmation, except such as have been obtained
or made and such as may be required under the Securities Act of
1933, as amended (the "Securities Act") or state securities laws.
(d) The Counterparty is an "eligible contract participant" (as such term
is defined in Section 1a(12) of the Commodity Exchange Act, as
amended (the "CEA") because one or more of the following is true:
The Counterparty is a corporation, partnership, proprietorship,
organization, trust or other entity and:
9
(A) the Counterparty has total assets in excess of USD 10,000,000;
(B) the obligations of the Counterparty hereunder are guaranteed,
or otherwise supported by a letter of credit or keepwell,
support or other agreement, by an entity of the type described
in Section 1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I),
1a(12)(A)(vii) or 1a(12)(C) of the CEA; or
(C) the Counterparty has a net worth in excess of USD 1,000,000
and has entered into this Agreement in connection with the
conduct of Counterparty's business or to manage the risk
associated with an asset or liability owned or incurred or
reasonably likely to be owned or incurred by the Counterparty
in the conduct of the Counterparty's business.
(e) The Counterparty is not, on the date hereof, in possession of any
material non-public information with respect to the Counterparty.
9. Other Provisions:
(a) Opinions. The Counterparty shall deliver to BofA an opinion of
counsel, dated as of the Trade Date, substantially in the form set
forth in Exhibit A hereto.
(b) Amendment. If the Initial Purchasers party to the Purchase Agreement
exercise their right to purchase additional Convertible Notes as set
forth therein, then, at the discretion of the Counterparty, BofA and
the Counterparty will amend this Confirmation to provide for such
increase in Convertible Notes (but on pricing terms acceptable to
BofA and the Counterparty) (such amendment to provide for the
payment by the Counterparty to BofA of the additional premium
related thereto).
(c) No Reliance, etc. Each party represents that (i) it is entering into
the Transaction evidenced hereby as principal (and not as agent or
in any other capacity); (ii) neither the other party nor any of its
agents are acting as a fiduciary for it; (iii) it is not relying
upon any representations except those expressly set forth in the
Agreement or this Confirmation; (iv) it has not relied on the other
party for any legal, regulatory, tax, business, investment,
financial, and accounting advice, and it has made its own
investment, hedging, and trading decisions based upon its own
judgment and not upon any view expressed by the other party or any
of its agents; and (v) it is entering into this Transaction with a
full understanding of the terms, conditions and risks thereof and it
is capable of and willing to assume those risks.
(d) Share De-listing Event. If at any time during the period from and
including the Trade Date, to and including the Final Expiration
Date, the Shares cease to be listed or quoted on the Exchange for
any reason (other than a Merger Event as a result of which the
shares of common stock underlying the Options are listed or quoted
on The New York Stock Exchange, The American Stock Exchange or the
NASDAQ National Market (or their respective successors) (the
"Successor Exchange")) and are not immediately re-listed or quoted
as of the date of such de-listing on the Successor Exchange (a
"Share De-listing"), then Cancellation and Payment (as defined in
Section 9.6 of the Equity Definitions, treating the "Announcement
Date" as the date of first public announcement that the Share
De-listing, will occur and the "Merger Date" as the date of the
Share De-listing) shall apply, and the date of the de-listing shall
be deemed the date of termination for purposes of calculating any
payment due from one party to the other in connection with the
cancellation of this Transaction. If the Shares are immediately
re-listed on a
10
Successor Exchange upon their de-listing from the Exchange, this
Transaction shall continue in full force and effect, provided that
the Successor Exchange shall be deemed to be the Exchange for all
purposes hereunder; provided that the Calculation Agent may make
appropriate adjustments to the terms of this Transaction to reflect
the effect of such re-listing. For the avoidance of doubt, in no
event will a Share De-listing result in an obligation of the
Counterparty under this Confirmation to make a payment to BofA.
(e) Repurchase Notices. The Counterparty shall, on any day on which the
Counterparty effects any repurchase of Shares, promptly give BofA a
written notice of such repurchase (a "Repurchase Notice") on such
day if following such repurchase, the number of outstanding Shares
on such day, subject to any adjustments provided herein, is (i) less
than 25 million (in the case of the first such notice) or (ii)
thereafter, more than 125,000 less than the number of Shares
included in the immediately preceding Repurchase Notice. The
Counterparty agrees to indemnify and hold harmless BofA and its
affiliates and their respective officers, directors, employees,
affiliates, advisors, agents and controlling persons (each, an
"Indemnified Person") from and against any and all losses (including
losses relating to BofA's reasonable hedging activities as a
consequence of becoming, or of the risk of becoming, a Section 16
"insider", including without limitation, any forbearance from
reasonable hedging activities or cessation of such hedging
activities and any losses in connection therewith with respect to
this Transaction), claims, damages, judgments, liabilities and
expenses (including reasonable attorney's fees), joint or several,
which an Indemnified Person actually may become subject to, as a
result of the Counterparty's failure to provide BofA with a
Repurchase Notice on the day and in the manner specified in this
Section 9(e), and to reimburse, within 30 days, upon written
request, each of such Indemnified Persons for any reasonable legal
or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action,
proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified
Person, such Indemnified Person shall promptly notify the
Counterparty in writing, and the Counterparty, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to
the Indemnified Person to represent the Indemnified Person and any
others the Counterparty may designate in such proceeding and shall
pay the fees and expenses of such counsel related to such
proceeding. The Counterparty shall not be liable for any settlement
of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the Counterparty agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such
settlement or judgment. The Counterparty shall not, without the
prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the
subject matter of such proceeding on terms reasonably satisfactory
to such Indemnified Person. If the indemnification provided for in
this paragraph (e) is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then the Counterparty under such
paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph (e) are not
exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in
equity. The indemnity and contribution agreements contained in this
11
paragraph (e) shall remain operative and in full force and effect
regardless of the termination of this Transaction.
(f) Regulation M. The Counterparty was not on the Trade Date and is not
on the date hereof engaged in a distribution, as such term is used
in Regulation M under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of any securities of the Counterparty,
other than a distribution meeting the requirements of the exception
set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M. The
Counterparty shall not, until the second Exchange Business Day
immediately following the Trade Date, engage in any such
distribution.
(g) No Manipulation. The Counterparty is not entering into this
Transaction to create actual or apparent trading activity in the
Shares (or any security convertible into or exchangeable for the
Shares) or to raise or depress or otherwise manipulate the price of
the Shares (or any security convertible into or exchangeable for the
Shares).
(h) Number of Repurchased Shares. The Counterparty represents that it
could have purchased Shares, in an amount equal to the product of
the Number of Options and the Option Entitlement, on the Exchange or
otherwise, in compliance with applicable law, its organizational
documents and any orders, decrees, contractual agreements binding
upon the Counterparty, on the Trade Date.
(i) Board Authorization. Each of this Transaction and the issuance of
the Convertible Notes was approved by its board of directors and
publicly announced, solely for the purposes stated in such board
resolution and public disclosure and the Counterparty's board of
directors has duly authorized any repurchase of Shares pursuant to
this Transaction. The Counterparty further represents that there is
no internal policy, whether written or oral, of the Counterparty
that would prohibit the Counterparty from entering into any aspect
of this Transaction, including, but not limited to, the purchases of
Shares to be made pursuant hereto.
(j) Transfer or Assignment. (i) The Counterparty shall have the right to
assign its rights and obligations hereunder with respect to any
Options hereunder (such Options, the "Transfer Options"), subject to
BofA's consent, such consent not to be unreasonably withheld or
delayed; provided that such assignment or transfer shall be effected
on terms satisfactory to BofA and shall be subject, but not limited,
to the following conditions:
(A) With respect to any Transfer Options, the Counterparty
shall not be released from its notice and indemnification
obligations pursuant to Section 9(c) or any obligations under
Section 9(s) of this Confirmation;
(B) Any Transfer Options shall only be transferred or assigned
to a third party reasonably acceptable to BofA and on terms,
including any reasonable undertakings by such third party and
execution of any documentation and delivery of legal opinions
with respect to securities laws and other matters by such
third party and the Counterparty, as are requested and
reasonably satisfactory to BofA; and
(C) The Counterparty shall be responsible for all reasonable
costs and expenses, including reasonable counsel fees,
incurred by BofA in connection with such transfer or
assignment.
(ii) BofA may not transfer or assign all or any portion of its
rights or obligations under this Transaction without consent of the
Counterparty; provided, however, that if BofA, in its reasonable
discretion, determines that, (x) its "beneficial ownership" (within
the
12
meaning of Section 16 of the Exchange Act and rules promulgated
thereunder) exceeds 8% or more of the Counterparty's outstanding
Shares or (y) the product of the Number of Options and the Option
Entitlement divided by the total number of the Counterparty's
outstanding Shares (the "Options Equity Percentage") exceeds 15%,
then:
(A) BofA may transfer or assign a number of Options sufficient
to reduce such "beneficial ownership" to 7.5% or such Options
Equity Percentage to 14.5% to any third party with a rating
for its long term, unsecured and unsubordinated indebtedness
of A- or better by Standard & Poor's Ratings Service or its
successor ("S&P"), or A3 or better by Moody's Investors
Service ("Moody's") or, if either S&P or Moody's ceases to
rate such debt, at least an equivalent rating or better by a
substitute rating agency mutually agreed by the Counterparty
and BofA; and
(B) If such "beneficial ownership" exceeds 8% or such Options
Equity Percentage exceeds 15%,
(1) at a time when the number of Counterparty's
outstanding Shares, subject to any adjustments provided
herein, is less than 22 million;
(2) as a result of any breach by the Counterparty of its
notice obligations under Section 9(e); or
(3) and if, in the good faith reasonable judgment of
BofA, based upon advice of counsel and as a result of
events occurring after the Trade Date, BofA reasonably
determines that it would be inadvisable to engage in any
alternative hedging transactions, which would enable it
to reduce its "beneficial" ownership or its Options
Equity Percentage, other than by transfer, assignment or
termination, and in either case BofA reasonably
determines that it is unable after its commercially
reasonable efforts to effect transfer or assignment on
pricing terms and in a time period reasonably acceptable
to BofA that would reduce its "beneficial ownership" to
7.5% or such Options Equity Percentage to 14.5%;
BofA may designate any Exchange Business Day as an Early
Termination Date with respect to a portion (the "Terminated
Portion") of this Transaction, such that its "beneficial
ownership" following such partial termination would be
approximately equal to 7.5% or the Options Equity Percentage
approximately equal to 14.5%, as applicable. If BofA so
designates an Early Termination Date with respect to a portion
of this Transaction, a payment shall be made pursuant to
Section 6 of the Agreement as if an Early Termination Date had
occurred in respect of a Transaction having terms identical to
this Transaction except with a Number of Options equal to the
Terminated Portion, with respect to which the Counterparty
shall be the sole Affected Party and such Transaction shall be
the only Affected Transaction.
(iii) Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing BofA to purchase, sell, receive
or deliver any Shares or other securities to or from the
Counterparty, BofA may designate any of its affiliates to purchase,
sell, receive or deliver such shares or other securities and
otherwise to perform BofA's obligations in respect of this
Transaction and any such designee may assume such obligations. BofA
shall be discharged of its obligations to the Counterparty only to
the extent of any such performance.
13
(k) Modified Settlement. If, upon advice of counsel, BofA reasonably
determines, with respect to applicable legal and regulatory
requirements, including any requirements relating to BofA's hedging
activities hereunder, or due to a lack of sufficient liquidity in
the borrow market for the Shares, that it would not be practicable
or advisable to deliver, or to acquire to deliver, any or all of the
Shares to be delivered by BofA on the Settlement Date for this
Transaction, BofA may, by notice to the Counterparty on or prior to
any anticipated Settlement Date (a "Nominal Settlement Date"), elect
to deliver the Shares on a different date or two or more dates,
whether immediately preceding or following such Settlement Date
(each, a "Staggered Settlement Date"), as follows:
(i) in such notice, BofA will specify to the Counterparty the
related Staggered Settlement Date or Dates (the last of which
may be no later than the twenty-fifth (25th) Scheduled Trading
Day following the Nominal Settlement Date) and the number of
Shares that it will deliver on each Staggered Settlement Date;
and
(ii) the aggregate number of Shares that BofA will deliver to the
Counterparty hereunder on all such Staggered Settlement Dates
will equal the number of Shares that BofA would otherwise be
required to deliver on such Nominal Settlement Date.
BofA shall effect such delivery as promptly as is practicable and
shall compensate the Counterparty for any delayed delivery by
paying, in addition to delivering any Shares hereunder, an amount,
as determined by the Calculation Agent, equal to the sum for each
day of such delay of the product of (i) the Federal Funds Rate
divided by 360 and (ii) the value of the Shares not delivered as of
such day; provided that if BofA fails to deliver any Shares
hereunder by the twenty-fifth (25th) Scheduled Trading Day
immediately following the Nominal Settlement Date, such event shall
constitute an Additional Termination Event with respect to the
portion of this Transaction corresponding to the number of Shares
not delivered by BofA by such date, with respect to which BofA shall
be the sole Affected Party and this Transaction the sole Affected
Transaction.
"Federal Funds Rate" means, for any day, the rate set forth for such
day opposite the caption "Federal funds", as such rate is displayed
on the page FedsOpen [Index][GO] on the Bloomberg Professional
Service or any successor page; provided that if no rate appears for
any day on such page, the rate for the immediately preceding day for
which a rate does so appear shall be used for such day.
(l) Damages. Neither party shall be liable under Section 6.10 of the
Equity Definitions for special, indirect or consequential damages,
even if informed of the possibility thereof.
(m) Early Unwind. In the event the sale of Convertible Notes is not
consummated with the initial purchasers for any reason by the close
of business in New York on March 13, 2006 (or such later date as
agreed upon by the parties) (March 13, 2006 or such later date as
agreed upon, being the "Early Unwind Date"), this Transaction shall
automatically terminate (the "Early Unwind"), on the Early Unwind
Date and (i) the Transaction and all of the respective rights and
obligations of BofA and the Counterparty under the Transaction shall
be cancelled and terminated and (ii) each party shall be released
and discharged by the other party from and agrees not to make any
claim against the other party with respect to any obligations or
liabilities of the other party arising out of and to be performed in
connection with the Transaction either prior to or after the Early
Unwind Date; provided that, if the failure to consummate the sale of
the Convertible Notes results from a breach by the Counterparty of
any representation of or any undertaking by the Counterparty
contained in the Purchase Agreement, the Counterparty shall purchase
from
14
BofA on the Early Unwind Date any Shares purchased by BofA or one or
more of its affiliates in connection with this Transaction and
reimburse BofA for any costs or expenses (including market losses)
relating to the unwinding of its reasonable hedging activities in
connection with the Transaction (including any losses or costs
incurred as a result of its terminating, liquidating, obtaining or
reestablishing any reasonable hedge or related trading position).
The amount of any such reimbursement shall be determined by BofA in
its reasonable good faith discretion. BofA shall notify the
Counterparty of such amount, including, upon the Counterparty's
request, an explanation of the basis of determination of such
amount, and the Counterparty shall pay such amount in immediately
available funds on the Early Unwind Date. BofA and the Counterparty
represent and acknowledge to the other that, subject to the proviso
included in this Section, upon an Early Unwind, all obligations with
respect to the Transaction shall be deemed fully and finally
discharged.
(n) Role of Agent. Each party agrees and acknowledges that (i) Banc of
America Securities LLC ("BASL"), has acted solely as agent and not
as principal with respect to this Transaction and (ii) BASL has no
obligation or liability, by way of guaranty, endorsement or
otherwise, in any manner in respect of this Transaction (including,
if applicable, in respect of the settlement thereof). Each party
agrees it will look solely to the other party (or any guarantor in
respect thereof) for performance of such other party's obligations
under this Transaction.
(o) Additional Provisions.
(i) Notwithstanding Section 9.7 of the Equity Definitions,
everything in the first paragraph of Section 9.7(b) of the Equity
Definitions after the words "Calculation Agent" in the third line
through the remainder of such Section 9.7 shall be deleted and
replaced with the following:
"based on an amount representing the Calculation Agent's
determination of the fair value to Buyer of an option with terms
that would preserve for Buyer the economic equivalent of any payment
or delivery (assuming satisfaction of each applicable condition
precedent, including, for the avoidance of doubt, the occurrence of
a Conversion Date with respect to each Option) by the parties in
respect of the relevant Transaction that would have been required
after that date but for the occurrence of the Share De-listing."
(ii) Notwithstanding anything to the contrary in the Agreement, this
Confirmation or the Equity Definitions, (A) in determining any
amount payable in respect of an Early Termination Date or a
Cancellation and Payment, the value of this Transaction shall be
determined as if all Options outstanding at such time would become
Exercisable Options during the Final Exercise Period and, (B) in no
event shall the calculation of the amount under Section 6 of the
Agreement in respect of an Additional Termination Event result in
any amount being payable by the Counterparty.
(p) Alternative Calculations and Payment on Early Termination and on
Certain Extraordinary Events. If, in respect of this Transaction, an
amount is payable by BofA to the Counterparty (i) pursuant to
Section 9.7 of the Equity Definitions or this Confirmation (except
in the event of a Merger Event in which the consideration to be paid
to holders of Shares consists solely of cash) or (ii) pursuant to
Section 6(d)(ii) of the Agreement (except in the event of an Event
of Default in which the Counterparty is the Defaulting Party or a
Termination Event in which the Counterparty is the Affected Party,
other than an Event of Default of the type described in Section
5(a)(iii), (v), (vi), (vii) or
15
(viii) of the Agreement or in this Confirmation or a Termination
Event of the type described in Section 5(b)(i), (ii), (iii), (iv),
(v) or (vi) of the Agreement or in this Confirmation, in each case
resulting from an event or events outside the Counterparty's
control) (a "Payment Obligation"), the Counterparty may, in its sole
-- discretion, request that BofA satisfy such Payment Obligation by
the Share Termination Alternative (as defined below) and shall give
irrevocable telephonic notice to BofA, confirmed in writing within
one Currency Business Day, no later than 12:00 p.m. New York City
time on the Merger Date, the date of the Share De-listing or the
Early Termination Date, as applicable; provided that if the
Counterparty does not validly request that BofA satisfy its Payment
Obligation by the Share Termination Alternative, BofA shall have the
right, in its sole discretion, to satisfy its Payment Obligation by
the Share Termination Alternative, notwithstanding Counterparty's
lack of election or election to the contrary. In calculating any
amounts under Section 6(e) of the Agreement, notwithstanding
anything to the contrary in the Agreement, (1) separate amounts
shall be calculated as set forth in Section 6(e) with respect to (a)
this Transaction and (b) all other Transactions, and (2) such
separate amounts shall be payable pursuant to Section 6(d)(ii) of
the Agreement, subject to, in the case of clause (1)(a), the Share
Termination Alternative right hereunder.
Share Termination Alternative: If applicable, BofA shall
deliver to the Counterparty the
Share Termination Delivery
Property on the date when the
Payment Obligation would
otherwise be due pursuant to
Section 9.7 of the Equity
Definitions, this Confirmation
or Section 6(d)(ii) and 6(e) of
the Agreement, as applicable
(the "Share Termination Payment
Date"), in satisfaction of the
Payment Obligation in the manner
reasonably requested by the
Counterparty free of payment.
Share Termination A number of Share Termination
Delivery Property: Delivery Units, as calculated by
the Calculation Agent, equal to
the Payment Obligation divided
by the Share Termination Unit
Price. The Calculation Agent
shall adjust the Share
Termination Delivery Property by
replacing any fractional portion
of a security therein with an
amount of cash equal to the
value of such fractional
security based on the values
used to calculate the Share
Termination Unit Price.
Share Termination Unit Price: The value to BofA of property
contained in one Share
Termination Delivery Unit on the
date such Share Termination
Delivery Units are to be
delivered as Share Termination
Delivery Property, as determined
by the Calculation Agent in its
discretion by commercially
reasonable means and notified
16
by the Calculation Agent to BofA
at the time of notification of
the Payment Obligation.
Share Termination Delivery Unit: One Share or, if a Merger Event
has occurred and a corresponding
adjustment to this Transaction
has been made, a unit consisting
of the number or amount of each
type of property received by a
holder of one Share (without
consideration of any requirement
to pay cash or other
consideration in lieu of
fractional amounts of any
securities) in such Merger
Event, as determined by the
Calculation Agent.
Failure to Deliver: Applicable
Other applicable provisions: If the Share Termination
Alternative is applicable, the
provisions of Sections 6.6, 6.7,
6.8, 6.9 and 6.10 (as modified
above) of the Equity Definitions
will be applicable, except that
all references in such
provisions to
"Physically-Settled" shall be
read as references to "Share
Termination Settled" and all
references to "Shares" shall be
read as references to "Share
Termination Delivery Units".
"Share Termination Settled" in
relation to this Transaction
means that the Share Termination
Alternative is applicable to
this Transaction.
(q) Governing Law. New York law (without reference to choice of law
doctrine).
(r) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by
jury in respect of any suit, action or proceeding relating to this
Transaction. Each party (i) certifies that no representative, agent
or attorney of the other party has represented, expressly or
otherwise, that such other party would not, in the event of such a
suit, action or proceeding, seek to enforce the foregoing waiver and
(ii) acknowledges that it and the other party have been induced to
enter into this Transaction, as applicable, by, among other things,
the mutual waivers and certifications provided herein.
(s) Registration. The Counterparty hereby agrees that if, in the good
faith reasonable judgment of BofA, based upon the advice of counsel,
the Shares ("Hedge Shares") acquired by BofA for the purpose of
hedging its obligations pursuant to this Transaction cannot be sold
in the U.S. public market by BofA without registration under the
Securities Act, the Counterparty shall, at its election, either (i)
in order to allow BofA to sell the Hedge Shares in a registered
offering, make available to BofA an effective registration statement
under the Securities Act to cover the resale of such Hedge Shares
and enter into an agreement, in form and substance reasonably
satisfactory to BofA, substantially in the form of an underwriting
agreement for a registered offering; provided, however, that if
BofA, in its reasonable discretion, is not satisfied with access to
due diligence materials, the results of its due diligence
investigation, or the procedures and
17
documentation for the registered offering referred to above, then
clause (ii) or clause (iii) of this Section 9(s) shall apply at the
election of the Counterparty, (ii) in order to allow BofA to sell
the Hedge Shares in a private placement, enter into a private
placement agreement substantially similar to private placement
purchase agreements customary for private placements of equity
securities, in form and substance reasonably satisfactory to BofA
(in which case, the Calculation Agent shall make any adjustments to
the terms of this Transaction that are necessary, in its reasonable
judgment, to compensate BofA for any discount from the public market
price of the Shares incurred on the sale of Hedge Shares in a
private placement), or (iii) purchase the Hedge Shares from BofA at
the Last Reported Sale Price on such Exchange Business Days, and in
the amounts, requested by BofA.
(t) Tax Advice. BofA and its affiliates do not provide tax advice.
Accordingly, any statements contained herein as to tax matters were
neither written nor intended by BofA to be used and cannot be used
by any taxpayer for the purpose of avoiding tax penalties that may
be imposed on such taxpayer. If any person uses or refers to any
such tax statement in promoting, marketing or recommending a
partnership or other entity, investment plan or arrangement to any
taxpayer, then the statement expressed above is being delivered to
support the promotion or marketing of the transaction or matter
addressed and the recipient should seek advice based on its
particular circumstances from an independent tax advisor.
Notwithstanding anything herein to the contrary, the sender and any
intended recipient of this communication (and any of its employees,
representatives and other agents) may disclose to any and all
persons, without limitation of any kind, the tax treatment or tax
structure of this transaction.
(u) No Setoff. Notwithstanding any provision of the Agreement or any
other agreement between the parties to the contrary, obligations
under this Transaction shall not be set off by BofA (including, for
the avoidance of doubt, pursuant to Section 6(f) of the Agreement)
against any other obligations of the parties, whether arising under
the Agreement, this Confirmation, under any other agreement between
the parties hereto, by operation of law or otherwise.
18
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it in the manner
indicated in the attached cover letter.
Very truly yours,
Bank of America, N.A.
By: /s/ Eric P. Hambleton
-----------------------
Authorized Signatory
Name: Eric P. Hambleton
Accepted and confirmed
as of the Trade Date:
ALBANY INTERNATIONAL CORP.
By: /s/ David C. Michaels
-----------------------
Authorized Signatory
Name: David C. Michaels
19
Annex A
Form of Legal Opinion
20
JPMorgan [LOGO]
JPMorgan Chase Bank, N. A.
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
March 7, 2006
To: Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Christopher J. Connally, Corporate Treasurer
Telephone No.: (518) 445-2235
Facsimile No.: (518) 447-6305
Re: Call Option Transaction
The purpose of this letter agreement is to confirm the terms and
conditions of the Transaction entered into between JPMorgan Chase Bank, National
Association, London Branch ("JPMorgan"), and Albany International Corp., a
Delaware corporation (the "Counterparty"), on the Trade Date specified below
(the "Transaction"). This letter agreement constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below. This Confirmation
shall replace any previous agreements and serve as the final documentation for
this Transaction.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. Certain
defined terms used herein have the meanings assigned to them in the Offering
Memorandum dated March 7, 2006 (the "Offering Memorandum") relating to the USD
150,000,000 principal amount of 2.25% Convertible Senior Notes due 2026, (the
"Convertible Notes" and each USD 1,000 principal amount of Convertible Notes, a
"Convertible Note") issued by the Counterparty pursuant to an Indenture to be
dated on or about March 13, 2006 between the Counterparty and JPMorgan Chase
Bank, N.A., as trustee (the "Indenture"). In the event of any inconsistency
between the terms defined in the Offering Memorandum and this Confirmation, this
Confirmation shall govern.
Each party is hereby advised, and each such party acknowledges, that the
other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties'
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between JPMorgan
and the Counterparty as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall supplement, form a part of, and be
subject to an agreement in the form of the 2002 ISDA Master Agreement (the
"Agreement") as if JPMorgan and the Counterparty had executed an agreement in
such form (but without any Schedule except for the election of the laws of the
State of New York as the governing law) on the Trade Date. In the event of any
inconsistency between provisions of that Agreement and this Confirmation, this
Confirmation will prevail for the purpose of the Transaction to which this
Confirmation relates. The parties hereby agree that no Transaction other than
the Transaction to which this Confirmation relates shall be governed by the
Agreement.
JPMorgan Chase Bank, National Association
Organised under the laws of the United States as a National Banking Association
Main Office 1111 Polaris Parkway, Columbus, Ohio 43271
Registered as a branch in England & Wales branch No. BR000746
Registered Branch Office 125 London Wall, London EC2Y 5AJ
Authorised and regulated by the Financial Services Authority
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: March 7, 2006
Option Style: "Modified American", as described under
"Exercise and Valuation" below
Option Type: Call
Buyer: Counterparty
Seller: JPMorgan
Shares: The Class A common stock of the
Counterparty, par value USD 0.001 per
Share (Exchange symbol "AIN")
Number of Options: 90,000
Option Entitlement: As of any date, a number equal to the
Conversion Rate as of such date (as
defined in the Indenture, but without
regard to any adjustments to the
Conversion Rate pursuant to Section
15.04(i), Section 15.03(a) or Section
15.03(d) of the Indenture), for each
Convertible Note.
Strike Price: USD 44.52
Premium: USD 23,909,312.47
Premium Payment Date: March 13, 2006
Exchange: The New York Stock Exchange
Related Exchange(s): None
Exercise and Valuation:
Exercise Period(s): Notwithstanding the Equity Definitions,
in respect of Exercisable Options
relating to Convertible Notes with a
particular Conversion Date (each as
defined below), the Exercise Period shall
be the period commencing on and including
the Conversion Date for the Convertible
Notes corresponding to such Exercisable
Options and ending at 7:30 a.m. New York
City time on the first day of the
relevant Cash Settlement Averaging
Period; provided that if the Counterparty
has validly designated March 15, 2013 as
a redemption date for the Convertible
Notes pursuant to the terms of the
Indenture, there shall be a single
Exercise Period for Exercisable Options
relating to the Convertible Notes with a
Conversion Date following the day on
which the Counterparty gives notice of
such redemption and that Exercise Period
shall terminate at 7:30 a.m. New York
City time on the redemption date;
provided further that if the Counterparty
has not validly designated March 15, 2013
as
2
a redemption date for the Convertible
Notes pursuant to the terms of the
Indenture, Conversion Dates occurring
after the date that is twenty-seven (27)
Scheduled Trading Days prior to March 15,
2013 shall not result in the commencement
of an Exercise Period and no Exercisable
Options will be exercised or deemed
exercised in respect thereof.
"Scheduled Trading Day" means any day on
which the Exchange is scheduled to be
open for trading for its regular trading
session.
Exercisable Options: In respect of any date on which a holder
of Convertible Notes properly surrenders,
or is deemed to surrender, to the
Counterparty a Convertible Note for
conversion (a "Conversion Date"), a
number of Options equal to 60% of the
number of Convertible Notes properly
surrendered, or deemed surrendered, for
conversion on such Conversion Date
(which, for the avoidance of doubt, may
be rounded up or down by the Company to
account for any conversions which may
result in fractional Exercisable Options
and may not exceed the Number of
Options).
Expiration Date: For any Exercisable Option, the earlier
of (i) the final day of the Exercise
Period for such Exercisable Option, and
(ii) the Final Expiration Date.
Final Expiration Date: March 15, 2013
Multiple Exercise: Applicable, as described under
Exercisable Options above.
Automatic Exercise: Applicable, subject to the provisions of
"Notice of Exercise" below.
Notice of Exercise: Notwithstanding anything to the contrary
in the Equity Definitions, in order to
exercise any Exercisable Option, the
Counterparty must notify JPMorgan, which
notification shall be irrevocable after
7:30 a.m. New York City time on the first
day of the relevant Cash Settlement
Averaging Period and shall not be subject
to subsequent amendments, in writing or
orally (and, if such Notice of Exercise
is delivered by the Counterparty after
the close of business in New York City on
the Scheduled Trading Day immediately
preceding the Expiration Date, via e-mail
to the address specified by JPMorgan and
delivered to the Counterparty by the
Premium Payment Date), by 7:30 a.m. New
York City time on the first day of the
relevant Cash Settlement Averaging Period
for such Exercisable Option of (i) the
number of Convertible Notes properly
submitted for conversion on the relevant
Conversion Date and the number of
Exercisable Options corresponding to such
Convertible Notes, (ii) the first day of
the applicable Cash Settlement Averaging
Period and (iii) the scheduled Settlement
Date; provided that if the
3
Counterparty has validly designated March
15, 2013 as a redemption date for the
Convertible Notes pursuant to the terms
of the Indenture, such notice may be
given on or prior to the Expiration Date
for such Exercisable Options and need
only specify the number of Convertible
Notes submitted for conversion during the
final Exercise Period and the number of
Exercisable Options corresponding to such
Convertible Notes.
Exchange Business Day: Section 1.20 of the Equity Definitions is
hereby replaced in its entirety by the
following:
"'Exchange Business Day' means a day
during which (i) trading in the Shares
generally occurs and (ii) there is no
Market Disruption Event and (iii) the
Last Reported Sale Price (as defined in
the Indenture) for the Shares is
available for such day."
Market Disruption Event: Section 4.3(a) of the Equity Definitions
is hereby replaced in its entirety by the
following:
"'Market Disruption Event' means, in
respect of the Shares, (i) a failure by
the Exchange to open for trading during
its regular trading session or (ii) the
occurrence or existence prior to 1:00
p.m. New York City time on any Exchange
Business Day for the Shares for an
aggregate one half-hour period of any
suspension or limitation imposed on
trading (by reason of movements in price
exceeding limits permitted by the
Exchange or otherwise) in the Shares or
in any options, contracts or future
contracts relating to the Shares."
Settlement Terms:
Settlement Method: Net Share Settlement
Net Share Settlement: For each Exercisable Option that is
exercised or deemed exercised, JPMorgan
will deliver to the Counterparty, on the
related Settlement Date, a number of
Shares equal to the Net Shares in respect
of such Exercisable Option. In no event
will the Net Shares be less than zero.
Net Shares: In respect of each Exercisable Option
exercised or deemed exercised, a number
of Shares equal to (i) the Option
Entitlement multiplied by (ii) the sum,
for each Exchange Business Day during the
relevant Cash Settlement Averaging
Period, of (A) the Relevant Price on such
Exchange Business Day, less the Strike
Price, divided by (B) the Relevant Price
on such Exchange Business Day, divided by
(iii) twenty-five (25); provided,
however, that if the calculation
contained in clause (A) above results in
a negative number, such number shall be
replaced with the number "zero".
JPMorgan will deliver cash in lieu of any
fractional Share with respect to any Net
Shares to be delivered
4
with respect to all Exercisable Options
having the same Settlement Date based on
the Last Reported Sale Price (as defined
in the Indenture) for the Shares on the
final Exchange Business Day of the
relevant Cash Settlement Averaging
Period.
Relevant Price: For each Exchange Business Day during a
Cash Settlement Averaging Period, the per
Share volume-weighted average price for
such day as displayed under the heading
"Bloomberg VWAP" on Bloomberg page AIN
{equity} AQR (or any successor thereto)
in respect of the period from 9:30 a.m.
to 4:00 p.m. (New York City time) on such
Exchange Business Day (or if such
volume-weighted average price is
unavailable, the market value of one
Share on such Exchange Business Day, as
determined by the Calculation Agent,
using a volume-weighted method).
Cash Settlement For each Exercisable Option, the
Averaging Period: twenty-five (25) consecutive Exchange
Business Days commencing on and including
the second Exchange Business Day
following the Conversion Date for the
Convertible Note relating to such
Exercisable Option; provided that if the
Counterparty has validly designated March
15, 2013 as a redemption date for the
Convertible Notes pursuant to the terms
of the Indenture, the Cash Settlement
Averaging Period for any Exercisable
Options relating to the Convertible Notes
with a Conversion Date following the date
on which the Counterparty gives notice of
such redemption, the twenty-five (25)
consecutive Exchange Business Days
commencing on and including the
twenty-eighth (28th) Scheduled Trading
Day preceding such redemption date.
Settlement Date: For each Exercisable Option, the
settlement date for Shares to be
delivered with respect to the related
Convertible Notes under the terms of the
Indenture.
Other Applicable Provisions: The provisions of Sections 6.6, 6.7, 6.8,
6.9 and 6.10 of the Equity Definitions
will be applicable, except that all
references in such provisions to
"Physically-Settled" shall be read as
references to "Net Share Settled". "Net
Share Settled" in relation to any Option
means that Net Share Settlement is
applicable to that Option.
Failure to Deliver: Applicable
3. Additional Terms applicable to the Transaction:
Adjustments applicable to
the Transaction:
Potential Adjustment Events: Notwithstanding Section 9.1(e) of the
Equity Definitions, a "Potential
Adjustment Event" means any occurrence of
any event or condition, as set forth in
Section 15.04 of the Indenture resulting
in an adjustment to the Conversion
5
Rate of the Convertible Notes, excluding
adjustments or conditions that result
from an adjustment to the Conversion Rate
pursuant to Section 15.04(i) or Section
15.03(a) of the Indenture.
Method of Adjustment: Calculation Agent Adjustment, and means
that, notwithstanding Section 9.1(c) of
the Equity Definitions, upon any
adjustment to the Conversion Rate of the
Convertible Notes pursuant to the
Indenture (other than Section 15.04(i)
and Section 15.03(a) of the Indenture)
and an equivalent adjustment to the
Option Entitlement hereunder, the
Calculation Agent, in order to reflect
the effect of the event or condition
relating to such adjustment on this
Transaction, will make a corresponding
adjustment to any one or more of the
Strike Price, Number of Options and any
other variable relevant to the exercise,
settlement or payment for the
Transaction.
Extraordinary Events applicable to the Transaction:
Merger Events: Notwithstanding Section 9.2(a) of the
Equity Definitions, a "Merger Event"
means the occurrence of any event or
condition set forth in Section 15.06 of
the Indenture.
Consequence of Merger Events: Notwithstanding Section 9.3 of the Equity
Definitions, upon the occurrence of a
Merger Event, the Calculation Agent shall
make a corresponding adjustment in
respect of any adjustment under the
Indenture to any one or more of the
nature of the Shares, Strike Price,
Number of Options, Option Entitlement and
any other variable relevant to the
exercise, settlement or payment for the
Transaction; provided, however, that such
adjustment (i) shall be made without
regard to any adjustment to the
Conversion Rate for the issuance of
additional shares as set forth in Section
15.03(a) of the Indenture, and (ii) shall
assume that, in the case of a "Public
Acquirer Change of Control" (as defined
in the Indenture), the Counterparty does
not make an election provided in Section
15.03(d) of the Indenture.
Additional Termination Events: If an event of default with respect to
the Counterparty shall occur under the
terms of the Convertible Notes as set
forth in Section 7.01 of the Indenture
and such event of default results in the
declaration of principal and interest
immediately due and payable pursuant to
the terms of the Indenture, such event
shall constitute an Additional
Termination Event applicable to this
Transaction, with respect to which the
Counterparty shall be deemed to be the
sole Affected Party and this Transaction
shall be the sole Affected Transaction;
provided that, notwithstanding Section
6(b)(iv)(1) of the Agreement, JPMorgan
will be required, if the Counterparty
makes itself promptly available upon
request, to consult with the Counterparty
and to reasonably consider whether it is
advisable to designate an Early
Termination Date pursuant to Section 6(b)
of the Agreement.
Whenever the Counterparty is required to
deliver to the Trustee an officer's
certificate with respect to a default or
an event of default pursuant to Section
5.08 of the Indenture, the Counterparty
shall also be required to deliver a copy
of such certificate to JPMorgan
hereunder.
6
4. Calculation Agent: JPMorgan. Whenever the Calculation Agent
is required to act or to exercise
judgment in any way, it will do so in
good faith and in a commercially
reasonable manner to achieve a
commercially reasonable result.
The Calculation Agent shall, not later
than the third Currency Business Day
following receipt of a written request of
the Counterparty, provide the
Counterparty with a written explanation
of the basis of any determination,
adjustment or calculation made hereunder;
provided that if, after reviewing such
written explanation, the Counterparty
objects to such determination, adjustment
or calculation, then the Counterparty,
JPMorgan and the Calculation Agent shall
make reasonable good faith efforts to
agree upon an appropriate determination,
adjustment or calculation.
5. Account Details:
(a) Account for payments from the Counterparty:
JPMorgan, New York
ABA: 021-000-021
Acct: CHASUS33
Acct No.: 910-1010-693
Account for delivery of Shares to the Counterparty:
DTC 50108 (Computershare)
Note: the shares cannot be sent electronically. They must be DWACed.
(b) Account for payments to JPMorgan:
JPMorgan Chase Bank, N.A., New York
ABA: 021 000 021
Favour: JPMorgan Chase Bank, N.A. - London
A/C: 0010962009 CHASUS33
Account for delivery of Shares from JPMorgan:
DTC 060
6. Offices:
The Office of the Counterparty for the Transaction is: Inapplicable, the
Counterparty is not a Multibranch Party.
The Office of JPMorgan for the Transaction is: New York
JPMorgan Chase Bank, N.A.
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
7
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to the Counterparty:
Albany International Corp. 1373 Broadway
Albany, New York 12204
Attention: Christopher J. Connally
Telephone No.: (518) 445-2235
Facsimile No.: (518) 447-6305
With a copy to:
Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Charles J. Silva, Jr.
Telephone No.: (518) 445-2277
Facsimile No.: (518) 447-6575
(b) Address for notices or communications to JPMorgan:
JPMorgan Chase Bank, National Association
277 Park Avenue, 11th Floor
New York, NY 10172
Attention: Nathan Lulek
EDG Corporate Marketing
Telephone No.: (212) 622-2262
Facsimile No.: (212) 622-8091
8. Representations and Warranties of the Counterparty
The representations and warranties of the Counterparty set forth in Section 4 of
the Purchase Agreement (the "Purchase Agreement") dated as of the Trade Date
between the Counterparty and J.P. Morgan Securities Inc. and Banc of America
Securities LLC, as Initial Purchasers, are true and correct and are hereby
deemed to be repeated to JPMorgan as if set forth herein. The Counterparty
hereby further represents and warrants to JPMorgan that:
(a) The Counterparty has all necessary corporate power and authority to
execute, deliver and perform its obligations in respect of this
Transaction; such execution, delivery and performance have been duly
authorized by all necessary corporate action on the Counterparty's
part; and this Confirmation has been duly and validly executed and
delivered by the Counterparty and constitutes its valid and binding
obligation, enforceable against the Counterparty in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law
or in equity) and except that rights to indemnification and
contribution hereunder may be limited by federal or state securities
laws or public policy relating thereto.
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of the Counterparty
hereunder will conflict with or result in a breach of the
certificate of incorporation or by-laws (or any equivalent
documents) of the Counterparty, or any applicable law or regulation,
or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to
which the Counterparty or any of its Significant Subsidiaries is a
party or by which the Counterparty or any of its Significant
Subsidiaries is bound or to which the Counterparty
8
or any of its Significant Subsidiaries is subject, or constitute a
default under, or result in the creation of any lien under, any such
agreement or instrument, or breach or constitute a default under any
agreements and contracts of the Counterparty and its Significant
Subsidiaries filed as exhibits to the Counterparty's Annual Report
on Form 10-K for the year ended December 31, 2004, incorporated by
reference in the Offering Memorandum.
(c) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required in
connection with the execution, delivery or performance by the
Counterparty of this Confirmation, except such as have been obtained
or made and such as may be required under the Securities Act of
1933, as amended (the "Securities Act") or state securities laws.
(d) The Counterparty is an "eligible contract participant" (as such term
is defined in Section 1a(12) of the Commodity Exchange Act, as
amended (the "CEA") because one or more of the following is true:
The Counterparty is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) the Counterparty has total assets in excess of USD 10,000,000;
(B) the obligations of the Counterparty hereunder are guaranteed,
or otherwise supported by a letter of credit or keepwell,
support or other agreement, by an entity of the type described
in Section 1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I),
1a(12)(A)(vii) or 1a(12)(C) of the CEA; or
(C) the Counterparty has a net worth in excess of USD 1,000,000
and has entered into this Agreement in connection with the
conduct of Counterparty's business or to manage the risk
associated with an asset or liability owned or incurred or
reasonably likely to be owned or incurred by the Counterparty
in the conduct of the Counterparty's business.
(e) The Counterparty is not, on the date hereof, in possession of any
material non-public information with respect to the Counterparty.
9. Other Provisions:
(a) Opinions. The Counterparty shall deliver to JPMorgan an opinion of
counsel, dated as of the Trade Date, substantially in the form set
forth in Exhibit A hereto.
(b) Amendment. If the Initial Purchasers party to the Purchase Agreement
exercise their right to purchase additional Convertible Notes as set
forth therein, then, at the discretion of the Counterparty, JPMorgan
and the Counterparty will amend this Confirmation to provide for
such increase in Convertible Notes (but on pricing terms acceptable
to JPMorgan and the Counterparty) (such amendment to provide for the
payment by the Counterparty to JPMorgan of the additional premium
related thereto).
(c) No Reliance, etc. Each party represents that (i) it is entering into
the Transaction evidenced hereby as principal (and not as agent or
in any other capacity); (ii) neither the other party nor any of its
agents are acting as a fiduciary for it; (iii) it is not relying
upon any representations except those expressly set forth in the
Agreement or this Confirmation; (iv) it has not relied on the other
party for any legal, regulatory, tax, business, investment,
financial, and accounting advice, and it has made its own
investment, hedging, and trading decisions based upon its own
judgment and not upon any view expressed by the other party or any
of its agents; and (v) it is entering into this Transaction with a
full understanding of the terms, conditions and risks thereof and it
is capable of and willing to assume those risks.
9
(d) Share De-listing Event. If at any time during the period from and
including the Trade Date, to and including the Final Expiration
Date, the Shares cease to be listed or quoted on the Exchange for
any reason (other than a Merger Event as a result of which the
shares of common stock underlying the Options are listed or quoted
on The New York Stock Exchange, The American Stock Exchange or the
NASDAQ National Market (or their respective successors) (the
"Successor Exchange")) and are not immediately re-listed or quoted
as of the date of such de-listing on the Successor Exchange (a
"Share De-listing"), then Cancellation and Payment (as defined in
Section 9.6 of the Equity Definitions, treating the "Announcement
Date" as the date of first public announcement that the Share
De-listing, will occur and the "Merger Date" as the date of the
Share De-listing) shall apply, and the date of the de-listing shall
be deemed the date of termination for purposes of calculating any
payment due from one party to the other in connection with the
cancellation of this Transaction. If the Shares are immediately
re-listed on a Successor Exchange upon their de-listing from the
Exchange, this Transaction shall continue in full force and effect,
provided that the Successor Exchange shall be deemed to be the
Exchange for all purposes hereunder; provided that the Calculation
Agent may make appropriate adjustments to the terms of this
Transaction to reflect the effect of such re-listing. For the
avoidance of doubt, in no event will a Share De-listing result in an
obligation of the Counterparty under this Confirmation to make a
payment to JPMorgan.
(e) Repurchase Notices. The Counterparty shall, on any day on which the
Counterparty effects any repurchase of Shares, promptly give
JPMorgan a written notice of such repurchase (a "Repurchase Notice")
on such day if following such repurchase, the number of outstanding
Shares on such day, subject to any adjustments provided herein, is
(i) less than 25 million (in the case of the first such notice) or
(ii) thereafter, more than 125,000 less than the number of Shares
included in the immediately preceding Repurchase Notice. The
Counterparty agrees to indemnify and hold harmless JPMorgan and its
affiliates and their respective officers, directors, employees,
affiliates, advisors, agents and controlling persons (each, an
"Indemnified Person") from and against any and all losses (including
losses relating to JPMorgan's reasonable hedging activities as a
consequence of becoming, or of the risk of becoming, a Section 16
"insider", including without limitation, any forbearance from
reasonable hedging activities or cessation of such hedging
activities and any losses in connection therewith with respect to
this Transaction), claims, damages, judgments, liabilities and
expenses (including reasonable attorney's fees), joint or several,
which an Indemnified Person actually may become subject to, as a
result of the Counterparty's failure to provide JPMorgan with a
Repurchase Notice on the day and in the manner specified in this
Section 9(e), and to reimburse, within 30 days, upon written
request, each of such Indemnified Persons for any reasonable legal
or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action,
proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified
Person, such Indemnified Person shall promptly notify the
Counterparty in writing, and the Counterparty, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to
the Indemnified Person to represent the Indemnified Person and any
others the Counterparty may designate in such proceeding and shall
pay the fees and expenses of such counsel related to such
proceeding. The Counterparty shall not be liable for any settlement
of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the
plaintiff, the Counterparty agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such
settlement or judgment. The Counterparty shall not, without the
prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of
which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the
subject matter of such proceeding on terms reasonably satisfactory
to such Indemnified Person. If the indemnification provided for in
10
this paragraph (e) is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then the Counterparty under such
paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph (e) are not
exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in
equity. The indemnity and contribution agreements contained in this
paragraph (e) shall remain operative and in full force and effect
regardless of the termination of this Transaction.
(f) Regulation M. The Counterparty was not on the Trade Date and is not
on the date hereof engaged in a distribution, as such term is used
in Regulation M under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), of any securities of the Counterparty,
other than a distribution meeting the requirements of the exception
set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M. The
Counterparty shall not, until the second Exchange Business Day
immediately following the Trade Date, engage in any such
distribution.
(g) No Manipulation. The Counterparty is not entering into this
Transaction to create actual or apparent trading activity in the
Shares (or any security convertible into or exchangeable for the
Shares) or to raise or depress or otherwise manipulate the price of
the Shares (or any security convertible into or exchangeable for the
Shares).
(h) Number of Repurchased Shares. The Counterparty represents that it
could have purchased Shares, in an amount equal to the product of
the Number of Options and the Option Entitlement, on the Exchange or
otherwise, in compliance with applicable law, its organizational
documents and any orders, decrees, contractual agreements binding
upon the Counterparty, on the Trade Date.
(i) Board Authorization. Each of this Transaction and the issuance of
the Convertible Notes was approved by its board of directors and
publicly announced, solely for the purposes stated in such board
resolution and public disclosure and the Counterparty's board of
directors has duly authorized any repurchase of Shares pursuant to
this Transaction. The Counterparty further represents that there is
no internal policy, whether written or oral, of the Counterparty
that would prohibit the Counterparty from entering into any aspect
of this Transaction, including, but not limited to, the purchases of
Shares to be made pursuant hereto.
(j) Transfer or Assignment. (i) The Counterparty shall have the right to
assign its rights and obligations hereunder with respect to any
Options hereunder (such Options, the "Transfer Options"), subject to
JPMorgan's consent, such consent not to be unreasonably withheld or
delayed; provided that such assignment or transfer shall be effected
on terms satisfactory to JPMorgan and shall be subject, but not
limited, to the following conditions:
(A) With respect to any Transfer Options, the Counterparty
shall not be released from its notice and indemnification
obligations pursuant to Section 9(c) or any obligations under
Section 9(s) of this Confirmation;
(B) Any Transfer Options shall only be transferred or assigned
to a third party reasonably acceptable to JPMorgan and on
terms, including any reasonable undertakings by such third
party and execution of any documentation and delivery of legal
opinions with respect to securities laws and other matters by
such third party and the Counterparty, as are requested and
reasonably satisfactory to JPMorgan; and
(C) The Counterparty shall be responsible for all reasonable
costs and expenses, including reasonable counsel fees,
incurred by JPMorgan in connection with such transfer or
assignment.
11
(ii) JPMorgan may not transfer or assign all or any portion of its
rights or obligations under this Transaction without consent of the
Counterparty; provided, however, that if JPMorgan, in its reasonable
discretion, determines that, (x) its "beneficial ownership" (within
the meaning of Section 16 of the Exchange Act and rules promulgated
thereunder) exceeds 8% or more of the Counterparty's outstanding
Shares or (y) the product of the Number of Options and the Option
Entitlement divided by the total number of the Counterparty's
outstanding Shares (the "Options Equity Percentage") exceeds 15%,
then:
(A) JPMorgan may transfer or assign a number of Options
sufficient to reduce such "beneficial ownership" to 7.5% or
such Options Equity Percentage to 14.5% to any third party
with a rating for its long term, unsecured and unsubordinated
indebtedness of A- or better by Standard & Poor's Ratings
Service or its successor ("S&P"), or A3 or better by Moody's
Investors Service ("Moody's") or, if either S&P or Moody's
ceases to rate such debt, at least an equivalent rating or
better by a substitute rating agency mutually agreed by the
Counterparty and JPMorgan; and
(B) If such "beneficial ownership" exceeds 8% or such Options
Equity Percentage exceeds 15%,
(1) at a time when the number of Counterparty's
outstanding Shares, subject to any adjustments provided
herein, is less than 22 million;
(2) as a result of any breach by the Counterparty of its
notice obligations under Section 9(e); or
(3) and if, in the good faith reasonable judgment of
JPMorgan, based upon advice of counsel and as a result
of events occurring after the Trade Date, JPMorgan
reasonably determines that it would be inadvisable to
engage in any alternative hedging transactions, which
would enable it to reduce its "beneficial" ownership or
its Options Equity Percentage, other than by transfer,
assignment or termination, and in either case JPMorgan
reasonably determines that it is unable after its
commercially reasonable efforts to effect transfer or
assignment on pricing terms and in a time period
reasonably acceptable to JPMorgan that would reduce its
"beneficial ownership" to 7.5% or such Options Equity
Percentage to 14.5%;
JPMorgan may designate any Exchange Business Day as an Early
Termination Date with respect to a portion (the "Terminated
Portion") of this Transaction, such that its "beneficial
ownership" following such partial termination would be
approximately equal to 7.5% or the Options Equity Percentage
approximately equal to 14.5%, as applicable. If JPMorgan so
designates an Early Termination Date with respect to a portion
of this Transaction, a payment shall be made pursuant to
Section 6 of the Agreement as if an Early Termination Date had
occurred in respect of a Transaction having terms identical to
this Transaction except with a Number of Options equal to the
Terminated Portion, with respect to which the Counterparty
shall be the sole Affected Party and such Transaction shall be
the only Affected Transaction.
(iii) Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing JPMorgan to purchase, sell,
receive or deliver any Shares or other securities to or from the
Counterparty, JPMorgan may designate any of its affiliates to
purchase, sell, receive or deliver such shares or other securities
and otherwise to perform JPMorgan's obligations in respect of this
Transaction and any such designee may assume such obligations.
JPMorgan shall be discharged of its obligations to the Counterparty
only to the extent of any such performance.
12
(k) Modified Settlement. If, upon advice of counsel, JPMorgan reasonably
determines, with respect to applicable legal and regulatory
requirements, including any requirements relating to JPMorgan's
hedging activities hereunder, or due to a lack of sufficient
liquidity in the borrow market for the Shares, that it would not be
practicable or advisable to deliver, or to acquire to deliver, any
or all of the Shares to be delivered by JPMorgan on the Settlement
Date for this Transaction, JPMorgan may, by notice to the
Counterparty on or prior to any anticipated Settlement Date (a
"Nominal Settlement Date"), elect to deliver the Shares on a
different date or two or more dates, whether immediately preceding
or following such Settlement Date (each, a "Staggered Settlement
Date"), as follows:
(i) in such notice, JPMorgan will specify to the Counterparty the
related Staggered Settlement Date or Dates (the last of which
may be no later than the twenty-fifth (25th) Scheduled Trading
Day following the Nominal Settlement Date) and the number of
Shares that it will deliver on each Staggered Settlement Date;
and
(ii) the aggregate number of Shares that JPMorgan will deliver to
the Counterparty hereunder on all such Staggered Settlement
Dates will equal the number of Shares that JPMorgan would
otherwise be required to deliver on such Nominal Settlement
Date.
JPMorgan shall effect such delivery as promptly as is practicable
and shall compensate the Counterparty for any delayed delivery by
paying, in addition to delivering any Shares hereunder, an amount,
as determined by the Calculation Agent, equal to the sum for each
day of such delay of the product of (i) the Federal Funds Rate
divided by 360 and (ii) the value of the Shares not delivered as of
such day; provided that if JPMorgan fails to deliver any Shares
hereunder by the twenty-fifth (25th) Scheduled Trading Day
immediately following the Nominal Settlement Date, such event shall
constitute an Additional Termination Event with respect to the
portion of this Transaction corresponding to the number of Shares
not delivered by JPMorgan by such date, with respect to which
JPMorgan shall be the sole Affected Party and this Transaction the
sole Affected Transaction.
"Federal Funds Rate" means, for any day, the rate set forth for such
day opposite the caption "Federal funds", as such rate is displayed
on the page FedsOpen {Index}{GO} on the Bloomberg Professional
Service or any successor page; provided that if no rate appears for
any day on such page, the rate for the immediately preceding day for
which a rate does so appear shall be used for such day.
(l) Damages. Neither party shall be liable under Section 6.10 of
the Equity Definitions for special, indirect or consequential
damages, even if informed of the possibility thereof.
(m) Early Unwind. In the event the sale of Convertible Notes is
not consummated with the initial purchasers for any reason by
the close of business in New York on March 13, 2006 (or such
later date as agreed upon by the parties) (March 13, 2006 or
such later date as agreed upon, being the "Early Unwind
Date"), this Transaction shall automatically terminate (the
"Early Unwind"), on the Early Unwind Date and (i) the
Transaction and all of the respective rights and obligations
of JPMorgan and the Counterparty under the Transaction shall
be cancelled and terminated and (ii) each party shall be
released and discharged by the other party from and agrees not
to make any claim against the other party with respect to any
obligations or liabilities of the other party arising out of
and to be performed in connection with the Transaction either
prior to or after the Early Unwind Date; provided that, if the
failure to consummate the sale of the Convertible Notes
results from a breach by the Counterparty of any
representation of or any undertaking by the Counterparty
contained in the Purchase Agreement, the Counterparty shall
purchase from JPMorgan on the Early Unwind Date any Shares
purchased by JPMorgan or one or more of its affiliates in
connection with this Transaction and reimburse JPMorgan for
any costs
13
or expenses (including market losses) relating to the
unwinding of its reasonable hedging activities in connection
with the Transaction (including any losses or costs incurred
as a result of its terminating, liquidating, obtaining or
reestablishing any reasonable hedge or related trading
position). The amount of any such reimbursement shall be
determined by JPMorgan in its reasonable good faith
discretion. JPMorgan shall notify the Counterparty of such
amount, including, upon the Counterparty's request, an
explanation of the basis of determination of such amount, and
the Counterparty shall pay such amount in immediately
available funds on the Early Unwind Date. JPMorgan and the
Counterparty represent and acknowledge to the other that,
subject to the proviso included in this Section, upon an Early
Unwind, all obligations with respect to the Transaction shall
be deemed fully and finally discharged.
(n) Role of Agent. Each party agrees and acknowledges that (i)
J.P. Morgan Securities Inc., an affiliate of JPMorgan
("JPMSI"), has acted solely as agent and not as principal with
respect to this Transaction and (ii) JPMSI has no obligation
or liability, by way of guaranty, endorsement or otherwise, in
any manner in respect of this Transaction (including, if
applicable, in respect of the settlement thereof). Each party
agrees it will look solely to the other party (or any
guarantor in respect thereof) for performance of such other
party's obligations under this Transaction.
(o) Additional Provisions.
(i) Notwithstanding Section 9.7 of the Equity Definitions,
everything in the first paragraph of Section 9.7(b) of the
Equity Definitions after the words "Calculation Agent" in the
third line through the remainder of such Section 9.7 shall be
deleted and replaced with the following:
"based on an amount representing the Calculation Agent's
determination of the fair value to Buyer of an option with
terms that would preserve for Buyer the economic equivalent of
any payment or delivery (assuming satisfaction of each
applicable condition precedent, including, for the avoidance
of doubt, the occurrence of a Conversion Date with respect to
each Option) by the parties in respect of the relevant
Transaction that would have been required after that date but
for the occurrence of the Share De-listing."
(ii) Notwithstanding anything to the contrary in the
Agreement, this Confirmation or the Equity Definitions, (A) in
determining any amount payable in respect of an Early
Termination Date or a Cancellation and Payment, the value of
this Transaction shall be determined as if all Options
outstanding at such time would become Exercisable Options
during the Final Exercise Period and, (B) in no event shall
the calculation of the amount under Section 6 of the Agreement
in respect of an Additional Termination Event result in any
amount being payable by the Counterparty.
(p) Alternative Calculations and Payment on Early Termination and
on Certain Extraordinary Events. If, in respect of this
Transaction, an amount is payable by JPMorgan to the
Counterparty (i) pursuant to Section 9.7 of the Equity
Definitions or this Confirmation (except in the event of a
Merger Event in which the consideration to be paid to holders
of Shares consists solely of cash) or (ii) pursuant to Section
6(d)(ii) of the Agreement (except in the event of an Event of
Default in which the Counterparty is the Defaulting Party or a
Termination Event in which the Counterparty is the Affected
Party, other than an Event of Default of the type described in
Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement
or in this Confirmation or a Termination Event of the type
described in Section 5(b)(i), (ii), (iii), (iv), (v) or (vi)
of the Agreement or in this Confirmation, in each case
resulting from an event or events outside the Counterparty's
control) (a "Payment Obligation"), the Counterparty may, in
its sole -- discretion, request that JPMorgan satisfy such
Payment Obligation by the Share Termination Alternative (as
defined below) and shall give irrevocable telephonic notice to
JPMorgan, confirmed in writing within one Currency Business
Day, no later than 12:00 p.m. New York City time
14
on the Merger Date, the date of the Share De-listing or the
Early Termination Date, as applicable; provided that if the
Counterparty does not validly request that JPMorgan satisfy
its Payment Obligation by the Share Termination Alternative,
JPMorgan shall have the right, in its sole discretion, to
satisfy its Payment Obligation by the Share Termination
Alternative, notwithstanding Counterparty's lack of election
or election to the contrary. In calculating any amounts under
Section 6(e) of the Agreement, notwithstanding anything to the
contrary in the Agreement, (1) separate amounts shall be
calculated as set forth in Section 6(e) with respect to (a)
this Transaction and (b) all other Transactions, and (2) such
separate amounts shall be payable pursuant to Section 6(d)(ii)
of the Agreement, subject to, in the case of clause (1)(a),
the Share Termination Alternative right hereunder.
Share Termination Alternative: If applicable, JPMorgan shall
deliver to the Counterparty
the Share Termination Delivery
Property on the date when the
Payment Obligation would
otherwise be due pursuant to
Section 9.7 of the Equity
Definitions, this Confirmation
or Section 6(d)(ii) and 6(e)
of the Agreement, as
applicable (the "Share
Termination Payment Date"), in
satisfaction of the Payment
Obligation in the manner
reasonably requested by the
Counterparty free of payment.
Share Termination Delivery Property: A number of Share Termination
Delivery Units, as calculated
by the Calculation Agent,
equal to the Payment
Obligation divided by the
Share Termination Unit Price.
The Calculation Agent shall
adjust the Share Termination
Delivery Property by replacing
any fractional portion of a
security therein with an
amount of cash equal to the
value of such fractional
security based on the values
used to calculate the Share
Termination Unit Price.
Share Termination Unit Price: The value to JPMorgan of
property contained in one
Share Termination Delivery
Unit on the date such Share
Termination Delivery Units are
to be delivered as Share
Termination Delivery Property,
as determined by the
Calculation Agent in its
discretion by commercially
reasonable means and notified
by the Calculation Agent to
JPMorgan at the time of
notification of the Payment
Obligation.
Share Termination Delivery Unit: One Share or, if a Merger
Event has occurred and a
corresponding adjustment to
this Transaction has been
made, a unit consisting of the
number or amount of each type
of property received by a
holder of one Share (without
consideration of any
requirement to pay cash or
other consideration in lieu of
fractional amounts
15
of any securities) in such
Merger Event, as determined by
the Calculation Agent.
Failure to Deliver: Applicable
Other applicable provisions: If the Share Termination
Alternative is applicable, the
provisions of Sections 6.6,
6.7, 6.8, 6.9 and 6.10 (as
modified above) of the Equity
Definitions will be
applicable, except that all
references in such provisions
to "Physically-Settled" shall
be read as references to
"Share Termination Settled"
and all references to "Shares"
shall be read as references to
"Share Termination Delivery
Units". "Share Termination
Settled" in relation to this
Transaction means that the
Share Termination Alternative
is applicable to this
Transaction.
(q) Governing Law. New York law (without reference to choice of
law doctrine).
(r) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial
by jury in respect of any suit, action or proceeding relating
to this Transaction. Each party (i) certifies that no
representative, agent or attorney of the other party has
represented, expressly or otherwise, that such other party
would not, in the event of such a suit, action or proceeding,
seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into
this Transaction, as applicable, by, among other things, the
mutual waivers and certifications provided herein.
(s) Registration. The Counterparty hereby agrees that if, in the
good faith reasonable judgment of JPMorgan, based upon the
advice of counsel, the Shares ("Hedge Shares") acquired by
JPMorgan for the purpose of hedging its obligations pursuant
to this Transaction cannot be sold in the U.S. public market
by JPMorgan without registration under the Securities Act, the
Counterparty shall, at its election, either (i) in order to
allow JPMorgan to sell the Hedge Shares in a registered
offering, make available to JPMorgan an effective registration
statement under the Securities Act to cover the resale of such
Hedge Shares and enter into an agreement, in form and
substance reasonably satisfactory to JPMorgan, substantially
in the form of an underwriting agreement for a registered
offering; provided, however, that if JPMorgan, in its
reasonable discretion, is not satisfied with access to due
diligence materials, the results of its due diligence
investigation, or the procedures and documentation for the
registered offering referred to above, then clause (ii) or
clause (iii) of this Section 9(s) shall apply at the election
of the Counterparty, (ii) in order to allow JPMorgan to sell
the Hedge Shares in a private placement, enter into a private
placement agreement substantially similar to private placement
purchase agreements customary for private placements of equity
securities, in form and substance reasonably satisfactory to
JPMorgan (in which case, the Calculation Agent shall make any
adjustments to the terms of this Transaction that are
necessary, in its reasonable judgment, to compensate JPMorgan
for any discount from the public market price of the Shares
incurred on the sale of Hedge Shares in a private placement),
or (iii) purchase the Hedge Shares from JPMorgan at the Last
Reported Sale Price on such Exchange Business Days, and in the
amounts, requested by JPMorgan.
(t) Tax Advice. JPMorgan and its affiliates do not provide tax
advice. Accordingly, any statements contained herein as to tax
matters were neither written nor intended by JPMorgan to be
used and cannot be used by any taxpayer for the purpose of
avoiding tax
16
penalties that may be imposed on such taxpayer. If any person
uses or refers to any such tax statement in promoting,
marketing or recommending a partnership or other entity,
investment plan or arrangement to any taxpayer, then the
statement expressed above is being delivered to support the
promotion or marketing of the transaction or matter addressed
and the recipient should seek advice based on its particular
circumstances from an independent tax advisor. Notwithstanding
anything herein to the contrary, the sender and any intended
recipient of this communication (and any of its employees,
representatives and other agents) may disclose to any and all
persons, without limitation of any kind, the tax treatment or
tax structure of this transaction.
(u) No Setoff. Notwithstanding any provision of the Agreement or
any other agreement between the parties to the contrary,
obligations under this Transaction shall not be set off by
JPMorgan (including, for the avoidance of doubt, pursuant to
Section 6(f) of the Agreement) against any other obligations
of the parties, whether arising under the Agreement, this
Confirmation, under any other agreement between the parties
hereto, by operation of law or otherwise.
17
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it in the manner
indicated in the attached cover letter.
Very truly yours,
J.P. Morgan Securities Inc., as agent for
JPMorgan Chase Bank, National
Association
By: /s/ Sudheer Tegulapelle
------------------------------------
Authorized Signatory
Name: Sudheer Tegulapelle
Accepted and confirmed
as of the Trade Date:
ALBANY INTERNATIONAL CORP.
By: /s/ David C. Michaels
-------------------------------
Authorized Signatory
Name: David C. Michaels
JPMorgan Chase Bank, National Association
Organised under the laws of the United States as a National Banking Association
Main Office 1111 Polaris Parkway, Columbus, Ohio 43271
Registered as a branch in England & Wales branch No. BR000746
Registered Branch Office 125 London Wall, London EC2Y 5AJ
Authorised and regulated by the Financial Services Authority
Annex A
Form of Legal Opinion
Exhibit 10.2
- --------------------------------------------------------------------------------
Bank of America [LOGO]
EQUITY FINANCIAL PRODUCTS GROUP
- --------------------------------------------------------------------------------
Bank of America, N.A.
c/o Banc of America Securities LLC
9 West 57th Street, 40th Floor
New York, NY 10019
March 7, 2006
To: Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Christopher J. Connally, Corporate Treasurer
Telephone No.: (518) 445-2212
Facsimile No.: (518) 447-6305
Re: Warrants
Ref. No.: NY-21552
The purpose of this letter agreement is to confirm the terms and
conditions of the Warrants issued by Albany International Corp., a Delaware
corporation (the "Company"), to Bank of America, N.A. ("BofA"), on the Trade
Date specified below (the "Transaction"). This letter agreement constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below. This
Confirmation shall replace any previous agreements and serve as the final
documentation for this Transaction.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. This
Transaction shall be deemed to be a Share Option Transaction within the meaning
set forth in the Equity Definitions.
Each party is hereby advised, and each such party acknowledges, that the
other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties'
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between BofA and
the Company as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall supplement, form a part of, and be subject to
an agreement in the form of the 2002 ISDA Master Agreement (the "Agreement") as
if BofA and the Company had executed an agreement in such form (but without any
Schedule except for the election of the laws of the State of New York as the
governing law) on the Trade Date. In the event of any inconsistency between
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which
this Confirmation relates shall be governed by the Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: March 7, 2006
1
Warrants: Equity call warrants, each giving the
holder the right to purchase one Share
at the Strike Price, subject to the
Settlement Terms set forth below. For
the purposes of the Equity Definitions,
each reference to a Warrant herein shall
be deemed to be a reference to a Call
Option.
Warrant Style: American
Buyer: BofA
Seller: Company
Shares: The Class A common stock of the Company,
par value USD 0.001 per Share (Exchange
symbol "AIN")
Number of Warrants: 1,374,662, subject to adjustment as
provided herein
Daily Number of Warrants: Subject to "Expiration Dates" below, for
any day, the Number of Warrants that
have not expired or been exercised as of
such day, divided by the remaining
number of Expiration Dates (including
such day) and rounded down to the
nearest whole number to account for any
fractional Daily Number of Warrants.
Warrant Entitlement: One Share per Warrant
Multiple Exercise: Applicable
Minimum Number of Warrants: 1
Maximum Number of Warrants: 1,374,662
Strike Price: USD 52.25
Premium: USD 11,079,541.64
Premium Payment Date: March 13, 2006
Exchange: The New York Stock Exchange
Related Exchange(s): The principal exchange(s) for options
contracts or futures contracts, if any,
with respect to the Shares.
Exercise and Valuation:
Expiration Time: The Valuation Time
Expiration Dates: Each Exchange Business Day during the
period beginning on and including the
First Expiration Date and ending on and
including the 59th Exchange Business Day
following the First Expiration Date
shall be an "Expiration Date" for a
number of Warrants equal to the Daily
Number of Warrants on such day.
2
Notwithstanding the foregoing and
anything to the contrary in the Equity
Definitions, if a Market Disruption
Event occurs on any Expiration Date
(including the First Expiration Date),
the Calculation Agent shall make
adjustments to the Daily Number of
Warrants for which such day shall be an
Expiration Date and shall designate a
scheduled Exchange Business Day or a
number of scheduled Exchange Business
Days as the Expiration Date(s) for the
remaining Daily Number of Warrants or a
portion thereof for the originally
scheduled Expiration Date, with such
adjustments based on, among other
factors, the duration of any Market
Disruption Event and the volume,
historical trading patterns and price of
the Shares; provided that if such
Expiration Date has not occurred
pursuant to this sentence as of the
eighth (8th) Exchange Business Day
following the last scheduled Expiration
Date under this Transaction, such eighth
(8th) Exchange Business Day shall be the
final Expiration Date and the
Calculation Agent shall determine its
good faith estimate of the fair market
value for the Shares as of the Valuation
Time on that eighth Exchange Business
Day.
First Expiration Date: June 15, 2013 (or, if such day is not an
Exchange Business Day, the next
following Exchange Business Day),
subject to Market Disruption Event
below.
Automatic Exercise: Applicable; and means that a number of
Warrants for each Expiration Date equal
to the Daily Number of Warrants (as
adjusted pursuant to the terms hereof)
for such Expiration Date will be deemed
to be automatically exercised.
Market Disruption Event: Section 4.3(a)(ii) is hereby amended by
adding after the words "or Share Basket
Transaction" in the first line thereof
the phrase "a failure by the Exchange or
Related Exchange to open for trading
during its regular trading session or"
and replacing the phrase "during the
one-half hour period that ends at the
relevant Valuation Time" with the phrase
"at any time during the regular trading
session on the Exchange or any Related
Exchange, without regard to after hours
or any other trading outside of the
regular trading session hours".
Valuation applicable to each Warrant:
Valuation Time: At the close of trading of the regular
trading session on the Exchange.
Valuation Date: Each Exercise Date.
Settlement Terms applicable to the Transaction:
Method of Settlement: Net Share Settlement; provided that,
with respect to all Warrants to be
exercised on the Expiration Dates, Cash
Settlement shall
3
apply if the Company validly elects Cash
Settlement pursuant to the provisions of
"Cash Settlement Election" below.
Net Share Settlement: On each Settlement Date, the Company
shall deliver to BofA, the Share
Delivery Quantity for such Settlement
Date to the account specified herein
free of payment through the Clearance
System.
Share Delivery Quantity: For each Settlement Date, (i) a number
of Shares (rounded down to the nearest
whole Share), as calculated by the
Calculation Agent, equal to the sum of,
for each Valuation Date that occurred in
the calendar week immediately preceding
such Settlement Date, the Settlement
Amount for such Valuation Date divided
by the Settlement Price on such
Valuation Date, and (ii) cash in lieu of
any fractional Share (based on the
Settlement Price on the last Valuation
Date during such week).
Settlement Amount: For each Valuation Date, an amount equal
to the product of (i) the number of
Warrants exercised or deemed exercised
on the relevant Exercise Date, (ii) the
Strike Price Differential for such
Valuation Date and (iii) the Warrant
Entitlement.
Strike Price Differential: (a) If the Settlement Price for any
Valuation Date is greater than the
Strike Price, an amount equal to the
excess of such Settlement Price over the
Strike Price; or
(b) If such Settlement Price is less
than or equal to the Strike Price, zero.
Settlement Price: For any Valuation Date, the per Share
volume-weighted average price as
displayed under the heading "Bloomberg
VWAP" on Bloomberg page AIN AQR
(or any successor thereto) in respect of
the period from 9:30 a.m. to 4:00 p.m.
(New York City time) on such Valuation
Date (or if such volume-weighted average
price is unavailable, the market value
of one Share on such Valuation Date, as
determined by the Calculation Agent
using a volume-weighted method).
Settlement Date: The first Exchange Business Day of each
calendar week shall be the Settlement
Date in respect of each Valuation Date
that occurred during the prior calendar
week.
Cash Settlement Election: Notwithstanding "Method of Settlement"
above, with respect to all Warrants to
be exercised on the Expiration Dates,
the Company can elect Cash Settlement by
delivering a written notice to BofA (the
"Cash Settlement Notice") on or prior to
the fifteenth (15th) scheduled Exchange
Business Day immediately preceding the
First Expiration Date, which Cash
Settlement Notice shall contain:
(i) a representation that (x) on the
date of such Cash Settlement Notice, the
Company is not in possession of any
material non-
4
public information with respect to the
Company or its Shares, (y) the Company
is electing Cash Settlement in good
faith and not as part of a plan or
scheme to evade the prohibitions of Rule
10b-5 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")
and (z) the Company has not entered into
or altered any hedging transaction
relating to the Shares corresponding to
or offsetting the Transaction;
(ii) a representation that the Company
is not, on the date of such Cash
Settlement Notice, and will not be, on
any day during the period commencing on
such day and ending on the second
Exchange Business Day following the last
Settlement Date hereunder (the
"Settlement Period"), engaged in a
distribution, as such term is used in
Regulation M under the Exchange Act,
other than a distribution meeting the
requirements of the exception set forth
in Rules 101(b)(10) and 102(b)(7) of
Regulation M;
(iii) a representation that the Company
is not electing Cash Settlement to
create actual or apparent trading
activity in the Shares (or any security
convertible into or exchangeable for the
Shares) or to raise or depress or
otherwise manipulate the price of the
Shares (or any security convertible into
or exchangeable for the Shares);
(iv) an acknowledgment by the Company
that (A) any transaction in Shares by
BofA following the Company's election of
Cash Settlement shall be made at BofA's
sole discretion and for BofA's own
account and (B) the Company does not
have, and shall not attempt to exercise,
any influence over how, when, whether or
at what price to effect such
transactions, or whether such
transactions are made on any securities
exchange or privately; and
(v) an agreement by the Company that,
during the Settlement Period, without
the prior written consent of BofA, the
Company shall not, and shall cause its
affiliated purchasers (each as defined
in Rule 10b-18 under the Exchange Act)
not to, directly or indirectly
(including, without limitation, by means
of a derivative instrument), purchase,
offer to purchase, place any bid or
limit order that would effect a purchase
of, or commence any tender offer
relating to, any Shares or any security
convertible into or exchangeable for the
Shares in the public markets.
Cash Settlement: If Cash Settlement is applicable, on
each Settlement Date, the Company shall
deliver to BofA (to an account specified
by BofA) the sum of the Settlement
Amounts for each Valuation Date that
occurred in the calendar week
immediately preceding such Settlement
Date.
The Company agrees that it shall not
have the right to elect Cash Settlement
if BofA notifies the Company that, it
has determined
5
that in the good faith reasonable
judgment of BofA, based upon advice of
counsel and as a result of events
occurring after the Trade Date, the
election of Cash Settlement or any
purchases of Shares that BofA (or its
affiliates) might make in connection
therewith would raise material risks
under applicable securities laws.
Failure to Deliver: Inapplicable
Other Applicable Provisions: If Net Share Settlement applies, the
provisions of Sections 6.6, 6.7, 6.8,
6.9 and 6.10 of the Equity Definitions
will be applicable, except that all
references in such provisions to
"Physically-Settled" shall be read as
references to "Net Share Settled". "Net
Share Settled" in relation to any
Warrant means that Net Share Settlement
is applicable to that Warrant.
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Warrants:
Method of Adjustment: Calculation Agent Adjustment. For
avoidance of doubt, in making any
adjustments under the Equity
Definitions, the Calculation Agent may
adjust the Strike Price, the Number of
Warrants, the Daily Number of Warrants
and the Warrant Entitlement.
Notwithstanding the foregoing, any cash
dividends or distributions, whether or
not extraordinary, shall be governed by
Section 9(l) of this Confirmation and
not by Section 9.1(c) of the Equity
Definitions.
Extraordinary Events applicable to the Transaction:
Consequence of Merger Events
(a) Share-for-Share: Alternative Obligation; provided that
the Calculation Agent will determine if
the Merger Event affects the theoretical
value of the Transaction and, if so, the
Calculation Agent shall make adjustments
to the Strike Price, the Number of
Warrants, the Daily Number of Warrants
and the Warrant Entitlement and any
other term necessary to reflect the
characteristics (including volatility,
dividend practice, borrow cost, policy
and liquidity) of the New Shares.
Notwithstanding the foregoing,
Cancellation and Payment shall apply in
the event the New Shares are not
publicly traded on a United States
national securities exchange or quoted
on the NASDAQ National Market (or any
successor thereto).
(b) Share-for-Other: Cancellation and Payment
(c) Share-for-Combined: Alternative Obligation in respect of the
portion of the consideration for the
relevant Shares that consists of New
Shares and subject to any adjustment
described in the proviso contained in
Share-for-Share above, and Cancellation
and
6
Payment in respect of the portion of the
consideration for the relevant Shares
that consists of Other Consideration.
Notwithstanding the foregoing,
Cancellation and Payment shall apply in
the event the New Shares are not
publicly traded on a United States
national securities exchange or quoted
on the NASDAQ National Market (or any
successor thereto).
Nationalization or Insolvency: Cancellation and Payment
4. Calculation Agent: BofA. Whenever the Calculation Agent is
required to act or to exercise judgment
in any way, it will do so in good faith
and in a commercially reasonable manner
to achieve a commercially reasonable
result.
The Calculation Agent shall, not later
than the third Currency Business Day
following receipt of a written request
of the Company, provide the Company with
a written explanation of the basis of
any determination, adjustment or
calculation made hereunder; provided
that if, after reviewing such written
explanation, the Company objects to such
determination, adjustment or
calculation, then the Company, BofA and
the Calculation Agent shall make
reasonable good faith efforts to agree
upon an appropriate determination,
adjustment or calculation.
5. Account Details:
(a) Account for payments to the Company:
JPMorgan, New York
ABA: 021-000-021
Acct: CHASUS33
Acct No.: 910-1010-693
Account for delivery of Shares from the Company:
DTC 50108 (Computershare)
Note: the shares cannot be sent electronically.
They must be DWACed.
(b) Account for payments from/to BofA:
Bank of America, N.A.
San Francisco, CA
SWIFT: BOFAUS65
Bank Routing: 121-000-358
Account Name: Bank of America
Account No.: 12333-34172
Account for delivery of Shares to BofA:
DTC 0733
Acct Name: Bank of America NA
Acct #: 116-0077
6. Offices:
7
The Office of the Company for the Transaction is: Inapplicable, the Company is
not a Multibranch Party.
The Office of BofA for the Transaction is: New York
Bank of America, N.A.
c/o Banc of America Securities LLC
9 West 57th Street, 40th Floor
New York, NY 10019
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to the Company:
Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Christopher J. Connally
Telephone No.: (518) 445-2235
Facsimile No.: (518) 447-6305
With a copy to:
Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Charles J. Silva, Jr.
Telephone No.: (518) 445-2277
Facsimile No.: (518) 447-6575
(b) Address for notices or communications to BofA:
Bank of America, N.A.
c/o Banc of America Securities LLC
Equity Financial Products
Attention: Legal Department
9 West 57th Street, 40th Floor
New York, NY 10019
Facsimile No.: (212) 326-8610
8. Representations and Warranties of the Company
The representations and warranties of the Company set forth in Section 4 of the
Purchase Agreement (the "Purchase Agreement") dated as of the Trade Date and
relating to the issuance of USD 150,000,000 principal amount of 2.25%
Convertible Senior Notes due 2026, (the "Convertible Notes") between the Company
and J.P. Morgan Securities Inc. and Banc of America Securities LLC as Initial
Purchasers are true and correct and are hereby deemed to be repeated to BofA as
if set forth herein. The Company hereby further represents and warrants to BofA
that:
(a) The Company has all necessary corporate power and authority to
execute, deliver and perform its obligations in respect of this
Transaction; such execution, delivery and performance have been duly
authorized by all necessary corporate action on the Company's part;
and this Confirmation has been duly and validly executed and
delivered by the Company and constitutes its valid and binding
obligation, enforceable against the Company in accordance with its
terms, subject to
8
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and
except that rights to indemnification and contribution hereunder may
be limited by federal or state securities laws or public policy
relating thereto.
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of the Company hereunder
will conflict with or result in a breach of the certificate of
incorporation or by-laws (or any equivalent documents) of the
Company, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which the Company or any
of its Significant Subsidiaries is a party or by which the Company
or any of its Significant Subsidiaries is bound or to which the
Company or any of its Significant Subsidiaries is subject, or
constitute a default under, or result in the creation of any lien
under, any such agreement or instrument, or breach or constitute a
default under any agreements and contracts of the Company and its
Significant Subsidiaries filed as exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 2004, as updated
by any subsequent filings.
(c) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required in
connection with the execution, delivery or performance by the
Company of this Confirmation, except such as have been obtained or
made and such as may be required under the Securities Act of 1933,
as amended (the "Securities Act") or state securities laws.
(d) The Shares of the Company initially issuable upon exercise of the
Warrant by the net share settlement method (the "Warrant Shares")
have been reserved for issuance by all required corporate action of
the Company. The Warrant Shares have been duly authorized and, when
delivered against payment therefor (which may include Net Share
Settlement in lieu of cash) and otherwise as contemplated by the
terms of the Warrant following the exercise of the Warrant in
accordance with the terms and conditions of the Warrant, will be
validly issued, fully-paid and non-assessable, and the issuance of
the Warrant Shares will not be subject to any preemptive or similar
rights.
(e) The Company is an "eligible contract participant" (as such term is
defined in Section 1a(12) of the Commodity Exchange Act, as amended
(the "CEA") because one or more of the following is true:
The Company is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) the Company has total assets in excess of USD 10,000,000;
(B) the obligations of the Company hereunder are guaranteed, or
otherwise supported by a letter of credit or keepwell, support
or other agreement, by an entity of the type described in
Section 1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I),
1a(12)(A)(vii) or 1a(12)(C) of the CEA; or
(C) the Company has a net worth in excess of USD 1,000,000 and has
entered into this Agreement in connection with the conduct of
the Company's business or to manage the risk associated with
an asset or liability owned or incurred or reasonably likely
to be owned or incurred by the Company in the conduct of the
Company's business.
9
(f) The Company is not, on the date hereof, in possession of any
material non-public information with respect to the Company.
9. Other Provisions:
(a) Opinions. The Company shall deliver to BofA an opinion of counsel,
dated as of the Trade Date, substantially in the form set forth in
Exhibit A hereto.
(b) Amendment. If the Initial Purchasers party to the Purchase Agreement
exercise their right to purchase additional Convertible Notes as set
forth therein, then, at the discretion of the Company, BofA and the
Company will amend this Confirmation to provide for such increase in
Convertible Notes (but on pricing terms acceptable to BofA and the
Company) (such amendment to provide for the payment by BofA to the
Company of the additional premium related thereto).
(c) No Reliance, etc. Each party represents that (i) it is entering into
the Transaction evidenced hereby as principal (and not as agent or
in any other capacity); (ii) neither the other party nor any of its
agents are acting as a fiduciary for it; (iii) it is not relying
upon any representations except those expressly set forth in the
Agreement or this Confirmation; (iv) it has not relied on the other
party for any legal, regulatory, tax, business, investment,
financial, and accounting advice, and it has made its own
investment, hedging, and trading decisions based upon its own
judgment and not upon any view expressed by the other party or any
of its agents; and (v) it is entering into this Transaction with a
full understanding of the terms, conditions and risks thereof and it
is capable of and willing to assume those risks.
(d) Share De-listing Event. If at any time during the period from and
including the Trade Date, to and including the final Expiration
Date, the Shares cease to be listed or quoted on the Exchange for
any reason (other than a Merger Event as a result of which the
shares of common stock underlying the Warrants are listed or quoted
on The New York Stock Exchange, The American Stock Exchange or the
NASDAQ National Market (or their respective successors) (the
"Successor Exchange")) and are not immediately re-listed or quoted
as of the date of such de-listing on the Successor Exchange (a
"Share De-listing"), then Cancellation and Payment (as defined in
Section 9.6 of the Equity Definitions, treating the "Announcement
Date" as the date of first public announcement that the Share
De-listing will occur and the "Merger Date" as the date of the Share
De-listing) shall apply, and the date of the de-listing shall be
deemed the date of termination for purposes of calculating any
payment due from one party to the other in connection with the
cancellation of this Transaction. If the Shares are immediately
re-listed on a Successor Exchange upon their de-listing from the
Exchange, this Transaction shall continue in full force and effect,
provided that the Successor Exchange shall be deemed to be the
Exchange for all purposes hereunder, provided that the Calculation
Agent may make appropriate adjustments to the terms of this
Transaction to reflect the effect of such re-listing. For the
avoidance of doubt, in no event will a Share De-listing result in an
obligation of BofA under this Confirmation to make a payment to the
Company.
(e) Repurchase Notices. The Company shall, on any day on which the
Company effects any repurchase of Shares, promptly give BofA a
written notice of such repurchase (a "Repurchase Notice") on such
day if following such repurchase, the number of outstanding Shares
on such day, subject to any adjustments provided herein, is (i) less
than 25 million (in the case of the first such notice) or (ii)
thereafter, more than 125,000 less than the number of Shares
included in the immediately preceding Repurchase Notice. The Company
agrees to indemnify and hold harmless BofA and its affiliates and
their respective officers, directors, employees, affiliates,
advisors, agents and controlling persons (each, an "Indemnified
Person") from and against any and all losses (including losses
relating to BofA's reasonable hedging activities as a consequence of
10
becoming, or of the risk of becoming, a Section 16 "insider",
including without limitation, any forbearance from reasonable
hedging activities or cessation of such hedging activities and any
losses in connection therewith with respect to this Transaction),
claims, damages, judgments, liabilities and expenses (including
reasonable attorney's fees), joint or several, which an Indemnified
Person actually may become subject to, as a result of the Company's
failure to provide BofA with a Repurchase Notice on the day and in
the manner specified in this Section 9(e), and to reimburse, within
30 days, upon written request, each of such Indemnified Persons for
any reasonable legal or other expenses incurred in connection with
investigating, preparing for, providing testimony or other evidence
in connection with or defending any of the foregoing. If any suit,
action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against
the Indemnified Person, such Indemnified Person shall promptly
notify the Company in writing, and the Company, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to
the Indemnified Person to represent the Indemnified Person and any
others the Company may designate in such proceeding and shall pay
the fees and expenses of such counsel related to such proceeding.
The Company shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
Company agrees to indemnify any Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. The
Company shall not, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement
includes an unconditional release of such Indemnified Person from
all liability on claims that are the subject matter of such
proceeding on terms reasonably satisfactory to such Indemnified
Person. If the indemnification provided for in this paragraph (e) is
unavailable to an Indemnified Person or insufficient in respect of
any losses, claims, damages or liabilities referred to therein, then
the Company under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid
or payable by such Indemnified Person as a result of such losses,
claims, damages or liabilities. The remedies provided for in this
paragraph (e) are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any Indemnified Person
at law or in equity. The indemnity and contribution agreements
contained in this paragraph (e) shall remain operative and in full
force and effect regardless of the termination of this Transaction.
(f) Regulation M. The Company was not on the Trade Date and is not on
the date hereof engaged in a distribution, as such term is used in
Regulation M under the Exchange Act, of any securities of the
Company, other than a distribution meeting the requirements of the
exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation
M. The Company shall not, until the second Exchange Business Day
immediately following the Trade Date, engage in any such
distribution.
(g) No Manipulation. The Company is not entering into this Transaction
to create actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or to
raise or depress or otherwise manipulate the price of the Shares (or
any security convertible into or exchangeable for the Shares).
(h) Board Authorization. The Company represents that it is entering into
the Transaction, solely for the purposes stated in the board
resolution authorizing this Transaction and in its public
disclosure. The Company further represents that there is no internal
policy, whether written or oral, of the Company that would prohibit
the Company from entering into any aspect of this Transaction,
including, but not limited to, the issuance of Shares pursuant
hereto.
(i) Transfer or Assignment. (i) The Company may not transfer any of its
rights or obligations under this Transaction without the prior
written consent of BofA. BofA may transfer or assign all or any
11
portion of its rights or obligations under this Transaction in
compliance with applicable laws without consent of the Company. In
addition, if BofA's "beneficial ownership" (within the meaning of
Section 16 of the Exchange Act and rules promulgated thereunder)
exceeds 8% of the Company's outstanding shares, or the product of
the Number of Warrants and the Warrant Entitlement divided by the
total number of the Company's outstanding Shares (the "Warrant
Equity Percentage") exceeds 15% and if, in the good faith,
reasonable judgment of BofA based upon advice of counsel and as a
result of events occurring after the Trade Date, BofA reasonably
determines that it would be inadvisable to engage in alternative
hedging transactions which would enable it to reduce its "beneficial
ownership" or the Warrants Equity Percentage other than by transfer,
assignment or termination, and BofA reasonably determines that it is
unable after making commercially reasonable efforts to effect
transfer or assignment on pricing terms and in a time period
reasonably acceptable to BofA that would reduce its "beneficial
ownership" to 7.5% or such Warrant Equity Percentage to 14.5%,
respectively, BofA may designate any Exchange Business Day as an
Early Termination Date with respect to a portion (the "Terminated
Portion") of this Transaction, such that its "beneficial ownership"
following such partial termination would be approximately equal to
but less than 7.5% or the Warrant Equity Percentage approximately
equal to 14.5%, as applicable.
(ii) If BofA so designates an Early Termination Date with respect to
a portion of this Transaction, (i) a payment shall be made pursuant
to Section 6 of the Agreement as if an Early Termination Date
occurred in respect of a Transaction having terms identical to this
Transaction and a Number of Warrants equal to the Terminated
Portion, (ii) the Company shall be the sole Affected Party with
respect to such partial termination and (iii) such Transaction shall
be the only Terminated Transaction. For the avoidance of doubt, if
BofA assigns or terminates any Warrants hereunder, each Daily Number
of Warrants not previously settled hereunder shall be reduced
proportionately, as calculated by the Calculation Agent.
(iii) Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing BofA to purchase, sell, receive
or deliver any Shares or other securities to or from the Company,
BofA may designate any of its affiliates to purchase, sell, receive
or deliver such Shares or other securities and otherwise to perform
BofA's obligations in respect of this Transaction and any such
designee may assume such obligations. BofA shall be discharged of
its obligations to the Company only to the extent of any such
performance.
(j) Damages. Neither party shall be liable under Section 6.10 of the
Equity Definitions for special, indirect or consequential damages,
even if informed of the possibility thereof.
(k) Early Unwind. In the event the sale of Convertible Notes is not
consummated with the initial purchasers for any reason by the close
of business in New York on March 13, 2006 (or such later date as
agreed upon by the parties) (March 13, 2006 or such later date as
agreed upon being the "Early Unwind Date"), this Transaction shall
automatically terminate (the "Early Unwind"), on the Early Unwind
Date and (i) the Transaction and all of the respective rights and
obligations of BofA and the Company under the Transaction shall be
cancelled and terminated and (ii) each party shall be released and
discharged by the other party from and agrees not to make any claim
against the other party with respect to any obligations or
liabilities of the other party arising out of and to be performed in
connection with the Transaction either prior to or after the Early
Unwind Date; provided that, if the failure to consummate the sale of
the Convertible Notes results from a breach by the Company of any
representation of or any undertaking by the Company contained in the
Purchase Agreement, the Company shall purchase from BofA on the
Early Unwind Date any Shares purchased by BofA or one or more of its
affiliates in connection with this Transaction and reimburse BofA
for any costs or expenses (including market losses) relating to the
unwinding of its reasonable hedging activities in connection with
the Transaction (including any losses or costs
12
incurred as a result of its terminating, liquidating, obtaining or
reestablishing any reasonable hedge or related trading position).
The amount of any such reimbursement shall be determined by BofA in
its reasonable good faith discretion. BofA shall notify the Company
of such amount, including, upon the Company's request, an
explanation of the basis of determination of such amount, and the
Company shall pay such amount in immediately available funds on the
Early Unwind Date. BofA and the Company represent and acknowledge to
the other that, subject to the proviso included in this Section,
upon an Early Unwind, all obligations with respect to the
Transaction shall be deemed fully and finally discharged.
(l) Dividends. If at any time during the period from and including the
Trade Date, to but excluding the Expiration Date, an ex-dividend
date for a cash dividend occurs with respect to the Shares (an
"Ex-Dividend Date"), and that dividend is different from the Regular
Dividend on a per Share basis then the Calculation Agent will, in
its reasonable discretion, adjust the Strike Price, the Number of
Warrants, the Daily Number of Warrants and the Warrant Entitlement
to preserve the fair value of the Warrant to BofA after taking into
account such dividend. "Regular Dividend" shall mean USD 0.09 per
Share per quarter.
(m) Role of Agent. Each party agrees and acknowledges that (i) Banc of
America Securities LLC ("BASL"), has acted solely as agent and not
as principal with respect to this Transaction and (ii) BASL has no
obligation or liability, by way of guaranty, endorsement or
otherwise, in any manner in respect of this Transaction (including,
if applicable, in respect of the settlement thereof). Each party
agrees it will look solely to the other party (or any guarantor in
respect thereof) for performance of such other party's obligations
under this Transaction.
(n) Additional Provisions.
(i) Notwithstanding Section 9.7 of the Equity Definitions,
everything in the first paragraph of Section 9.7(b) of the Equity
Definitions after the words "Calculation Agent" in the third line
through the remainder of such Section 9.7 shall be deleted and
replaced with the following:
"based on an amount representing the Calculation Agent's
determination of the fair value to Buyer of an option with terms
that would preserve for Buyer the economic equivalent of any payment
or delivery (assuming satisfaction of each applicable condition
precedent) by the parties in respect of the relevant Transaction
that would have been required after that date but for the occurrence
of the Merger Event, Nationalization, Insolvency or Share De-listing
as the case may be."
(ii) Sections 12.8 and 12.9 of the 2002 ISDA Equity Derivatives
Definitions shall apply to this Transaction and, for the purposes of
such sections, "Hedging Disruption", "Increased Cost of Hedging" and
"Loss of Stock Borrow" shall be "Applicable" and, in each case, BofA
shall be the Hedging Party and the Determining Party. With respect
to the Loss of Stock Borrow, the "Maximum Stock Loan Rate" shall
mean the Federal Funds Rate, as determined by the Calculation Agent,
minus 50 basis points.
"Federal Funds Rate" means, for any day, the rate set forth for such
day opposite the caption "Federal funds", as such rate is displayed
on the page FedsOpen on the Bloomberg Professional
Service or any successor page; provided that if no rate appears for
any day on such page, the rate for the immediately preceding day for
which a rate does so appear shall be used for such day.
(o) No Collateral or Setoff. Notwithstanding any provision of the
Agreement or any other agreement between the parties to the
contrary, the obligations of the Company hereunder are not secured
by any collateral. Obligations under this Transaction shall not be
set off by the Company (including,
13
for the avoidance of doubt, pursuant to Section 6(f) of the
Agreement) against any other obligations of the parties, whether
arising under the Agreement, this Confirmation, under any other
agreement between the parties hereto, by operation of law or
otherwise. Any provision in the Agreement with respect to the
satisfaction of the Company's payment obligations to the extent of
BofA's payment obligations to the Company in the same currency and
in the same Transaction (including, without limitation Section 2(c)
thereof) shall not apply to the Company and, for the avoidance of
doubt, the Company shall fully satisfy such payment obligations
notwithstanding any payment obligation to the Company by BofA in the
same currency and in the same Transaction. In calculating any
amounts under Section 6(e) of the Agreement, notwithstanding
anything to the contrary in the Agreement, (1) separate amounts
shall be calculated as set forth in such Section 6(e) with respect
to (a) this Transaction and (b) all other Transactions, and (2) such
separate amounts shall be payable pursuant to Section 6(d)(ii) of
the Agreement, subject to the Share Termination Alternative.
(p) Alternative Calculations and Payment on Early Termination and on
Certain Extraordinary Events. If, in respect of this Transaction, an
amount is payable by the Company to BofA, (i) pursuant to Section
9.7 of the Equity Definitions (except in the event of a
Nationalization or Insolvency or a Merger Event, in each case, in
which the consideration to be paid to holders of Shares consists
solely of cash) or (ii) pursuant to Section 6(d)(ii) of the
Agreement (except in the event of an Event of Default in which the
Company is the Defaulting Party or a Termination Event in which the
Company is the Affected Party, other than an Event of Default of the
type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of
the Agreement or in this Confirmation or a Termination Event of the
type described in Section 5(b)(i), (ii), (iii), (iv), (v) or (vi) of
the Agreement or this Confirmation in each case resulting from an
event or events outside the Company's control) (a "Payment
Obligation"), the Company may, in its sole discretion, satisfy any
such Payment Obligation by the Share Termination Alternative (as
defined below) and shall give irrevocable telephonic notice to BofA,
confirmed in writing within one Currency Business Day, no later than
12:00 p.m. New York local time on the Merger Date, the date of the
occurrence of the Nationalization or Insolvency, the date of the
Share De-listing or the Early Termination Date, as applicable. In
calculating any amounts under Section 6(e) of the Agreement,
notwithstanding anything to the contrary in the Agreement, (1)
separate amounts shall be calculated as set forth in Section 6(e)
with respect to (a) this Transaction and (b) any other Transactions
under the Agreement, and (2) such separate amounts shall be payable
pursuant to Section 6(d)(ii) of the Agreement, subject to, in the
case of clause (1)(a), the Company's Share Termination Alternative
right hereunder.
Share Termination Alternative: If applicable, the Company shall
deliver to BofA the Share
Termination Delivery Property on
the date when the Payment
Obligation would otherwise be due,
subject to Section 9(q) below,
pursuant to Section 9.7 of the
Equity Definitions, this
Confirmation, or Section 6(d)(ii)
and 6(e) of the Agreement, as
applicable (the "Share Termination
Payment Date"), in satisfaction, of
the Payment Obligation in the
manner reasonably requested by BofA
free of payment.
Share Termination A number of Share Termination
Delivery Property: Delivery Units, as calculated by
the Calculation Agent, equal to the
Payment Obligation divided by the
Share Termination Unit Price. The
Calculation Agent shall adjust the
Share Termination Delivery Property
by
14
replacing any fractional portion of
a security therein with an amount
of cash equal to the value of such
fractional security based on the
values used to calculate the Share
Termination Unit Price.
Share Termination Unit Price: The value to BofA of property
contained in one Share Termination
Delivery Unit on the date such
Share Termination Delivery Units
are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation Agent
in its discretion by commercially
reasonable means and notified by
the Calculation Agent to the
Company at the time of notification
of the Payment Obligation. In the
case of a Private Placement
Settlement of Share Termination
Delivery Units that are Restricted
Shares (as defined below) as set
forth in paragraph (q)(i) below,
the Share Termination Unit Price
shall be determined by the
discounted price applicable to such
Share Termination Delivery Units.
In the case of a Registered
Settlement of Share Termination
Delivery Units that are Restricted
Shares (as defined below) as set
forth in paragraph (q)(ii) below,
the Share Termination Unit Price
shall be the Settlement Price on
the Merger Date, the date of the
occurrence of the Nationalization
or Insolvency, the date of the
Share De-listing or the Early
Termination Date, as applicable.
Share Termination Delivery Unit: In the case of a Share De-listing,
Termination Event or Event of
Default, one Share or, in the case
of Nationalization or Insolvency or
a Merger Event, a unit consisting
of the number or amount of each
type of property received by a
holder of one Share (without
consideration of any requirement to
pay cash or other consideration in
lieu of fractional amounts of any
securities) in such Nationalization
or Insolvency or such Merger Event.
If such Merger Event involves a
choice of consideration to be
received by holders, such holder
shall be deemed to have elected to
receive the maximum possible amount
of cash.
Failure to Deliver: Inapplicable
Other applicable provisions: If the Share Termination
Alternative is applicable, the
provisions of Sections 6.6, 6.7,
6.8, 6.9 and 6.10 (as modified
above) of the Equity Definitions
will be applicable, except that all
references in such provisions to
"Physically-Settled" shall be read
as references to "Share Termination
Settled" and all references to
"Shares" shall be read as
references to "Share Termination
Delivery Units". "Share
15
Termination Settled" in relation to
this Transaction means that the
Share Termination Alternative is
applicable to this Transaction.
(q) Registration/Private Placement Procedures. If, in the reasonable
opinion of BofA, based on the advice of counsel, following any
delivery of Shares or Share Termination Delivery Property to BofA
hereunder, such Shares or Share Termination Delivery Property would
be in the hands of BofA subject to any applicable restrictions with
respect to any registration or qualification requirement or
prospectus delivery requirement for such Shares or Share Termination
Delivery Property pursuant to any applicable federal or state
securities law (including, without limitation, any such requirement
arising under Section 5 of the Securities Act as a result of such
Shares or Share Termination Delivery Property being "restricted
securities", as such term is defined in Rule 144 under the
Securities Act, or as a result of the sale of such Shares or Share
Termination Delivery Property being subject to paragraph (c) of Rule
145 under the Securities Act) (such Shares or Share Termination
Delivery Property, "Restricted Shares"), then delivery of such
Restricted Shares shall be effected pursuant to either clause (i) or
(ii) below at the election of the Company, unless waived by BofA.
Notwithstanding the foregoing, solely in respect of any Warrants
exercised or deemed exercised on any Expiration Date, (x) BofA shall
use reasonable efforts to give notice to the Company no later than
twenty (20) Exchange Business Days prior to the First Expiration
Date if it believes at such time that this Section 9(q) would be
applicable to Shares or Share Termination Delivery Property to be
delivered in connection with any Expiration Date and (y) to the
extent Net Share Settlement applies, the Company shall elect, prior
to the first Settlement Date for the first Expiration Date, a
Private Placement Settlement or Registered Settlement for all
deliveries of Restricted Shares for all such Expiration Dates which
election shall be applicable to all Settlement Dates for such Daily
Number of Warrants and the procedures in clause (i) or clause (ii)
below shall apply for all such delivered Restricted Shares on an
aggregate basis commencing after the final Settlement Date for such
Daily Number of Warrants. The Calculation Agent shall make
reasonable adjustments to settlement terms and provisions under this
Confirmation to reflect a single Private Placement Settlement or
Registered Settlement for such aggregate Restricted Shares delivered
hereunder.
(i) If the Company elects to settle the Transaction pursuant to
this clause (i) (a "Private Placement Settlement"), then
delivery of Restricted Shares by the Company shall be effected
in customary private placement procedures with respect to such
Restricted Shares reasonably acceptable to BofA; provided that
the Company may not elect a Private Placement Settlement if,
on the date of its election, it has taken, or caused to be
taken, any action that would make unavailable either the
exemption pursuant to Section 4(2) of the Securities Act for
the sale by the Company to BofA (or any affiliate designated
by BofA) of the Restricted Shares or the exemption pursuant to
Section 4(1) or Section 4(3) of the Securities Act for resales
of the Restricted Shares by BofA (or any such affiliate of
BofA). The Private Placement Settlement of such Restricted
Shares shall include customary representations, covenants,
blue sky and other governmental filings and/or registrations,
indemnities to BofA, due diligence rights (for BofA or any
designated buyer of the Restricted Shares by BofA), opinions
and certificates, and such other documentation as is customary
for private placement agreements, all reasonably acceptable to
BofA. In the case of a Private Placement Settlement, BofA
shall determine the appropriate discount to the Share
Termination Unit Price (in the case of settlement of Share
Termination Delivery Units pursuant to paragraph (p) above) or
any Settlement Price (in the case of settlement of Shares
pursuant to Section 2 above) applicable to such Restricted
Shares in a commercially reasonable manner and appropriately
adjust the amount of such Restricted Shares to be delivered to
BofA hereunder; provided that in no event shall such number be
greater than 5,498,648 (the "Maximum Amount").
16
Notwithstanding the Agreement or this Confirmation, the date
of delivery of such Restricted Shares (the "Due Date") shall
be the Exchange Business Day following notice by BofA to the
Company, of such applicable discount and the number of
Restricted Shares to be delivered pursuant to this clause (i).
For the avoidance of doubt, delivery of Restricted Shares
shall be due as set forth in the previous sentence and not be
due on the Share Termination Payment Date (in the case of
settlement of Share Termination Delivery Units pursuant to
paragraph (p) above) or on the Settlement Date for such
Restricted Shares (in the case of settlement of Shares
pursuant to Section 2 above).
In the event the Company shall not have delivered the full
number of Restricted Shares otherwise applicable as a result
of the proviso above relating to the Maximum Amount (such
deficit, the "Deficit Restricted Shares"), the Company shall
be continually obligated to deliver, from time to time until
the full number of Deficit Restricted Shares have been
delivered pursuant to this paragraph, Restricted Shares when,
and to the extent, that (i) Shares are repurchased, acquired
or otherwise received by the Company or any of its
subsidiaries after the Trade Date (whether or not in exchange
for cash, fair value or any other consideration), (ii)
authorized and unissued Shares reserved for issuance in
respect of other transactions prior to such date which prior
to the relevant date become no longer so reserved and (iii)
the Company additionally authorizes and unissued Shares that
are not reserved for other transactions. The Company shall
immediately notify BofA of the occurrence of any of the
foregoing events (including the number of Shares subject to
clause (i), (ii) or (iii) and the corresponding number of
Restricted Shares to be delivered) and promptly deliver such
Restricted Shares thereafter.
In the event of a Private Placement, the Net Share Settlement
Amount or the Payment Obligation, respectively, shall be
deemed to be the Net Share Settlement Amount or the Payment
Obligation, respectively, plus an additional amount
(determined from time to time by the Calculation Agent in its
commercially reasonable judgment) attributable to interest
that would be earned on such Net Share Settlement Amount or
the Payment Obligation, respectively, (increased on a daily
basis to reflect the accrual of such interest and reduced from
time to time by the amount of net proceeds received by BofA as
provided herein) at a rate equal to the open Federal Funds
Rate plus the Spread for the period from, and including, such
Settlement Date or the date on which the Payment Obligation is
due, respectively, to, but excluding, the Due Date, calculated
on an Actual/360 basis. The foregoing provision shall be
without prejudice to BofA's rights under the Agreement
(including, without limitation, Sections 5 and 6 thereof).
As used in this Section 9(p)(i), "Spread" means, with respect
to any Net Share Settlement Amount or Payment Obligation,
respectively, the credit spread over the applicable overnight
rate that would be imposed if BofA were to extend credit to
the Company in an amount equal to such Net Share Settlement
Amount, all as determined by the Calculation Agent using its
commercially reasonable judgment as of the related Settlement
Date or Due Date, respectively. Commercial reasonableness
shall take into consideration all factors deemed relevant by
the Calculation Agent, which are expected to include, among
other things, the credit quality of the Company (and any
relevant affiliates) in the then-prevailing market and the
credit spread of similar companies in the relevant industry
and other companies having a substantially similar credit
quality.
(ii) If the Company elects to settle the Transaction pursuant to
this clause (ii) (a "Registration Settlement"), then the
Company shall promptly (but in any event no later than the
beginning of the Resale Period) file and use its reasonable
best efforts to make effective under the Securities Act a
registration statement or supplement or amend an
17
outstanding registration statement in form and substance
reasonably satisfactory to BofA, to cover the resale of such
Restricted Shares in accordance with customary resale
registration procedures, including covenants, conditions,
representations, underwriting discounts (if applicable),
commissions (if applicable), indemnities due diligence rights,
opinions and certificates, and such other documentation as is
customary for equity resale underwriting agreements, all
reasonably acceptable to BofA. If BofA, in its reasonable
discretion, is not satisfied with such procedures and
documentation, Private Placement Settlement shall apply. If
BofA is satisfied with such procedures and documentation, it
shall sell the Restricted Shares pursuant to such registration
statement during a period (the "Resale Period") commencing on
(x) the Share Termination Payment Date in case of settlement
of Share Termination Delivery Units pursuant to paragraph (p)
above or (y) the Settlement Date in respect of the final
Expiration Date for all Daily Number of Warrants and ending on
the earliest of (i) the Exchange Business Day on which BofA
completes the sale of all Restricted Shares or a sufficient
number of Restricted Shares so that the realized net proceeds
of such sales exceed the Payment Obligation (as defined
above), (ii) the date upon which all Restricted Shares have
been sold or transferred pursuant to Rule 144 (or similar
provisions then in force) or Rule 145(d)(1) or (2) (or any
similar provision then in force) under the Securities Act and
(iii) the date upon which all Restricted Shares may be sold or
transferred by a non-affiliate pursuant to Rule 144(k) (or any
similar provision then in force) or Rule 145(d)(3) (or any
similar provision then in force) under the Securities Act. If
the Payment Obligation exceeds the realized net proceeds from
such resale, the Company shall transfer to BofA by the open of
the regular trading session on the Exchange on the Exchange
Trading Day immediately following the last day of the Resale
Period the amount of such excess (the "Additional Amount") in
cash or in a number of Restricted Shares ("Make-whole Shares")
in an amount that, based on the Settlement Price on the last
day of the Resale Period (as if such day was the "Valuation
Date" for purposes of computing such Settlement Price), has a
dollar value equal to the Additional Amount. The Resale Period
shall continue to enable the sale of the Make-whole Shares. If
the Company elects to pay the Additional Amount in Restricted
Shares, the requirements and provisions for Registration
Settlement shall apply. This provision shall be applied
successively until the Additional Amount is equal to zero. In
no event shall the Company deliver a number of Restricted
Shares greater than the Maximum Amount. Once the realized net
proceeds of such sales exceed the Payment Obligation, BofA
shall return to the Company any excess proceeds or remaining
Restricted Shares.
(iii) Without limiting the generality of the foregoing, but subject
to the last sentence of Section 9(s) below, the Company agrees
that any Restricted Shares delivered to BofA, as purchaser of
such Restricted Shares, (i) may be transferred by and among
BofA and its affiliates in compliance with applicable law and
the Company shall effect such transfer without any further
action by BofA and (ii) after the minimum "holding period"
within the meaning of Rule 144(d) under the Securities Act has
elapsed after any Settlement Date for such Restricted Shares,
the Company shall promptly remove, or cause the transfer agent
for such Restricted Shares to remove, any legends referring to
any such restrictions or requirements from such Restricted
Shares upon delivery by BofA (or such affiliate of BofA) to
the Company or such transfer agent of seller's and broker's
representation letters customarily delivered by BofA in
connection with resales of restricted securities pursuant to
Rule 144 under the Securities Act, without any further
requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document,
any transfer tax stamps or payment of any other amount or any
other action by BofA (or such affiliate of BofA).
18
If the Private Placement Settlement or the Registration
Settlement shall not be effected as set forth in clauses (i)
or (ii), as applicable, then failure to effect such Private
Placement Settlement or such Registration Settlement shall
constitute an Event of Default with respect to which the
Company shall be the Defaulting Party.
(r) Limit on Beneficial Ownership. Notwithstanding any other provisions
hereof, BofA may not exercise any Warrant hereunder or receive any
Shares as a result of such exercise, and Automatic Exercise shall
not apply with respect thereto, to the extent (but only to the
extent) that such exercise or receipt would result in BofA directly
or indirectly beneficially owning (as such term is defined for
purposes of Section 13(d) of the Exchange Act) at any time in excess
of 9.0% of the outstanding Shares. Any purported delivery hereunder
shall be void and have no effect to the extent (but only to the
extent) that such delivery would result in BofA directly or
indirectly so beneficially owning in excess of 9.0% of the
outstanding Shares. If any delivery owed to BofA hereunder is not
made, in whole or in part, as a result of this provision, the
Company's obligation to make such delivery shall not be extinguished
and the Company shall make such delivery as promptly as practicable
after, but in no event later than one Exchange Business Day after,
BofA gives notice to the Company that such delivery would not result
in BofA directly or indirectly so beneficially owning in excess of
9.0% of the outstanding Shares.
(s) Share Deliveries. The Company acknowledges and agrees that, to the
extent the holder of this Warrant is not then an affiliate and has
not been an affiliate for 90 days (it being understood that BofA
will not be considered an affiliate under this Section 9(s) solely
by reason of its receipt of Shares pursuant to this Transaction),
and otherwise satisfies all holding period and other requirements of
Rule 144 of the Securities Act applicable to it, any delivery of
Shares or Share Termination Delivery Property hereunder at any time
after two years from the Premium Payment Date shall be eligible for
resale under Rule 144(k) of the Securities Act and the Company
agrees to promptly remove, or cause the transfer agent for such
Shares or Share Termination Delivery Property, to remove, any
legends referring to any restrictions on resale under the Securities
Act from the Shares or Share Termination Delivery Property. The
Company further agrees, for any delivery of Shares or Share
Termination Delivery Property hereunder at any time after one year
from the Premium Payment Date but within two years of the Premium
Payment Date, to the extent the holder of this Warrant then
satisfies the holding period and other requirements of Rule 144 of
the Securities Act, to promptly remove, or cause the transfer agent
for such Shares or Share Termination Delivery Property to remove,
any legends referring to any such restrictions or requirements from
such Shares or Share Termination Delivery Property. Such Shares or
Share Termination Delivery Property will be de-legended upon
delivery by BofA (or such affiliate of BofA) to the Company or such
transfer agent of customary seller's and broker's representation
letters in connection with resales of restricted securities pursuant
to Rule 144 of the Securities Act, without any further requirement
for the delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax stamps or
payment of any other amount or any other action by BofA (or such
affiliate of BofA). The Company further agrees that any delivery of
Shares or Share Termination Delivery Property prior to the date that
is one year from the Premium Payment Date, may be transferred by and
among BofA and its affiliates in compliance with applicable law and
the Company shall effect such transfer without any further action by
BofA. Notwithstanding anything to the contrary herein, to the extent
the provisions of Rule 144 of the Securities Act or any successor
rule are amended, or the applicable interpretation thereof by the
Securities and Exchange Commission or any court change after the
Trade Date, the agreements of the Company herein shall be deemed
modified to the extent necessary, in the opinion of counsel of the
Company, to comply with Rule 144 of the Securities Act, including
Rule 144(k) as in effect at the time of delivery of the relevant
Shares or Share Termination Delivery Property.
19
(t) Additional Termination Event. If within the period commencing on the
Trade Date and ending on the second anniversary of the Trade Date,
an event shall occur, as a result of which, based on the advice of
counsel, BofA reasonably determines that it is advisable to
terminate a portion of this Transaction to comply with applicable
securities laws, rules or regulations, the occurrence of such event
shall constitute an Additional Termination Event under the Agreement
permitting BofA to terminate a portion of this Transaction in
respect of which (1) the Company shall be the sole Affected Party
and (2) this Transaction shall be the sole Affected Transaction;
provided, however, that BofA shall have the right to effect such
termination only to the extent reasonably necessary to comply with
such laws, rules or regulations.
(u) Right to Extend. BofA may delay any Settlement Date or any other
date of delivery by BofA, with respect to some or all of the
Warrants hereunder, if BofA reasonably determines, in its
discretion, that such extension is reasonably necessary to enable
BofA to effect purchases of Shares in connection with its hedging
activity hereunder in a manner that would be in compliance with
applicable legal and regulatory requirements.
(v) Governing Law. New York law (without reference to choice of law
doctrine).
(w) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by
jury in respect of any suit, action or proceeding relating to this
Transaction. Each party (i) certifies that no representative, agent
or attorney of the other party has represented, expressly or
otherwise, that such other party would not, in the event of such a
suit, action or proceeding, seek to enforce the foregoing waiver and
(ii) acknowledges that it and the other party have been induced to
enter into this Transaction, as applicable, by, among other things,
the mutual waivers and certifications provided herein.
(x) Maximum Share Delivery. Notwithstanding any other provision of this
Confirmation or the Agreement, in no event will the Company be
required to deliver more than the Maximum Amount of Shares in the
aggregate to BofA in connection with this Transaction, subject to
the provisions regarding Deficit Restricted Shares.
(y) Status of Claims in Bankruptcy. BofA acknowledges and agrees that
this confirmation is not intended to convey to BofA rights with
respect to the transactions contemplated hereby that are senior to
the claims of common stockholders in any U.S. bankruptcy proceedings
of the Company; provided, however, that nothing herein shall limit
or shall be deemed to limit BofA's right to pursue remedies in the
event of a breach by the Company of its obligations and agreements
with respect to this Confirmation and the Agreement; and provided,
further, that nothing herein shall limit or shall be deemed to limit
BofA's rights in respect of any transaction other than the
Transaction.
(z) Tax Advice. BofA and its affiliates do not provide tax advice.
Accordingly, any statements contained herein as to tax matters were
neither written nor intended by BofA to be used and cannot be used
by any taxpayer for the purpose of avoiding tax penalties that may
be imposed on such taxpayer. If any person uses or refers to any
such tax statement in promoting, marketing or recommending a
partnership or other entity, investment plan or arrangement to any
taxpayer, then the statement expressed above is being delivered to
support the promotion or marketing of the transaction or matter
addressed and the recipient should seek advice based on its
particular circumstances from an independent tax advisor.
Notwithstanding anything herein to the contrary, the sender and any
intended recipient of this communication (and any of its employees,
representatives and other agents) may disclose to any and all
persons, without limitation of any kind, the tax treatment or tax
structure of this transaction.
20
- --------------------------------------------------------------------------------
Bank of America [LOGO]
EQUITY FINANCIAL PRODUCTS GROUP
- --------------------------------------------------------------------------------
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it in the manner
indicated in the attached cover letter.
Very truly yours,
Bank of America, N.A.
By: /s/ Eric P. Hambleton
--------------------------
Authorized Signatory
Name: Eric P. Hambleton
Accepted and confirmed
as of the Trade Date:
ALBANY INTERNATIONAL CORP.
By: /s/ David C. Michaels
----------------------------
Authorized Signatory
Name: David C. Michaels
21
Annex A
Form of Legal Opinion
22
JPMorgan [LOGO]
JPMorgan Chase Bank, N.A.
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
March 7, 2006
To: Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Christopher J. Connally, Corporate Treasurer
Telephone No.: (518) 445-2235
Facsimile No.: (518) 447-6305
Re: Warrants
The purpose of this letter agreement is to confirm the terms and
conditions of the Warrants issued by Albany International Corp., a Delaware
corporation (the "Company"), to JPMorgan Chase Bank, National Association,
London Branch ("JPMorgan"), on the Trade Date specified below (the
"Transaction"). This letter agreement constitutes a "Confirmation" as referred
to in the ISDA Master Agreement specified below. This Confirmation shall replace
any previous agreements and serve as the final documentation for this
Transaction.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. This
Transaction shall be deemed to be a Share Option Transaction within the meaning
set forth in the Equity Definitions.
Each party is hereby advised, and each such party acknowledges, that the
other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties'
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between JPMorgan
and the Company as to the terms of the Transaction to which this Confirmation
relates. This Confirmation shall supplement, form a part of, and be subject to
an agreement in the form of the 2002 ISDA Master Agreement (the "Agreement") as
if JPMorgan and the Company had executed an agreement in such form (but without
any Schedule except for the election of the laws of the State of New York as the
governing law) on the Trade Date. In the event of any inconsistency between
provisions of that Agreement and this Confirmation, this Confirmation will
prevail for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction to which
this Confirmation relates shall be governed by the Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
JPMorgan Chase Bank, National Association
Organised under the laws of the United States as a National Banking Association
Main Office 1111 Polaris Parkway, Columbus, Ohio 43271
Registered as a branch in England & Wales branch No. BR000746
Registered Branch Office 125 London Wall, London EC2Y 5AJ
Authorised and regulated by the Financial Services Authority
1
General Terms:
Trade Date: March 7, 2006
Warrants: Equity call warrants, each giving the
holder the right to purchase one Share
at the Strike Price, subject to the
Settlement Terms set forth below. For
the purposes of the Equity Definitions,
each reference to a Warrant herein shall
be deemed to be a reference to a Call
Option.
Warrant Style: American
Buyer: JPMorgan
Seller: Company
Shares: The Class A common stock of the Company,
par value USD 0.001 per Share (Exchange
symbol "AIN")
Number of Warrants: 2,061,993, subject to adjustment as
provided herein
Daily Number of Warrants: Subject to "Expiration Dates" below, for
any day, the Number of Warrants that
have not expired or been exercised as of
such day, divided by the remaining
number of Expiration Dates (including
such day) and rounded down to the
nearest whole number to account for any
fractional Daily Number of Warrants.
Warrant Entitlement: One Share per Warrant
Multiple Exercise: Applicable
Minimum Number of Warrants: 1
Maximum Number of Warrants: 2,061,993
Strike Price: USD 52.25
Premium: USD 16,619,312.47
Premium Payment Date: March 13, 2006
Exchange: The New York Stock Exchange
Related Exchange(s): The principal exchange(s) for options
contracts or futures contracts, if any,
with respect to the Shares.
Exercise and Valuation:
Expiration Time: The Valuation Time
2
Expiration Dates: Each Exchange Business Day during the
period beginning on and including the
First Expiration Date and ending on and
including the 59th Exchange Business Day
following the First Expiration Date
shall be an "Expiration Date" for a
number of Warrants equal to the Daily
Number of Warrants on such day.
Notwithstanding the foregoing and
anything to the contrary in the Equity
Definitions, if a Market Disruption
Event occurs on any Expiration Date
(including the First Expiration Date),
the Calculation Agent shall make
adjustments to the Daily Number of
Warrants for which such day shall be an
Expiration Date and shall designate a
scheduled Exchange Business Day or a
number of scheduled Exchange Business
Days as the Expiration Date(s) for the
remaining Daily Number of Warrants or a
portion thereof for the originally
scheduled Expiration Date, with such
adjustments based on, among other
factors, the duration of any Market
Disruption Event and the volume,
historical trading patterns and price of
the Shares; provided that if such
Expiration Date has not occurred
pursuant to this sentence as of the
eighth (8th) Exchange Business Day
following the last scheduled Expiration
Date under this Transaction, such eighth
(8th) Exchange Business Day shall be the
final Expiration Date and the
Calculation Agent shall determine its
good faith estimate of the fair market
value for the Shares as of the Valuation
Time on that eighth Exchange Business
Day.
First Expiration Date: June 15, 2013 (or, if such day is not an
Exchange Business Day, the next
following Exchange Business Day),
subject to Market Disruption Event
below.
Automatic Exercise: Applicable; and means that a number of
Warrants for each Expiration Date equal
to the Daily Number of Warrants (as
adjusted pursuant to the terms hereof)
for such Expiration Date will be deemed
to be automatically exercised.
Market Disruption Event: Section 4.3(a)(ii) is hereby amended by
adding after the words "or Share Basket
Transaction" in the first line thereof
the phrase "a failure by the Exchange or
Related Exchange to open for trading
during its regular trading session or"
and replacing the phrase "during the
one-half hour period that ends at the
relevant Valuation Time" with the phrase
"at any time during the regular trading
session on the Exchange or any Related
Exchange, without regard to after hours
or any other trading outside of the
regular trading session hours".
Valuation applicable to each Warrant:
Valuation Time: At the close of trading of the regular
trading session on the Exchange.
Valuation Date: Each Exercise Date.
3
Settlement Terms applicable to the Transaction:
Method of Settlement: Net Share Settlement; provided that,
with respect to all Warrants to be
exercised on the Expiration Dates, Cash
Settlement shall apply if the Company
validly elects Cash Settlement pursuant
to the provisions of "Cash Settlement
Election" below.
Net Share Settlement: On each Settlement Date, the Company
shall deliver to JPMorgan, the Share
Delivery Quantity for such Settlement
Date to the account specified herein
free of payment through the Clearance
System.
Share Delivery Quantity: For each Settlement Date, (i) a number
of Shares (rounded down to the nearest
whole Share), as calculated by the
Calculation Agent, equal to the sum of,
for each Valuation Date that occurred in
the calendar week immediately preceding
such Settlement Date, the Settlement
Amount for such Valuation Date divided
by the Settlement Price on such
Valuation Date, and (ii) cash in lieu of
any fractional Share (based on the
Settlement Price on the last Valuation
Date during such week).
Settlement Amount: For each Valuation Date, an amount equal
to the product of (i) the number of
Warrants exercised or deemed exercised
on the relevant Exercise Date, (ii) the
Strike Price Differential for such
Valuation Date and (iii) the Warrant
Entitlement.
Strike Price Differential: (a) If the Settlement Price for any
Valuation Date is greater than the
Strike Price, an amount equal to the
excess of such Settlement Price over the
Strike Price; or
(b) If such Settlement Price is less
than or equal to the Strike Price, zero.
Settlement Price: For any Valuation Date, the per Share
volume-weighted average price as
displayed under the heading "Bloomberg
VWAP" on Bloomberg page AIN AQR
(or any successor thereto) in respect of
the period from 9:30 a.m. to 4:00 p.m.
(New York City time) on such Valuation
Date (or if such volume-weighted average
price is unavailable, the market value
of one Share on such Valuation Date, as
determined by the Calculation Agent
using a volume-weighted method).
Settlement Date: The first Exchange Business Day of each
calendar week shall be the Settlement
Date in respect of each Valuation Date
that occurred during the prior calendar
week.
Cash Settlement Election: Notwithstanding "Method of Settlement"
above, with respect to all Warrants to
be exercised on the Expiration Dates,
the Company can elect Cash Settlement by
delivering a written notice to JPMorgan
(the "Cash Settlement Notice") on or
prior to the fifteenth (15th) scheduled
Exchange Business Day immediately
4
preceding the First Expiration Date,
which Cash Settlement Notice shall
contain:
(i) a representation that (x) on the
date of such Cash Settlement Notice, the
Company is not in possession of any
material non-public information with
respect to the Company or its Shares,
(y) the Company is electing Cash
Settlement in good faith and not as part
of a plan or scheme to evade the
prohibitions of Rule 10b-5 under the
Securities Exchange Act of 1934, as
amended (the "Exchange Act") and (z) the
Company has not entered into or altered
any hedging transaction relating to the
Shares corresponding to or offsetting
the Transaction;
(ii) a representation that the Company
is not, on the date of such Cash
Settlement Notice, and will not be, on
any day during the period commencing on
such day and ending on the second
Exchange Business Day following the last
Settlement Date hereunder (the
"Settlement Period"), engaged in a
distribution, as such term is used in
Regulation M under the Exchange Act,
other than a distribution meeting the
requirements of the exception set forth
in Rules 101(b)(10) and 102(b)(7) of
Regulation M;
(iii) a representation that the Company
is not electing Cash Settlement to
create actual or apparent trading
activity in the Shares (or any security
convertible into or exchangeable for the
Shares) or to raise or depress or
otherwise manipulate the price of the
Shares (or any security convertible into
or exchangeable for the Shares);
(iv) an acknowledgment by the Company
that (A) any transaction in Shares by
JPMorgan following the Company's
election of Cash Settlement shall be
made at JPMorgan's sole discretion and
for JPMorgan's own account and (B) the
Company does not have, and shall not
attempt to exercise, any influence over
how, when, whether or at what price to
effect such transactions, or whether
such transactions are made on any
securities exchange or privately; and
(v) an agreement by the Company that,
during the Settlement Period, without
the prior written consent of JPMorgan,
the Company shall not, and shall cause
its affiliated purchasers (each as
defined in Rule 10b-18 under the
Exchange Act) not to, directly or
indirectly (including, without
limitation, by means of a derivative
instrument), purchase, offer to
purchase, place any bid or limit order
that would effect a purchase of, or
commence any tender offer relating to,
any Shares or any security convertible
into or exchangeable for the Shares in
the public markets.
Cash Settlement: If Cash Settlement is applicable, on
each Settlement Date, the Company shall
deliver to JPMorgan (to an account
specified by JPMorgan) the sum of the
Settlement Amounts for each
5
Valuation Date that occurred in the
calendar week immediately preceding such
Settlement Date.
The Company agrees that it shall not
have the right to elect Cash Settlement
if JPMorgan notifies the Company that,
it has determined that in the good faith
reasonable judgment of JPMorgan, based
upon advice of counsel and as a result
of events occurring after the Trade
Date, the election of Cash Settlement or
any purchases of Shares that JPMorgan
(or its affiliates) might make in
connection therewith would raise
material risks under applicable
securities laws.
Failure to Deliver: Inapplicable
Other Applicable Provisions: If Net Share Settlement applies, the
provisions of Sections 6.6, 6.7, 6.8,
6.9 and 6.10 of the Equity Definitions
will be applicable, except that all
references in such provisions to
"Physically-Settled" shall be read as
references to "Net Share Settled". "Net
Share Settled" in relation to any
Warrant means that Net Share Settlement
is applicable to that Warrant.
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Warrants:
Method of Adjustment: Calculation Agent Adjustment. For
avoidance of doubt, in making any
adjustments under the Equity
Definitions, the Calculation Agent may
adjust the Strike Price, the Number of
Warrants, the Daily Number of Warrants
and the Warrant Entitlement.
Notwithstanding the foregoing, any cash
dividends or distributions, whether or
not extraordinary, shall be governed by
Section 9(l) of this Confirmation and
not by Section 9.1(c) of the Equity
Definitions.
Extraordinary Events applicable to the Transaction:
Consequence of Merger Events
(a) Share-for-Share: Alternative Obligation; provided that
the Calculation Agent will determine if
the Merger Event affects the theoretical
value of the Transaction and, if so, the
Calculation Agent shall make adjustments
to the Strike Price, the Number of
Warrants, the Daily Number of Warrants
and the Warrant Entitlement and any
other term necessary to reflect the
characteristics (including volatility,
dividend practice, borrow cost, policy
and liquidity) of the New Shares.
Notwithstanding the foregoing,
Cancellation and Payment shall apply in
the event the New Shares are not
publicly traded on a United States
national securities exchange or quoted
on the NASDAQ National Market (or any
successor thereto).
(b) Share-for-Other: Cancellation and Payment
6
(c) Share-for-Combined: Alternative Obligation in respect of the
portion of the consideration for the
relevant Shares that consists of New
Shares and subject to any adjustment
described in the proviso contained in
Share-for-Share above, and Cancellation
and Payment in respect of the portion of
the consideration for the relevant
Shares that consists of Other
Consideration. Notwithstanding the
foregoing, Cancellation and Payment
shall apply in the event the New Shares
are not publicly traded on a United
States national securities exchange or
quoted on the NASDAQ National Market (or
any successor thereto).
Nationalization or Insolvency: Cancellation and Payment
4. Calculation Agent: JPMorgan. Whenever the Calculation Agent
is required to act or to exercise
judgment in any way, it will do so in
good faith and in a commercially
reasonable manner to achieve a
commercially reasonable result.
The Calculation Agent shall, not later
than the third Currency Business Day
following receipt of a written request
of the Company, provide the Company with
a written explanation of the basis of
any determination, adjustment or
calculation made hereunder; provided
that if, after reviewing such written
explanation, the Company objects to such
determination, adjustment or
calculation, then the Company, JPMorgan
and the Calculation Agent shall make
reasonable good faith efforts to agree
upon an appropriate determination,
adjustment or calculation.
5. Account Details:
(a) Account for payments to the Company:
JPMorgan, New York
ABA: 021-000-021
Acct: CHASUS33
Acct No.: 910-1010-693
Account for delivery of Shares from the Company:
DTC 50108 (Computershare)
Note: the shares cannot be sent electronically.
They must be DWACed.
(b) Account for payments from/to JPMorgan:
JPMorgan Chase Bank, N.A., New York
ABA: 021 000 021
Favour: JPMorgan Chase Bank N.A., - London
A/C: 0010962009
CHASUS33
7
Account for delivery of Shares to JPMorgan:
DTC 060
6. Offices:
The Office of the Company for the Transaction is: Inapplicable, the Company is
not a Multibranch Party.
The Office of JPMorgan for the Transaction is: New York
JPMorgan Chase Bank, N.A.
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to the Company:
Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Christopher J. Connally
Telephone No.: (518) 445-2235
Facsimile No.: (518) 447-6305
With a copy to:
Albany International Corp.
1373 Broadway
Albany, New York 12204
Attention: Charles J. Silva, Jr.
Telephone No.: (518) 445-2277
Facsimile No.: (518) 447-6575
(b) Address for notices or communications to JPMorgan:
JPMorgan Chase Bank, N. A.
277 Park Avenue, 11th Floor
New York, NY 10172
Attention: Nathan Lulek
EDG Corporate Marketing
Telephone No.: (212) 622-2262
Facsimile No.: (212) 622-8091
8. Representations and Warranties of the Company
The representations and warranties of the Company set forth in Section 4 of the
Purchase Agreement (the "Purchase Agreement") dated as of the Trade Date and
relating to the issuance of USD 150,000,000 principal amount of
8
2.25%
Convertible Senior Notes due 2026, (the "Convertible Notes") between the Company
and J.P. Morgan Securities Inc. and Banc of America Securities LLC as Initial
Purchasers are true and correct and are hereby deemed to be repeated to JPMorgan
as if set forth herein. The Company hereby further represents and warrants to
JPMorgan that:
(a) The Company has all necessary corporate power and authority to
execute, deliver and perform its obligations in respect of this
Transaction; such execution, delivery and performance have been duly
authorized by all necessary corporate action on the Company's part;
and this Confirmation has been duly and validly executed and
delivered by the Company and constitutes its valid and binding
obligation, enforceable against the Company in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law
or in equity) and except that rights to indemnification and
contribution hereunder may be limited by federal or state securities
laws or public policy relating thereto.
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of the Company hereunder
will conflict with or result in a breach of the certificate of
incorporation or by-laws (or any equivalent documents) of the
Company, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which the Company or any
of its Significant Subsidiaries is a party or by which the Company
or any of its Significant Subsidiaries is bound or to which the
Company or any of its Significant Subsidiaries is subject, or
constitute a default under, or result in the creation of any lien
under, any such agreement or instrument, or breach or constitute a
default under any agreements and contracts of the Company and its
Significant Subsidiaries filed as exhibits to the Company's Annual
Report on Form 10-K for the year ended December 31, 2004, as updated
by any subsequent filings.
(c) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required in
connection with the execution, delivery or performance by the
Company of this Confirmation, except such as have been obtained or
made and such as may be required under the Securities Act of 1933,
as amended (the "Securities Act") or state securities laws.
(d) The Shares of the Company initially issuable upon exercise of the
Warrant by the net share settlement method (the "Warrant Shares")
have been reserved for issuance by all required corporate action of
the Company. The Warrant Shares have been duly authorized and, when
delivered against payment therefor (which may include Net Share
Settlement in lieu of cash) and otherwise as contemplated by the
terms of the Warrant following the exercise of the Warrant in
accordance with the terms and conditions of the Warrant, will be
validly issued, fully-paid and non-assessable, and the issuance of
the Warrant Shares will not be subject to any preemptive or similar
rights.
(e) The Company is an "eligible contract participant" (as such term is
defined in Section 1a(12) of the Commodity Exchange Act, as amended
(the "CEA") because one or more of the following is true:
The Company is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) the Company has total assets in excess of USD 10,000,000;
9
(B) the obligations of the Company hereunder are guaranteed, or
otherwise supported by a letter of credit or keepwell, support
or other agreement, by an entity of the type described in
Section 1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I),
1a(12)(A)(vii) or 1a(12)(C) of the CEA; or
(C) the Company has a net worth in excess of USD 1,000,000 and has
entered into this Agreement in connection with the conduct of
the Company's business or to manage the risk associated with
an asset or liability owned or incurred or reasonably likely
to be owned or incurred by the Company in the conduct of the
Company's business.
(f) The Company is not, on the date hereof, in possession of any
material non-public information with respect to the Company.
9. Other Provisions:
(a) Opinions. The Company shall deliver to JPMorgan an opinion of
counsel, dated as of the Trade Date, substantially in the form set
forth in Exhibit A hereto.
(b) Amendment. If the Initial Purchasers party to the Purchase Agreement
exercise their right to purchase additional Convertible Notes as set
forth therein, then, at the discretion of the Company, JPMorgan and
the Company will amend this Confirmation to provide for such
increase in Convertible Notes (but on pricing terms acceptable to
JPMorgan and the Company) (such amendment to provide for the payment
by JPMorgan to the Company of the additional premium related
thereto).
(c) No Reliance, etc. Each party represents that (i) it is entering into
the Transaction evidenced hereby as principal (and not as agent or
in any other capacity); (ii) neither the other party nor any of its
agents are acting as a fiduciary for it; (iii) it is not relying
upon any representations except those expressly set forth in the
Agreement or this Confirmation; (iv) it has not relied on the other
party for any legal, regulatory, tax, business, investment,
financial, and accounting advice, and it has made its own
investment, hedging, and trading decisions based upon its own
judgment and not upon any view expressed by the other party or any
of its agents; and (v) it is entering into this Transaction with a
full understanding of the terms, conditions and risks thereof and it
is capable of and willing to assume those risks.
(d) Share De-listing Event. If at any time during the period from and
including the Trade Date, to and including the final Expiration
Date, the Shares cease to be listed or quoted on the Exchange for
any reason (other than a Merger Event as a result of which the
shares of common stock underlying the Warrants are listed or quoted
on The New York Stock Exchange, The American Stock Exchange or the
NASDAQ National Market (or their respective successors) (the
"Successor Exchange")) and are not immediately re-listed or quoted
as of the date of such de-listing on the Successor Exchange (a
"Share De-listing"), then Cancellation and Payment (as defined in
Section 9.6 of the Equity Definitions, treating the "Announcement
Date" as the date of first public announcement that the Share
De-listing will occur and the "Merger Date" as the date of the Share
De-listing) shall apply, and the date of the de-listing shall be
deemed the date of termination for purposes of calculating any
payment due from one party to the other in connection with the
cancellation of this Transaction. If the Shares are immediately
re-listed on a Successor Exchange upon their de-listing from the
Exchange, this Transaction shall continue in full force and effect,
provided that the Successor Exchange shall be deemed to be the
Exchange for all purposes hereunder, provided that the Calculation
Agent may make appropriate adjustments to the terms of this
Transaction to reflect the effect of such re-listing. For the
avoidance of doubt, in no event will
10
a Share De-listing result in an obligation of JPMorgan under this
Confirmation to make a payment to the Company.
(e) Repurchase Notices. The Company shall, on any day on which the
Company effects any repurchase of Shares, promptly give JPMorgan a
written notice of such repurchase (a "Repurchase Notice") on such
day if following such repurchase, the number of outstanding Shares
on such day, subject to any adjustments provided herein, is (i) less
than 25 million (in the case of the first such notice) or (ii)
thereafter, more than 125,000 less than the number of Shares
included in the immediately preceding Repurchase Notice. The Company
agrees to indemnify and hold harmless JPMorgan and its affiliates
and their respective officers, directors, employees, affiliates,
advisors, agents and controlling persons (each, an "Indemnified
Person") from and against any and all losses (including losses
relating to JPMorgan's reasonable hedging activities as a
consequence of becoming, or of the risk of becoming, a Section 16
"insider", including without limitation, any forbearance from
reasonable hedging activities or cessation of such hedging
activities and any losses in connection therewith with respect to
this Transaction), claims, damages, judgments, liabilities and
expenses (including reasonable attorney's fees), joint or several,
which an Indemnified Person actually may become subject to, as a
result of the Company's failure to provide JPMorgan with a
Repurchase Notice on the day and in the manner specified in this
Section 9(e), and to reimburse, within 30 days, upon written
request, each of such Indemnified Persons for any reasonable legal
or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action,
proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified
Person, such Indemnified Person shall promptly notify the Company in
writing, and the Company, upon request of the Indemnified Person,
shall retain counsel reasonably satisfactory to the Indemnified
Person to represent the Indemnified Person and any others the
Company may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. The Company
shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Company agrees to
indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. The Company
shall not, without the prior written consent of the Indemnified
Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability
on claims that are the subject matter of such proceeding on terms
reasonably satisfactory to such Indemnified Person. If the
indemnification provided for in this paragraph (e) is unavailable to
an Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then the Company
under such paragraph, in lieu of indemnifying such Indemnified
Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages
or liabilities. The remedies provided for in this paragraph (e) are
not exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in
equity. The indemnity and contribution agreements contained in this
paragraph (e) shall remain operative and in full force and effect
regardless of the termination of this Transaction.
(f) Regulation M. The Company was not on the Trade Date and is not on
the date hereof engaged in a distribution, as such term is used in
Regulation M under the Exchange Act, of any securities of the
Company, other than a distribution meeting the requirements of the
exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation
M. The Company shall not, until the second Exchange Business Day
immediately following the Trade Date, engage in any such
distribution.
11
(g) No Manipulation. The Company is not entering into this Transaction
to create actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or to
raise or depress or otherwise manipulate the price of the Shares (or
any security convertible into or exchangeable for the Shares).
(h) Board Authorization. The Company represents that it is entering into
the Transaction, solely for the purposes stated in the board
resolution authorizing this Transaction and in its public
disclosure. The Company further represents that there is no internal
policy, whether written or oral, of the Company that would prohibit
the Company from entering into any aspect of this Transaction,
including, but not limited to, the issuance of Shares pursuant
hereto.
(i) Transfer or Assignment. (i) The Company may not transfer any of its
rights or obligations under this Transaction without the prior
written consent of JPMorgan. JPMorgan may transfer or assign all or
any portion of its rights or obligations under this Transaction in
compliance with applicable laws without consent of the Company. In
addition, if JPMorgan's "beneficial ownership" (within the meaning
of Section 16 of the Exchange Act and rules promulgated thereunder)
exceeds 8% of the Company's outstanding shares, or the product of
the Number of Warrants and the Warrant Entitlement divided by the
total number of the Company's outstanding Shares (the "Warrant
Equity Percentage") exceeds 15% and if, in the good faith,
reasonable judgment of JPMorgan based upon advice of counsel and as
a result of events occurring after the Trade Date, JPMorgan
reasonably determines that it would be inadvisable to engage in
alternative hedging transactions which would enable it to reduce its
"beneficial ownership" or the Warrants Equity Percentage other than
by transfer, assignment or termination, and JPMorgan reasonably
determines that it is unable after making commercially reasonable
efforts to effect transfer or assignment on pricing terms and in a
time period reasonably acceptable to JPMorgan that would reduce its
"beneficial ownership" to 7.5% or such Warrant Equity Percentage to
14.5%, respectively, JPMorgan may designate any Exchange Business
Day as an Early Termination Date with respect to a portion (the
"Terminated Portion") of this Transaction, such that its "beneficial
ownership" following such partial termination would be approximately
equal to but less than 7.5% or the Warrant Equity Percentage
approximately equal to 14.5%, as applicable.
(ii) If JPMorgan so designates an Early Termination Date with
respect to a portion of this Transaction, (i) a payment shall be
made pursuant to Section 6 of the Agreement as if an Early
Termination Date occurred in respect of a Transaction having terms
identical to this Transaction and a Number of Warrants equal to the
Terminated Portion, (ii) the Company shall be the sole Affected
Party with respect to such partial termination and (iii) such
Transaction shall be the only Terminated Transaction. For the
avoidance of doubt, if JPMorgan assigns or terminates any Warrants
hereunder, each Daily Number of Warrants not previously settled
hereunder shall be reduced proportionately, as calculated by the
Calculation Agent.
(iii) Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing JPMorgan to purchase, sell,
receive or deliver any Shares or other securities to or from the
Company, JPMorgan may designate any of its affiliates to purchase,
sell, receive or deliver such Shares or other securities and
otherwise to perform JPMorgan's obligations in respect of this
Transaction and any such designee may assume such obligations.
JPMorgan shall be discharged of its obligations to the Company only
to the extent of any such performance.
(j) Damages. Neither party shall be liable under Section 6.10 of the
Equity Definitions for special, indirect or consequential damages,
even if informed of the possibility thereof.
(k) Early Unwind. In the event the sale of Convertible Notes is not
consummated with the initial purchasers for any reason by the close
of business in New York on March 13, 2006 (or such later date as
agreed upon by the parties) (March 13, 2006 or such later date as
agreed upon being the
12
"Early Unwind Date"), this Transaction shall automatically terminate
(the "Early Unwind"), on the Early Unwind Date and (i) the
Transaction and all of the respective rights and obligations of
JPMorgan and the Company under the Transaction shall be cancelled
and terminated and (ii) each party shall be released and discharged
by the other party from and agrees not to make any claim against the
other party with respect to any obligations or liabilities of the
other party arising out of and to be performed in connection with
the Transaction either prior to or after the Early Unwind Date;
provided that, if the failure to consummate the sale of the
Convertible Notes results from a breach by the Company of any
representation of or any undertaking by the Company contained in the
Purchase Agreement, the Company shall purchase from JPMorgan on the
Early Unwind Date any Shares purchased by JPMorgan or one or more of
its affiliates in connection with this Transaction and reimburse
JPMorgan for any costs or expenses (including market losses)
relating to the unwinding of its reasonable hedging activities in
connection with the Transaction (including any losses or costs
incurred as a result of its terminating, liquidating, obtaining or
reestablishing any reasonable hedge or related trading position).
The amount of any such reimbursement shall be determined by JPMorgan
in its reasonable good faith discretion. JPMorgan shall notify the
Company of such amount, including, upon the Company's request, an
explanation of the basis of determination of such amount, and the
Company shall pay such amount in immediately available funds on the
Early Unwind Date. JPMorgan and the Company represent and
acknowledge to the other that, subject to the proviso included in
this Section, upon an Early Unwind, all obligations with respect to
the Transaction shall be deemed fully and finally discharged.
(l) Dividends. If at any time during the period from and including the
Trade Date, to but excluding the Expiration Date, an ex-dividend
date for a cash dividend occurs with respect to the Shares (an
"Ex-Dividend Date"), and that dividend is different from the Regular
Dividend on a per Share basis then the Calculation Agent will, in
its reasonable discretion, adjust the Strike Price, the Number of
Warrants, the Daily Number of Warrants and the Warrant Entitlement
to preserve the fair value of the Warrant to JPMorgan after taking
into account such dividend. "Regular Dividend" shall mean USD 0.09
per Share per quarter.
(m) Role of Agent. Each party agrees and acknowledges that (i) J.P.
Morgan Securities Inc., an affiliate of JPMorgan ("JPMSI"), has
acted solely as agent and not as principal with respect to this
Transaction and (ii) JPMSI has no obligation or liability, by way of
guaranty, endorsement or otherwise, in any manner in respect of this
Transaction (including, if applicable, in respect of the settlement
thereof). Each party agrees it will look solely to the other party
(or any guarantor in respect thereof) for performance of such other
party's obligations under this Transaction.
(n) Additional Provisions.
(i) Notwithstanding Section 9.7 of the Equity Definitions,
everything in the first paragraph of Section 9.7(b) of the Equity
Definitions after the words "Calculation Agent" in the third line
through the remainder of such Section 9.7 shall be deleted and
replaced with the following:
"based on an amount representing the Calculation Agent's
determination of the fair value to Buyer of an option with terms
that would preserve for Buyer the economic equivalent of any payment
or delivery (assuming satisfaction of each applicable condition
precedent) by the parties in respect of the relevant Transaction
that would have been required after that date but for the occurrence
of the Merger Event, Nationalization, Insolvency or Share De-listing
as the case may be."
(ii) Sections 12.8 and 12.9 of the 2002 ISDA Equity Derivatives
Definitions shall apply to this Transaction and, for the purposes of
such sections, "Hedging Disruption", "Increased Cost of Hedging" and
"Loss of Stock Borrow" shall be "Applicable" and, in each case,
JPMorgan shall be the Hedging Party and the Determining Party. With
respect to the Loss of Stock Borrow, the
13
"Maximum Stock Loan Rate" shall mean the Federal Funds Rate, as
determined by the Calculation Agent, minus 50 basis points.
"Federal Funds Rate" means, for any day, the rate set forth for such
day opposite the caption "Federal funds", as such rate is displayed
on the page FedsOpen on the Bloomberg Professional
Service or any successor page; provided that if no rate appears for
any day on such page, the rate for the immediately preceding day for
which a rate does so appear shall be used for such day.
(o) No Collateral or Setoff. Notwithstanding any provision of the
Agreement or any other agreement between the parties to the
contrary, the obligations of the Company hereunder are not secured
by any collateral. Obligations under this Transaction shall not be
set off by the Company (including, for the avoidance of doubt,
pursuant to Section 6(f) of the Agreement) against any other
obligations of the parties, whether arising under the Agreement,
this Confirmation, under any other agreement between the parties
hereto, by operation of law or otherwise. Any provision in the
Agreement with respect to the satisfaction of the Company's payment
obligations to the extent of JPMorgan's payment obligations to the
Company in the same currency and in the same Transaction (including,
without limitation Section 2(c) thereof) shall not apply to the
Company and, for the avoidance of doubt, the Company shall fully
satisfy such payment obligations notwithstanding any payment
obligation to the Company by JPMorgan in the same currency and in
the same Transaction. In calculating any amounts under Section 6(e)
of the Agreement, notwithstanding anything to the contrary in the
Agreement, (1) separate amounts shall be calculated as set forth in
such Section 6(e) with respect to (a) this Transaction and (b) all
other Transactions, and (2) such separate amounts shall be payable
pursuant to Section 6(d)(ii) of the Agreement, subject to the Share
Termination Alternative.
(p) Alternative Calculations and Payment on Early Termination and on
Certain Extraordinary Events. If, in respect of this Transaction, an
amount is payable by the Company to JPMorgan, (i) pursuant to
Section 9.7 of the Equity Definitions (except in the event of a
Nationalization or Insolvency or a Merger Event, in each case, in
which the consideration to be paid to holders of Shares consists
solely of cash) or (ii) pursuant to Section 6(d)(ii) of the
Agreement (except in the event of an Event of Default in which the
Company is the Defaulting Party or a Termination Event in which the
Company is the Affected Party, other than an Event of Default of the
type described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of
the Agreement or in this Confirmation or a Termination Event of the
type described in Section 5(b)(i), (ii), (iii), (iv), (v) or (vi) of
the Agreement or this Confirmation in each case resulting from an
event or events outside the Company's control) (a "Payment
Obligation"), the Company may, in its sole discretion, satisfy any
such Payment Obligation by the Share Termination Alternative (as
defined below) and shall give irrevocable telephonic notice to
JPMorgan, confirmed in writing within one Currency Business Day, no
later than 12:00 p.m. New York local time on the Merger Date, the
date of the occurrence of the Nationalization or Insolvency, the
date of the Share De-listing or the Early Termination Date, as
applicable. In calculating any amounts under Section 6(e) of the
Agreement, notwithstanding anything to the contrary in the
Agreement, (1) separate amounts shall be calculated as set forth in
Section 6(e) with respect to (a) this Transaction and (b) any other
Transactions under the Agreement, and (2) such separate amounts
shall be payable pursuant to Section 6(d)(ii) of the Agreement,
subject to, in the case of clause (1)(a), the Company's Share
Termination Alternative right hereunder.
Share Termination Alternative: If applicable, the Company shall
deliver to JPMorgan the Share
Termination Delivery Property on
the date when the Payment
Obligation would otherwise be due,
subject to Section 9(q) below,
pursuant to
14
Section 9.7 of the Equity
Definitions, this Confirmation, or
Section 6(d)(ii) and 6(e) of the
Agreement, as applicable (the
"Share Termination Payment Date"),
in satisfaction, of the Payment
Obligation in the manner reasonably
requested by JPMorgan free of
payment.
Share Termination A number of Share Termination
Delivery Property: Delivery Units, as calculated by
the Calculation Agent, equal to the
Payment Obligation divided by the
Share Termination Unit Price. The
Calculation Agent shall adjust the
Share Termination Delivery Property
by replacing any fractional portion
of a security therein with an
amount of cash equal to the value
of such fractional security based
on the values used to calculate the
Share Termination Unit Price.
Share Termination Unit Price: The value to JPMorgan of property
contained in one Share Termination
Delivery Unit on the date such
Share Termination Delivery Units
are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation Agent
in its discretion by commercially
reasonable means and notified by
the Calculation Agent to the
Company at the time of notification
of the Payment Obligation. In the
case of a Private Placement
Settlement of Share Termination
Delivery Units that are Restricted
Shares (as defined below) as set
forth in paragraph (q)(i) below,
the Share Termination Unit Price
shall be determined by the
discounted price applicable to such
Share Termination Delivery Units.
In the case of a Registered
Settlement of Share Termination
Delivery Units that are Restricted
Shares (as defined below) as set
forth in paragraph (q)(ii) below,
the Share Termination Unit Price
shall be the Settlement Price on
the Merger Date, the date of the
occurrence of the Nationalization
or Insolvency, the date of the
Share De-listing or the Early
Termination Date, as applicable.
Share Termination Delivery Unit: In the case of a Share De-listing,
Termination Event or Event of
Default, one Share or, in the case
of Nationalization or Insolvency or
a Merger Event, a unit consisting
of the number or amount of each
type of property received by a
holder of one Share (without
consideration of any requirement to
pay cash or other consideration in
lieu of fractional amounts of any
securities) in such Nationalization
or Insolvency or such Merger Event.
If such Merger Event involves a
choice of consideration to be
received by holders, such holder
shall be deemed to
15
have elected to receive the maximum
possible amount of cash.
Failure to Deliver: Inapplicable
Other applicable provisions: If the Share Termination
Alternative is applicable, the
provisions of Sections 6.6, 6.7,
6.8, 6.9 and 6.10 (as modified
above) of the Equity Definitions
will be applicable, except that all
references in such provisions to
"Physically-Settled" shall be read
as references to "Share Termination
Settled" and all references to
"Shares" shall be read as
references to "Share Termination
Delivery Units". "Share Termination
Settled" in relation to this
Transaction means that the Share
Termination Alternative is
applicable to this Transaction.
(q) Registration/Private Placement Procedures. If, in the reasonable
opinion of JPMorgan, based on the advice of counsel, following any
delivery of Shares or Share Termination Delivery Property to
JPMorgan hereunder, such Shares or Share Termination Delivery
Property would be in the hands of JPMorgan subject to any applicable
restrictions with respect to any registration or qualification
requirement or prospectus delivery requirement for such Shares or
Share Termination Delivery Property pursuant to any applicable
federal or state securities law (including, without limitation, any
such requirement arising under Section 5 of the Securities Act as a
result of such Shares or Share Termination Delivery Property being
"restricted securities", as such term is defined in Rule 144 under
the Securities Act, or as a result of the sale of such Shares or
Share Termination Delivery Property being subject to paragraph (c)
of Rule 145 under the Securities Act) (such Shares or Share
Termination Delivery Property, "Restricted Shares"), then delivery
of such Restricted Shares shall be effected pursuant to either
clause (i) or (ii) below at the election of the Company, unless
waived by JPMorgan. Notwithstanding the foregoing, solely in respect
of any Warrants exercised or deemed exercised on any Expiration
Date, (x) JPMorgan shall use reasonable efforts to give notice to
the Company no later than twenty (20) Exchange Business Days prior
to the First Expiration Date if it believes at such time that this
Section 9(q) would be applicable to Shares or Share Termination
Delivery Property to be delivered in connection with any Expiration
Date and (y) to the extent Net Share Settlement applies, the Company
shall elect, prior to the first Settlement Date for the first
Expiration Date, a Private Placement Settlement or Registered
Settlement for all deliveries of Restricted Shares for all such
Expiration Dates which election shall be applicable to all
Settlement Dates for such Daily Number of Warrants and the
procedures in clause (i) or clause (ii) below shall apply for all
such delivered Restricted Shares on an aggregate basis commencing
after the final Settlement Date for such Daily Number of Warrants.
The Calculation Agent shall make reasonable adjustments to
settlement terms and provisions under this Confirmation to reflect a
single Private Placement Settlement or Registered Settlement for
such aggregate Restricted Shares delivered hereunder.
(i) If the Company elects to settle the Transaction pursuant to
this clause (i) (a "Private Placement Settlement"), then
delivery of Restricted Shares by the Company shall be effected
in customary private placement procedures with respect to such
Restricted Shares reasonably acceptable to JPMorgan; provided
that the Company may not elect a Private Placement Settlement
if, on the date of its election, it has taken, or caused to be
taken, any action that would make unavailable either the
exemption pursuant to Section 4(2) of the Securities Act for
the sale by the Company to JPMorgan (or any affiliate
designated by JPMorgan) of the Restricted Shares or the
exemption pursuant to Section 4(1) or Section
16
4(3) of the Securities Act for resales of the Restricted
Shares by JPMorgan (or any such affiliate of JPMorgan). The
Private Placement Settlement of such Restricted Shares shall
include customary representations, covenants, blue sky and
other governmental filings and/or registrations, indemnities
to JPMorgan, due diligence rights (for JPMorgan or any
designated buyer of the Restricted Shares by JPMorgan),
opinions and certificates, and such other documentation as is
customary for private placement agreements, all reasonably
acceptable to JPMorgan. In the case of a Private Placement
Settlement, JPMorgan shall determine the appropriate discount
to the Share Termination Unit Price (in the case of settlement
of Share Termination Delivery Units pursuant to paragraph (p)
above) or any Settlement Price (in the case of settlement of
Shares pursuant to Section 2 above) applicable to such
Restricted Shares in a commercially reasonable manner and
appropriately adjust the amount of such Restricted Shares to
be delivered to JPMorgan hereunder; provided that in no event
shall such number be greater than 8,247,972 (the "Maximum
Amount"). Notwithstanding the Agreement or this Confirmation,
the date of delivery of such Restricted Shares (the "Due
Date") shall be the Exchange Business Day following notice by
JPMorgan to the Company, of such applicable discount and the
number of Restricted Shares to be delivered pursuant to this
clause (i). For the avoidance of doubt, delivery of Restricted
Shares shall be due as set forth in the previous sentence and
not be due on the Share Termination Payment Date (in the case
of settlement of Share Termination Delivery Units pursuant to
paragraph (p) above) or on the Settlement Date for such
Restricted Shares (in the case of settlement of Shares
pursuant to Section 2 above).
In the event the Company shall not have delivered the full
number of Restricted Shares otherwise applicable as a result
of the proviso above relating to the Maximum Amount (such
deficit, the "Deficit Restricted Shares"), the Company shall
be continually obligated to deliver, from time to time until
the full number of Deficit Restricted Shares have been
delivered pursuant to this paragraph, Restricted Shares when,
and to the extent, that (i) Shares are repurchased, acquired
or otherwise received by the Company or any of its
subsidiaries after the Trade Date (whether or not in exchange
for cash, fair value or any other consideration), (ii)
authorized and unissued Shares reserved for issuance in
respect of other transactions prior to such date which prior
to the relevant date become no longer so reserved and (iii)
the Company additionally authorizes and unissued Shares that
are not reserved for other transactions. The Company shall
immediately notify JPMorgan of the occurrence of any of the
foregoing events (including the number of Shares subject to
clause (i), (ii) or (iii) and the corresponding number of
Restricted Shares to be delivered) and promptly deliver such
Restricted Shares thereafter.
In the event of a Private Placement, the Net Share Settlement
Amount or the Payment Obligation, respectively, shall be
deemed to be the Net Share Settlement Amount or the Payment
Obligation, respectively, plus an additional amount
(determined from time to time by the Calculation Agent in its
commercially reasonable judgment) attributable to interest
that would be earned on such Net Share Settlement Amount or
the Payment Obligation, respectively, (increased on a daily
basis to reflect the accrual of such interest and reduced from
time to time by the amount of net proceeds received by
JPMorgan as provided herein) at a rate equal to the open
Federal Funds Rate plus the Spread for the period from, and
including, such Settlement Date or the date on which the
Payment Obligation is due, respectively, to, but excluding,
the Due Date, calculated on an Actual/360 basis. The foregoing
provision shall be without prejudice to JPMorgan's rights
under the Agreement (including, without limitation, Sections 5
and 6 thereof).
17
As used in this Section 9(p)(i), "Spread" means, with respect
to any Net Share Settlement Amount or Payment Obligation,
respectively, the credit spread over the applicable overnight
rate that would be imposed if JPMorgan were to extend credit
to the Company in an amount equal to such Net Share Settlement
Amount, all as determined by the Calculation Agent using its
commercially reasonable judgment as of the related Settlement
Date or Due Date, respectively. Commercial reasonableness
shall take into consideration all factors deemed relevant by
the Calculation Agent, which are expected to include, among
other things, the credit quality of the Company (and any
relevant affiliates) in the then-prevailing market and the
credit spread of similar companies in the relevant industry
and other companies having a substantially similar credit
quality.
(ii) If the Company elects to settle the Transaction pursuant to
this clause (ii) (a "Registration Settlement"), then the
Company shall promptly (but in any event no later than the
beginning of the Resale Period) file and use its reasonable
best efforts to make effective under the Securities Act a
registration statement or supplement or amend an outstanding
registration statement in form and substance reasonably
satisfactory to JPMorgan, to cover the resale of such
Restricted Shares in accordance with customary resale
registration procedures, including covenants, conditions,
representations, underwriting discounts (if applicable),
commissions (if applicable), indemnities due diligence rights,
opinions and certificates, and such other documentation as is
customary for equity resale underwriting agreements, all
reasonably acceptable to JPMorgan. If JPMorgan, in its
reasonable discretion, is not satisfied with such procedures
and documentation, Private Placement Settlement shall apply.
If JPMorgan is satisfied with such procedures and
documentation, it shall sell the Restricted Shares pursuant to
such registration statement during a period (the "Resale
Period") commencing on (x) the Share Termination Payment Date
in case of settlement of Share Termination Delivery Units
pursuant to paragraph (p) above or (y) the Settlement Date in
respect of the final Expiration Date for all Daily Number of
Warrants and ending on the earliest of (i) the Exchange
Business Day on which JPMorgan completes the sale of all
Restricted Shares or a sufficient number of Restricted Shares
so that the realized net proceeds of such sales exceed the
Payment Obligation (as defined above), (ii) the date upon
which all Restricted Shares have been sold or transferred
pursuant to Rule 144 (or similar provisions then in force) or
Rule 145(d)(1) or (2) (or any similar provision then in force)
under the Securities Act and (iii) the date upon which all
Restricted Shares may be sold or transferred by a
non-affiliate pursuant to Rule 144(k) (or any similar
provision then in force) or Rule 145(d)(3) (or any similar
provision then in force) under the Securities Act. If the
Payment Obligation exceeds the realized net proceeds from such
resale, the Company shall transfer to JPMorgan by the open of
the regular trading session on the Exchange on the Exchange
Trading Day immediately following the last day of the Resale
Period the amount of such excess (the "Additional Amount") in
cash or in a number of Restricted Shares ("Make-whole Shares")
in an amount that, based on the Settlement Price on the last
day of the Resale Period (as if such day was the "Valuation
Date" for purposes of computing such Settlement Price), has a
dollar value equal to the Additional Amount. The Resale Period
shall continue to enable the sale of the Make-whole Shares. If
the Company elects to pay the Additional Amount in Restricted
Shares, the requirements and provisions for Registration
Settlement shall apply. This provision shall be applied
successively until the Additional Amount is equal to zero. In
no event shall the Company deliver a number of Restricted
Shares greater than the Maximum Amount. Once the realized net
proceeds of such sales exceed the Payment Obligation, JPMorgan
shall return to the Company any excess proceeds or remaining
Restricted Shares.
18
(iii) Without limiting the generality of the foregoing, but subject
to the last sentence of Section 9(s) below, the Company agrees
that any Restricted Shares delivered to JPMorgan, as purchaser
of such Restricted Shares, (i) may be transferred by and among
JPMorgan and its affiliates in compliance with applicable law
and the Company shall effect such transfer without any further
action by JPMorgan and (ii) after the minimum "holding period"
within the meaning of Rule 144(d) under the Securities Act has
elapsed after any Settlement Date for such Restricted Shares,
the Company shall promptly remove, or cause the transfer agent
for such Restricted Shares to remove, any legends referring to
any such restrictions or requirements from such Restricted
Shares upon delivery by JPMorgan (or such affiliate of
JPMorgan) to the Company or such transfer agent of seller's
and broker's representation letters customarily delivered by
JPMorgan in connection with resales of restricted securities
pursuant to Rule 144 under the Securities Act, without any
further requirement for the delivery of any certificate,
consent, agreement, opinion of counsel, notice or any other
document, any transfer tax stamps or payment of any other
amount or any other action by JPMorgan (or such affiliate of
JPMorgan).
If the Private Placement Settlement or the Registration Settlement
shall not be effected as set forth in clauses (i) or (ii), as
applicable, then failure to effect such Private Placement Settlement
or such Registration Settlement shall constitute an Event of Default
with respect to which the Company shall be the Defaulting Party.
(r) Limit on Beneficial Ownership. Notwithstanding any other provisions
hereof, JPMorgan may not exercise any Warrant hereunder or receive
any Shares as a result of such exercise, and Automatic Exercise
shall not apply with respect thereto, to the extent (but only to the
extent) that such exercise or receipt would result in JPMorgan
directly or indirectly beneficially owning (as such term is defined
for purposes of Section 13(d) of the Exchange Act) at any time in
excess of 9.0% of the outstanding Shares. Any purported delivery
hereunder shall be void and have no effect to the extent (but only
to the extent) that such delivery would result in JPMorgan directly
or indirectly so beneficially owning in excess of 9.0% of the
outstanding Shares. If any delivery owed to JPMorgan hereunder is
not made, in whole or in part, as a result of this provision, the
Company's obligation to make such delivery shall not be extinguished
and the Company shall make such delivery as promptly as practicable
after, but in no event later than one Exchange Business Day after,
JPMorgan gives notice to the Company that such delivery would not
result in JPMorgan directly or indirectly so beneficially owning in
excess of 9.0% of the outstanding Shares.
(s) Share Deliveries. The Company acknowledges and agrees that, to the
extent the holder of this Warrant is not then an affiliate and has
not been an affiliate for 90 days (it being understood that JPMorgan
will not be considered an affiliate under this Section 9(s) solely
by reason of its receipt of Shares pursuant to this Transaction),
and otherwise satisfies all holding period and other requirements of
Rule 144 of the Securities Act applicable to it, any delivery of
Shares or Share Termination Delivery Property hereunder at any time
after two years from the Premium Payment Date shall be eligible for
resale under Rule 144(k) of the Securities Act and the Company
agrees to promptly remove, or cause the transfer agent for such
Shares or Share Termination Delivery Property, to remove, any
legends referring to any restrictions on resale under the Securities
Act from the Shares or Share Termination Delivery Property. The
Company further agrees, for any delivery of Shares or Share
Termination Delivery Property hereunder at any time after one year
from the Premium Payment Date but within two years of the Premium
Payment Date, to the extent the holder of this Warrant then
satisfies the holding period and other requirements of Rule 144 of
the Securities Act, to promptly remove, or cause the transfer agent
for such Shares or Share Termination Delivery Property to remove,
any legends referring to any such restrictions or
19
requirements from such Shares or Share Termination Delivery
Property. Such Shares or Share Termination Delivery Property will be
de-legended upon delivery by JPMorgan (or such affiliate of
JPMorgan) to the Company or such transfer agent of customary
seller's and broker's representation letters in connection with
resales of restricted securities pursuant to Rule 144 of the
Securities Act, without any further requirement for the delivery of
any certificate, consent, agreement, opinion of counsel, notice or
any other document, any transfer tax stamps or payment of any other
amount or any other action by JPMorgan (or such affiliate of
JPMorgan). The Company further agrees that any delivery of Shares or
Share Termination Delivery Property prior to the date that is one
year from the Premium Payment Date, may be transferred by and among
JPMorgan and its affiliates in compliance with applicable law and
the Company shall effect such transfer without any further action by
JPMorgan. Notwithstanding anything to the contrary herein, to the
extent the provisions of Rule 144 of the Securities Act or any
successor rule are amended, or the applicable interpretation thereof
by the Securities and Exchange Commission or any court change after
the Trade Date, the agreements of the Company herein shall be deemed
modified to the extent necessary, in the opinion of counsel of the
Company, to comply with Rule 144 of the Securities Act, including
Rule 144(k) as in effect at the time of delivery of the relevant
Shares or Share Termination Delivery Property.
(t) Additional Termination Event. If within the period commencing on the
Trade Date and ending on the second anniversary of the Trade Date,
an event shall occur, as a result of which, based on the advice of
counsel, JPMorgan reasonably determines that it is advisable to
terminate a portion of this Transaction to comply with applicable
securities laws, rules or regulations, the occurrence of such event
shall constitute an Additional Termination Event under the Agreement
permitting JPMorgan to terminate a portion of this Transaction in
respect of which (1) the Company shall be the sole Affected Party
and (2) this Transaction shall be the sole Affected Transaction;
provided, however, that JPMorgan shall have the right to effect such
termination only to the extent reasonably necessary to comply with
such laws, rules or regulations.
(u) Right to Extend. JPMorgan may delay any Settlement Date or any other
date of delivery by JPMorgan, with respect to some or all of the
Warrants hereunder, if JPMorgan reasonably determines, in its
discretion, that such extension is reasonably necessary to enable
JPMorgan to effect purchases of Shares in connection with its
hedging activity hereunder in a manner that would be in compliance
with applicable legal and regulatory requirements.
(v) Governing Law. New York law (without reference to choice of law
doctrine).
(w) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by
jury in respect of any suit, action or proceeding relating to this
Transaction. Each party (i) certifies that no representative, agent
or attorney of the other party has represented, expressly or
otherwise, that such other party would not, in the event of such a
suit, action or proceeding, seek to enforce the foregoing waiver and
(ii) acknowledges that it and the other party have been induced to
enter into this Transaction, as applicable, by, among other things,
the mutual waivers and certifications provided herein.
(x) Maximum Share Delivery. Notwithstanding any other provision of this
Confirmation or the Agreement, in no event will the Company be
required to deliver more than the Maximum Amount of Shares in the
aggregate to JPMorgan in connection with this Transaction, subject
to the provisions regarding Deficit Restricted Shares.
(y) Status of Claims in Bankruptcy. JPMorgan acknowledges and agrees
that this confirmation is not intended to convey to JPMorgan rights
with respect to the transactions contemplated hereby that are senior
to the claims of common stockholders in any U.S. bankruptcy
proceedings of the Company; provided, however, that nothing herein
shall limit or shall be deemed to limit
20
JPMorgan's right to pursue remedies in the event of a breach by the
Company of its obligations and agreements with respect to this
Confirmation and the Agreement; and provided, further, that nothing
herein shall limit or shall be deemed to limit JPMorgan's rights in
respect of any transaction other than the Transaction.
(z) Tax Advice. JPMorgan and its affiliates do not provide tax advice.
Accordingly, any statements contained herein as to tax matters were
neither written nor intended by JPMorgan to be used and cannot be
used by any taxpayer for the purpose of avoiding tax penalties that
may be imposed on such taxpayer. If any person uses or refers to any
such tax statement in promoting, marketing or recommending a
partnership or other entity, investment plan or arrangement to any
taxpayer, then the statement expressed above is being delivered to
support the promotion or marketing of the transaction or matter
addressed and the recipient should seek advice based on its
particular circumstances from an independent tax advisor.
Notwithstanding anything herein to the contrary, the sender and any
intended recipient of this communication (and any of its employees,
representatives and other agents) may disclose to any and all
persons, without limitation of any kind, the tax treatment or tax
structure of this transaction.
21
JPMorgan [LOGO]
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it in the manner
indicated in the attached cover letter.
Very truly yours,
J.P. Morgan Securities Inc., as agent for
JPMorgan Chase Bank, National Association
By: /s/ Sudheer Tegulapalle
-------------------------------------
Authorized Signatory
Name: Sudheer Tegulapalle
Accepted and confirmed
as of the Trade Date:
ALBANY INTERNATIONAL CORP.
By: /s/ David C. Michaels
----------------------------
Authorized Signatory
Name: David C. Michaels
JPMorgan Chase Bank, National Association
Organised under the laws of the United States as a National Banking Association
Main Office 1111 Polaris Parkway, Columbus, Ohio 43271
Registered as a branch in England & Wales branch No. BR000746
Registered Branch Office 125 London Wall, London EC2Y 5AJ
Authorised and regulated by the Financial Services Authority
22
Annex A
Form of Legal Opinion
23