In February 2003, our Board of Directors reauthorized our share repurchase
program. Under the program, we may repurchase up to an additional 1,000,000
shares of our common stock for an aggregate purchase price not to exceed $15
million. We may repurchase shares under this program through February 2004
either in the open market or in privately negotiated transactions. During 2002,
we repurchased approximately 100,000 shares of our common stock under this
program. Repurchases under this program are separate and in addition to the 1.5
million shares of common stock repurchased concurrent with the issuance of the
contingent convertible notes in March 2003.
FORWARD-LOOKING STATEMENTS
We have made statements in this report, including statements under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" which
constitute forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are subject to a number of risks, uncertainties
and assumptions about the Company, including those described under "Risk
Factors" in the Company's Annual Report on Form 10-K for the year ended December
31, 2002 filed with the Securities and Exchange Commission and those set forth
in Exhibit 99.2 appearing elsewhere in this report. In light of these risks and
uncertainties, the forward-looking events and circumstances discussed in this
report may not occur and actual results could differ materially from those
anticipated or implied in the forward-looking statements.
You can identify these forward-looking statements by forward-looking words such
as "believe," "may," "could," "will," "estimate," "continue," "anticipate,"
"intend," "seek," "plan," "expect," "should," "would" and similar expressions in
this report.
21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have exposure to financial risk from changes in foreign exchange rates and
interest rates.
Foreign Currency Exchange
A discussion of foreign currency exchange risks is provided under the caption
"International Product Revenues and Operations" under "Management's Discussion
and Analysis of Financial Condition and Results of Operations".
Interest Rate and Credit Risk
We are exposed to the risk of interest rate fluctuations on the fair value and
interest income earned on our cash and cash equivalents and investments in
available-for-sale marketable debt securities and on the fair value of our
contingent convertible notes. We do not have any floating rate debt
obligations.
A hypothetical 100 basis point movement in interest rates applicable to our cash
and cash equivalents and investments in marketable debt securities outstanding
at March 31, 2003 would increase or decrease interest income by approximately
$1.7 million on an annual basis. We are not subject to material foreign currency
exchange risk with respect to these investments.
A hypothetical 100 basis point increase in interest rates would decrease the
fair value of our $105.0 million of contingent convertible notes outstanding at
March 31, 2003 by approximately $4.7 million. We are not subject to foreign
currency exchange risk with respect to this debt.
ITEM 4. CONTROLS AND PROCEDURES
Within 90 days before filing this report, the Chief Executive Officer and Senior
Vice President, Finance and Treasurer evaluated the effectiveness of the design
and operation of Integra's disclosure controls and procedures. Integra's
disclosure controls and procedures are the controls and other procedures that
the Chief Executive Officer and Senior Vice President, Finance and Treasurer
have designed to ensure that Integra records, processes, summarizes and reports
in a timely manner the information we must disclose in reports filed under the
Securities Exchange Act of 1934, as amended. Stuart M. Essig, Chief Executive
Officer, and David B. Holtz, Senior Vice President, Finance and Treasurer,
reviewed and participated in this evaluation. Based on this evaluation, Messrs.
Essig and Holtz concluded that, as of the date of their evaluation, Integra's
disclosure controls and procedures were effective.
Since the date of the evaluation described above, there have not been any
significant changes in our internal controls or in other factors that could
significantly affect those controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
22
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 9 to the Unaudited Consolidated Financial Statements.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On March 31, 2003, we issued and sold, in a private placement, $105.0 million
aggregate principal amount of 2 1/2 Contingent Convertible Subordinated Notes
due March 15, 2008. The notes are convertible into our common stock at a
conversion rate of 29.2847 shares of common stock per $1,000 principal amount of
notes, which is equivalent to an initial conversion price of approximately
$34.15 per share. Conversion of the notes is subject to certain conditions,
including when the market price of our common stock on the previous trading day
is more than 110% of the conversion price. In addition to fixed interest at the
rate of 2.50% per year, the notes also pay contingent interest under certain
circumstances. See Note 5 to the Company's Unaudited Financial Statements.
We sold the notes to Credit Suisse First Boston LLC, Banc of America Securities
LLC, and U.S. Bancorp Piper Jaffray Inc. in reliance upon the private placement
exemption afforded by Section 4(2) of the Securities Act of 1933, as amended.
The initial purchasers offered and sold the notes to "qualified institutional
buyers" under Rule 144A of the Securities Act of 1933, as amended. We have
agreed to file a registration statement under the Securities Act to permit
registered resales of the notes and of the common stock issuable upon their
conversion.
The aggregate offering price of the notes was $105.0 million, 100% of the
principal amount thereof. We received aggregate net proceeds of approximately
$101.9 million, the difference between the aggregate offering price of the notes
and the initial purchasers' discount of $3.1 million, or 3% of the principal
amount of the notes. We used approximately $35.3 million of the aggregate net
proceeds to repurchase 1.5 million shares of our common stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
4.1 Indenture, dated as of March 31, 2003, between Integra LifeSciences
Holdings Corporation and Wells Fargo Bank Minnesota, National
Association.
10.1 Retention Agreement of Robert Paltridge dated as of February 20, 2003
99.1 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as created by
Section 906 of the Sarbanes-Oxley Act of 2002 (1)
99.2 Risk Factors
(b) Reports on Form 8-K
On March 25, 2003, we filed with the Securities and Exchange Commission a Report
on Form 8-K with respect to the acquisition of all of the issued and outstanding
capital stock of J. Jamner Surgical Instruments, Inc. on March 17, 2003.
(1) The certifications are furnished to, and not filed with, the Securities and
Exchange Commission and are not incorporated by reference into any registration
statement filed under the Securities Act of 1933, as amended.
23
SIGNATURES
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 thereunto duly authorized.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
Date: May 15, 2003 /s/ Stuart M. Essig
-------------------
Stuart M. Essig
President and Chief Executive Officer
Date: May 15, 2003 /s/ David B. Holtz
-------------------
David B. Holtz
Senior Vice President, Finance and Treasurer
CERTIFICATIONS
Certification of Principal Executive Officer
I, Stuart M. Essig, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Integra
LifeSciences Holding Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
24
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 15, 2003
/s/ Stuart M. Essig
------------------------
Stuart M. Essig
Chief Executive Officer
Certification of Principal Financial Officer
I, David B. Holtz, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Integra
LifeSciences Holding Corporation;
2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
25
a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrant's ability to record, process,
summarize and report financial data and have
identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.
Date: May 15, 2003
/s/ David B. Holtz
------------------------
David B. Holtz
Senior Vice President,
Finance and Treasurer
26
Exhibits
4.1 Indenture, dated as of March 31, 2003, between Integra LifeSciences
Holdings Corporation and Wells Fargo Bank Minnesota, National
Association.
10.1 Retention Agreement of Robert Paltridge dated as of February 20, 2003
99.1 Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as created by
Section 906 of the Sarbanes-Oxley Act of 2002 (1)
99.2 Risk Factors
(1) The certifications are furnished to, and not filed with, the Securities and
Exchange Commission and are not incorporated by reference into any registration
statement filed under the Securities Act of 1933, as amended.
27
Exhibit 4.1
Integra LifeSciences Holdings Corporation
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
--------------------
INDENTURE
DATED AS OF MARCH 31, 2003
--------------------
WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
AS TRUSTEE
================================================================================
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.............................................................1
SECTION 1.1. DEFINITIONS................................................................................1
SECTION 1.2. OTHER DEFINITIONS..........................................................................7
SECTION 1.3. TRUST INDENTURE ACT PROVISIONS.............................................................8
SECTION 1.4. RULES OF CONSTRUCTION......................................................................8
ARTICLE 2 THE SECURITIES.........................................................................................9
SECTION 2.1. FORM AND DATING............................................................................9
SECTION 2.2. EXECUTION AND AUTHENTICATION..............................................................11
SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT..............................................12
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.......................................................12
SECTION 2.5. SECURITYHOLDER LISTS......................................................................13
SECTION 2.6. TRANSFER AND EXCHANGE.....................................................................13
SECTION 2.7. REPLACEMENT SECURITIES....................................................................14
SECTION 2.8. OUTSTANDING SECURITIES....................................................................14
SECTION 2.9. TREASURY SECURITIES.......................................................................15
SECTION 2.10. TEMPORARY SECURITIES.....................................................................15
SECTION 2.11. CANCELLATION.............................................................................15
SECTION 2.12. LEGEND; ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS....................................16
SECTION 2.13. CUSIP NUMBERS............................................................................18
SECTION 2.14. TAX TREATMENT............................................................................18
ARTICLE 3 REDEMPTION AND PURCHASES..............................................................................19
SECTION 3.1. REDEMPTION BY THE COMPANY.................................................................19
SECTION 3.2. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN CONTROL.....................19
SECTION 3.3. EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE...............................................22
SECTION 3.4. DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE...............................................22
SECTION 3.5. SECURITIES PURCHASED IN PART..............................................................23
SECTION 3.6. COMPLIANCE WITH SECURITIES LAWS UPON PURCHASE OF SECURITIES...............................23
SECTION 3.7. REPAYMENT TO THE COMPANY..................................................................23
ARTICLE 4 CONVERSION............................................................................................23
SECTION 4.1. CONVERSION PRIVILEGE......................................................................23
SECTION 4.2. CONVERSION PROCEDURE......................................................................26
SECTION 4.3. FRACTIONAL SHARES.........................................................................27
SECTION 4.4. TAXES ON CONVERSION.......................................................................27
SECTION 4.5. COMPANY TO PROVIDE STOCK..................................................................27
SECTION 4.6. ADJUSTMENT OF CONVERSION PRICE............................................................28
SECTION 4.7. NO ADJUSTMENT.............................................................................33
SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES...............................................................33
SECTION 4.9. NOTICE OF ADJUSTMENT......................................................................34
SECTION 4.10. NOTICE OF CERTAIN TRANSACTIONS...........................................................34
SECTION 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION PRIVILEGE........34
SECTION 4.12. TRUSTEE'S DISCLAIMER.....................................................................35
SECTION 4.13. VOLUNTARY REDUCTION......................................................................35
ARTICLE 5 SUBORDINATION.........................................................................................36
SECTION 5.1. AGREEMENT OF SUBORDINATION................................................................36
SECTION 5.2. PAYMENTS TO HOLDERS.......................................................................36
SECTION 5.3. SUBROGATION OF SECURITIES.................................................................39
SECTION 5.4. AUTHORIZATION TO EFFECT SUBORDINATION.....................................................40
SECTION 5.5. NOTICE TO TRUSTEE.........................................................................40
SECTION 5.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.................................................41
SECTION 5.7. NO IMPAIRMENT OF SUBORDINATION............................................................41
SECTION 5.8. CERTAIN CONVERSIONS DEEMED PAYMENT........................................................41
SECTION 5.9. ARTICLE APPLICABLE TO PAYING AGENTS.......................................................42
SECTION 5.10. SENIOR INDEBTEDNESS ENTITLED TO RELY.....................................................42
ARTICLE 6 COVENANTS.............................................................................................42
SECTION 6.1. PAYMENT OF SECURITIES.....................................................................42
SECTION 6.2. SEC AND OTHER REPORTS.....................................................................43
SECTION 6.3. COMPLIANCE CERTIFICATES...................................................................43
SECTION 6.4. FURTHER INSTRUMENTS AND ACTS..............................................................44
SECTION 6.5. MAINTENANCE OF CORPORATE EXISTENCE........................................................44
SECTION 6.6. RULE 144A INFORMATION REQUIREMENT.........................................................44
SECTION 6.7. STAY, EXTENSION AND USURY LAWS............................................................44
SECTION 6.8. PAYMENT OF ADDITIONAL INTEREST............................................................44
ARTICLE 7 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE..................................................45
SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN TERMS.......................................45
SECTION 7.2. SUCCESSOR SUBSTITUTED.....................................................................45
ARTICLE 8 DEFAULT AND REMEDIES..................................................................................46
SECTION 8.1. EVENTS OF DEFAULT.........................................................................46
SECTION 8.2. ACCELERATION..............................................................................47
SECTION 8.3. OTHER REMEDIES............................................................................48
SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT..................................................48
SECTION 8.5. CONTROL BY MAJORITY.......................................................................49
SECTION 8.6. LIMITATIONS ON SUITS......................................................................49
SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT.......................................49
SECTION 8.8. COLLECTION SUIT BY TRUSTEE................................................................50
SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM..........................................................50
SECTION 8.10. PRIORITIES...............................................................................50
SECTION 8.11. UNDERTAKING FOR COSTS....................................................................51
ARTICLE 9 TRUSTEE...............................................................................................51
SECTION 9.1. DUTIES OF TRUSTEE.........................................................................51
SECTION 9.2. RIGHTS OF TRUSTEE.........................................................................52
SECTION 9.3. INDIVIDUAL RIGHTS OF TRUSTEE..............................................................53
SECTION 9.4. TRUSTEE'S DISCLAIMER......................................................................53
SECTION 9.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT....................................................53
SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS.............................................................53
SECTION 9.7. COMPENSATION AND INDEMNITY................................................................54
SECTION 9.8. REPLACEMENT OF TRUSTEE....................................................................55
SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC..........................................................55
SECTION 9.10. ELIGIBILITY; DISQUALIFICATION............................................................56
SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY........................................56
ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE..............................................................56
SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE..................................................56
SECTION 10.2. APPLICATION OF TRUST MONEY...............................................................57
SECTION 10.3. REPAYMENT TO COMPANY.....................................................................57
SECTION 10.4. REINSTATEMENT............................................................................57
ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS..................................................................58
SECTION 11.1. WITHOUT CONSENT OF HOLDERS...............................................................58
SECTION 11.2. WITH CONSENT OF HOLDERS..................................................................58
SECTION 11.3. COMPLIANCE WITH TRUST INDENTURE ACT......................................................59
SECTION 11.4. REVOCATION AND EFFECT OF CONSENTS........................................................60
SECTION 11.5. NOTATION ON OR EXCHANGE OF SECURITIES....................................................60
SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC..........................................................60
SECTION 11.7. EFFECT OF SUPPLEMENTAL INDENTURES........................................................60
ARTICLE 12 MISCELLANEOUS........................................................................................60
SECTION 12.1. TRUST INDENTURE ACT CONTROLS.............................................................60
SECTION 12.2. NOTICES..................................................................................61
SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.............................................62
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.......................................62
SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS.......................................62
SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT...........................63
SECTION 12.7. LEGAL HOLIDAYS...........................................................................63
SECTION 12.8. GOVERNING LAW............................................................................63
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS............................................63
SECTION 12.10. NO RECOURSE AGAINST OTHERS..............................................................63
SECTION 12.11. SUCCESSORS..............................................................................63
SECTION 12.12. MULTIPLE COUNTERPARTS...................................................................64
SECTION 12.13. SEPARABILITY............................................................................64
SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC........................................................64
================================================================================
Integra LifeSciences Holdings Corporation
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
--------------------
INDENTURE
DATED AS OF MARCH 31, 2003
--------------------
WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
AS TRUSTEE
================================================================================
CROSS-REFERENCE TABLE*
INDENTURE
TIA SECTION SECTION
Section 310(a)(1)........................................................... 9.10
(a)(2).............................................................. 9.10
(a)(3).............................................................. N.A.**
(a)(4).............................................................. N.A.
(a)(5).............................................................. 9.10
(b)................................................................. 9.8; 9.10
(c)................................................................. N.A.
Section 311(a).............................................................. 9.11
(b)................................................................. 9.11
(c)................................................................. N.A.
Section 312(a).............................................................. 2.5
(b)................................................................. 12.3
(c)................................................................. 12.3
Section 313(a).............................................................. 9.6
(b)(1).............................................................. N.A.
(b)(2).............................................................. 9.6
(c)................................................................. 9.6; 12.2
(d)................................................................. 9.6
Section 314(a).............................................................. 6.2; 6.4; 12.2
(b)................................................................. N.A.
(c)(1).............................................................. 12.4(a)
(c)(2).............................................................. 12.4(a)
(c)(3).............................................................. N.A.
(d)................................................................. N.A.
(e)................................................................. 12.4(b)
(f)................................................................. N.A.
Section 315(a).............................................................. 9.1(b)
(b)................................................................. 9.5; 12.2
(c)................................................................. 9.1(a)
(d)................................................................. 9.1(c)
(e)................................................................. 8.11
Section 316(a)(last sentence)............................................... 2.9
(a)(1)(A)........................................................... 8.5
(a)(1)(B)........................................................... 8.4
(a)(2).............................................................. N.A.
(b)................................................................. 8.7
(c)................................................................. 12.5
Section 317(a)(1)........................................................... 8.8
(a)(2).............................................................. 8.9
(b)................................................................. 2.4
* This Cross-Reference Table shall not, for any purpose, be deemed a part of
this Indenture.
** N.A. means Not Applicable
THIS INDENTURE dated as of March 31, 2003 is between Integra
LifeSciences Holdings Corporation, a corporation duly organized under the laws
of the State of Delaware (the "Company"), and Wells Fargo Bank Minnesota,
National Association, a national bank association organized and existing under
the laws of the United States, as Trustee (the "Trustee").
In consideration of the premises and the purchase of the
Securities by the Holders thereof, both parties agree as follows for the benefit
of the other and for the equal and ratable benefit of the registered Holders of
the Company's 2 1/2% Contingent Convertible Subordinated Notes due 2008.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS
"Additional Interest" has the meaning specified in Section 5
of the Registration Rights Agreement. All references herein to interest accrued
or payable as of any date shall include any Additional Interest accrued or
payable as of such date as provided in the Registration Rights Agreement.
"Affiliate" means, with respect to any specified person, any
other person directly or indirectly controlling or controlled by or under direct
or indirect common control with such specified person. For the purposes of this
definition, "control" when used with respect to any person means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent" means any Registrar, Paying Agent or Conversion Agent.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial ownership interests in a Global Security, the rules and
procedures of the Depositary, in each case to the extent applicable to such
transfer or exchange.
"Board of Directors" means either the board of directors of
the Company or any committee of the Board of Directors authorized to act for it
with respect to this Indenture.
"Business Day" means each day that is not a Legal Holiday.
"Capital Stock" or "capital stock" of any Person means any and
all shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) equity of such Person,
but excluding any debt securities convertible into such equity.
"Cash" or "cash" means such coin or currency of the United
States as at any time of payment is legal tender for the payment of public and
private debts.
"Cash Equivalents" means (i) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued by any state of
the United States of America or any political subdivision of any such state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Ratings Service or
Moody's Investors Service, Inc.; (iii) commercial paper maturing no more than
one year from the date of acquisition thereof issued by any bank organized under
the laws of the United States of America or any state thereof or the District of
Columbia or any U.S. branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250,000,000; (iv)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (i) above entered into with any bank
meeting the qualifications specified in clause (iii) above; and (v) money market
funds which invest substantially all their assets in securities of the types
described in clauses (i) through (iv) above.
"Certificated Security" means a Security that is in
substantially the form attached hereto as Exhibit A and that does not include
the information or the schedule called for by footnotes 1, 3 and 4 thereof.
"Common Stock" means the common stock of the Company, $0.01
par value, as it exists on the date of this Indenture and any shares of any
class or classes of capital stock of the Company resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided, however, that if at any time
there shall be more than one such resulting class, the shares of each such class
then so issuable on conversion of Securities shall be substantially in the
proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes
resulting from all such reclassifications.
"Company" means the party named as such in the first paragraph
of this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture, and thereafter "Company" shall mean such successor
Company.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors who (a) was a member of the Board of
Directors as of the date hereof or (b) was nominated for election or elected to
the Board of Directors with the approval of a majority of the Continuing
Directors who were members at the time of the new director's nomination or
election.
"Conversion Rate" means the number of shares of Common Stock
into which each Security is convertible, and shall equal the quotient obtained
by dividing $1,000 by the then current Conversion Price.
"Corporate Trust Office" means the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Indenture is
located at 213 Court Street, Suite 703, Middletown, CT 06457, Attention:
Corporate Trust Services or at any other time at such other address as the
Trustee may designate from time to time by notice to the Company.
"Default" or "default" means, when used with respect to the
Securities, any event which is or, after notice or passage of time or both,
would be an Event of Default.
"Designated Senior Indebtedness" means any particular Senior
Indebtedness of the Company in which the instrument creating or evidencing the
same or the assumption or guarantee thereof (or any related agreements or
documents to which the Company is a party) expressly provides that such Senior
Indebtedness shall be "Designated Senior Indebtedness" for purposes of this
Indenture (provided that such instrument, agreement or other document may place
limitations and conditions on the right of such Senior Indebtedness to exercise
the rights of Designated Senior Indebtedness). If any payment made to any holder
of any Designated Senior Indebtedness or its Representative with respect to such
Designated Senior Indebtedness is rescinded or must otherwise be returned by
such holder or Representative upon the insolvency, bankruptcy or reorganization
of the Company or otherwise, the reinstated Indebtedness of the Company arising
as a result of such rescission or return shall constitute Designated Senior
Indebtedness effective as of the date of such rescission or return.
"Exchange Act" means the Securities and Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder, as in effect
from time to time.
"Final Maturity Date" means March 15, 2008.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the date of this Indenture,
including those set forth in (1) the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants, (2) the statements and pronouncements of the Financial Accounting
Standards Board, (3) such other statements by such other entity as approved by a
significant segment of the accounting profession and (4) the rules and
regulations of the SEC governing the inclusion of financial statements
(including pro forma financial statements) in registration statements filed
under the Securities Act and periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the accounting staff of
the SEC.
"Global Security" means a permanent Global Security that is in
substantially the form attached hereto as Exhibit A and that includes the
information and schedule called for by footnotes 1, 3 and 4 thereof and which is
deposited with the Depositary or its custodian and registered in the name of the
Depositary or its nominee.
"Holder" or "Securityholder" means the person in whose name a
Security is registered on the Primary Registrar's books.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all indebtedness, obligations and other liabilities (contingent
or otherwise) of such Person (i) for borrowed money (including obligations of
such Person in respect of overdrafts, foreign exchange contracts, currency
exchange agreements, interest rate protection agreements, and any loans or
advances from banks, whether or not evidenced by notes or similar instruments)
or (ii) evidenced by credit or loan agreements, bonds, debentures, notes or
similar instruments (whether or not the recourse of the lender is to the whole
of the assets of such Person or to only a portion thereof) (other than any
accounts payable or other accrued current liability or obligation incurred in
the ordinary course of business in connection with the obtaining of materials or
services), (b) all reimbursement obligations and other liabilities (contingent
or otherwise) of such Person with respect to letters of credit, bank guarantees
or bankers' acceptances, (c) all obligations and liabilities (contingent or
otherwise) of such Person (i) in respect of leases of such Person required, in
conformity with GAAP, to be accounted for as capitalized lease obligations on
the balance sheet of such Person (as determined by such Person), or (ii) under
any lease or related document (including a purchase agreement, conditional sale
or other title retention agreement) in connection with the lease of real
property or improvements thereon (or any personal property included as part of
any such lease) which provides that such Person is contractually obligated to
purchase or cause a third party to purchase the leased property or pay an agreed
upon residual value of the leased property to the lessor (whether or not such
lease transaction is characterized as an operating lease or a capitalized lease
in accordance with GAAP), (d) all obligations (contingent or otherwise) of such
Person with respect to any interest rate or other swap, cap, floor or collar
agreement, hedge agreement, forward contract, or other similar instrument or
agreement or foreign currency hedge, exchange, purchase or similar instrument or
agreement; (e) all direct or indirect guaranties or similar agreements by such
Person in respect of, and obligations or liabilities of such Person to purchase
or otherwise acquire or otherwise assure a creditor against loss in respect of,
indebtedness, obligations or liabilities of another Person of the kinds
described in clauses (a) through (d), and (f) any and all deferrals, renewals,
extensions, refinancings and refundings of, or amendments, modifications or
supplements to, any indebtedness, obligation or liability of the kinds described
in clauses (a) through (e); provided, however, that Indebtedness shall not
include obligations and liabilities of such Person (x) arising from the honoring
by a bank of other financial institution of a check, draft of similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business, provided such obligations are extinguished within two Business Days of
their incurrence, (y) resulting from the endorsement of negotiable instruments
for collection in the ordinary course of business and consistent with past
business practices and (z) stand-by letters of credit to the extent
collaterallized by Cash or Cash Equivalents.
"Indenture" means this Indenture as amended or supplemented
from time to time pursuant to the terms of this Indenture.
"Initial Purchasers" means Credit Suisse First Boston LLC,
Banc of America Securities LLC and U.S. Bancorp Piper Jaffray Inc.
"Officer" means the Chairman or any Co-Chairman of the Board,
any Vice Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Chief Financial Officer, the Secretary or any Assistant
Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers; provided, however, that for purposes of Sections 4.11 and 6.3,
"Officers' Certificate" means a certificate signed by the principal executive
officer, principal financial officer or principal accounting officer of the
Company and by one other Officer.
"Opinion of Counsel" means a written opinion from legal
counsel. The counsel may be an employee of or counsel to the Company or the
Trustee.
"Person" or "person" means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof or any other entity.
"Principal" or "principal" of a debt security, including the
Securities, means the principal of the security plus, when appropriate, the
premium, if any, on the security.
"Registration Rights Agreement" means the Registration Rights
Agreement dated, as of March 31, 2003, by and among the Company and the Initial
Purchasers.
"Representative" means the (a) indenture trustee or other
trustee, agent or representative for any Senior Indebtedness or (b) with respect
to any Senior Indebtedness that does not have any such trustee, agent or other
representative, (i) in the case of such Senior Indebtedness issued pursuant to
an agreement providing for voting arrangements as among the holders or owners of
such Senior Indebtedness, any holder or owner of such Senior Indebtedness acting
with the consent of the required persons necessary to bind such holders or
owners of such Senior Indebtedness and (ii) in the case of all other such Senior
Indebtedness, the holder or owner of such Senior Indebtedness.
"Restricted Global Security" means a Global Security that is a
Restricted Security.
"Restricted Security" means a Security required to bear the
restricted legend set forth in the form of Security set forth in Exhibit A of
this Indenture.
"Rule 144" means Rule 144 under the Securities Act or any
successor to such Rule.
"Rule 144A" means Rule 144A under the Securities Act or any
successor to such Rule.
"SEC" means the Securities and Exchange Commission.
"Securities" means the 2 1/2% Contingent Convertible
Subordinated Notes due 2008 or any of them (each, a "Security"), as amended or
supplemented from time to time, that are issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, as in effect from time to
time.
"Securities Custodian" means the Trustee, as custodian with
respect to the Securities in global form, or any successor thereto.
"Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowed as a claim in any such proceeding) and rent payable on or in
connection with, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, Indebtedness of the Company, whether secured or
unsecured, absolute or contingent, due or to become due, outstanding on the date
of this Indenture or thereafter created, incurred, assumed, guaranteed or in
effect guaranteed by the Company (including all deferrals, renewals, extensions
or refundings of, or amendments, modifications or supplements to, the
foregoing), unless in the case of any particular Indebtedness the instrument
creating or evidencing the same or the assumption or guarantee thereof expressly
provides that such Indebtedness shall not be senior in right of payment to the
Securities or expressly provides that such Indebtedness is "pari passu" or
"junior" to the Securities. Notwithstanding the foregoing, the term Senior
Indebtedness shall not include the Securities. If any payment made to any holder
of any Senior Indebtedness or its Representative with respect to such Senior
Indebtedness is rescinded or must otherwise be returned by such holder or
Representative upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, the reinstated Indebtedness of the Company arising as a result of
such rescission or return shall constitute Senior Indebtedness effective as of
the date of such rescission or return.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, general partners or
trustees thereof is at the time owned or controlled, directly or indirectly, by
(i) such Person; (ii) such Person and one or more Subsidiaries of such Person;
or (iii) one or more Subsidiaries of such Person.
"TIA" means the Trust Indenture Act of 1939, as amended, and
the rules and regulations thereunder as in effect on the date of this Indenture,
except as provided in Section 11.3, and except to the extent any amendment to
the Trust Indenture Act expressly provides for application of the Trust
Indenture Act as in effect on another date.
"Trading Day" means, with respect to any security, each
Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which
securities are not generally traded on the principal exchange or market in which
such security is traded.
"Trustee" means the party named as such in the first paragraph
of this Indenture until a successor replaces it in accordance with the
provisions of this Indenture, and thereafter means the successor.
"Trust Officer" means, with respect to the Trustee, any
officer assigned to the Corporate Trust Office, 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.
"Unrestricted Certificated Security" means a Certificated
Security that is not a Restricted Security.
"Unrestricted Global Security" means a Global Security that
is not a Restricted Security.
"Vice President" when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors.
SECTION 1.2. OTHER DEFINITIONS
Term Defined in Section
"Agent Members"...................................................................... 2.1(b)
"Bankruptcy Law"..................................................................... 8.1
"Change in Control".................................................................. 3.2(a)
"Change in Control Purchase Date".................................................... 3.2(a)
"Change in Control Purchase Notice".................................................. 3.2(c)
"Change in Control Purchase Price"................................................... 3.2(a)
"Closing Price"...................................................................... 4.6(e)
"Company Order"...................................................................... 2.2
"Conversion Agent"................................................................... 2.3
"Conversion Date".................................................................... 4.2
"Conversion Price"................................................................... 4.6
"Conversion Value"................................................................... 4.1
"Current Market Price"............................................................... 4.6(e)
"Custodian".......................................................................... 8.1
"DTC"................................................................................ 2.1
"Depositary"......................................................................... 2.1
"Determination Date"................................................................. 4.6(d)
"Event of Default"................................................................... 8.1
"Expiration Date".................................................................... 4.6(d)
"Expiration Time".................................................................... 4.6(d)
"Legal Holiday"...................................................................... 12.7
"Legend" ............................................................................ 2.12
"NNM"................................................................................ 3.2(a)
"Paying Agent"....................................................................... 2.3
"Payment Blockage Notice"............................................................ 5.2
"Primary Registrar".................................................................. 2.3
"Purchase Agreement"................................................................. 2.1
"Purchased Shares"................................................................... 4.6(d)
"QIB"................................................................................ 2.1
"Registrar".......................................................................... 2.3
"Rights Plan" ....................................................................... 4.6(c)
"Trading Price"...................................................................... 4.1
Term Defined in Section
"Triggering Distribution"............................................................ 4.6(d)
"Trigger Event" ..................................................................... 4.6(c)
SECTION 1.3. TRUST INDENTURE ACT PROVISIONS
Whenever this Indenture refers to a provision of the TIA, that
provision is incorporated by reference in and made a part of this Indenture. The
Indenture shall also include those provisions of the TIA required to be included
herein by the provisions of the Trust Indenture Reform Act of 1990. The
following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and "obligor" on the indenture securities means the Company or any
other obligor on the Securities.
All other terms used in this Indenture that are defined in the
TIA, defined by TIA reference to another statute or defined by any SEC rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.4. RULES OF CONSTRUCTION
Unless the context otherwise requires:
(A)......a term has the meaning assigned to it;
(B)......an accounting term not otherwise defined has
the meaning assigned to it in accordance with GAAP;
(C)......words in the singular include the plural, and
words in the plural include the singular;
(D)......provisions apply to successive events and
transactions;
(E)......the term "merger" includes a statutory share
exchange and the term "merged" has a correlative meaning;
(F)......the masculine gender includes the feminine and
the neuter;
(G)......references to agreements and other instruments
include subsequent amendments thereto; and
(H)......"herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE 2
THE SECURITIES
SECTION 2.1. FORM AND DATING
The Securities and the Trustee's certificate of authentication
shall be substantially in the respective forms set forth in Exhibit A, which
Exhibit is incorporated in and made part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule or
usage. The Company shall provide any such notations, legends or endorsements to
the Trustee in writing. Each Security shall be dated the date of its
authentication. The Securities are being offered and sold by the Company
pursuant to a Purchase Agreement, dated March 26, 2003 (the "Purchase
Agreement"), between the Company and the Initial Purchasers, in transactions
exempt from, or not subject to, the registration requirements of the Securities
Act.
(a) Restricted Global Securities. All of the Securities are
initially being offered and sold to qualified institutional buyers as defined in
Rule 144A (collectively, "QIBs" or individually, each a "QIB") in reliance on
Rule 144A under the Securities Act and shall be issued initially in the form of
one or more Restricted Global Securities, which shall be deposited on behalf of
the purchasers of the Securities represented thereby with the Trustee, at its
Corporate Trust Office, as custodian for the depositary, The Depository Trust
Company ("DTC") (such depositary, or any successor thereto, being hereinafter
referred to as the "Depositary"), and registered in the name of its nominee,
Cede & Co., duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Restricted Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Securities Custodian as hereinafter provided, subject in
each case to compliance with the Applicable Procedures.
(b) Global Securities In General. Each Global Security shall
represent such of the outstanding Securities as shall be specified therein and
each shall provide that it shall represent the aggregate amount of outstanding
Securities from time to time endorsed thereon and that the aggregate amount of
outstanding Securities represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges, purchases or conversions of
such Securities. Any adjustment of the aggregate principal amount of a Global
Security to reflect the amount of any increase or decrease in the amount of
outstanding Securities represented thereby shall be made by the Trustee in
accordance with instructions given by the Holder thereof as required by Section
2.12 hereof and shall be made on the records of the Trustee and the Depositary.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or under the Global Security,
and the Depositary (including, for this purpose, its nominee) may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner and Holder of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall (A) prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or (B) impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
(c) Book Entry Provisions. The Company shall execute and the
Trustee shall, in accordance with this Section 2.1(c), authenticate and deliver
initially one or more Global Securities that (i) shall be registered in the name
of the Depositary, (ii) shall be delivered by the Trustee to the Depositary or
pursuant to the Depositary's instructions and (iii) shall bear legends
substantially to the following effect:
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO INTEGRA LIFESCIENCES HOLDINGS CORPORATION (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 THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT AND
THE ISSUE DATE OF THIS SECURITY IS MARCH 31, 2003. IN ADDITION, THIS SECURITY IS
SUBJECT TO UNITED STATES FEDERAL INCOME TAX REGULATIONS GOVERNING CONTINGENT
PAYMENT DEBT INSTRUMENTS. UNDER SUCH REGULATIONS, THE COMPARABLE YIELD OF THIS
SECURITY IS 9.702% (WHICH WILL BE TREATED AS THE YIELD FOR UNITED STATES FEDERAL
INCOME TAX PURPOSES), COMPOUNDED SEMIANNUALLY.
THE COMPANY AGREES, AND BY ACCEPTING A BENEFICIAL OWNERSHIP INTEREST IN THIS
SECURITY EACH HOLDER OF THIS SECURITY WILL BE DEEMED TO HAVE AGREED, FOR UNITED
STATES FEDERAL INCOME TAX PURPOSES, TO TREAT THIS SECURITY AS A "CONTINGENT
PAYMENT DEBT INSTRUMENT" AND TO BE BOUND BY THE COMPANY'S APPLICATION OF THE
TREASURY REGULATIONS THAT GOVERN CONTINGENT PAYMENT DEBT INSTRUMENTS, INCLUDING
THE COMPANY'S DETERMINATION (1) OF THE PROJECTED PAYMENT SCHEDULE AND (2) THAT
THE RATE AT WHICH INTEREST WILL BE DEEMED TO ACCRUE FOR UNITED STATES FEDERAL
INCOME TAX PURPOSES WILL BE 9.702% COMPOUNDED SEMI-ANNUALLY. THE COMPANY AGREES
TO PROVIDE PROMPTLY TO THE HOLDER OF THIS SECURITY, UPON WRITTEN REQUEST, THE
AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE PRICE, YIELD TO MATURITY, AND PROJECTED
PAYMENT SCHEDULE. ANY SUCH WRITTEN REQUEST SHOULD BE SENT TO THE COMPANY AT THE
FOLLOWING ADDRESS: INTEGRA LIFESCIENCES HOLDING CORPORATION, 311 ENTERPRISE
DRIVE, PLAINSBORO, NEW JERSEY 08536, ATTENTION: INVESTOR/PUBLIC RELATIONS."
SECTION 2.2. EXECUTION AND AUTHENTICATION
An Officer shall sign the Securities for the Company by manual
or facsimile signature attested by the manual or facsimile signature of the
Secretary or an Assistant Secretary of the Company. Typographic and other minor
errors or defects in any such facsimile signature shall not affect the validity
or enforceability of any Security which has been authenticated and delivered by
the Trustee.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate and make available for delivery
Securities for original issue in the aggregate principal amount of up to
$120,000,000 upon receipt of a written order or orders of the Company signed by
two Officers of the Company (a "Company Order"). The Company Order shall specify
the amount of Securities to be authenticated, shall provide that all such
Securities will be represented by a Restricted Global Security and the date on
which each original issue of Securities is to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$120,000,000 except as provided in Section 2.7.
The Trustee shall act as the initial authenticating agent.
Thereafter, the Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 principal amount and any
integral multiple thereof.
SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT
The Company shall maintain one or more offices or agencies
where Securities may be presented for registration of transfer or for exchange
(each, a "Registrar"), one or more offices or agencies where Securities may be
presented for payment (each, a "Paying Agent"), one or more offices or agencies
where Securities may be presented for conversion (each, a "Conversion Agent")
and one or more offices or agencies where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served. The
Company will at all times maintain a Paying Agent, Conversion Agent, Registrar
and an office or agency where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served in the Borough of
Manhattan, The City of New York. One of the Registrars (the "Primary Registrar")
shall keep a register of the Securities and of their transfer and exchange.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any Agent not a party to this Indenture.
If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent or
agent for service of notices and demands in any place required by this
Indenture, or fails to give the foregoing notice, the Trustee shall act as such.
The Company or any Affiliate of the Company may act as Paying Agent (except for
the purposes of Section 6.1 and Article 10).
The Company hereby initially designates the Trustee as Paying
Agent, Registrar, Custodian and Conversion Agent, and each of the Corporate
Trust Office of the Trustee and the office or agency of the Trustee in the
Borough of Manhattan, The City of New York, one such office or agency of the
Company for each of the aforesaid purposes.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST
Prior to 11:00 a.m., New York City time, on each due date of
the principal of or interest, if any (including contingent interest and
Additional Interest, if any), on any Securities, the Company shall deposit with
a Paying Agent a sum sufficient to pay such principal or interest, if any
(including contingent interest and Additional Interest, if any), so becoming
due. Subject to Section 5.2, a Paying Agent shall hold in trust for the benefit
of Securityholders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest, if any (including contingent interest and
Additional Interest, if any), on the Securities, and shall notify the Trustee of
any default by the Company (or any other obligor on the Securities) in making
any such payment. If the Company or an Affiliate of the Company acts as Paying
Agent, it shall, before 11:00 a.m., New York City time, on each due date of the
principal of or interest on any Securities, segregate the money and hold it as a
separate trust fund. The Company at any time may require a Paying Agent to pay
all money held by it to the Trustee, and the Trustee may at any time during the
continuance of any default, upon written request to a Paying Agent, require such
Paying Agent to pay forthwith to the Trustee all sums so held in trust by such
Paying Agent. Upon doing so, the Paying Agent (other than the Company) shall
have no further liability for the money.
SECTION 2.5. SECURITYHOLDER LISTS
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders. If the Trustee is not the Primary Registrar, the
Company shall furnish to the Trustee on or before each semiannual interest
payment date, and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of Securityholders.
SECTION 2.6. TRANSFER AND EXCHANGE
(a)......Subject to compliance with any applicable additional
requirements contained in Section 2.12, when a Security is presented to a
Registrar with a request to register a transfer thereof or to exchange such
Security for an equal principal amount of Securities of other authorized
denominations (if any), the Registrar shall register the transfer or make the
exchange as requested; provided, however, that every Security presented or
surrendered for registration of transfer or exchange shall be duly endorsed or
accompanied by an assignment form and, if applicable, a transfer certificate
each in the form included in Exhibit A, and in form satisfactory to the
Registrar duly executed by the Holder thereof or its attorney duly authorized in
writing. To permit registration of transfers and exchanges, upon surrender of
any Security for registration of transfer or exchange at an office or agency
maintained pursuant to Section 2.3, the Company shall execute and the Trustee
shall authenticate Securities of a like aggregate principal amount at the
Registrar's request. Any exchange or transfer shall be without charge, except
that the Company or the Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto, and provided, that this sentence shall not apply to any exchange
pursuant to Section 2.10, 2.12(a), 3.5, 4.2 (last paragraph) or 11.5.
Neither the Company, any Registrar nor the Trustee shall be
required to exchange or register a transfer of any Securities or portions
thereof in respect of which a Change in Control Purchase Notice has been
delivered and not withdrawn by the Holder thereof (except, in the case of the
purchase of a Security in part, the portion thereof not to be purchased).
All Securities issued upon any transfer or exchange of
Securities shall be valid obligations of the Company, evidencing the same debt
and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
(b)......Any Registrar appointed pursuant to Section 2.3 hereof
shall provide to the Trustee such information as the Trustee may reasonably
require in connection with the delivery by such Registrar of Securities upon
transfer or exchange of Securities.
(c)......The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between or
among Agent Members or other beneficial owners of interests in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by the terms of, this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
SECTION 2.7. REPLACEMENT SECURITIES
If any mutilated Security is surrendered to the Company, a
Registrar or the Trustee, or the Company, a Registrar and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company, the applicable Registrar and
the Trustee such security or indemnity as will be required by them to hold each
of them harmless, then, in the absence of notice to the Company, such Registrar
or the Trustee that such Security has been acquired by a bona fide purchaser,
the Company shall execute, and upon its written request the Trustee shall
authenticate and deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, or is about to be purchased by
the Company pursuant to Article 3, the Company in its discretion may, instead of
issuing a new Security, pay or purchase such Security, as the case may be.
Upon the issuance of any new Securities under this Section
2.7, the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the reasonable fees and expenses of the Trustee
or the Registrar) in connection therewith.
Every new Security issued pursuant to this Section 2.7 in lieu
of any mutilated, destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
mutilated, destroyed, lost or stolen Security shall be at any time enforceable
by anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 2.7 are (to the extent lawful)
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities.
SECTION 2.8. OUTSTANDING SECURITIES
Securities outstanding at any time are all Securities
authenticated by the Trustee, except for those canceled by it, those converted
pursuant to Article 4, those delivered to it for cancellation or surrendered for
transfer or exchange and those described in this Section 2.8 as not outstanding.
If a Security is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Company receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If a Paying Agent (other than the Company or an Affiliate of
the Company) holds on a Change in Control Purchase Date or the Final Maturity
Date money sufficient to pay the principal of (including premium, if any) and
accrued interest (including contingent interest and Additional Interest, if any)
on Securities (or portions thereof) in respect of which a Change in Control
Purchase Notice has been delivered and not withdrawn payable on that date, then
on and after such Change in Control Purchase Date or the Final Maturity Date, as
the case may be, such Securities (or portions thereof, as the case may be) shall
cease to be outstanding and interest on them (including contingent interest and
Additional Interest, if any) shall cease to accrue.
Subject to the restrictions contained in Section 2.9, a
Security does not cease to be outstanding because the Company or an Affiliate of
the Company holds the Security.
SECTION 2.9. TREASURY SECURITIES
In determining whether the Holders of the required principal
amount of Securities have concurred in any notice, direction, waiver or consent,
Securities owned by the Company or any other obligor on the Securities or by any
Affiliate of the Company or of such other obligor shall be disregarded, except
that, for purposes of determining whether the Trustee shall be protected in
relying on any such notice, direction, waiver or consent, only Securities which
a Trust Officer of the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith shall not
be disregarded if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to the Securities and that the pledgee is
not the Company or any other obligor on the Securities or any Affiliate of the
Company or of such other obligor.
SECTION 2.10. TEMPORARY SECURITIES
Until definitive Securities are ready for delivery, the
Company may prepare and execute, and, upon receipt of a Company Order, the
Trustee shall authenticate and deliver, temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company with the consent of the Trustee considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate and deliver definitive
Securities in exchange for temporary Securities.
SECTION 2.11. CANCELLATION
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar, the Paying Agent and the Conversion Agent shall
forward to the Trustee or its agent any Securities surrendered to them for
transfer, exchange, payment or conversion. The Trustee and no one else shall
cancel, in accordance with its standard procedures, all Securities surrendered
for transfer, exchange, payment, conversion or cancellation and shall deliver
the canceled Securities to the Company. All Securities which are purchased or
otherwise acquired by the Company or any of its Subsidiaries prior to the Final
Maturity Date may, to the extent permitted by law, be reissued or resold or the
Company may, at its option, delivery and such Securities to the Trustee for
cancellation.
SECTION 2.12. LEGEND; ADDITIONAL TRANSFER AND EXCHANGE R
EQUIREMENTS
(a) If Securities are issued upon the transfer, exchange
or replacement of Securities subject to restrictions on transfer and bearing the
legends set forth on the forms of Securities attached hereto as Exhibit A
(collectively, the "Legend"), or if a request is made to remove the Legend on a
Security, the Securities so issued shall bear the Legend, or the Legend shall
not be removed, as the case may be, unless there is delivered to the Company and
the Registrar such satisfactory evidence, which shall include an opinion of
counsel if requested by the Company or such Registrar, as may be reasonably
required by the Company and the Registrar, that neither the Legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A or Rule 144 under the Securities
Act or that such Securities are not "restricted" within the meaning of Rule 144
under the Securities Act; provided that no such evidence need be supplied in
connection with the sale of such Security pursuant to a registration statement
that is effective at the time of such sale. Upon (i) provision of such
satisfactory evidence if requested, or (ii) notification by the Company to the
Trustee and Registrar of the sale of such Security pursuant to a registration
statement that is effective at the time of such sale, the Trustee, at the
written direction of the Company, shall authenticate and deliver a Security that
does not bear the Legend. If the Legend is removed from the face of a Security
and the Security is subsequently held by an Affiliate of the Company, the Legend
shall be reinstated.
(b) A Global Security may not be transferred, in whole or
in part, to any Person other than the Depositary or a nominee or any successor
thereof, and no such transfer to any such other Person may be registered;
provided that the foregoing shall not prohibit any transfer of a Security that
is issued in exchange for a Global Security but is not itself a Global Security.
No transfer of a Security to any Person shall be effective under this Indenture
or the Securities unless and until such Security has been registered in the name
of such Person. Notwithstanding any other provisions of this Indenture or the
Securities, transfers of a Global Security, in whole or in part, shall be made
only in accordance with this Section 2.12.
(c) Subject to the succeeding paragraph, every Security
shall be subject to the restrictions on transfer provided in the Legend other
than a Restricted Global Security. Whenever any Restricted Security other than a
Restricted Global Security is presented or surrendered for registration of
transfer or for exchange for a Security registered in a name other than that of
the Holder, such Security must be accompanied by a certificate in substantially
the form set forth in Exhibit B, dated the date of such surrender and signed by
the Holder of such Security, as to compliance with such restrictions on
transfer. The Registrar shall not be required to accept for such registration of
transfer or exchange any Security not so accompanied by a properly completed
certificate.
(d) The restrictions imposed by the Legend upon the
transferability of any Security shall cease and terminate when such Security has
been sold pursuant to an effective registration statement under the Securities
Act or transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or, if earlier, upon the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision). Any Security as to which such restrictions on
transfer shall have expired in accordance with their terms or shall have
terminated may, upon a surrender of such Security for exchange to the Registrar
in accordance with the provisions of this Section 2.12 (accompanied, in the
event that such restrictions on transfer have terminated by reason of a transfer
in compliance with Rule 144 or any successor provision, by, if requested by the
Company or the Registrar, an opinion of counsel in form reasonably acceptable to
the Company and addressed to the Company, to the effect that the transfer of
such Security has been made in compliance with Rule 144 or such successor
provision), be exchanged for a new Security, of like tenor and aggregate
principal amount, which shall not bear the restrictive Legend. The Company shall
inform the Trustee of the effective date of any registration statement
registering the Securities under the Securities Act. The Trustee shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the aforementioned opinion of counsel or registration statement.
(e) As used in the preceding two paragraphs of this Section
2.12, the term "transfer" encompasses any sale, pledge, transfer, hypothecation
or other disposition of any Security.
(f) The provisions of clauses (i), (ii), (iii) and (iv)
below shall apply only to Global Securities:
(i) Notwithstanding any other provisions of this
Indenture or the Securities, a Global Security shall not be exchanged
in whole or in part for a Security registered in the name of any
Person other than the Depositary or one or more nominees thereof,
provided that a Global Security may be exchanged for Securities
registered in the names of any person designated by the Depositary in
the event that (A) the Depositary has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security
or such Depositary has ceased to be a "clearing agency" registered
under the Exchange Act, and a successor Depositary is not appointed by
the Company within 90 days, (B) the Company has provided the
Depositary with written notice that it has decided to discontinue use
of the system of book-entry transfer through the Depositary or any
successor Depositary or (C) an Event of Default has occurred and is
continuing with respect to the Securities. Any Global Security
exchanged pursuant to clauses (A) or (B) above shall be so exchanged
in whole and not in part, and any Global Security exchanged pursuant
to clause (C) above may be exchanged in whole or from time to time in
part as directed by the Depositary. Any Security issued in exchange
for a Global Security or any portion thereof shall be a Global
Security; provided that any such Security so issued that is registered
in the name of a Person other than the Depositary or a nominee thereof
shall not be a Global Security.
(ii) Securities issued in exchange for a Global
Security or any portion thereof shall be issued in definitive, fully
registered form, without interest coupons, shall have an aggregate
principal amount equal to that of such Global Security or portion
thereof to be so exchanged, shall be registered in such names and be
in such authorized denominations as the Depositary shall designate and
shall bear the applicable legends provided for herein. Any Global
Security to be exchanged in whole shall be surrendered by the
Depositary to the Trustee, as Registrar. With regard to any Global
Security to be exchanged in part, either such Global Security shall be
so surrendered for exchange or, if the Trustee is acting as custodian
for the Depositary or its nominee with respect to such Global
Security, the principal amount thereof shall be reduced, by an amount
equal to the portion thereof to be so exchanged, by means of an
appropriate adjustment made on the records of the Trustee. Upon any
such surrender or adjustment, the Trustee shall authenticate and
deliver the Security issuable on such exchange to or upon the order of
the Depositary or an authorized representative thereof.
(iii) Subject to the provisions of clause (v) below,
the registered Holder may grant proxies and otherwise authorize any
Person, including Agent Members and persons that may hold interests
through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
(iv) In the event of the occurrence of any of the
events specified in clause (i) above, the Company will promptly make
available to the Trustee a reasonable supply of Certificated
Securities in definitive, fully registered form, without interest
coupons.
(v) Neither Agent Members nor any other Persons on
whose behalf Agent Members may act shall have any rights under this
Indenture with respect to any Global Security registered in the name
of the Depositary or any nominee thereof, or under any such Global
Security, and the Depositary or such nominee, as the case may be, may
be treated by the Company, the Trustee and any agent of the Company or
the Trustee as the absolute owner and holder of such Global Security
for all purposes whatsoever, Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the
Depositary or such nominee, as the case may be, or impair, as between
the Depositary, its Agent Members and any other person on whose behalf
an Agent Member may act, the operation of customary practices of such
Persons governing the exercise of the rights of a Holder of any
Security.
SECTION 2.13. CUSIP NUMBERS
The Company in issuing the Securities may use one or more
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of purchase as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a purchase and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such purchase shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the "CUSIP" numbers.
SECTION 2.14. TAX TREATMENT
The Company agrees, and by acceptance of beneficial ownership
interests in the Securities each beneficial owner of the Securities will be
deemed to have agreed, for United States federal income tax purposes, to treat
the Securities as "contingent payment debt instruments" and to be bound by the
Company's application of the Treasury regulations that govern contingent payment
debt instruments, including the Company's determination (1) of the projected
payment schedule and (2) that the rate at which interest will be deemed to
accrue for federal income tax purposes will be 9.702% compounded semi-annually.
The Holders of the Securities may obtain the amount of original issue discount,
issue price, yield to maturity, and projected payment schedule by submitting
written requests to the Company at Integra LifeSciences Holdings Corporation,
311 Enterprise Drive, Plainsboro, New Jersey 08536, Attention: Investor/Public
Relations.
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.1. REDEMPTION BY THE COMPANY
The Securities may not be redeemed by the Company prior to the
Final Maturity Date.
SECTION 3.2. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER
UPON CHANGE IN CONTROL
(a) If at any time that Securities remain outstanding
there shall occur a Change in Control, Securities shall be purchased by the
Company at the option of the Holders, in whole or in part, as of the date that
is 30 Business Days after the occurrence of the Change in Control (the "Change
in Control Purchase Date") at a purchase price in cash equal to 100% of the
principal amount of the Securities, together with accrued and unpaid interest
(including contingent interest and Additional Interest, if any) to, but
excluding, the Change in Control Purchase Date (the "Change in Control Purchase
Price"), subject to satisfaction by or on behalf of any Holder of the
requirements set forth in subsection (c) of this Section 3.2.
A "Change in Control" shall be deemed to have occurred if any
of the following occurs after the date hereof:
1. any "person" (as such term is defined below) becomes the
"beneficial owner" (as defined below), directly or indirectly, through a
purchase, merger or other acquisition transaction or series of transactions, of
shares of Voting Stock of the Company entitling the person to exercise 50% or
more of the total voting power of all outstanding classes of Voting Stock of the
Company, other than an acquisition by the Company, any of its Subsidiaries or
any of its employee benefit plans;
2. the Company merges or consolidates with or into any Person,
any Person consolidates with or merges with or into the Company, or the Company
conveys, sells, transfers or leases all or substantially all of the assets of
the Company to another Person other than to one or more of the Company's
wholly-owned subsidiaries, other than pursuant to a transaction in which the
Persons that "beneficially owned" (as defined below), directly or indirectly,
shares of Voting Stock of the Company immediately prior to such transaction have
the entitlement to exercise, directly or indirectly, shares of Voting Stock of
the continuing or surviving Person in such transaction representing 50% or more
of the total voting power of all outstanding classes of Voting Stock entitled to
vote generally in the election of directors of such continuing or surviving
Person immediately after such transaction; or
3. the first day on which a majority of the members of the
board of directors of the Company are not Continuing Directors.
For the purpose of the definition of "Change in Control," (i) "person" has the
meaning given such term under Section 13(d) of the Exchange Act or any successor
provision to such provision and includes any syndicate or group which would be
deemed to be a "person" under Section 13(d)(3) of the Exchange Act, and (ii) a
"beneficial owner" shall be determined in accordance with Rule 13d-3 under the
Exchange Act, as in effect on the date of this Indenture.
Notwithstanding anything to the contrary set forth in this
Section 3.2, a Change in Control will not be deemed to have occurred if either:
(1) the Closing Price (determined in accordance with
Section 4.6(d) of this Indenture) of the Common Stock for any five Trading Days
within (i) the period of ten consecutive Trading Days ending immediately after
the later of the Change in Control or the public announcement of the Change in
Control, in the case of a Change in Control relating to an acquisition of
Capital Stock, or (ii) the period of ten consecutive Trading Days ending
immediately before the Change in Control, in the case of a Change in Control
relating to a merger, consolidation or asset sale, equals or exceeds 110% of the
Conversion Price in effect on each of those Trading Days; or
(2) at least 90% of the consideration, excluding cash
payments for fractional shares and cash payments made pursuant to dissenters'
appraisal rights, in a merger or consolidation otherwise constituting a Change
in Control consists of shares of common stock, depository receipts or other
certificates representing common equity interests traded on a national
securities exchange or quoted on the Nasdaq National Market (the "NNM"), or will
be so traded or quoted immediately following such merger or consolidation, and
as a result of such merger or consolidation the Securities become convertible
solely into such common stock, depository receipts or other certificates
representing common equity interests.
(b) Within 10 Business Days after the occurrence of a
Change in Control, the Company shall mail a written notice of the Change in
Control to the Trustee and to each Holder (and to beneficial owners as required
by applicable law). The notice shall include the form of a Change in Control
Purchase Notice to be completed by the Holder and shall state:
(1) the date of such Change in Control and, briefly,
the events causing such Change in Control;
(2) the date by which the Change in Control Purchase
Notice pursuant to this Section 3.2 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the Holder's right to require the Company to
purchase the Securities;
(6) briefly, the conversion rights of the Securities;
(7) the name and address of each Paying Agent and
Conversion Agent;
(8) the Conversion Price and any adjustments thereto;
(9) that Securities as to which a Change in Control
Purchase Notice has been given may be converted into
Common Stock pursuant to Article 4 of this Indenture only to the extent that the
Change in Control Purchase Notice has been withdrawn in accordance with the
terms of this Indenture;
(10) the procedures that the Holder must follow to
exercise rights under this Section 3.2;
(11) the procedures for withdrawing a Change in
Control Purchase Notice, including a form of notice of
withdrawal; and
(12) that the Holder must satisfy the requirements
set forth in the Securities in order to convert the
Securities.
If any of the Securities is in the form of a Global Security,
then the Company shall modify such notice to the extent necessary to accord with
the procedures of the Depositary applicable to the repurchase of Global
Securities.
(c) A Holder may exercise its rights specified in
subsection (a) of this Section 3.2 upon delivery of a written notice (which
shall be in substantially the form included in Exhibit A hereto and which may be
delivered by letter, overnight courier, hand delivery, facsimile transmission or
in any other written form and, in the case of Global Securities, may be
delivered electronically or by other means in accordance with the Depositary's
customary procedures) of the exercise of such rights (a "Change in Control
Purchase Notice") to any Paying Agent at any time prior to the close of business
on the second Business Day next preceding the Change in Control Purchase Date.
The delivery of such Security to any Paying Agent (together
with all necessary endorsements) at the office of such Paying Agent shall be a
condition to the receipt by the Holder of the Change in Control Purchase Price
therefor.
The Company shall purchase from the Holder thereof, pursuant
to this Section 3.2, a portion of a Security if the principal amount of such
portion is $1,000 or an integral multiple of $1,000. Provisions of the Indenture
that apply to the purchase of all of a Security pursuant to Sections 3.2 through
3.7 also apply to the purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder
delivering to a Paying Agent the Change in Control Purchase Notice contemplated
by this subsection (c) shall have the right to withdraw such Change in Control
Purchase Notice in whole or in a portion thereof that is a principal amount of
$1,000 or in an integral multiple thereof at any time prior to the close of
business on the second Business Day next preceding the Change in Control
Purchase Date by delivery of a written notice of withdrawal to the Paying Agent
in accordance with Section 3.3.
A Paying Agent shall promptly notify the Company of the
receipt by it of any Change in Control Purchase Notice or written withdrawal
thereof.
Anything herein to the contrary notwithstanding, in the case
of Global Securities, any Change in Control Purchase Notice may be delivered or
withdrawn and such Securities may be surrendered or delivered for purchase in
accordance with the Applicable Procedures as in effect from time to time.
SECTION 3.3. EFFECT OF CHANGE IN CONTROL PURCHASE NOTICE
Upon receipt by any Paying Agent of the Change in Control
Purchase Notice specified in Section 3.2(c), the Holder of the Security in
respect of which such Change in Control Purchase Notice was given shall (unless
such Change in Control Purchase Notice is withdrawn as specified below)
thereafter be entitled to receive the Change in Control Purchase Price with
respect to such Security. Such Change in Control Purchase Price shall be paid to
such Holder promptly following the later of (a) the Change in Control Purchase
Date with respect to such Security (provided the conditions in Section 3.2(c)
have been satisfied) and (b) the time of delivery of such Security to a Paying
Agent by the Holder thereof in the manner required by Section 3.2(c). Securities
in respect of which a Change in Control Purchase Notice has been given by the
Holder thereof may not be converted into shares of Common Stock pursuant to
Article 4 on or after the date of the delivery of such Change in Control
Purchase Notice unless such Change in Control Purchase Notice has first been
validly withdrawn.
A Change in Control Purchase Notice may be withdrawn by means
of a written notice (which may be delivered by mail, overnight courier, hand
delivery, facsimile transmission or in any other written form and, in the case
of Global Securities, may be delivered electronically or by other means in
accordance with the Depositary's customary procedures) of withdrawal delivered
by the Holder to a Paying Agent at any time prior to the close of business on
the second Business Day immediately preceding the Change in Control Purchase
Date, specifying the principal amount of the Security or portion thereof (which
must be a principal amount of $1,000 or an integral multiple of $1,000 in excess
thereof) with respect to which such notice of withdrawal is being submitted.
SECTION 3.4. DEPOSIT OF CHANGE IN CONTROL PURCHASE PRICE
On or before 11:00 a.m. New York City time on the Change in
Control Purchase Date, the Company shall deposit with the Trustee or with a
Paying Agent (other than the Company or an Affiliate of the Company) an amount
of money (in immediately available funds if deposited on such Change in Control
Purchase Date) sufficient to pay the aggregate Change in Control Purchase Price
of all the Securities or portions thereof that are to be purchased as of such
Change in Control Purchase Date. The manner in which the deposit required by
this Section 3.4 is made by the Company shall be at the option of the Company,
provided that such deposit shall be made in a manner such that the Trustee or a
Paying Agent shall have immediately available funds on the Change in Control
Purchase Date.
If a Paying Agent holds, in accordance with the terms hereof,
money sufficient to pay the Change in Control Purchase Price of any Security for
which a Change in Control Purchase Notice has been tendered and not withdrawn in
accordance with this Indenture then, on the Change in Control Purchase Date,
such Security will cease to be outstanding and the rights of the Holder in
respect thereof shall terminate (other than the right to receive the Change in
Control Purchase Price as aforesaid). The Company shall publicly announce the
principal amount of Securities purchased as a result of such Change in Control
on or as soon as practicable after the Change in Control Purchase Date.
SECTION 3.5. SECURITIES PURCHASED IN PART
Any Security that is to be purchased only in part shall be
surrendered at the office of a Paying Agent, and promptly after the Change in
Control Purchase Date the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without service charge,
a new Security or Securities, of such authorized denomination or denominations
as may be requested by such Holder, in aggregate principal amount equal to, and
in exchange for, the portion of the principal amount of the Security so
surrendered that is not purchased.
SECTION 3.6. COMPLIANCE WITH SECURITIES LAWS UPON
PURCHASE OF SECURITIES
In connection with any offer to purchase or purchase of
Securities under Section 3.2, the Company shall (a) comply with Rule 13e-4 and
Rule 14e-1 (or any successor to either such Rule), if applicable, under the
Exchange Act, (b) file the related Schedule TO (or any successor or similar
schedule, form or report) if required under the Exchange Act, and (c) otherwise
comply with all federal and state securities laws in connection with such offer
to purchase or purchase of Securities, all so as to permit the rights of the
Holders and obligations of the Company under Sections 3.2 through 3.5 to be
exercised in the time and in the manner specified therein.
SECTION 3.7. REPAYMENT TO THE COMPANY
To the extent that the aggregate amount of cash deposited by
the Company pursuant to Section 3.4 exceeds the aggregate Change in Control
Purchase Price together with interest, if any (including contingent interest and
Additional Interest, if any), thereon of the Securities or portions thereof that
the Company is obligated to purchase, then promptly after the Change in Control
Purchase Date the Trustee or a Paying Agent, as the case may be, shall return
any such excess cash to the Company.
ARTICLE 4
CONVERSION
SECTION 4.1. CONVERSION PRIVILEGE
Subject to the further provisions of this Article 4 and
paragraph 7 of the Securities, a Holder of a Security may convert the principal
amount of such Security (or any portion thereof equal to $1,000 or any integral
multiple of $1,000 in excess thereof) into Common Stock at any time prior to the
close of business on the Final Maturity Date, at the Conversion Price then in
effect, if:
(a) the Closing Price of the Common Stock on the Trading Day
immediately preceding the Conversion Date was 110% or more of the Conversion
Price of such Security on such Trading Day;
(b) the Company distributes to Holders of Common Stock rights
entitling them to purchase Common Stock at less than the Closing Price of the
Common Stock on the last Trading Day preceding the declaration for such
distribution;
(c) the Company distributes to Holders of Common Stock assets,
debt, securities or certain rights to purchase the Company's securities, which
distribution has a per share value as determined by the Board of Directors
exceeding 10% of the Closing Price of the Common Stock for the last Trading Day
preceding the declaration for such distribution; or
(d) the Company becomes a party to a consolidation, merger or
sale of all or substantially all of the Company's assets or a Change in Control
occurs pursuant to which the Common Stock would be converted into cash, stock or
other property unless all of the consideration, excluding cash payments for
fractional shares and cash payments made pursuant to dissenters' appraisal
rights, in a merger or consolidation otherwise constituting a Change in Control
consists of shares of common stock, depositary receipts or other certificates
representing common equity interests traded on a national securities exchange or
quoted on the NNM, or will be so traded immediately following such merger or
consolidation, and as a result of such merger or consolidation the Securities
become convertible solely into such common stock, depositary receipts or other
securities representing common equity interests.
In the case of Sections 4.1(b) and 4.1(c) above, the Company
must notify Holders at least 20 days prior to the ex-dividend date for such
distribution, provided, however, that the Company shall not be required to
notify any Holder that otherwise participates in such distribution without
conversion. Once the Company has given such notice, if applicable, Holders may
surrender their Securities for conversion at any time until the earlier of the
close of business on the Business Day prior to the ex-dividend date or the
Company's announcement that such distribution will not take place.
A Holder of a Security may also convert the principal amount
of such Security (or any portion thereof equal to $1,000 or any integral
multiple of $1,000 in excess thereof) into Common Stock if:
(a) at any time prior to March 15, 2006 after any five (5)
consecutive Trading Day period in which the average Trading Prices for the
Securities for that five (5) Trading Day period was less than 103% of the
average Conversion Value for the Securities during that period; and
(b) at any time on or after March 15, 2006 and prior to the
Final Maturity Date after any five (5) consecutive Trading Day period in which
the average Trading Prices for the Securities for that five (5) Trading Day
period was less than 97% of the average Conversion Value for the Securities
during that period, however, a Holder may not convert a Security on or after
March 15, 2006 pursuant to this clause (b) if, at the time of the calculation,
the Closing Price of shares of Common Stock is between the then current
Conversion Price on the Securities and 110% of the then current Conversion Price
of the Securities.
The "Conversion Value" for the Securities is on any given day
equal to the product of (i) the Closing Price of the Common Stock on such day
and (ii) the Conversion Rate on such date.
The "Trading Price" of the Securities on any Trading Day means
the average of the secondary market bid quotations per $1,000 principal amount
of Securities obtained by the Company for $2,500,000 principal amount of the
Securities at approximately 3:30 p.m., New York City time, on such Trading Day
from three independent nationally recognized securities dealers the Company
selects, provided that if at least three such bids cannot reasonably be obtained
by the Company, but two such bids can be obtained, then the average of the two
bids shall be used, and if only one such bid can reasonably be obtained by the
Company, this one bid shall be used. If the Company cannot reasonably obtain at
least one bid for $2,500,000 principal amount of the Securities from a
nationally recognized securities dealer or in the Company's reasonable judgment,
the bid quotations are not indicative of the secondary market value of the
Securities, then the Trading Price of the Securities will be deemed to be less
than 97% or 103%, as the case may be, of the Conversion Value for the Securities
on such Trading Day. The Conversion Agent shall have no obligation to determine
the Trading Price of the Securities.
If a Security is submitted or presented for purchase pursuant
to Article 3, the Holder's conversion right shall terminate at the close of
business on the Business Day immediately preceding the Change in Control
Purchase Date for such Security or such earlier date as the Holder presents such
Security for purchase (unless the Company shall default in making the Change in
Control Purchase Price payment when due, in which case the conversion right
shall terminate at the close of business on the date such default is cured and
such Security is purchased). The number of shares of Common Stock issuable upon
conversion of a Security shall be determined by dividing the principal amount of
the Security or portion thereof surrendered for conversion by the Conversion
Price in effect on the Conversion Date. The initial Conversion Price is set
forth in paragraph 7 of the Securities and is subject to adjustment as provided
in this Article 4.
Provisions of this Indenture that apply to conversion of all
of a Security also apply to conversion of a portion of a Security.
A Security in respect of which a Holder has delivered a Change
in Control Purchase Notice pursuant to Section 3.2(c) exercising the option of
such Holder to require the Company to purchase such Security may be converted,
as provided in Section 4.1 of this Article 4, only if such Change in Control
Purchase Notice is withdrawn by a written notice of withdrawal delivered to a
Paying Agent prior to the close of business on the second Business Day
immediately preceding the Change in Control Purchase Date in accordance with
Section 3.3.
A Holder of Securities is not entitled to any rights of a
holder of Common Stock until such Holder has converted its Securities to Common
Stock, and only to the extent such Securities are deemed to have been converted
into Common Stock pursuant to this Article 4.
SECTION 4.2. CONVERSION PROCEDURE
To convert a Security, a Holder must (a) complete and manually
sign the conversion notice on the back of the Security and deliver such notice
to a Conversion Agent, (b) surrender the Security to a Conversion Agent, (c)
furnish appropriate endorsements and transfer documents if required by a
Registrar or a Conversion Agent, and (d) pay any transfer or similar tax, if
required to be paid by such Holder under Section 4.4. The date on which the
Holder satisfies all of those requirements is the "Conversion Date." As soon as
reasonably practicable after the Conversion Date, the Company shall deliver to
the Holder through a Conversion Agent a certificate for the number of whole
shares of Common Stock issuable upon the conversion and cash in lieu of any
fractional shares pursuant to Section 4.3. Anything herein to the contrary
notwithstanding, in the case of Global Securities, conversion notices may be
delivered and such Securities may be surrendered for conversion in accordance
with the Applicable Procedures as in effect from time to time.
The person in whose name the Common Stock certificate is
registered shall be deemed to be a stockholder of record on the Conversion Date;
provided, however, that no surrender of a Security on any date when the stock
transfer books of the Company shall be closed shall be effective to constitute
the person or persons entitled to receive the shares of Common Stock upon such
conversion as the record holder or holders of such shares of Common Stock on
such date, but such surrender shall be effective to constitute the person or
persons entitled to receive such shares of Common Stock as the record holder or
holders thereof for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open; provided, further, that such
conversion shall be at the Conversion Price in effect on the Conversion Date as
if the stock transfer books of the Company had not been closed. Upon conversion
of a Security, such person shall no longer be a Holder of such Security. No
payment or adjustment will be made for dividends or distributions on shares of
Common Stock issued upon conversion of a Security.
Securities so surrendered for conversion (in whole or in part)
during the period from the close of business on any regular record date to the
opening of business on the next succeeding interest payment date (excluding
Securities or portions thereof presented for purchase upon a Change in Control
on a Change in Control Purchase Date during the period beginning at the close of
business on a regular record date and ending at the opening of business on the
first Business Day after the next succeeding interest payment date, or if such
interest payment date is not a Business Day, the second such Business Day) shall
also be accompanied by payment in funds acceptable to the Company of an amount
equal to the interest payable on such interest payment date on the principal
amount of such Security then being converted, and such interest shall be payable
to such registered Holder notwithstanding the conversion of such Security,
subject to the provisions of this Indenture relating to the payment of defaulted
interest by the Company. However, if a Holder submits Securities for conversion
between the record date for the final interest payment and the opening of
business on the Final Maturity Date, such Holder will not be required to pay
funds equal to the interest (including contingent interest and Additional
Interest, if any) payable on the Final Maturity Date. Except as otherwise
provided in this Section 4.2, no payment or adjustment will be made for accrued
interest (including contingent interest and Additional Interest, if any) on a
converted Security. If the Company defaults in the payment of interest payable
on such interest payment date, the Company shall promptly repay such funds to
such Holder.
Nothing in this Section shall affect the right of a Holder in
whose name any Security is registered at the close of business on a record date
to receive the interest (including contingent interest and Additional Interest,
if any) payable on such Security on the related interest payment date in
accordance with the terms of this Indenture and the Securities. If a Holder
converts more than one Security at the same time, the number of shares of Common
Stock issuable upon the conversion shall be based on the aggregate principal
amount of Securities converted.
Upon surrender of a Security that is converted in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, a new Security equal in principal amount to the unconverted portion of
the Security surrendered.
SECTION 4.3. FRACTIONAL SHARES
The Company will not issue fractional shares of Common Stock
upon conversion of Securities. In lieu thereof, the Company will pay an amount
in cash for the current market value of the fractional shares. The current
market value of a fractional share shall be determined, (calculated to the
nearest 1/1000th of a share) by multiplying the Closing Price (determined as set
forth in Section 4.6(d)) of the Common Stock on the Trading Day immediately
prior to the Conversion Date by such fractional share and rounding the product
to the nearest whole cent.
SECTION 4.4. TAXES ON CONVERSION
If a Holder converts a Security, the Company shall pay any
documentary, stamp or similar issue or transfer tax due on the issue of shares
of Common Stock upon such conversion. However, the Holder shall pay any such tax
which is due because the Holder requests the shares to be issued in a name other
than the Holder's name. The Conversion Agent may refuse to deliver the
certificate representing the Common Stock being issued in a name other than the
Holder's name until the Conversion Agent receives a sum sufficient to pay any
tax which 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 regulation.
SECTION 4.5. COMPANY TO PROVIDE STOCK
The Company shall, prior to issuance of any Securities
hereunder, and from time to time as may be necessary, reserve, out of its
authorized but unissued Common Stock, a sufficient number of shares of Common
Stock to permit the conversion of all outstanding Securities into shares of
Common Stock.
All shares of Common Stock delivered upon conversion of the
Securities shall be newly issued shares, shall be duly authorized, validly
issued, fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company will endeavor promptly to comply with all federal
and state securities laws regulating the offer and delivery of shares of Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Common Stock on each national securities exchange or on
the NNM or other over-the-counter market or such other market on which the
Common Stock is then listed or quoted; provided, however, that if rules of such
automated quotation system or exchange permit the Company to defer the listing
of such Common Stock until (a) the first conversion of the Notes into Common
Stock in accordance with the provisions of this Indenture or (b) such other
time, the Company covenants to list such Common Stock issuable upon conversion
of the Notes in accordance with the requirements of such automated quotation
system or exchange at such time. Any Common Stock issued upon conversion of a
Security hereunder which at the time of conversion was a Restricted Security
will also be a Restricted Security.
SECTION 4.6. ADJUSTMENT OF CONVERSION PRICE
The conversion price as stated in paragraph 7 of the
Securities (the "Conversion Price") shall be adjusted from time to time by the
Company as follows:
(a) In case the Company shall (i) pay a dividend on its Common
Stock in shares of Common Stock, (ii) make a distribution on its Common Stock in
shares of Common Stock, (iii) subdivide its outstanding Common Stock into a
greater number of shares, or (iv) combine its outstanding Common Stock into a
smaller number of shares, the Conversion Price in effect immediately prior
thereto shall be adjusted so that the Holder of any Security thereafter
surrendered for conversion shall be entitled to receive that number of shares of
Common Stock which it would have owned had such Security been converted
immediately prior to the happening of such event. An adjustment made pursuant to
this subsection (a) shall become effective immediately after the record date in
the case of a dividend or distribution and shall become effective immediately
after the effective date in the case of subdivision or combination.
(b) In case the Company shall issue rights or warrants to all
or substantially all holders of its Common Stock entitling them (for a period of
not more than 60 days after such issuance) to subscribe for or purchase shares
of Common Stock (or securities convertible into Common Stock) at a price per
share (or having a conversion price per share) less than the Current Market
Price per share of Common Stock (as determined in accordance with subsection (e)
of this Section 4.6) on the record date for the determination of stockholders
entitled to receive such rights or warrants, the Conversion Price in effect
immediately prior thereto shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to such record date by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding on such record date plus the number of shares
which the aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate conversion price of the convertible securities so
offered, which shall be determined by multiplying the number of shares of Common
Stock issuable upon conversion of such convertible securities by the conversion
price per share of Common Stock pursuant to the terms of such convertible
securities) would purchase at the Current Market Price per share (as defined in
subsection (e) of this Section 4.6) of Common Stock on such record date, and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock offered
(or into which the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever any such rights or warrants are
issued, and shall become effective immediately after such record date. If at the
end of the period during which such rights or warrants are exercisable not all
rights or warrants shall have been exercised, the adjusted Conversion Price
shall be immediately readjusted to what it would have been based upon the number
of additional shares of Common Stock actually issued (or the number of shares of
Common Stock issuable upon conversion of convertible securities actually
issued).
(c) In case the Company shall distribute to all or
substantially all holders of its Common Stock any shares of capital stock of the
Company (other than Common Stock), evidences of indebtedness or other non-cash
assets (including securities of any person other than the Company but excluding
(1) dividends or distributions paid exclusively in cash or (2) dividends or
distributions referred to in subsection (a) of this Section 4.6), or shall
distribute to all or substantially all holders of its Common Stock rights or
warrants to subscribe for or purchase any of its securities (excluding those
rights and warrants referred to in subsection (b) of this Section 4.6 and also
excluding the distribution of rights to all holders of Common Stock pursuant to
a Rights Plan (as defined below) adopted before or after the date of this
Indenture), then in each such case the Conversion Price shall be adjusted so
that the same shall equal the price determined by multiplying the current
Conversion Price by a fraction of which the numerator shall be the Current
Market Price per share (as defined in subsection (e) of this Section 4.6) of the
Common Stock on the record date mentioned below less the fair market value on
such record date (as determined by the Board of Directors, whose determination
shall be conclusive evidence of such fair market value and which shall be
evidenced by an Officers' Certificate delivered to the Trustee) of the portion
of the capital stock, evidences of indebtedness or other non-cash assets so
distributed or of such rights or warrants applicable to one share of Common
Stock (determined on the basis of the number of shares of Common Stock
outstanding on the record date), and of which the denominator shall be the
Current Market Price per share (as defined in subsection (e) of this Section
4.6) of the Common Stock on such record date. Such adjustment shall be made
successively whenever any such distribution is made and shall become effective
immediately after the record date for the determination of shareholders entitled
to receive such distribution.
In the event the then fair market value (as so determined by
the Company) of the portion of the capital stock, evidences of indebtedness or
other non-cash assets so distributed or of such rights or warrants applicable to
one share of Common Stock is equal to or greater than the Current Market Price
per share of the Common Stock on such record date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder of a Security
shall have the right to receive upon conversion the amount of capital stock,
evidences of indebtedness or other non-cash assets so distributed or of such
rights or warrants such Holder would have received had such Holder converted
each Security on such record date. In the event that such distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such distribution had not been declared.
If the Board of Directors determines the fair market value of any distribution
for purposes of this Section 4.6(c) by reference to the actual or when issued
trading market for any securities, it must in doing so consider the prices in
such market over the same period used in computing the Current Market Price of
the Common Stock.
With respect to any rights that may be issued or distributed
pursuant to any rights plan that the Company implements after the date of this
Indenture (a "Rights Plan"), upon conversion of the Securities into Common
Stock, to the extent that such Rights Plan is in effect upon such conversion,
the holders of Securities will receive, in addition to the Common Stock, the
rights described therein (whether or not the rights have separated from the
Common Stock at the time of conversion), subject to the limitations set forth in
any such Rights Plan. Any distribution of rights or warrants pursuant to a
Rights Plan complying with the requirements set forth in the immediately
preceding sentence of this paragraph shall not constitute a distribution of
rights or warrants pursuant to this Section 4.6(c).
Rights or warrants (other than rights issued pursuant to a
Rights Plan) distributed by the Company to all holders of Common Stock entitling
the holders thereof to subscribe for or purchase shares of the Company's capital
stock (either initially or under certain circumstances), which rights or
warrants, until the occurrence of a specified event or events ("Trigger Event"):
(i) are deemed to be transferred with such shares of Common Stock; (ii) are not
exercisable; and (iii) are also issued in respect of future issuances of Common
Stock, shall be deemed not to have been distributed for purposes of this Section
4.6 (and no adjustment to the Conversion Price under this Section 4.6 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 Price shall be made under this
Section 4.6(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 non-cash
assets, then the date of the occurrence of any and each such event shall be
deemed to be the date of distribution and record date with respect to new rights
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 Price under this
Section 4.6 was made, (1) in the case of any such rights or warrants which shall
all have been redeemed or repurchased without exercise by any holders thereof,
the Conversion Price shall be readjusted upon such final redemption or
repurchase to give effect to such distribution or Trigger Event, as the case may
be, as though it were a cash distribution, equal to the per share redemption or
repurchase price received by a holder or holders of Common Stock with respect to
such rights 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 which shall have
expired or been terminated without exercise by any holders thereof, the
Conversion Price shall be readjusted as if such rights and warrants had not been
issued.
(d) (1) In case the Company shall, by dividend or otherwise,
at any time distribute (a "Triggering Distribution") to all or substantially all
holders of its Common Stock cash in an aggregate amount that, together with the
aggregate amount of (A) any cash and the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive evidence thereof and
which shall be evidenced by an Officers' Certificate delivered to the Trustee)
of any other consideration payable in respect of any tender offer by the Company
or a Subsidiary of the Company for Common Stock consummated within the 12 months
preceding the date of payment of the Triggering Distribution and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made
and (B) all other cash distributions to all or substantially all holders of its
Common Stock made within the 12 months preceding the date of payment of the
Triggering Distribution and in respect of which no Conversion Price adjustment
pursuant to this Section 4.6 has been made, exceeds an amount equal to 5.0% of
the product of the Current Market Price per share of Common Stock (as determined
in accordance with subsection (e) of this Section 4.6) on the Business Day (the
"Determination Date") immediately preceding the day on which such Triggering
Distribution is declared by the Company multiplied by the number of shares of
Common Stock outstanding on the Determination Date (excluding shares held in the
treasury of the Company), the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying such Conversion Price in effect
immediately prior to the Determination Date by a fraction of which the numerator
shall be the Current Market Price per share of the Common Stock (as determined
in accordance with subsection (e) of this Section 4.6) on the Determination Date
less the sum of the aggregate amount of cash and the aggregate fair market value
(determined as aforesaid in this Section 4.6(d)(1)) of any such other
consideration so distributed, paid or payable within such 12 months (including,
without limitation, the Triggering Distribution) applicable to one share of
Common Stock (determined on the basis of the number of shares of Common Stock
outstanding on the Determination Date) and the denominator shall be such Current
Market Price per share of the Common Stock (as determined in accordance with
subsection (e) of this Section 4.6) on the Determination Date, such reduction to
become effective immediately prior to the opening of business on the day
following the date on which the Triggering Distribution is paid.
(2) In case any tender offer made by the Company or any of
its Subsidiaries for Common Stock shall expire and such tender offer (as amended
upon the expiration thereof) shall involve the payment of aggregate
consideration in an amount (determined as the sum of the aggregate amount of
cash consideration and the aggregate fair market value (as determined by the
Board of Directors, whose determination shall be conclusive evidence thereof and
which shall be evidenced by an Officers' Certificate delivered to the Trustee
thereof) of any other consideration) that, together with the aggregate amount of
(A) any cash and the fair market value (as determined by the Board of Directors,
whose determination shall be conclusive evidence thereof and which shall be
evidenced by an Officers' Certificate delivered to the Trustee) of any other
consideration payable in respect of any other tender offers by the Company or
any Subsidiary of the Company for Common Stock consummated within the 12 months
preceding the date of the Expiration Date (as defined below) and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made
and (B) all cash distributions to all or substantially all holders of its Common
Stock made within the 12 months preceding the Expiration Date and in respect of
which no Conversion Price adjustment pursuant to this Section 4.6 has been made,
exceeds an amount equal to 5.0% of the product of the Current Market Price per
share of Common Stock (as determined in accordance with subsection (e) of this
Section 4.6) as of the last date (the "Expiration Date") tenders could have been
made pursuant to such tender offer (as it may be amended) (the last time at
which such tenders could have been made on the Expiration Date is hereinafter
sometimes called the "Expiration Time") multiplied by the number of shares of
Common Stock outstanding (including tendered shares but excluding any shares
held in the treasury of the Company) at the Expiration Time, then, immediately
prior to the opening of business on the day after the Expiration Date, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior to
the close of business on the Expiration Date by a fraction of which the
numerator shall be the product of the number of shares of Common Stock
outstanding (including tendered shares but excluding any shares held in the
treasury of the Company) at the Expiration Time multiplied by the Current Market
Price per share of the Common Stock (as determined in accordance with subsection
(e) of this Section 4.6) on the Trading Day next succeeding the Expiration Date
and the denominator shall be the sum of (x) the aggregate consideration
(determined as aforesaid) payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender offer) of all shares validly
tendered and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased Shares")
and (y) the product of the number of shares of Common Stock outstanding (less
any Purchased Shares and excluding any shares held in the treasury of the
Company) at the Expiration Time and the Current Market Price per share of Common
Stock (as determined in accordance with subsection (e) of this Section 4.6) on
the Trading Day next succeeding the Expiration Date, such reduction to become
effective immediately prior to the opening of business on the day following the
Expiration Date. In the event that the Company is obligated to purchase shares
pursuant to any such tender offer, but the Company is permanently prevented by
applicable law from effecting any or all such purchases or any or all such
purchases are rescinded, the Conversion Price shall again be adjusted to be the
Conversion Price which would have been in effect based upon the number of shares
actually purchased. If the application of this Section 4.6(d)(2) to any tender
offer would result in an increase in the Conversion Price, no adjustment shall
be made for such tender offer under this Section 4.6(d)(2).
(3) For purposes of this Section 4.6(d), the term "tender
offer" shall mean and include both tender offers and exchange offers, all
references to "purchases" of shares in tender offers (and all similar
references) shall mean and include both the purchase of shares in tender offers
and the acquisition of shares pursuant to exchange offers, and all references to
"tendered shares" (and all similar references) shall mean and include shares
tendered in both tender offers and exchange offers.
(e) For the purpose of any computation under subsections (b),
(c) and (d) of this Section 4.6, the current market price (the "Current Market
Price") per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices for the 30 consecutive Trading Days commencing 45
Trading Days before (i) the Determination Date or the Expiration Date, as the
case may be, with respect to distributions or tender offers under subsection (c)
or (d) of this Section 4.6 or (ii) the record date with respect to
distributions, issuances or other events requiring such computation under
subsection (b), (c) or (d) of this Section 4.6. The closing price (the "Closing
Price") for each day shall be the last reported sales price or, in case no such
reported sale takes place on such date, the average of the reported closing bid
and asked prices in either case on the NNM or, if the Common Stock is not listed
or admitted to trading on the NNM, on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if not listed or
admitted to trading on the NNM or any national securities exchange, the last
reported sales price of the Common Stock as quoted on NASDAQ or, in case no
reported sales takes place, the average of the closing bid and asked prices as
quoted on NASDAQ or any comparable system or, if the Common Stock is not quoted
on NASDAQ or any comparable system, the closing sales price or, in case no
reported sale takes place, the average of the closing bid and asked prices, as
furnished by any two members of the National Association of Securities Dealers,
Inc. selected from time to time by the Company for that purpose. If no such
prices are available, the Current Market Price per share shall be the fair value
of a share of Common Stock as determined in good faith by the Board of Directors
(which shall be evidenced by an Officers' Certificate delivered to the Trustee).
(f) In any case in which this Section 4.6 shall require that an
adjustment be made following a record date or a Determination Date or Expiration
Date, as the case may be, established for purposes of this Section 4.6, the
Company may elect to defer (but only until five Business Days following the
filing by the Company with the Trustee of the certificate described in Section
4.9) issuing to the Holder of any Security converted after such record date or
Determination Date or Expiration Date the shares of Common Stock and other
capital stock of the Company issuable upon such conversion over and above the
shares of Common Stock and other capital stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so deferred, the Company shall
issue or cause its transfer agents to issue due bills or other appropriate
evidence prepared by the Company of the right to receive such shares. If any
distribution in respect of which an adjustment to the Conversion Price is
required to be made as of the record date or Determination Date or Expiration
Date therefor is not thereafter made or paid by the Company for any reason, the
Conversion Price shall be readjusted to the Conversion Price which would then be
in effect if such record date had not been fixed or such effective date or
Determination Date or Expiration Date had not occurred.
SECTION 4.7. NO ADJUSTMENT
No adjustment in the Conversion Price shall be required unless
the adjustment would require an increase or decrease of at least 1% in the
Conversion Price as last adjusted; provided, however, that any adjustments which
by reason of this Section 4.7 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article 4 shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.
No adjustment need be made for issuances of Common Stock
pursuant to a Company plan for reinvestment of dividends or interest or for a
change in the par value or a change to no par value of the Common Stock.
To the extent that the Securities become convertible into the
right to receive cash, no adjustment need be made thereafter as to the cash.
Interest (including contingent interest and Additional Interest, if any) will
not accrue on the cash.
SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES
The Company shall be entitled to make such reductions in the
Conversion Price, in addition to those required by Section 4.6, as it in its
discretion shall determine to be advisable in order that any stock dividends,
subdivisions of shares, distributions of rights to purchase stock or securities
or distributions of securities convertible into or exchangeable for stock
hereafter made by the Company to its stockholders shall not be taxable.
SECTION 4.9. NOTICE OF ADJUSTMENT
Whenever the Conversion Price is adjusted, the Company shall
promptly mail to Securityholders a notice of the adjustment and file with the
Trustee an Officers' Certificate briefly stating the facts requiring the
adjustment and the manner of computing it. Unless and until the Trustee shall
receive an Officers' Certificate setting forth an adjustment of the Conversion
Price, the Trustee may assume without inquiry that the Conversion Price has not
been adjusted and that the last Conversion Price of which it has knowledge
remains in effect.
SECTION 4.10. NOTICE OF CERTAIN TRANSACTIONS
In the event that:
(1) the Company takes any action which would require an
adjustment in the Conversion Price;
(2) the Company consolidates or merges with, or
transfers all or substantially all of its property and assets to, another
corporation and shareholders of the Company must approve the transaction; or
(3) there is a dissolution or liquidation of the
Company,
the Company shall mail to Holders and file with the Trustee a notice stating the
proposed record or effective date, as the case may be and shall either issue a
press release containing the relevant information or make such information
available on the Company's web site or through another public medium as the
Company may use at such time. The Company shall mail the notice at least ten
days before such date. Failure to mail such notice or any defect therein shall
not affect the validity of any transaction referred to in clause (1), (2) or (3)
of this Section 4.10.
SECTION 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE ON CONVERSION PRIVILEGE
If any of the following shall occur, namely: (a) any
reclassification or change of shares of Common Stock issuable upon conversion of
the Securities (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination, or any other change for which an adjustment is provided in Section
4.6); (b) any consolidation or merger or combination to which the Company is a
party other than a merger in which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination) in, outstanding shares of Common
Stock; or (c) any sale or conveyance as an entirety or substantially as an
entirety of the property and assets of the Company, directly or indirectly, to
any person, then the Company, or such successor, purchasing or transferee
corporation, as the case may be, shall, as a condition precedent to such
reclassification, change, combination, consolidation, merger, sale or
conveyance, execute and deliver to the Trustee a supplemental indenture
providing that the Holder of each Security then outstanding shall have the right
to convert such Security into the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such reclassification,
change, combination, consolidation, merger, sale or conveyance by a holder of
the number of shares of Common Stock deliverable upon conversion of such
Security immediately prior to such reclassification, change, combination,
consolidation, merger, sale or conveyance. Such supplemental indenture shall
provide for adjustments of the Conversion Price which shall be as nearly
equivalent as may be practicable to the adjustments of the Conversion Price
provided for in this Article 4. If, in the case of any such consolidation,
merger, combination, sale or conveyance, the stock or other securities and
property (including cash) receivable thereupon by a holder of Common Stock
include shares of stock or other securities and property of a person other than
the successor, purchasing or transferee corporation, as the case may be, in such
consolidation, merger, combination, sale or conveyance, then such supplemental
indenture shall also be executed by such other person and shall contain such
additional provisions to protect the interests of the Holders of the Securities
as the Board of Directors shall reasonably consider necessary by reason of the
foregoing. The provisions of this Section 4.11 shall similarly apply to
successive reclassifications, changes, combinations, consolidations, mergers,
sales or conveyances.
In the event the Company shall execute a supplemental
indenture pursuant to this Section 4.11, the Company shall promptly file with
the Trustee (x) an Officers' Certificate briefly stating the reasons therefor,
the kind or amount of shares of stock or other securities or property (including
cash) receivable by Holders of the Securities upon the conversion of their
Securities after any such reclassification, change, combination, consolidation,
merger, sale or conveyance, any adjustment to be made with respect thereto and
that all conditions precedent have been complied with and (y) an Opinion of
Counsel that all conditions precedent have been complied with, and shall mail
notice thereof to all Holders within 30 days of such reclassification,
consolidation, merger, sale or conveyance.
SECTION 4.12. TRUSTEE'S DISCLAIMER
The Trustee shall have no duty to determine when an adjustment
under this Article 4 should be made, how it should be made or what such
adjustment should be, but may accept as conclusive evidence of that fact or the
correctness of any such adjustment, and shall be protected in relying upon, an
Officers' Certificate including the Officers' Certificate with respect thereto
which the Company is obligated to file with the Trustee pursuant to Section 4.9.
The Trustee makes no representation as to the validity or value of any
securities or assets issued upon conversion of Securities, and the Trustee shall
not be responsible for the Company's failure to comply with any provisions of
this Article 4.
The Trustee shall not be under any responsibility to determine
the correctness of any provisions contained in any supplemental indenture
executed pursuant to Section 4.11, but may accept as conclusive evidence of the
correctness thereof, and shall be fully protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 4.11.
SECTION 4.13. VOLUNTARY REDUCTION
The Company from time to time may reduce the Conversion Price
by any amount for any period of time if the period is at least 20 days and if
the reduction is irrevocable during the period if the Company's Board of
Directors determines that such reduction would be in the best interest of the
Company or to avoid or diminish income tax to holders of shares of the Company's
Common Stock in connection with a dividend or distribution of stock or similar
event, and the Company provides at least 15 days prior notice of any reduction
in the Conversion Price; provided, however, that in no event may the Company
reduce the Conversion Price to be less than the par value of a share of Common
Stock.
ARTICLE 5
SUBORDINATION
SECTION 5.1. AGREEMENT OF SUBORDINATION
The Company covenants and agrees, and each Holder of
Securities issued hereunder by its acceptance thereof likewise covenants and
agrees, that all Securities shall be issued subject to the provisions of this
Article 5; and each Person holding any Security, whether upon original issue or
upon transfer, assignment or exchange thereof, accepts and agrees to be bound by
such provisions.
The payment of the principal of, premium, if any, and interest
(including Additional Interest and contingent interest, if any) on all
Securities (including, but not limited to, the Change in Control Purchase Price
with respect to the Securities subject to purchase in accordance with Article 3
as provided in this Indenture) issued hereunder shall, to the extent and in the
manner hereinafter set forth, be subordinated and subject in right of payment to
the prior payment in full in cash or payment satisfactory to the holders of
Senior Indebtedness of all Senior Indebtedness, whether outstanding at the date
of this Indenture or thereafter incurred.
No provision of this Article 5 shall prevent the occurrence of
any default or Event of Default hereunder.
SECTION 5.2. PAYMENTS TO HOLDERS
No payment shall be made with respect to the principal of, or
premium, if any, and interest (including Additional Interest and contingent
interest, if any) on the Securities (including, but not limited to, the Change
in Control Purchase Price with respect to the Securities subject to purchase in
accordance with Article 3 as provided in this Indenture), except payments and
distributions made by the Trustee as permitted by the first or second paragraph
of Section 5.5, if:
(i) a default in the payment of principal, premium, interest,
rent or other obligations due on any Designated Senior Indebtedness occurs and
is continuing (or, in the case of Designated Senior Indebtedness for which there
is a period of grace, in the event of such a default that continues beyond the
period of grace, if any, specified in the instrument or lease evidencing such
Designated Senior Indebtedness), unless and until such default shall have been
cured or waived or shall have ceased to exist; or
(ii) a default, other than a payment default, on any Designated
Senior Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a
Representative or holder of Designated Senior Indebtedness or the Company.
Subject to the provisions of Section 5.5, if the Trustee
receives any Payment Blockage Notice pursuant to clause (ii) above, no
subsequent Payment Blockage Notice shall be effective for purposes of this
Section unless and until at least 365 consecutive days shall have elapsed since
the effectiveness of the immediately prior Payment Blockage Notice and all
scheduled payments on the Securities that have come due have been paid in full
in cash. No nonpayment default that existed or was continuing on the date of
delivery of any Payment Blockage Notice to the Trustee (unless such default was
waived, cured or otherwise ceased to exist and thereafter subsequently
reoccurred) shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Company may and shall resume payments on and distributions
in respect of the Securities:
(a) in the case of a default referred to in clause (i) above,
upon the date upon which the default is cured or waived or ceases to exist, or
(b) in the case of a default referred to in clause (ii) above,
upon the earlier of (1) the date on which such default is cured or waived or
ceases to exist or (2) 179 days after the date on which the applicable Payment
Blockage Notice is received, if the maturity of such Designated Senior
Indebtedness has not been accelerated, unless this Article 5 otherwise prohibits
the payment or distribution at the time of such payment or distribution.
Upon any payment by the Company, or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company (whether voluntary or involuntary) or in bankruptcy, insolvency,
receivership or similar proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash, or other payments
satisfactory to the holders of Senior Indebtedness before any payment is made on
account of the principal of, premium, if any, or interest (including Additional
Interest and contingent interest, if any) on the Securities (except payments
made pursuant to Article 10 from monies deposited with the Trustee pursuant
thereto prior to commencement of proceedings for such dissolution, winding-up,
liquidation or reorganization); and upon any such dissolution or winding-up or
liquidation or reorganization of the Company or bankruptcy, insolvency,
receivership or other proceeding, any payment by the Company, or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders of the Securities or the Trustee would be
entitled, except for the provision of this Article 5, shall (except as
aforesaid) be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders of the Securities or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, or as otherwise required by law or a court order) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in cash, or other payment
satisfactory to the holders of Senior Indebtedness, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Indebtedness,
before any payment or distribution is made to the Holders of the Securities or
to the Trustee.
For purposes of this Article 5, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article 5 with respect
to the Securities to the payment of all Senior Indebtedness which may at the
time be outstanding; provided that (i) the Senior Indebtedness is assumed by the
new corporation, if any, resulting from any reorganization or readjustment, and
(ii) the rights of the holders of Senior Indebtedness (other than leases which
are not assumed by the Company or the new corporation, as the case may be) are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or dissolution of the
Company following the conveyance, transfer or lease of its property as an
entirety, or substantially as an entirety, to another corporation upon the terms
and conditions provided for in Article 7 shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 5.2
if such other corporation shall, as a part of such consolidation, merger,
conveyance, transfer or lease, comply with the conditions stated in Article 7.
In the event of the acceleration of the Securities because of
an Event of Default, no payment or distribution shall be made to the Trustee or
any Holder of Securities in respect of the principal of, premium, if any, or
interest (including Additional Interest and contingent interest, if any) on the
Securities by the Company (including, but not limited to, the Change in Control
Purchase Price with respect to the Securities subject to purchase in accordance
with Article 3 as provided in this Indenture), except payments and distributions
made by the Trustee as permitted by Section 5.5, until all Senior Indebtedness
has been paid in full in cash or other payment satisfactory to the holders of
Senior Indebtedness or such acceleration is rescinded in accordance with the
terms of this Indenture. If payment of the Securities is accelerated because of
an Event of Default, the Company shall promptly notify holders of Senior
Indebtedness of such acceleration.
In the event that, notwithstanding the foregoing provisions,
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by way
of setoff or otherwise), prohibited by the foregoing, shall be received by the
Trustee or the Holders of the Securities before all Senior Indebtedness is paid
in full, in cash or other payment satisfactory to the holders of Senior
Indebtedness, or provision is made for such payment thereof in accordance with
its terms in cash or other payment satisfactory to the holders of Senior
Indebtedness, such payment or distribution shall be held in trust for the
benefit of and shall be paid over or delivered to the holders of Senior
Indebtedness or their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments evidencing any
Senior Indebtedness may have been issued, as their respective interests may
appear, as calculated by the Company, for application to the payment of all
Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior
Indebtedness in full, in cash or other payment satisfactory to the holders of
Senior Indebtedness, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
Nothing in this Section 5.2 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 9.7. This Section 5.2
shall be subject to the further provisions of Section 5.5.
SECTION 5.3. SUBROGATION OF SECURITIES
Subject to the payment in full, in cash or other payment
satisfactory to the holders of Senior Indebtedness, of all Senior Indebtedness,
the rights of the Holders of the Securities shall be subrogated to the extent of
the payments or distributions made to the holders of such Senior Indebtedness
pursuant to the provisions of this Article 5 (equally and ratably with the
holders of all indebtedness of the Company which by its express terms is
subordinated to other indebtedness of the Company to substantially the same
extent as the Securities are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal, premium, if any, and
interest (including Additional Interest and contingent interest, if any) on the
Securities shall be paid in full in cash or other payment satisfactory to the
holders of Senior Indebtedness; and, for the purposes of such subrogation, no
payments or distributions to the holders of the Senior Indebtedness of any cash,
property or securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article 5, and no payment
over pursuant to the provisions of this Article 5, to or for the benefit of the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Indebtedness, and the Holders of the Securities, be deemed to be a payment by
the Company to or on account of the Senior Indebtedness; and no payments or
distributions of cash, property or securities to or for the benefit of the
Holders of the Securities pursuant to the subrogation provisions of this Article
5, which would otherwise have been paid to the holders of Senior Indebtedness
shall be deemed to be a payment by the Company to or for the account of the
Securities. It is understood that the provisions of this Article 5 are and are
intended solely for the purposes of defining the relative rights of the Holders
of the Securities, on the one hand, and the holders of the Senior Indebtedness,
on the other hand.
Nothing contained in this Article 5 or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including contingent interest and Additional
Interest, if any) on the Securities as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders of the Securities and creditors of the Company
other than the holders of the Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article 5 of the holders of
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article 5, the Trustee, subject to the provisions of Section
9.1, and the Holders of the Securities shall be entitled to rely upon any order
or decree made by any court of competent jurisdiction in which such bankruptcy,
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidating trustee,
agent or other person making such payment or distribution, delivered to the
Trustee or to the Holders of the Securities, for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon and all other facts pertinent thereto or to this Article 5.
SECTION 5.4. AUTHORIZATION TO EFFECT SUBORDINATION
Each Holder of a Security by the Holder's acceptance thereof
authorizes and directs the Trustee on the Holder's behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article 5 and appoints the Trustee to act as the Holder's attorney-in-fact
for any and all such purposes. If the Trustee does not file a proper proof of
claim or proof of debt in the form required in any proceeding referred to in
Section 5.3 hereof at least 30 days before the expiration of the time to file
such claim, the holders of any Senior Indebtedness or their representatives are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Securities.
SECTION 5.5. NOTICE TO TRUSTEE
The Company shall give prompt written notice in the form of an
Officers' Certificate to a Trust Officer of the Trustee and to any Paying Agent
of any fact known to the Company which would prohibit the making of any payment
of monies to or by the Trustee or any Paying Agent in respect of the Securities
pursuant to the provisions of this Article 5. Notwithstanding the provisions of
this Article 5 or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts which would prohibit the
making of any payment of monies to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article 5, unless and until a
Trust Officer of the Trustee shall have received written notice thereof at the
Corporate Trust Office from the Company (in the form of an Officers'
Certificate) or a Representative or a Holder or Holders of Senior Indebtedness
or from any trustee thereof; and before the receipt of any such written notice,
the Trustee, subject to the provisions of Section 9.1, shall be entitled in all
respects to assume that no such facts exist; provided that if on a date not less
than one Business Day prior to the date upon which by the terms hereof any such
monies may become payable for any purpose (including, without limitation, the
payment of the principal of, or premium, if any, or interest (including
contingent interest and Additional Interest, if any) on any Security) the
Trustee shall not have received, with respect to such monies, the notice
provided for in this Section 5.5, then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary which may be
received by it on or after such prior date. Notwithstanding anything in this
Article 5 to the contrary, nothing shall prevent any payment by the Trustee to
the Holders of monies deposited with it pursuant to Article 10, and any such
payment shall not be subject to the provisions of Article 5.
The Trustee, subject to the provisions of Section 9.1, shall
be entitled to rely on the delivery to it of a written notice by a
Representative or a person representing himself to be a holder of Senior
Indebtedness (or a trustee on behalf of such holder) to establish that such
notice has been given by a Representative or a holder of Senior Indebtedness or
a trustee on behalf of any such holder or holders. In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article 5, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article 5, and if such
evidence is not furnished the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
SECTION 5.6. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS
The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article 5 in respect of any Senior Indebtedness
at any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in Section 9.11 or elsewhere in this Indenture shall
deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 5, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and,
subject to the provisions of Section 9.1, the Trustee shall not be liable to any
holder of Senior Indebtedness if it shall pay over or deliver to Holders of
Securities, the Company or any other person money or assets to which any holder
of Senior Indebtedness shall be entitled by virtue of this Article 5 or
otherwise.
SECTION 5.7. NO IMPAIRMENT OF SUBORDINATION
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof which any such holder may
have or otherwise be charged with.
SECTION 5.8. CERTAIN CONVERSIONS DEEMED PAYMENT
For the purposes of this Article 5 only, (1) the issuance and
delivery of junior securities upon conversion of Securities in accordance with
Article 4 shall not be deemed to constitute a payment or distribution on account
of the principal of (or premium, if any) or interest (including contingent
interest and Additional Interest, if any) on Securities or on account of the
purchase or other acquisition of Securities, and (2) the payment, issuance or
delivery of cash (except in satisfaction of fractional shares pursuant to
Section 4.3), property or securities (other than junior securities) upon
conversion of a Security shall be deemed to constitute payment on account of the
principal of such Security. For the purposes of this Section 5.8, the term
"junior securities" means (a) shares of any stock of any class of the Company,
or (b) securities of the Company which are subordinated in right of payment to
all Senior Indebtedness which may be outstanding at the time of issuance or
delivery of such securities to substantially the same extent as, or to a greater
extent than, the Securities are so subordinated as provided in this Article.
Nothing contained in this Article 5 or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders, the right, which is
absolute and unconditional, of the Holder of any Security to convert such
Security in accordance with Article 4.
SECTION 5.9. ARTICLE APPLICABLE TO PAYING AGENTS
If at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall (unless the context otherwise requires)
be construed as extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent were named in this
Article in addition to or in place of the Trustee; provided, however, that the
first paragraph of Section 5.5 shall not apply to the Company or any Affiliate
of the Company if it or such Affiliate acts as Paying Agent.
SECTION 5.10. SENIOR INDEBTEDNESS ENTITLED TO RELY
The holders of Senior Indebtedness (including, without
limitation, Designated Senior Indebtedness) shall have the right to rely upon
this Article 5, and no amendment or modification of the provisions contained
herein shall diminish the rights of such holders unless such holders shall have
agreed in writing thereto.
ARTICLE 6
COVENANTS
SECTION 6.1. PAYMENT OF SECURITIES
The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities and this
Indenture. An installment of principal or interest (including contingent
interest and Additional Interest, if any) or Additional Interest, if any, shall
be considered paid on the date it is due if the Paying Agent (other than the
Company) holds by 11:00 a.m., New York City time, on that date money, deposited
by the Company or an Affiliate thereof, sufficient to pay the installment. The
Company shall, (in immediately available funds) to the fullest extent permitted
by law, pay interest on overdue principal (including premium, if any) and
overdue installments of interest at the rate borne by the Securities per annum.
Payment of the principal of (and premium, if any) and any
interest (including contingent interest and Additional Interest, if any) on the
Securities 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 coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Register;
provided further that a Holder with an aggregate principal amount in excess of
$1,000,000 will be paid by wire transfer in immediately available funds at the
election of such Holder if such Holder has provided wire transfer instructions
to the Company at least 10 Business Days prior to the payment date.
SECTION 6.2. SEC and other REPORTS
(a) Whether or not required by the rules and regulations of
the SEC, including the reporting requirements of Section 13 or 15(d) of the
Exchange Act, so long as any Securities are outstanding, the Company will
furnish to the Trustee:
(i) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the Company were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
describes the financial condition and results of operations of the Company and
its Subsidiaries and, with respect to the annual information only, a report on
the consolidated financial statements required by Form 10-K by the Company's
independent certified public accountants; and
(ii) all reports that would be required to be filed with the
SEC on Form 8-K if the Company were required to file such reports.
(b) In addition, whether or not required by the rules and
regulation of the SEC, the Company will file a copy of all such information with
the SEC for public availability (unless the SEC will not accept such a filing)
and make such information available to investors or prospective investors who
request it in writing.
(c) The Company will furnish to the Holders or beneficial
Holders of Securities and prospective purchasers of Securities designated by
Holders, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under Securities Act until such time as the Company has
registered all of the Notes for resale under the Securities Act.
(d) Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 6.3. COMPLIANCE CERTIFICATES
The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year of the Company (beginning with the fiscal year
ending December 31, 2003), an Officers' Certificate stating as to the best of
the signer's knowledge whether or not the Company is in compliance with all
conditions and covenants on its part contained in this Indenture and stating
whether or not, to the best of the signer's knowledge, there has been any
default or Event of Default and, if so, the Officers' Certificate shall describe
the default or Event of Default and the efforts to remedy the same. For the
purposes of this Section 6.3, compliance shall be determined without regard to
any grace period or requirement of notice provided pursuant to the terms of this
Indenture.
SECTION 6.4. 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 6.5. MAINTENANCE OF CORPORATE EXISTENCE
Subject to Article 7, 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 6.6. RULE 144A INFORMATION REQUIREMENT
Within the period prior to the expiration of the holding
period applicable to sales thereof under Rule 144(k) under the Securities Act
(or any successor provision), the Company covenants and agrees that it shall,
during any period in which it is not subject to Section 13 or 15(d) under the
Exchange Act, upon the request of any Holder or beneficial holder of the
Securities make available to such Holder or beneficial holder of Securities or
any Common Stock issued upon conversion thereof which continue to be Restricted
Securities in connection with any sale thereof and any prospective purchaser of
Securities or such Common Stock designated by such Holder or beneficial holder,
the information required pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 6.7. 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 which would prohibit or forgive the Company from paying
all or any portion of the principal of, premium, if any, or interest (including
Additional Interest or contingent interest, if any) on the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which 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 6.8. PAYMENT OF ADDITIONAL INTEREST
If Additional Interest is payable by the Company pursuant to
the Registration Rights Agreement, the Company shall deliver to the Trustee a
certificate to that effect stating (i) the amount of such Additional Interest
that is payable and (ii) the date on which such Additional Interest is payable.
Unless and until a Trust Officer of the Trustee receives such a certificate, the
Trustee may assume without inquiry that no such Additional Interest is payable.
If the Company has paid Additional Interest directly to the Persons entitled to
it, the Company shall deliver to the Trustee a certificate setting forth the
particulars of such payment.
ARTICLE 7
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC, ONLY ON CERTAIN
TERMS
The Company shall not consolidate with or merge into any other
Person (in a transaction in which the Company is not the surviving corporation)
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, other than to one or more of its Subsidiaries, unless:
(1) in case the Company shall consolidate with or merge
into another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by conveyance or transfer, or which leases, the properties and assets of the
Company substantially as an entirety shall be a corporation, limited liability
company, partnership, trust or other business entity organized and validly
existing under the laws of the United States of America, any State thereof or
the District of Columbia and, if the Company is not the surviving corporation,
shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and any premium and interest (including
contingent interest and Additional Interest, if any) on all the Securities and
the performance or observance of every covenant of this Indenture on the part of
the Company to be performed or observed and the conversion rights shall be
provided for in accordance with Article 4, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee, by
the Person (if other than the Company) formed by such consolidation or into
which the Company shall have been merged or by the Person which shall have
acquired the Company's assets;
(2) immediately after giving effect to such transaction,
no Event of Default or Default, shall have occurred and be continuing; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture complies with this Article and that all conditions precedent herein
provided for relating to such transaction have been complied with.
SECTION 7.2. SUCCESSOR SUBSTITUTED
Upon any consolidation of the Company with, or merger of the
Company into, any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 7.1, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
ARTICLE 8
DEFAULT AND REMEDIES
SECTION 8.1. EVENTS OF DEFAULT
An "Event of Default" shall occur if:
(1) the Company defaults in the payment of any interest
(including contingent interest or Additional Interest, if any), payable to all
holders of Registrable Securities (as defined in the Registration Rights
Agreement) on any Security when the same becomes due and payable and the default
continues for a period of 30 days, whether or not such payment shall be
prohibited by the provisions of Article 5 hereof;
(2) the Company defaults in the payment of any principal
of (including, without limitation, any premium, if any, on) any Security when
the same becomes due and payable (whether at maturity, on a Change in Control
Purchase Date or otherwise), whether or not such payment shall be prohibited by
the provisions of Article 5 hereof;
(3) the Company fails to comply with any of its other
agreements contained in the Securities or this Indenture and the default
continues for the period and after the notice specified below;
(4) the Company fails to provide a Change in
Control Purchase Notice when required by Section 3.2;
(5) any indebtedness under any bond, debenture, note
or other evidence of indebtedness for money borrowed by the Company or any
Subsidiary (all or substantially all of the outstanding voting securities of
which are owned, directly or indirectly, by the Company) or under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by the Company or any
Subsidiary (all or substantially all of the outstanding voting securities of
which are owned, directly or indirectly, by the Company) (an "Instrument") with
a principal amount then outstanding in excess of U.S. $5,000,000, whether such
indebtedness now exists or shall hereafter be created, is not paid at final
maturity of the Instrument (either at its stated maturity or upon acceleration
thereof), and such indebtedness is not discharged, or such acceleration is not
rescinded or annulled, within a period of 30 days after there shall have been
given, by registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the then outstanding Securities a written notice specifying such
default and requiring the Company to cause such indebtedness to be discharged or
cause such default to be cured or waived or such acceleration to be rescinded or
annulled and stating that such notice is a "Notice of Default" hereunder;
(6) the Company fails to issue Common Stock upon
conversion of Securities in accordance with Article 4;
(7) the Company or any Subsidiary, pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case or
proceeding;
(B) consents to the entry of an order for
relief against it in an involuntary
case or proceeding;
(C) consents to the appointment of a
Custodian of it or for all or
substantially all of its property; or
(D) makes a general assignment for the
benefit of its creditors; or
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or
any Subsidiary in an involuntary case
or proceeding;
(B) appoints a Custodian of the Company or
any Subsidiary or for all or
substantially all of the property of
the Company or any Subsidiary; or
(C) orders the liquidation of the Company
or any Subsidiary;
and in each case the order or decree remains unstayed and in effect for 60
consecutive days.
The term "Bankruptcy Law" means Title 11 of the United States
Code (or any successor thereto) or any similar federal or state law for the
relief of debtors. The term "Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy Law.
A default under clause (3) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate principal amount of the Securities then outstanding notify the Company
and the Trustee, in writing of the default, and the Company does not cure the
default within 60 days after receipt of such notice. The notice given pursuant
to this Section 8.1 must specify the default, demand that it be remedied and
state that the notice is a "Notice of Default." When any default under this
Section 8.1 is cured, it ceases.
The Trustee shall not be charged with knowledge of any Event
of Default unless written notice thereof shall have been given to a Trust
Officer at the Corporate Trust Office of the Trustee by the Company, a Paying
Agent, any Holder or any agent of any Holder.
SECTION 8.2. ACCELERATION
If an Event of Default (other than an Event of Default
specified in clause (7) or (8) of Section 8.1 with respect to the Company)
occurs and is continuing, the Trustee may, by notice to the Company, or the
Holders of at least 25% in aggregate principal amount of the Securities then
outstanding may, by notice to the Company and the Trustee, declare all unpaid
principal to the date of acceleration on the Securities then outstanding (if not
then due and payable) to be due and payable upon any such declaration, and the
same shall become and be immediately due and payable. If an Event of Default
specified in clause (7) or (8) of Section 8.1 occurs with respect to the
Company, all unpaid principal of the Securities then outstanding shall ipso
facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of a majority in
aggregate principal amount of the Securities then outstanding by notice to the
Trustee may rescind an acceleration and its consequences if (a) all existing
Events of Default, other than the nonpayment of the principal of the Securities
which has become due solely by such declaration of acceleration, have been cured
or waived; (b) to the extent the payment of such interest is lawful, interest
(calculated at the rate per annum borne by the Securities) on overdue
installments of interest and overdue principal, which has become due otherwise
than by such declaration of acceleration, has been paid; (c) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction; and (d) all payments due to the Trustee and any predecessor
Trustee under Section 9.7 have been made. No such rescission shall affect any
subsequent default or impair any right consequent thereto.
SECTION 8.3. OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee
may, but shall not be obligated to, pursue any available remedy by proceeding at
law or in equity to collect the payment of the principal of or interest
(including contingent interest and Additional Interest, if any) on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT
Subject to Sections 8.7 and 11.2, the Holders of a majority in
aggregate principal amount of the Securities then outstanding by notice to the
Trustee may waive an existing default or Event of Default and its consequence,
except a default or Event of Default in the payment of the principal of,
premium, if any, or interest (including contingent interest and Additional
Interest, if any) on any Security, a failure by the Company to convert any
Securities into Common Stock or any default or Event of Default in respect of
any provision of this Indenture or the Securities which, under Section 11.2,
cannot be modified or amended without the consent of the Holder of each Security
affected. When a default or Event of Default is waived, it is cured and ceases.
SECTION 8.5. CONTROL BY MAJORITY
The Holders of a majority in aggregate principal amount of the
Securities then outstanding may 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 it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture, that the Trustee determines
may be unduly prejudicial to the rights of another Holder or the Trustee, or
that may involve the Trustee in personal liability unless the Trustee is offered
indemnity satisfactory to it; provided, however, that the Trustee may take any
other action deemed proper by the Trustee which is not inconsistent with such
direction.
SECTION 8.6. LIMITATIONS ON SUITS
A Holder may not pursue any remedy with respect to this
Indenture or the Securities (except actions for payment of overdue principal or
interest (including any payments in connection with a Change in Control) or for
the conversion of the Securities pursuant to Article 4) unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event ofDefault;
(2) the Holders of at least 25% in aggregate principal
amount of the then outstanding Securities make a written request to the Trustee
to pursue the remedy;
(3) such Holder or Holders offer to the Trustee
reasonable indemnity to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request
within 60 days after receipt of the request and the offer of indemnity; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Securities then outstanding.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over such
other Securityholder.
SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO
CONVERT
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of the principal of and
interest on the Security (including any payments in connection with a Change in
Control, contingent interest and Additional Interest, if any), on or after the
respective due dates expressed in the Security and this Indenture, to convert
such Security accordance with Article 4 and to bring suit for the enforcement of
any such payment on or after such respective dates or the right to convert, is
absolute and unconditional and shall not be impaired or affected without the
consent of the Holder.
SECTION 8.8. COLLECTION SUIT BY TRUSTEE
If an Event of Default in the payment of principal or interest
specified in clause (1) or (2) of Section 8.1 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or another obligor on the Securities for the whole amount of
principal and accrued interest remaining unpaid, together with, to the extent
that payment of such interest is lawful, interest on overdue principal and on
overdue installments of interest, in each case at the rate per annum borne by
the Securities and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor on the Securities), its creditors or its property and shall be
entitled and empowered to collect and receive any money or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 9.7, and to the extent that such payment
of the reasonable compensation, expenses, disbursements and advances 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,
money, securities and other property which the Holders 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, on behalf of any
Holder, to authorize, accept or adopt any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
SECTION 8.10. PRIORITIES
If the Trustee collects any money pursuant to this Article 8,
it shall pay out the money in the following order:
First, to the Trustee for amounts due under Section 9.7;
Second, to the holders of Senior Indebtedness to the extent
required by Article 5;
Third, to Holders for amounts due and unpaid on the Securities
for principal and interest (including Additional Interest and contingent
interest, if any), ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest (including Additional Interest and contingent interest, if any),
respectively; and
Fourth, the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section 8.10.
SECTION 8.11. UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section 8.11 does not apply to a suit made by the
Trustee, a suit by a Holder pursuant to Section 8.7, or a suit by Holders of
more than 10% in aggregate principal amount of the Securities then outstanding.
ARTICLE 9
TRUSTEE
SECTION 9.1. DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is continuing, 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 its exercise as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties as
are specifically set forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. The Trustee,
however, shall examine any certificates and opinions which by any provision
hereof are specifically required to be delivered to the Trustee to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) this paragraph does not limit the effect of
subsection (b) of this Section 9.1;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 8.5.
(d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers unless the Trustee shall have received adequate indemnity in
its opinion against potential costs and liabilities incurred by it relating
thereto.
(e) Every provision of this Indenture that in any way relates
to the Trustee is subject to subsections (a), (b), (c) and (d) of this Section
9.1.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 9.2. RIGHTS OF TRUSTEE
Subject to Section 9.1:
(a) The Trustee may rely conclusively on any document believed
by it to be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both, which shall
conform to Section 12.4(b). The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers' Certificate
or Opinion.
(c) The Trustee may act through its agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of such counsel as to matters of law shall be full and
complete authorization and protection in respect of any such action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such Holders
shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
(g) 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, note, other
evidence of indebtedness 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 at the
sole cost of the Company and shall incur no liability or additional liability of
any kind by reason of such inquiry or investigation.
(h) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office, and such
notice references the Securities and this Indenture.
(i) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 9.3. INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights. However, the Trustee is subject to Sections 5.6, 9.10 and 9.11.
SECTION 9.4. TRUSTEE'S DISCLAIMER
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use of the proceeds from the Securities, and it shall not be
responsible for any statement in the Securities other than its certificate of
authentication.
SECTION 9.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT
If a default or an Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each Securityholder
notice of the default or Event of Default within 90 days after it occurs.
However, the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding notice is in the
interests of Securityholders, except in the case of a default or an Event of
Default in payment of the principal of or interest on any Security.
SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS
If such report is required by TIA Section 313, within 60 days
after each March 15, beginning with March 15, 2004, the Trustee shall mail to
each Securityholder a brief report dated as of such March 15 that complies with
TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b)(2) and
(c).
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the SEC and each
stock exchange, if any, on which the Securities are listed. The Company shall
notify the Trustee whenever the Securities become listed on any stock exchange
or listed or admitted to trading on any quotation system and any changes in the
stock exchanges or quotation systems on which the Securities are listed or
admitted to trading and of any delisting thereof.
SECTION 9.7. COMPENSATION AND INDEMNITY
The Company shall pay to the Trustee from time to time such
compensation as agreed to from time to time by the Company and the Trustee in
writing for its services (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances incurred or made by it. Such expenses may
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
The Company shall indemnify the Trustee or any predecessor
Trustee (which for purposes of this Section 9.7 shall include its officers,
directors, employees and agents) for, and hold it harmless against, any and all
loss, liability or expense including taxes (other than taxes based upon,
measured by or determined by the income of the Trustee), (including reasonable
legal fees and expenses) incurred by it in connection with the acceptance or
administration of its duties under this Indenture or any action or failure to
act as authorized or within the discretion or rights or powers conferred upon
the Trustee hereunder including the reasonable costs and expenses of the Trustee
and its counsel in defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company need not pay for any
settlement effected without its prior written consent, which shall not be
unreasonably withheld.
The Company need not reimburse the Trustee for any expense or
indemnify it against any loss or liability incurred by it resulting from its
gross negligence or bad faith.
To secure the Company's payment obligations in this Section
9.7, the Trustee shall have a senior claim to which the Securities are hereby
made subordinate on all money or property held or collected by the Trustee,
except such money or property held in trust to pay the principal of and interest
on the Securities. The obligations of the Company under this Section 9.7 shall
survive the satisfaction and discharge of this Indenture or the resignation or
removal of the Trustee.
When the Trustee incurs expenses or renders services after an
Event of Default specified in clause (7) or (8) of Section 8.1 occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law. The provisions of this
Section shall survive the termination of this Indenture.
SECTION 9.8. REPLACEMENT OF TRUSTEE
The Trustee may resign by so notifying the Company. The
Holders of a majority in aggregate principal amount of the Securities then
outstanding may remove the Trustee by so notifying the Trustee and may, with the
Company's written consent (which consent shall not be unreasonably withheld),
appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 9.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. The resignation or removal of a Trustee shall not be
effective until a successor Trustee shall have delivered the written acceptance
of its appointment as described below.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of 10% in aggregate principal amount of the Securities
then outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee at the expense of the Company.
If the Trustee fails to comply with Section 9.10, any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee and be released from its obligations (exclusive of any
liabilities that the retiring Trustee may have incurred while acting as Trustee)
hereunder, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
A retiring Trustee shall not be liable for the acts or
omissions of any successor Trustee after its succession.
Notwithstanding replacement of the Trustee pursuant to this
Section 9.8, the Company's obligations under Section 9.7 shall continue for the
benefit of the retiring Trustee.
SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets (including the
administration of this Indenture) to, another corporation, the resulting,
surviving or transferee corporation, without any further act, shall be the
successor Trustee, provided such transferee corporation shall qualify and be
eligible under Section 9.10. Such successor Trustee shall promptly mail notice
of its succession to the Company and each Holder.
SECTION 9.10. ELIGIBILITY; DISQUALIFICATION
The Trustee shall always satisfy the requirements of
paragraphs (1), (2) and (5) of TIA Section 310(a). The Trustee (or its parent
holding company) shall have a combined capital and surplus of at least
$50,000,000. If at any time the Trustee shall cease to satisfy any such
requirements, it shall resign immediately in the manner and with the effect
specified in this Article 9. The Trustee shall be subject to the provisions of
TIA Section 310(b). Nothing herein shall prevent the Trustee from filing with
the SEC the application referred to in the penultimate paragraph of TIA Section
310(b).
SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
COMPANY
The Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
ARTICLE 10
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE
This Indenture shall cease to be of further effect (except as
to any surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for and except as further provided below),
and the Trustee, on demand of and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all Securities theretofore
authenticated and delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced or paid as provided in
Section 2.7 and (ii) Securities for whose payment money has theretofore been
deposited in trust and thereafter repaid to the Company as provided in Section
10.3) have been delivered to the Trustee for cancellation; or
(B) all such Securities not theretofore
delivered to the Trustee for cancellation have become due and payable and the
Company has irrevocably deposited or caused to be irrevocably deposited cash
with the Trustee or a Paying Agent (other than the Company or any of its
Affiliates) as trust funds in trust for the purpose of and in an amount
sufficient to pay and discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for principal and
interest (including Additional Interest and contingent interest, if any) to the
date of such deposit (in the case of Securities which have become due and
payable);
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein 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 9.7 shall
survive and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the provisions of Sections 2.3,
2.4, 2.5, 2.6, 2.7, 2.12, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7 and 12.5, Article 4, the
last paragraph of Section 6.2 and this Article 10, shall survive until the
Securities have been paid in full.
SECTION 10.2. APPLICATION OF TRUST MONEY
Subject to the provisions of Section 10.3, the Trustee or a
Paying Agent shall hold in trust, for the benefit of the Holders, all money
deposited with it pursuant to Section 10.1 and shall apply the deposited money
in accordance with this Indenture and the Securities to the payment of the
principal of and interest (including Additional Interest and contingent
interest, if any) on the Securities. Money so held in trust shall not be subject
to the subordination provisions of Article 5.
SECTION 10.3. REPAYMENT TO COMPANY
The Trustee and each Paying Agent shall promptly pay to the
Company upon request any excess money (i) deposited with them pursuant to
Section 10.1 and (ii) held by them at any time.
The Trustee and each Paying Agent shall pay to the Company
upon request any money held by them for the payment of principal or interest
that remains unclaimed for two years after a right to such money has matured;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such payment, may at the expense of the Company cause to be mailed
to each Holder entitled to such money notice that such money remains unclaimed
and that after a date specified therein, which shall be at least 30 days from
the date of such mailing, any unclaimed balance of such money then remaining
will be repaid to the Company. After payment to the Company, Holders entitled to
money must look to the Company for payment as general creditors unless an
applicable abandoned property law designates another person.
SECTION 10.4. REINSTATEMENT
If the Trustee or any Paying Agent is unable to apply any
money in accordance with Section 10.2 by reason of any legal proceeding or by
reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 10.1 until
such time as the Trustee or such Paying Agent is permitted to apply all such
money in accordance with Section 10.2; provided, however, that if the Company
has made any payment of the principal of or interest on any Securities because
of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive any such payment from the
money held by the Trustee or such Paying Agent.
ARTICLE 11
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 11.1. WITHOUT CONSENT OF HOLDERS
The Company and the Trustee may amend or supplement this
Indenture or the Securities without notice to or consent of any Securityholder:
(a) to comply with Sections 4.11 and 7.1;
(b) to cure any ambiguity, defect or inconsistency;
(c) to make any other change that does not adversely affect
the rights of any Securityholder;
(d) to comply with the provisions of the TIA;
(e) to add to the covenants of the Company for the equal and
ratable benefit of the Securityholders or to surrender any right, power or
option conferred upon the Company; or
(f) to appoint a successor Trustee.
SECTION 11.2. WITH CONSENT OF HOLDERS
The Company and the Trustee may amend or supplement this
Indenture or the Securities with the written consent of the Holders of at least
a majority in aggregate principal amount of the Securities then outstanding. The
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding may waive compliance in a particular instance by the Company
with any provision of this Indenture or the Securities without notice to any
Securityholder. However, notwithstanding the foregoing but subject to Section
11.4, without the written consent of each Securityholder affected, an amendment,
supplement or waiver, including a waiver pursuant to Section 8.4, may not:
(a) change the stated maturity of the principal of, or time or
manner of payment of interest (including contingent interest, if any) on, any
Security;
(b) reduce the principal amount of, or any premium or interest
(including contingent interest, if any) on, any Security;
(c) reduce the amount of principal payable upon acceleration
of the maturity of any Security;
(d) change the place or currency of payment of principal of,
or any premium or interest (including contingent interest, if any) on, any
Security;
(e) impair the right to institute suit for the enforcement of
any payment on, or with respect to, any Security;
(f) modify the provisions with respect to the purchase right
of Holders pursuant to Article 3 upon a Change in Control in a manner adverse to
Holders;
(g) modify the subordination provisions of Article 5 in a
manner adverse to the Holders of Securities;
(h) adversely affect the right of Holders to convert
Securities other than as provided in or under Article 4 of this Indenture;
(i) reduce the percentage of the aggregate principal amount of
the outstanding Securities whose Holders must consent to a modification or
amendment;
(j) reduce the percentage of the aggregate principal amount of
the outstanding Securities necessary for the waiver of compliance with certain
provisions of this Indenture or the waiver of certain defaults under this
Indenture; and
(k) modify any of the provisions of this Section or Section
8.4, except to increase any such percentage or to provide that certain
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under
this Section 11.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section
11.2 becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver. An amendment or supplement under this Section 11.2 or under Section 11.1
may not make any change that adversely affects the rights under Article 5 of any
holder of an issue of Senior Indebtedness unless the holders of that issue,
pursuant to its terms, consent to the change.
SECTION 11.3. COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment to or supplement of this Indenture or the
Securities shall comply with the TIA as in effect at the date of such amendment
or supplement.
SECTION 11.4. REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security. However, any such Holder or subsequent Holder may revoke
the consent as to its Security or portion of a Security if the Trustee receives
the notice of revocation before the date the amendment, supplement or waiver
becomes effective.
SECTION 11.5. NOTATION ON OR EXCHANGE OF SECURITIES
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company or
the Trustee so determines, the Company in exchange for the Security shall issue
and the Trustee shall authenticate a new Security that reflects the changed
terms.
SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 11 if the amendment or supplemental
indenture does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, in its sole discretion,
but need not sign it. In signing or refusing to sign such amendment or
supplemental indenture, the Trustee shall be entitled to receive and, subject to
Section 9.1, shall be fully protected in relying upon, an Opinion of Counsel
stating that such amendment or supplemental indenture is authorized or permitted
by this Indenture. The Company may not sign an amendment or supplement indenture
until the Board of Directors approves it.
SECTION 11.7. EFFECT OF SUPPLEMENTAL INDENTURES
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of
the TIA through operation of Section 318(c) thereof, such imposed duties shall
control.
SECTION 12.2. NOTICES
Any demand, authorization notice, request, consent or
communication shall be given in writing and delivered in person or mailed by
first-class mail, postage prepaid, addressed as follows or transmitted by
facsimile transmission (confirmed by delivery in person or mail by first-class
mail, postage prepaid, or by guaranteed overnight courier) to the following
facsimile numbers:
If to the Company, to:
Integra LifeSciences Holdings Corporation
311 Enterprise Drive
Plainsboro, New Jersey 08536
Attention: John B. Henneman III
Facsimile: (609) 275-1082
with a copy to:
Latham & Watkins LLP
885 Third Avenue
Suite 1000
New York, New York 10022
Attention: Peter M. Labonski
Facsimile: (212) 751-4864
if to the Trustee, to:
Wells Fargo Bank Minnesota, National Association
213 Court Street, Suite 703
Middletown, CT 06457
Attention: Corporate Trust Services
Facsimile No.: (860) 704-6219
Such notices or communications shall be effective when
received.
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed by first-class mail or delivered by an overnight delivery service to
it at its address shown on the register kept by the Primary Registrar.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication to a Securityholder is mailed in
the manner provided above, it is duly given, whether or not the addressee
receives it.
SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS
Securityholders may communicate pursuant to TIA Section 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and any other person
shall have the protection of TIA Section 312(c).
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS
PRECEDENT
(a) Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company shall furnish to
the Trustee at the request of the Trustee:
(1) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent (including any covenants,
compliance with which constitutes a condition precedent), if any, provided for
in this Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion
of such counsel, all such conditions precedent (including any covenants,
compliance with which constitutes a condition precedent) have been complied
with.
(b) Each Officers' Certificate and Opinion of Counsel with
respect to compliance with a condition or covenant provided for in this
Indenture 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 statements or opinions contained in
such certificate or opinion are 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;
provided however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF
SECURITYHOLDERS
The Company (or, in the event deposits have been made pursuant
to Section 10.1, the Trustee) may set a record date for purposes of determining
the identity of Holders entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture, which record date shall
not be more than forty-five (45) days prior to the date of the commencement of
solicitation of such action. Notwithstanding the provisions of Section 11.4, if
a record date is fixed, those persons who were Holders of Securities at the
close of business on such record date (or their duly designated proxies), and
only those persons, shall be entitled to take such action by vote or consent or
to revoke any vote or consent previously given, whether or not such persons
continue to be Holders after such record date.
SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND
CONVERSION AGENT
The Trustee may make reasonable rules (not inconsistent with
the terms of this Indenture) for action by or at a meeting of Holders. Any
Registrar, Paying Agent or Conversion Agent may make reasonable rules for its
functions.
SECTION 12.7. LEGAL HOLIDAYS
A "Legal Holiday" is a Saturday, Sunday or a day on which
state or federally chartered banking institutions in New York, New York and the
state in which the Corporate Trust Office is located are not required to be
open. If a payment date is a Legal Holiday, payment shall be made on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If a regular record date is a Legal Holiday, the record date
shall not be affected.
SECTION 12.8. GOVERNING LAW
This Indenture and the Securities shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary of the Company. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. NO RECOURSE AGAINST OTHERS
All liability described in paragraph 16 of the Securities of
any director, officer, employee or shareholder, as such, of the Company is
waived and released.
SECTION 12.11. SUCCESSORS
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the Trustee in this
Indenture shall bind its successor.
SECTION 12.12. MULTIPLE COUNTERPARTS
The parties may sign multiple counterparts of this Indenture.
Each signed counterpart shall be deemed an original, but all of them together
represent the same agreement.
SECTION 12.13. SEPARABILITY
In case any provisions in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands as of the date and year first above written.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
By:
Name: John B. Henneman, III
Title: Executive Vice President, Chief
Administrative Officer and Secretary
Wells Fargo Bank MINNESOTA, National
Association, as Trustee
By:
Name:
Title:
[Signature page to Indenture]
EXHIBIT A
[FORM OF FACE OF SECURITY]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO INTEGRA LIFESCIENCES HOLDINGS
CORPORATION 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 THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]1
[THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY AND THE SHARES OF COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.]2
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL
ISSUE DISCOUNT AND THE ISSUE DATE OF THIS SECURITY IS MARCH 31, 2003. IN
ADDITION, THIS SECURITY IS SUBJECT TO UNITED STATES FEDERAL INCOME TAX
REGULATIONS GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS. UNDER SUCH
REGULATIONS, THE COMPARABLE YIELD OF THIS SECURITY IS 9.702% (WHICH WILL BE
1 These paragraphs should be included only if the Secretary is a Global
Security.
2 These paragraphs to be included only if the Secretary is a Restricted
Security.
TREATED AS THE YIELD FOR UNITED STATES FEDERAL INCOME TAX PURPOSES), COMPOUNDED
SEMIANNUALLY.
THE COMPANY AGREES, AND BY ACCEPTING A BENEFICIAL OWNERSHIP
INTEREST IN THIS SECURITY EACH HOLDER OF THIS SECURITY WILL BE DEEMED TO HAVE
AGREED, FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, TO TREAT THIS SECURITY AS
A "CONTINGENT PAYMENT DEBT INSTRUMENT" AND TO BE BOUND BY THE COMPANY'S
APPLICATION OF THE TREASURY REGULATIONS THAT GOVERN CONTINGENT PAYMENT DEBT
INSTRUMENTS, INCLUDING THE COMPANY'S DETERMINATION (1) OF THE PROJECTED PAYMENT
SCHEDULE AND (2) THAT THE RATE AT WHICH INTEREST WILL BE DEEMED TO ACCRUE FOR
UNITED STATES FEDERAL INCOME TAX PURPOSES WILL BE 9.702% COMPOUNDED
SEMI-ANNUALLY. THE COMPANY AGREES TO PROVIDE PROMPTLY TO THE HOLDER OF THIS
SECURITY, UPON WRITTEN REQUEST, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE
PRICE, YIELD TO MATURITY, AND PROJECTED PAYMENT SCHEDULE. ANY SUCH WRITTEN
REQUEST SHOULD BE SENT TO THE COMPANY AT THE FOLLOWING ADDRESS: INTEGRA
LIFESCIENCES HOLDING CORPORATION, 311 ENTERPRISE DRIVE, PLAINSBORO, NEW JERSEY
08536, ATTENTION: INVESTOR/PUBLIC RELATIONS.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS SECURITY AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.]2
[THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A
REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED
TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY
AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.]2
2 These paragraphs to be included only if the Secretary is a Restricted
Security.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
CUSIP: 457985AA7 R-______
2 1/2 % CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
Integra LifeSciences Holdings Corporation, a Delaware
corporation (the "Company", which term shall include any successor corporation
under the Indenture referred to on the reverse hereof), promises to pay
to___________ _________________, or registered assigns, the principal sum of
_____________________________ Dollars ($__________) on March 15, 2008 [or such
greater or lesser amount as is indicated on the Schedule of Exchanges of Notes
on the other side of this Note].3
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
This Note is convertible as specified on the other side of
this Note. Additional provisions of this Note are set forth on the other side of
this Note.
3 This phrase should be included only if the Security is a global Security.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
By:
Name:
Title:
Attest:
...................
Name:
Title:
Dated: March 31, 2003
Trustee's Certificate of Authentication: This is one of the
Securities referred to in the within-mentioned Indenture.
Wells Fargo Bank MINNESOTA,
National Association, as Trustee
By:
...................
Authorized Signatory
[FORM OF REVERSE SIDE OF SECURITY]
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
2 1/2% CONTINGENT CONVERTIBLE SUBORDINATED NOTES DUE 2008
1. INTEREST
Integra LifeSciences Holdings Corporation, a Delaware
corporation (the "Company," which term shall include any successor corporation
under the Indenture hereinafter referred to), promises to pay interest on the
principal amount of this Note at the rate of 2 1/2% per annum. The Company shall
pay interest semiannually on March 15 and September 15 of each year, commencing
September 15, 2003. Interest on the Notes shall accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from March 31,
2003; provided, however, that if there is not an existing default in the payment
of interest and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding interest payment date, interest shall
accrue from such interest payment date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months. Any reference herein to interest
accrued or payable as of any date shall include any Additional Interest accrued
or payable on such date as provided in the Registration Rights Agreement.
The Company shall pay contingent interest to the Holders on
March 15, 2008, if the Closing Price of the Common Stock on February 15, 2008
(the "Measurement Date") is equal to or greater than 110% of the Conversion
Price in effect on the Measurement Date. The amount of contingent interest
payable per $1,000 principal amount of Notes will equal the sum for each of the
twelve-month periods ended March 15, 2006, March 15, 2007 and March 15, 2008 of
the greater of (x) 0.50% per annum of $1,000 principal amount of Notes and (y)
the aggregate amount of regular cash dividends that would have been paid on the
number of shares of Common Stock into which a $1,000 principal amount of Notes
were convertible on the Measurement Date (assuming such Notes were then
convertible) if such shares were issued and outstanding throughout such
twelve-month period. The Company will pay contingent interest, if any, in the
same manner as it will pay interest as described below. The contingent interest
will be determined by the Company, which shall be evidenced by an Officers'
Certificate delivered to the Trustee.
Upon determination that Holders will be entitled to receive
contingent interest, the Company shall issue a press release and publish such
information on its web site.
2. METHOD OF PAYMENT
The Company shall pay interest on this Note (except defaulted
interest) to the person who is the Holder of this Note at the close of business
on March 1 and September 1, as the case may be, next preceding the related
interest payment date. The Holder must surrender this Note to a Paying Agent to
collect payment of principal. The Company will pay principal and interest
(including contingent interest, if any) in money of the United States that at
the time of payment is legal tender for payment of public and private debts. The
Company may, however, pay principal and interest in respect of any Certificated
Security by check or wire payable in such money; provided, however, that a
Holder with an aggregate principal amount in excess of $1,000,000 will be paid
by wire transfer in immediately available funds at the election of such Holder
if such Holder has provided wire transfer instructions to the Company. The
Company may mail an interest check to the Holder's registered address.
Notwithstanding the foregoing, so long as this Note is registered in the name of
a Depositary or its nominee, all payments hereon shall be made by wire transfer
of immediately available funds to the account of the Depositary or its nominee.
3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT
Initially, Wells Fargo Bank Minnesota, National Association
(the "Trustee", which term shall include any successor trustee under the
Indenture hereinafter referred to) will act as Paying Agent, Registrar and
Conversion Agent. The Company may change any Paying Agent, Registrar or
Conversion Agent without notice to the Holder. The Company or any of its
Subsidiaries may, subject to certain limitations set forth in the Indenture, act
as Paying Agent or Registrar.
4. INDENTURE, LIMITATIONS
This Note is one of a duly authorized issue of Securities of
the Company designated as its 2 1/2% Contingent Convertible Subordinated Notes
due 2008 (the "Notes"), issued under an Indenture dated as of March 31, 2003
(together with any supplemental indentures thereto, the "Indenture"), between
the Company and the Trustee. The terms of this Note include those stated in the
Indenture and those required by or made part of the Indenture by reference to
the Trust Indenture Act of 1939, as amended, as in effect on the date of the
Indenture. This Note is subject to all such terms, and the Holder of this Note
is referred to the Indenture and said Act for a statement of them.
The Notes are subordinated unsecured obligations of the
Company limited to $120,000,000 aggregate principal amount. The Indenture does
not limit other debt of the Company, secured or unsecured, including Senior
Indebtedness.
5. REDEMPTION
The Company may not redeem the Notes at any time prior to
March 15, 2008.
No sinking fund is provided for the Notes.
6. PURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL
At the option of the Holder and subject to the terms and
conditions of the Indenture, the Company shall become obligated to purchase all
or any part specified by the Holder (so long as the principal amount of such
part is $1,000 or an integral multiple of $1,000 in excess thereof) of the Notes
held by such Holder on the date that is 30 Business Days after the occurrence of
a Change in Control, in cash, at a purchase price equal to 100% of the principal
amount thereof together with accrued interest (including contingent interest, if
any) up to, but excluding, the Change in Control Purchase Date. The Holder shall
have the right to withdraw any Change in Control Purchase Notice (in whole or in
a portion thereof that is $1,000 or an integral multiple of $1,000 in excess
thereof) at any time prior to the close of business on the second Business Day
next preceding the Change in Control Purchase Date by delivering a written
notice of withdrawal to the Paying Agent in accordance with the terms of the
Indenture.
7. CONVERSION
Subject to the provisions of the Indenture, a Holder may
convert the principal amount of this Note (or any portion of this Note equal to
$1,000 or any integral multiple of $1,000 in excess thereof) into Common Stock
at any time prior to the close of business on the Final Maturity Date, at the
Conversion Price then in effect, if:
(a) the Closing Price of the Common Stock on the Trading Day
immediately preceding the Conversion Date was 110% or more of the Conversion
Price on the Notes on such Trading Day;
(b) the Company distributes to Holders of Common Stock certain
rights entitling them to purchase Common Stock at less than the Closing Price of
the Common Stock for the last Trading Day preceding the declaration for such
distribution;
(c) the Company distributes to Holders of Common Stock assets,
debt, securities or certain rights to purchase the Company's securities, which
distribution has a per share value as determined by the Board of Directors
exceeding 10% of the Closing Price of the Common Stock for the last Trading Day
preceding the declaration for such distribution; or
(d) the Company becomes a party to a consolidation, merger or
sale of all or substantially all of the Company's assets or a change in control
occurs pursuant to which the Common Stock would be converted into cash, stock or
other property unless all of the consideration, excluding cash payments for
fractional shares and cash payments made pursuant to dissenters' appraisal
rights, in a merger or consolidation otherwise constituting a Change in Control
consists of shares of common stock, depositary receipts or other certificates
representing common equity interests traded on a national securities exchange or
quoted on the Nasdaq National Market, or will be so traded immediately following
such merger or consolidation, and as a result of such merger or consolidation
the Securities become convertible solely into such common stock, depositary
receipts or other securities representing common equity interests.
In the case of Sections 7(b) and 7(c) above, the Company must
notify Holders at least 20 days prior to the ex-dividend date for such
distribution, provided, however, that the Company shall not be required to
notify any Holder that otherwise participates in such distribution without
conversion. Once the Company has given such notice, Holders may surrender their
Securities for conversion at any time until the earlier of the close of business
on the Business Day prior to the ex-dividend date or to the Company's
announcement that such distribution will not take place.
A Holder may also convert the principal amount of this Note
(or any portion thereof equal to $1,000 or any integral multiple of $1,000 in
excess thereof) into Common Stock, if:
(a) at any time prior to March 15, 2006 after any five (5)
consecutive Trading Day period in which the average Trading Prices for the Notes
for that five (5) Trading Day period was less than 103% of the average
Conversion Value for the Notes during that period; and
(b) at any time on or after March 15, 2006 and prior to the
Final Maturity Date after any five (5) consecutive Trading Day period in which
the average Trading Prices for the Notes for that five (5) Trading Day period
was less than 97% of the average Conversion Value for the Notes during that
period, however, a Holder may not convert a Security on or after March 15, 2006
pursuant to this clause if, at the time of the calculation, the Closing Price of
shares of Common Stock is between the then current Conversion Price on the
Securities and 110% of the then current Conversion Price of the Notes.
If a Note is subject to purchase upon a Change in Control, the
conversion right will terminate at the close of business on the Business Day
immediately preceding the Change in Control Purchase Date for such Note or such
earlier date as the Holder presents such Note for purchase (unless the Company
shall default in making the Change in Control Purchase Price, as the case may
be, when due, in which case the conversion right shall terminate at the close of
business on the date such default is cured and such Note is purchased).
The initial Conversion Price is $34.1475 per share, subject to
adjustment under certain circumstances as provided in the Indenture. The number
of shares of Common Stock issuable upon conversion of a Note is determined by
dividing the principal amount of the Note or portion thereof converted by the
Conversion Price in effect on the Conversion Date. No fractional shares will be
issued upon conversion; in lieu thereof, an amount will be paid in cash based
upon the Closing Price of the Common Stock on the Trading Day immediately prior
to the Conversion Date.
To convert a Note, a Holder must (a) complete and manually
sign the conversion notice set forth below and deliver such notice to a
Conversion Agent, (b) surrender the Note to a Conversion Agent, (c) furnish
appropriate endorsements and transfer documents if required by a Registrar or a
Conversion Agent, and (d) pay any transfer or similar tax, if required under the
Indenture.Notes so surrendered for conversion (in whole or in part) during the
period from the close of business on any regular record date to the opening of
business on the next succeeding interest payment date (excluding Notes or
portions thereof subject to purchase upon a Change in Control on a Change in
Control Purchase Date, as the case may be, during the period beginning at the
close of business on a regular record date and ending at the opening of business
on the first Business Day after the next succeeding interest payment date, or if
such interest payment date is not a Business Day, the second such Business Day)
shall also be accompanied by payment in funds acceptable to the Company of an
amount equal to the interest payable on such interest payment date on the
principal amount of such Note then being converted, and such interest shall be
payable to such registered Holder notwithstanding the conversion of such Note,
subject to the provisions of this Indenture relating to the payment of defaulted
interest by the Company. However, if a Holder submits Notes for conversion
between the record date for the final interest payment and the opening of
business on the Final Maturity Date, such Holder will not be required to pay
funds equal to the interest (including contingent interest, if any) payable on
the Final Maturity Date. If the Company defaults in the payment of interest
(including contingent interest, if any) payable on such interest payment date,
the Company shall promptly repay such funds to such Holder. A Holder may convert
a portion of a Note equal to $1,000 or any integral multiple thereof.
A Note in respect of which a Holder had delivered a Change in
Control Purchase Notice exercising the option of such Holder to require the
Company to purchase such Note may be converted only if the Change in Control
Purchase Notice is withdrawn in accordance with the terms of the Indenture.
8. SUBORDINATION
The indebtedness evidenced by the Notes is, to the extent and
in the manner provided in the Indenture, subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness of the Company.
Any Holder by accepting this Note agrees to and shall be bound by such
subordination provisions and authorizes the Trustee to give them effect. In
addition to all other rights of Senior Indebtedness described in the Indenture,
the Senior Indebtedness shall continue to be Senior Indebtedness and entitled to
the benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any terms of any instrument relating to the Senior
Indebtedness or any extension or renewal of the Senior Indebtedness.
9. DENOMINATIONS, TRANSFER, EXCHANGE
The Notes are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of or exchange Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes or other governmental
charges that may be imposed in relation thereto by law or permitted by the
Indenture.
10. PERSONS DEEMED OWNERS
The Holder of a Note may be treated as the owner of it for all
purposes.
11. UNCLAIMED MONEY
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent will pay the money back to
the Company at its written request, subject to applicable unclaimed property
law. After that, Holders entitled to money must look to the Company for payment
as general creditors unless an applicable abandoned property law designates
another person.
12. AMENDMENT, SUPPLEMENT AND WAIVER
Subject to certain exceptions, the Indenture or the Notes may
be amended or supplemented with the consent of the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding, and an
existing default or Event of Default and its consequence or compliance with any
provision of the Indenture or the Notes may be waived in a particular instance
with the consent of the Holders of a majority in aggregate principal amount of
the Notes then outstanding. Without the consent of or notice to any Holder, the
Company and the Trustee may amend or supplement the Indenture or the Notes to,
among other things, cure any ambiguity, defect or inconsistency or make any
other change that does not adversely affect the rights of any Holder.
13. SUCCESSOR ENTITY
When a successor corporation assumes all the obligations of
its predecessor under the Notes and the Indenture in accordance with the terms
and conditions of the Indenture, the predecessor corporation (except in certain
circumstances specified in the Indenture) shall be released from those
obligations.
14. DEFAULTS AND REMEDIES
Under the Indenture, an Event of Default includes: (i) default
for 30 days in payment of any interest (including contingent interest, if any)
or Additional Interest on any Notes; (ii) default in payment of any principal
(including, without limitation, any premium, if any) on the Notes when due
(whether at maturity, on a Change in Control Purchase Date or otherwise); (iii)
failure by the Company for 60 days after notice to it to comply with any of its
other agreements contained in the Indenture or the Notes; (iv) default in the
payment of certain indebtedness of the Company or a Subsidiary; (v) failure by
the Company to give the Holders notice of their right to require the Company to
purchase Notes upon a Change in Control, (vi) failure by the Company to issue
Common Stock upon conversion of the Notes and (vii) certain events of
bankruptcy, insolvency or reorganization of the Company or any Subsidiary. If an
Event of Default (other than as a result of certain events of bankruptcy,
insolvency or reorganization of the Company or any Subsidiary) occurs and is
continuing, the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes then outstanding may declare all unpaid principal to the
date of acceleration on the Notes then outstanding to be due and payable
immediately, all as and to the extent provided in the Indenture. If an Event of
Default occurs as a result of certain events of bankruptcy, insolvency or
reorganization of the Company, unpaid principal of the Notes then outstanding
shall become due and payable immediately without any declaration or other act on
the part of the Trustee or any Holder, all as and to the extent provided in the
Indenture. Holders may not enforce the Indenture or the Notes except as provided
in the Indenture. The Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes. Subject to certain limitations, Holders of
a majority in aggregate principal amount of the Notes then outstanding may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders notice of any continuing default (except a default in
payment of principal or interest) if it determines that withholding notice is in
their interests. The Company is required to file periodic reports with the
Trustee as to the absence of default.
15. TRUSTEE DEALINGS WITH THE COMPANY
Wells Fargo Bank Minnesota, National Association, the Trustee
under the Indenture, in its individual or any other capacity, may make loans to,
accept deposits from and perform services for the Company or an Affiliate of the
Company, and may otherwise deal with the Company or an Affiliate of the Company,
as if it were not the Trustee.
16. NO RECOURSE AGAINST OTHERS
A director, officer, employee or shareholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Notes or the Indenture nor for any claim based on, in respect of or by
reason of such obligations or their creation. The Holder of this Note by
accepting this Note waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Note.
17. AUTHENTICATION
This Note shall not be valid until the Trustee or an
authenticating agent manually signs the certificate of authentication on the
other side of this Note.
18. ABBREVIATIONS AND DEFINITIONS
Customary abbreviations may be used in the name of the Holder
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act).
All terms defined in the Indenture and used in this Note but
not specifically defined herein are defined in the Indenture and are used herein
as so defined.
19. INDENTURE TO CONTROL; GOVERNING LAW
In the case of any conflict between the provisions of this
Note and the Indenture, the provisions of the Indenture shall control. This Note
shall be governed by, and construed in accordance with, the laws of the State of
New York.
The Company will furnish to any Holder, upon written request
and without charge, a copy of the Indenture. Requests may be made to: Integra
LifeSciences Holdings Corporation, 311 Enterprise Drive, Plainsboro, New Jersey
08536, (609) 936-2239, Attention: Investor Relations.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
_________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint
____________________________________________________
agent to transfer this Note on the books of the Company.
The agent may substitute another to act for him or her.
Your Signature:
Date: ________________________________ ______________________________
(Sign exactly as your name appears
on the other side of this Note)
*Signature guaranteed by:
By: __________________________________
* The signature must be guaranteed by an institution which is a member
of one of the following recognized signature guaranty programs: (i)
the Securities Transfer Agent Medallion Program (STAMP); (ii) the
New York Stock Exchange Medallion Program (MSP); (iii) the Stock
Exchange Medallion Program (SEMP); or (iv) such other guaranty
program acceptable to the Trustee.
CONVERSION NOTICE
To convert this Note into Common Stock of the Company, check
the box:
To convert only part of this Note, state the principal amount
to be converted (must be $1,000 or a integral multiple of $1,000): $__________.
If you want the stock certificate made out in another person's
name, fill in the form below:
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
.................. Your Signature:
Date: ________________________________ ___________________________
(Sign exactly as your name
appears on the other side
of this Note)
*Signature guaranteed by:
By: __________________________________
* The signature must be guaranteed by an institution which is a member
of one of the following recognized signature guaranty programs: (i)
the Securities Transfer Agent Medallion Program (STAMP); (ii) the
New York Stock Exchange Medallion Program (MSP); (iii) the Stock
Exchange Medallion Program (SEMP); or (iv) such other guaranty
program acceptable to the Trustee.
OPTION TO ELECT REPURCHASE
UPON A CHANGE IN CONTROL
To: Integra LifeSciences Holdings Corporation
The undersigned registered owner of this Security hereby
irrevocably acknowledges receipt of a notice from Integra LifeSciences Holdings
Corporation (the "Company") as to the occurrence of a Change in Control with
respect to the Company and requests and instructs the Company to purchase the
entire principal amount of this Security, or the portion thereof (which is
$1,000 or an integral multiple thereof) below designated, in accordance with the
terms of the Indenture referred to in this Security at the Change in Control
Purchase Price, together with accrued interest to, but excluding, such date, to
the registered Holder hereof.
Dated: ____________ ------------------------------------
------------------------------------
Signature(s)
Signature(s) must be guaranteed by a
qualified guarantor institution with
membership in an approved signature
guarantee program pursuant to Rule
17Ad-15 under the Securities Exchange
Act of 1934.
------------------------------------
Signature Guaranty
Principal amount to be purchased
(in an integral multiple of $1,000, if less than all):
________________________________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
SCHEDULE OF EXCHANGES OF NOTES4
The following exchanges, repurchases or conversions of a part
of this global Note have been made:
Principal Amount
of this Global Note Authorized Amount of
Following Such Signatory of Amount of Decrease in Increase in
Decrease Date Securities Principal Amount Principal Amount
of Exchange Custodian of this Global Note of this Global Note
(or Increase)
____________________ _____________ ____________________ ___________________
4 This schedule should be included only if the Security is a Global Security.
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION
OF TRANSFER OF TRANSFER RESTRICTED SECURITIES5
Re: 2 1/2% Contingent Convertible Subordinated Notes due 2008 (the "Notes") of
Integra LifeSciences Holdings Corporation
This certificate relates to $_______ principal amount of Notes owned in
(check applicable box)
__book-entry or __definitive form by __________(the "Transferor").
The Transferor has requested a Registrar or the Trustee to exchange or
register the transfer of such Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that the Transferor is familiar with transfer
restrictions relating to the Notes as provided in Section 2.12 of the Indenture
dated as of March 26, 2003 between Integra LifeSciences Holdings Corporation and
Wells Fargo Bank Minnesota, National Association, as trustee (the "Indenture"),
and the transfer of such Note is being made pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") (check applicable box) or the transfer or exchange, as the
case may be, of such Note does not require registration under the Securities Act
because (check applicable box):
__Such Note is being transferred pursuant to an effective registration
statement under the Securities Act.
__Such Note is being acquired for the Transferor's own account, without
transfer.
__Such Note is being transferred to the Company or a Subsidiary (as
defined in the Indenture) of the Company.
__Such Note is being transferred to a person the Transferor reasonably
believes is a "qualified institutional buyer" (as defined in Rule 144A or any
successor provision thereto ("Rule 144A") under the Securities Act) that is
purchasing for its own account or for the account of a "qualified institutional
buyer", in each case to whom notice has been given that the transfer is being
made in reliance on such Rule 144A, and in each case in reliance on Rule 144A.
__Such Note is being transferred pursuant to and in compliance with an
exemption from the registration requirements under the Securities Act in
accordance with Rule 144 (or any successor thereto) ("Rule 144") under the
Securities Act.
Such Note is being transferred pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act (other than
an exemption referred to above) and as a result of which such Note will, upon
such transfer, cease to be a "restricted security" within the meaning of Rule
144 under the Securities Act.
5 This certificate should only be inluded if this Security is a Restricted
Security.
The Transferor acknowledges and agrees that, if the transferee will
hold any such Notes in the form of beneficial interests in a global Note which
is a "restricted security" within the meaning of Rule 144 under the Securities
Act, then such transfer can only be made pursuant to Rule 144A under the
Securities Act and such transferee must be a "qualified institutional buyer" (as
defined in Rule 144A).
Date: _______________________ ____________________________
(Insert Name of Transferor)
Exhibit 10.1
RETENTION AGREEMENT
This retention agreement (this "Agreement") is made as of the 20th day
of February, 2003 by and between Integra LifeSciences Holdings Corporation, a
Delaware Corporation, and Robert Paltridge ("Executive").
Background
WHEREAS, this Agreement is intended to specify the financial
arrangements that the Company will provide to Executive upon Executive's
separation from employment with the Company in connection with or after a Change
in Control, as defined.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and intended to be legally bound hereby, the parties
hereto agree as follows:
Terms
1. Definitions. The following words and phrases shall have the
meanings set forth below for the purposes of this Agreement (unless the context
clearly indicates otherwise):
(a) "Base Salary" shall mean a minimum total salary and
commissions per year of $228,000 ("Base Salary"),
payable in periodic installments in accordance with
Company's regular payroll practices in effect from
time to time. Executive's Base Salary shall be
subject to annual reviews, but may not be decreased
without Executive's express written consent (unless
the decrease is pursuant to a general compensation
reduction applicable to all, or substantially all,
executive officers of Company) and may increase
pursuant to such reviews, in which case the increased
Base Salary shall become the "Base Salary."
(b) "Board" shall mean the Board of Direcetors of Company,
or any successor thereto.
(c) "Cause," as determined by the Board in good faith,
shall mean Executive has --
(1) failed to perform his stated duties in all
material respects, which failure continues for 15
days after his receipt of written notice of the
failure;
(2) intentionally and materially breached any
provision of this Agreement and not cured such
breach (if curable) within 15 days of his receipt
of written notice of the breach;
(3) demonstrated his personal dishonesty in
connection with his employment by Company;
(4) engaged in willful misconduct in connection
with his employment with the Company;
(5) engaged in a breach of fiduciary duty in
connection with his employment with the Company; or
(6) willfully violated any material law, rule or
regulation, or final cease-and-desist order (other
than traffic violations or similar offenses) or
engaged in other serious misconduct of such a
nature that his continued employment may reasonably
be expected to cause the Company substantial
economic or reputational injury.
(d) A "Change in Control" of Company shall be deemed to
have occurred:
(1) if the "beneficial ownership" (as defined in
Rule 13d-3 under the Securities Exchange Act of
1934) of securities representing more than fifty
percent (50%) of the combined voting power of
Company Voting Securities (as herein defined) is
acquired by any individual, entity or group
(a "Person"), other than Company, any trustee or
other fiduciary holding securities under any
employee benefit plan of Company or an affiliate
thereof, or any corporation owned, directly or
indirectly, by the stockholders of Company in
substantially the same proportions as their
ownership of stock of Company (for purposes of this
Agreement, "Company Voting Securities" shall mean
the then outstanding voting securities of Company
entitled to vote generally in the election of
directors); provided, however, that any acquisition
from Company or any acquisition pursuant to a
transaction which complies with clauses (i), (ii)
and (iii) of paragraph (3) of this definition shall
not be a Change in Control under this paragraph
(1); or
(2) if individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of
the Board; provided, however, that any individual
becoming a director subsequent to the date hereof
whose election, or nomination for election by
Company's stockholders, was approved by a vote of
at least a majority of the directors then
comprising the Incumbent Board shall be considered
as though such individual were a member of the
Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of
office occurs as a result of an actual or
threatened election contest with respect to the
election or removal of directors or other actual or
threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(3) upon consummation by Company of a
reorganization, merger or consolidation or sale or
other disposition of all or substantially all of
the assets of Company or the acquisition of assets
or stock of any entity (a "Business Combination"),
in each case, unless immediately following such
Business Combination: (i) Company Voting Securities
outstanding immediately prior to such Business
Combination (or if such Company Voting Securities
were converted pursuant to such Business
Combination, the shares into which such Company
Voting Securities were converted) (x) represent,
directly or indirectly, more than 50% of the
combined voting power of the then outstanding
voting securities entitled to vote generally in the
election of directors of the corporation resulting
from such Business Combination (the "Surviving
Corporation"), or, if applicable, a corporation
which as a result of such transaction owns Company
or all or substantially all of Company's assets
either directly or through one or more subsidiaries
(the "Parent Corporation") and (y) are held in
substantially the same proportions after such
Business Combination as they were immediately prior
to such Business Combination; (ii) no Person
(excluding any employee benefit plan (or related
trust) of Company or such corporation resulting
from such Business Combination) beneficially owns,
directly or indirectly, 50% or more of the combined
voting power of the then outstanding voting
securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) except to
the extent that such ownership of Company existed
prior to the Business Combination; and (iii) at
least a majority of the members of the board of
directors of the Parent Corporation (or, if there
is no Parent Corporation, the Surviving
Corporation) were members of the Incumbent Board at
the time of the execution of the initial agreement,
or the action of the Board, providing for such
Business Combination; or
(4) upon approval by the stockholders of Company of
a complete liquidation or dissolution of Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(f) "Company" shall mean Integra LifeSciences Holdings
Corporation and any corporation, partnership or other
entity owned directly or indirectly, in whole or in
part, by Integra LifeSciences Holdings Corporation.
(g) "Disability" shall mean Executive's inability to
perform his duties hereunder by reason of any medically
determinable physical or mental impairment which is
expected to result in death or which has lasted or is
expected to last for a continuous period of not fewer
than six months.
(h) "Good Reason" shall mean:
(1) a material breach of this Agreement by Company
which is not cured by Company within 15 days of its
receipt of written notice of the breach;
(2) Company fails to obtain the assumption of this
Agreement by any successor to Company; or
(3) during the one-year period following a Change
in Control, the Company, without Executive's express
written consent: (i) reduces Executive's base salary or the
aggregate fringe benefits provided to Executive (except to
the extent the decrease is pursuant to a general
compensation or benefits reduction applicable to all, or
substantially all, executive officers of Company); (ii)
substantially diminishes the nature or status of
Executive's responsibilities; or (iii) requires Executive
to be based more than 25 miles from Executive's office
location immediately prior to the Change in Control (except
for required travel on Company business to an extent
substantially consistent with Executive's business travel
obligations immediately prior to the Change in Control).
(i) "Retirement" shall mean the termination of Executive's
employment with Company in accordance with the
retirement policies including early retirement
policies, generally applicable to Company's salaried
employees.
(j) "Termination Date" shall mean the date specified in the
Termination Notice.
(k) "Termination Notice" shall mean a dated notice which:
(i) indicates the specific termination provision in
this Agreement relied upon (if any); (ii) sets forth in
reasonable detail the facts and circumstances claimed
to provide a basis for the termination of Executive's
employment under such provision; (iii) specifies a
Termination Date; and (iv) is given in the manner
specified in Section 9(h).
2. Term of Agreement. The term of this Agreement shall commence
on the date hereof as first written above and shall continue through January 1,
2004; provided that commencing on January 1, 2004 and each January 1st
thereafter, the term of this Agreement shall automatically be extended for one
additional year unless not later than December 31 of the preceding year, the
Company shall have given notice that it does not wish to extend this Agreement;
and provided, further, that notwithstanding any such notice by the Company not
to extend, this Agreement shall continue in effect for a period of 12 months
beyond the date on which a Change in Control occurs if a Change in Control shall
have occurred during such term.
3. Termination of Employment
(a) Prior to a Change in Control. Executive's rights upon
termination of employment prior to a Change in Control shall be governed by the
Company's standard employment termination policy applicable to Executive in
effect at the time of termination or, if applicable, any written employment
agreement between the Company and Executive other than this Agreement in effect
at the time of termination.
(b) After a Change in Control.
(i) From and after the date of a Change in
Control during the term of this Agreement, the Company shall not terminate
Executive from employment with the Company except as provided in this Section
3(b) or as a result of Executive's Disability, Retirement or death.
(ii) From and after the date of a Change in
Control during the term of this Agreement, the Company shall have the right to
terminate Executive from employment with the Company at any time during the term
of this Agreement for Cause, by written notice to Executive, specifying the
particulars of the conduct of Executive forming the basis for such termination.
(iii) From and after the date of a Change in
Control during the term of this Agreement: (x) the Company shall have the right
to terminate Executive's employment without Cause, at any time; and (y)
Executive shall, upon the occurrence of such a termination by the Company
without Cause, or upon the voluntary termination of Executive's employment by
Executive for Good Reason, be entitled to receive the benefits provided in
Section 4 hereof. Executive shall evidence a voluntary termination for Good
Reason by written notice to the Company given within 60 days after the date of
the occurrence of any event that Executive knows or should reasonably have known
constitutes Good Reason for voluntary termination. Such notice need only
identify Executive and set forth in reasonable detail the facts and
circumstances claimed by Executive to constitute Good Reason. Any notice give by
Executive pursuant to this Section 3 shall be effective five business days after
the date it is given by Executive.
4. Termination.
(a) Termination with Salary Continuation . In the event
that within twelve months of a Change in Control (i) Executive terminates his
employment for Good Reason, or (ii) Executive's employment is terminated by
Company for a reason other than Retirement, Disability, death or Cause, then
Company shall:
(i) pay Executive a severance amount equal to Executive's Base
Salary (determined without regard to any reduction that would give
rise to Good Reason) as of his last day of active employment; the
severance amount shall be paid in a single sum on the first business
day of the month following the Termination Date; and
(ii) maintain and provide to Executive, at no cost to Executive,
for a period ending at the earliest of (i) the third anniversary of
the Termination Date and (ii) Executive's death, continued
participation in all group insurance, life insurance, health and
accident, disability, and other employee benefit plans in which
Executive would have been entitled to participate had his employment
with Company continued throughout such period, provided that such
participation is not prohibited by the terms of the plan or by Company
for legal reasons.
(b) Other Termination. In the event Executive's employment
terminates other than as set forth in Section 4(a), Executive's rights upon
termination shall be governed by the Company's standard employment termination
policy applicable to Executive in effect at the time of termination or, if
applicable, any written employment agreement between the Company and Executive
other than this Agreement in effect at the time of termination
(c) Termination Notice. Except in the event of Executive's
death, a termination under this Agreement shall be effected by means of a
Termination Notice.
5. Executive Duties. Executive shall not terminate employment
with the Company without giving 30 days prior notice to the Board, and during
such 30-day period Executive will assist, as and to the extent reasonably
requested by the Company, in training the successor to Executive's position with
the Company. The provisions of this Section 5 shall not apply to any
termination (voluntary or involuntary) of the employment of Executive pursuant
to Section 4(a) hereof.
6. Withholding. Company shall have the right to withhold from
all payments made pursuant to this Agreement any federal, state, or local taxes
and such other amounts as may be required by law to be withheld from such
payments.
7. Assignability. Company may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any entity to
which Company may transfer all or substantially all of its assets, if in any
such case said entity shall expressly in writing assume all obligations of
Company hereunder as fully as if it had been originally made a party hereto.
Company may not otherwise assign this Agreement or its rights and obligations
hereunder. This Agreement is personal to Executive and his rights and duties
hereunder shall not be assigned except as expressly agreed to in writing by
Company.
8. Death of Executive. Any amounts due Executive under this
Agreement (not including any Base Salary not yet earned by Executive) unpaid as
of the date of Executive's death shall be paid in a single sum as soon as
practicable after Executive's death to Executive's surviving spouse, or if none,
to the duly appointed personal representative of his estate.
9. Legal Expenses. In the event of a termination pursuant to
Section 4(a) hereof, the Company shall also pay to Executive all reasonable
legal fees and expenses incurred by Executive as a result of such termination of
employment (including all fees and expenses, if any, incurred by Executive in
contesting or disputing any such termination or in seeking to obtain to enforce
any right or benefit provided to Executive by this Agreement whether by
arbitration or otherwise).
10. Miscellaneous.
(a) Amendment. No provision of this Agreement may be
amended unless such amendment is signed by Executive
and such officer as may be specifically designated by
the Board to sign on Company's behalf.
(b) Nature of Obligations. Nothing contained herein shall
create or require Company to create a trust of any kind
to fund any benefits which may be payable hereunder,
and to the extent that Executive acquires a right to
receive benefits from Company hereunder, such right
shall be no greater than the right of any unsecured
general creditor of the Company.
(c) ERISA. For purposes of the Executive Retirement Income
Security Act of 1974, this Agreement is intended to be
a severance pay Executive welfare benefit plan, and not
an Executive pension plan, and shall be construed and
administered with that intention.
(d) Prior Employment. Executive represents and warrants
that his acceptance of employment with Company has not
breached, and the performance of his duties hereunder
will not breach, any duty owed by him to any prior
employer or other person.
(e) Headings. The Section headings contained in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation or this
Agreement. In the event of a conflict between a
heading and the content of a Section, the content of
the Section shall control.
(f) Gender and Number. Whenever used in this Agreement, a
masculine pronoun is deemed to include the feminine and
a neuter pronoun is deemed to include both the
masculine and the feminine, unless the context clearly
indicates otherwise. The singular form, whenever used
herein, shall mean or include the plural form where
applicable.
(g) Severability. If any provision of this Agreement or
the application thereof to any person or circumstance
shall be invalid or unenforceable under any applicable
law, such event shall not affect or render invalid or
unenforceable any other provision of this Agreement and
shall not affect the application of any provision to
other persons or circumstances.
(h) Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and
their respective successors, permitted assigns, heirs,
executors and administrators.
(i) Notice. For purposes of this Agreement, notices and
all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been
duly given if hand-delivered, sent by documented
overnight delivery service or by certified or
registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set
forth below:
To the Company:
Integra LifeSciences Holdings Corporation
311 Enterprise Drive
Plainsboro, New Jersey 08536
Attn: President
With a copy to:
The Company's General Counsel
To the Executive:
Robert Paltridge
35 Crescent Place
Matawan, NJ 07747
(j) Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior
agreements, arrangements and communications, whether
oral or written, pertaining to the subject matter
hereof.
(k) Governing Law. The validity, interpretation,
construction and performance of this Agreement shall be
governed by the laws of the United States where
applicable and otherwise by the laws of the State of
New Jersey.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
INTEGRA LIFESCIENCES EXECUTIVE
HOLDINGS CORPORATION
By:________________________________ ________________________
Its: President and Chief Executive Officer
Exhibit 99.1
Certification of Chief Executive Officer
Pursuant to Section 906 of the
Sarbanes -Oxley Act of 2002
I, Stuart M. Essig, Chief Executive Officer and Director of Integra
LifeSciences Holdings Corporation (the "Company"), hereby certify that, to my
knowledge:
1. The Quarterly Report on Form 10-Q of the Company for the three
month period ended March 31, 2003 (the "Report") fully
complies with the requirement of Section 13(a) or Section
15(d), as applicable, of the Securities Exchange Act of 1934,
as amended; and
2. The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
Date: May 15, 2003
By: /s/ Stuart M. Essig
_______________________________
Stuart M. Essig
Chief Executive Officer
A signed original of this written statement required by Section 906 has
been provided to Integra LifeSciences Holdings Corporation and will be retained
by Integra LifeSciences Holdings Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
Certification of Chief Financial Officer
Pursuant to Section 906 of the
Sarbanes -Oxley Act of 2002
I, David B. Holtz, Senior Vice President, Finance and Treasurer of
Integra LifeSciences Holdings Corporation (the "Company"), hereby certify that,
to my knowledge:
1. The Quarterly Report on Form 10-Q of the Company for the three
month period ended March 31, 2003 (the "Report") fully
complies with the requirement of Section 13(a) or Section
15(d), as applicable, of the Securities Exchange Act of 1934,
as amended; and
2. The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operations of the Company.
Date: May 15, 2003 By: /s/ David B. Holtz
_____________________________
David B. Holtz
Sr. Vice President,
Finance and Treasurer
A signed original of this written statement required by Section 906 has
been provided to Integra LifeSciences Holdings Corporation and will be retained
by Integra LifeSciences Holdings Corporation and furnished to the Securities and
Exchange Commission or its staff upon request.
Exhibit 99.2
RISK FACTORS
We believe that the following important factors, among others, have affected,
and in the future could affect, our business, financial condition, and results
of operations and could cause our future results to differ materially from our
historical results and those anticipated in any forward-looking statements made
by us. Such factors are not meant to represent an exhaustive list of the risks
and uncertainties associated with our business. These and other factors may
affect our future results and our stock price, particularly on a quarterly
basis.
RISKS RELATED TO OUR BUSINESS
Our Operating Results May Fluctuate.
Our operating results may fluctuate from time to time, which could affect
our stock price. Our operating results have fluctuated in the past and can be
expected to fluctuate from time to time in the future. Some of the factors that
may cause these fluctuations include:
o the impact of acquisitions;
o the timing of significant customer orders;
o market acceptance of our existing products, as well as products in
development;
o the timing of regulatory approvals;
o the timing of payments received and the recognition of those payments
as revenue under collaborative arrangements and strategic alliances;
o expenses incurred and business lost in connection with product field
corrections or recalls;
o our ability to manufacture our products
efficiently; and
o the timing of our research and development expenditures.
The Industry And Market Segments in Which We Operate Are Highly Competitive, And
We May Be Unable to Compete Effectively with Other Companies.
In general, the medical technology industry is characterized by intense
competition. We compete with established medical technology and pharmaceutical
companies. Competition also comes from early stage companies that have
alternative technological solutions for our primary clinical targets, as well as
universities, research institutions and other non-profit entities. Many of our
competitors have access to greater financial, technical, research and
development, marketing, manufacturing, sales, distribution services and other
resources than we do. Further, our competitors may be more effective at
implementing their technologies to develop commercial products.
Our competitive position will depend on our ability to achieve market
acceptance for our products, implement production and marketing plans, secure
regulatory approval for products under development, obtain patent protection and
secure adequate capital resources. We may need to develop new applications for
our products to remain competitive. Technological advances by one or more of our
current or future competitors could render our present or future products
obsolete or uneconomical. Our future success will depend upon our ability to
compete effectively against current technology as well as to respond effectively
to technological advances. Competitive pressures could adversely affect our
profitability.
Our largest competitors in the neurosurgery markets are the Medtronic
Neurotechnologies division of Medtronic, Inc., the Codman division of Johnson &
Johnson, the Aesculap division of B. Braun, and the Valleylab division of Tyco
International Ltd. In addition, various of our product lines compete with
smaller specialized companies or larger companies that do not otherwise focus on
neurosurgery. Our private label products face diverse and broad competition,
depending on the market addressed by the product. Finally, in certain cases our
products compete primarily against medical practices that treat a condition
without using a device, rather than any particular product, such as autograft
tissue as a substitute for INTEGRA(R) Dermal Regeneration Template.
Our Current Strategy Involves Growth Through Acquisitions, Which Requires Us To
Incur Substantial Costs And Potential Liabilities For Which We May Never Realize
The Anticipated Benefits.
In addition to internal growth, our current strategy involves growth
through acquisitions. Since 1999, we have acquired 12 businesses or product
lines at a total cost of approximately $107 million.
We may be unable to continue to implement our growth strategy, and this
strategy may be ultimately unsuccessful. A significant portion of our growth in
revenues has resulted from, and is expected to continue to result from, the
acquisition of businesses complementary to our own. We engage in evaluations of
potential acquisitions and are in various stages of discussion regarding
possible acquisitions, certain of which, if consummated, could be significant to
us. Any potential acquisitions may result in material transaction expenses,
increased interest and amortization expense, increased depreciation expense and
increased operating expense, any of which could have a material adverse effect
on our operating results. As we grow by acquisitions, we must integrate and
manage the new businesses to realize economies of scale and control costs. In
addition, acquisitions involve other risks, including diversion of management
resources otherwise available for ongoing development of our business and risks
associated with entering new markets with which our marketing and sales force
has limited experience or where experienced distribution alliances are not
available. Our future profitability will depend in part upon our ability to
develop further our resources to adapt to these new products or business areas
and to identify and enter into satisfactory distribution networks. We may not be
able to identify suitable acquisition candidates in the future, obtain
acceptable financing or consummate any future acquisitions. If we cannot
integrate acquired operations, manage the cost of providing our products or
price our products appropriately, our profitability could suffer. In addition,
as a result of our acquisitions of other healthcare businesses, we may be
subject to the risk of unanticipated business uncertainties or legal liabilities
relating to those acquired businesses for which the sellers of the acquired
businesses may not indemnify us. Future acquisitions may also result in
potentially dilutive issuances of securities.
To Market Our Products under Development We Will First Need To Obtain Regulatory
Approval. Further, If We Fail To Comply With The Extensive Governmental
Regulations That Affect Our Business, We Could Be Subject To Penalties And Could
Be Precluded From Marketing Our Products.
Our research and development activities and the manufacturing, labeling,
distribution and marketing of our existing and future products are subject to
regulation by numerous governmental agencies in the United States and in other
countries. The Food and Drug Administration (FDA) and comparable agencies in
other countries impose mandatory procedures and standards for the conduct of
clinical trials and the production and marketing of products for diagnostic and
human therapeutic use.
Our products under development are subject to FDA approval or clearance
prior to marketing for commercial use. The process of obtaining necessary FDA
approvals or clearances can take years and is expensive and full of
uncertainties. Our inability to obtain required regulatory approval on a timely
or acceptable basis could harm our business. Further, approval or clearance may
place substantial restrictions on the indications for which the product may be
marketed or to whom it may be marketed. Further studies, including clinical
trials and FDA approvals, may be required to gain approval for the use of a
product for clinical indications other than those for which the product was
initially approved or cleared or for significant changes to the product. In
addition, for products with an approved premarket approval application (PMA),
the
FDA requires annual reports and may require post-approval surveillance programs
to monitor the products' safety and effectiveness. Results of post-approval
programs may limit or expand the further marketing of the product.
We believe that the most significant risk of our recent applications to the
FDA relates to the regulatory classification of certain of our new products or
proposed new uses for existing products. In the filing of each application, we
make a legal judgment about the appropriate form and content of the application.
If the FDA disagrees with our judgment in any particular case and, for example,
requires us to file a PMA application rather than allowing us to market for
approved uses while we seek broader approvals or requires extensive additional
clinical data, the time and expense required to obtain the required approval
might be significantly increased or approval might not be granted.
Approved products are subject to continuing FDA requirements relating to
quality control and quality assurance, maintenance of records, reporting of
adverse events and product recalls, documentation, and labeling and promotion of
medical devices.
The FDA and foreign regulatory authorities require that our products be
manufactured according to rigorous standards. These regulatory requirements may
significantly increase our production or purchasing costs and may even prevent
us from making or obtaining our products in amounts sufficient to meet market
demand. If a third-party manufacturer or we change our approved manufacturing
process, the FDA may require a new approval before that process may be used.
Failure to develop our manufacturing capability may mean that even if we develop
promising new products, we may not be able to produce them profitably, as a
result of delays and additional capital investment costs. Manufacturing
facilities, both international and domestic, are also subject to inspections by
or under the authority of the FDA. In addition, failure to comply with
applicable regulatory requirements could subject us to enforcement action,
including product seizures, recalls, withdrawal of clearances or approvals,
restrictions on or injunctions against marketing our product or products based
on our technology, and civil and criminal penalties. See
"Business--Regulation--Government Regulation" in our 2002 Annual Report on Form
10-K.
Certain Of Our Products Contain Materials Derived From Animal Sources And May
Become Subject To Additional Regulation.
Certain of our products, including the DuraGen(R) Dural Graft Matrix and
the INTEGRA(R) Dermal Regeneration Template, contain material derived from
bovine tissue. Products, including food as well as pharmaceuticals and medical
devices, that contain materials derived from animal sources are increasingly
subject to scrutiny in the press and by regulatory authorities. Regulatory
authorities are concerned about the potential for the transmission of disease
from animals to humans via those materials. This public scrutiny has been
particularly acute in Japan and Western Europe with respect to products derived
from cattle, because of concern that materials infected with the agent that
causes bovine spongiform encephalopathy, otherwise known as BSE or mad cow
disease, may, if ingested or implanted, cause a variant of the human
Creutzfeldt-Jakob Disease, an ultimately fatal disease with no known cure.
We take great care to provide that our products are safe, and free of
agents that can cause disease. In particular, the collagen used in the
manufacture of our products is derived only from the Achilles tendon of cattle
from the United States, where no cases of BSE have been reported. Scientists and
regulatory authorities classify the Achilles tendon as having a negligible risk
of containing the agent that causes BSE (an improperly folded protein known as a
prion) compared with other parts of the body. Additionally, we use processes in
the manufacturing of our products that are believed to inactivate prions.
Nevertheless, products that contain materials derived from animals, including
our products, may become subject to additional regulation, or even be banned in
certain countries, because of concern over the potential for prion transmission.
Accordingly, new regulation, or a ban of our products, could have a significant
adverse effect on our current business or our ability to expand our business.
Lack Of Market Acceptance For Our Products Or Market Preference For Technologies
That Compete With Our Products Could Reduce Our Revenues And Profitability.
We cannot be certain that our current products or any other products that
we may develop or market, will achieve or maintain market acceptance. Certain of
the medical indications that can be treated by our devices can also be treated
by other medical devices or by medical practices that do not include a device.
The medical community widely accepts many alternative treatments, and certain of
these other treatments have a long history of use. For example, the use of
autograft tissue is a well-established means for repairing the dermis, and it
may interfere with the widespread acceptance in the market for INTEGRA(R) Dermal
Regeneration Template.
We cannot be certain that our devices and procedures will be able to
replace those established treatments or that either physicians or the medical
community in general will accept and utilize our devices or any other medical
products that we may develop. For example, we cannot be certain that the medical
community will accept the NeuraGen(TM) Nerve Guide over conventional
microsurgical techniques for connecting severed peripheral nerves.
In addition, our future success depends, in part, on our ability to develop
additional products. Even if we determine that a product candidate has medical
benefits, the cost of commercializing that product candidate may be too high to
justify development. Competitors may develop products that are more effective,
cost less, or are ready for commercial introduction before our products. For
example, our sales of shunt products could decline if neurosurgeons increase
their use of programmable valves and we fail to introduce a competitive product.
If we are unable to develop additional, commercially viable products, our future
prospects could be adversely affected.
Market acceptance of our products depends on many factors, including our
ability to convince prospective collaborators and customers that our technology
is an attractive alternative to other technologies, to manufacture products in
sufficient quantities and at acceptable costs, and to supply and service
sufficient quantities of our products directly or through our strategic
alliances. In addition, limited funding available for product and technology
acquisitions by our customers, as well as internal obstacles to customer
approvals of purchases of our products, could harm acceptance of our products.
The industry is subject to rapid and continuous change arising from, among other
things, consolidation and technological improvements. One or more of these
factors may vary unpredictably, which could materially adversely affect our
competitive position. We may not be able to adjust our contemplated plan of
development to meet changing market demands.
Our Business Depends Significantly On Key Relationships With Third Parties,
Which We May Be Unable To Establish And Maintain.
Our revenue stream and our business strategy depend in part on our entering
into and maintaining collaborative or alliance agreements with third parties
concerning product marketing, as well as research and development programs. Our
most important strategic alliances are our agreement with Ethicon, Inc., a
division of Johnson & Johnson, relating to INTEGRA(R) Dermal Regeneration
Template, and our agreement with the Wyeth BioPharma division of Wyeth for the
development of collagen matrices to be used in conjunction with Wyeth
BioPharma's recombinant bone protein, a protein that stimulates the growth of
bone in humans. Termination of these alliances would require us to develop other
means to distribute the affected products and could adversely affect our
expectations for the growth of private label products.
Ethicon has notified us that if we do not agree to substantial amendments
to its agreement with us, it will consider alternatives that may include
exercising its right to terminate the agreement.
Our ability to enter into agreements with collaborators depends in part on
convincing them that our technology can help them achieve their goals and
execute their strategies. This may require substantial time, effort and expense
on our part with no guarantee that a strategic relationship will result. We may
not be able to establish or maintain these relationships on commercially
acceptable terms. Our future agreements may not ultimately be successful. Even
if we enter into collaborative or alliance agreements, our collaborators could
terminate these agreements, or these agreements could expire before meaningful
developmental milestones are reached. The termination or expiration of any of
these relationships could have a material adverse effect on our business.
Much of the revenue that we may receive under these collaborations will
depend upon our collaborators' ability to successfully introduce, market and
sell new products derived from our products. Our success depends in part upon
the performance by these collaborators of their responsibilities under these
agreements. Some collaborators may not perform their obligations as we expect.
Some of the companies we currently have alliances with or are targeting as
potential allies offer products competitive with our products or may develop
competitive production technologies or competitive products outside of their
collaborations with us that could have a material adverse effect on our
competitive position.
In addition, our role in the collaborations is mostly limited to the
production aspects. As a result, we may also be dependent on collaborators for
other aspects of the development, preclinical and clinical testing, regulatory
approval, sales, marketing and distribution of our products. If our current or
future collaborators fail to market our products effectively or to develop
additional products based on our technology, our sales and other revenues could
significantly be reduced.
Finally, we have received and may continue to receive payments from
collaborators that may not be immediately recognized as revenue and therefore
may not contribute to reported profits until further conditions are satisfied.
Our Intellectual Property Rights May Not Provide Meaningful Commercial
Protection For Our Products, Which Could Enable Third Parties To Use Our
Technology Or Very Similar Technology And Could Reduce Our Ability To Compete In
The Market.
Our ability to compete effectively depends in part, on our ability to
maintain the proprietary nature of our technologies and manufacturing processes,
which includes the ability to obtain, protect and enforce patents on our
technology and to protect our trade secrets. We own or have licensed patents
that cover significant aspects of many of our product lines. However, you should
not rely on our patents to provide us with any significant competitive
advantage. Others may challenge our patents and, as a result, our patents could
be narrowed, invalidated or rendered unenforceable. Competitors may develop
products similar to ours that our patents do not cover. In addition, our current
and future patent applications may not result in the issuance of patents in the
United States or foreign countries. Further, there is a substantial backlog of
patent applications at the U.S. Patent and Trademark Office, and the approval or
rejection of patent applications may take several years.
Our Competitive Position Depends, In Part, Upon Unpatented Trade Secrets Which
We May Be Unable To Protect.
Our competitive position is also dependent upon unpatented trade secrets.
Trade secrets are difficult to protect. We cannot assure you that others will
not independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to our trade secrets, that our trade secrets
will not be disclosed, or that we can effectively protect our rights to
unpatented trade secrets.
In an effort to protect our trade secrets, we have a policy of requiring
our employees, consultants and advisors to execute proprietary information and
invention assignment agreements upon commencement of employment or consulting
relationships with us. These agreements provide that, except in specified
circumstances, all confidential information developed or made known to the
individual during the course of their relationship with us must be kept
confidential. We cannot assure you, however, that these agreements will provide
meaningful protection for our trade secrets or other proprietary information in
the event of the unauthorized use or disclosure of confidential information.
Our Success Will Depend Partly On Our Ability To Operate Without Infringing Or
Misappropriating The Proprietary Rights Of Others.
We may be sued for infringing the intellectual property rights of others.
In addition, we may find it necessary, if threatened, to initiate a lawsuit
seeking a declaration from a court that we do not infringe the proprietary
rights of others or that their rights are invalid or unenforceable. If we do not
prevail in any litigation, in addition to any damages we might have to pay, we
would be required to stop the infringing activity or obtain a license. Any
required license may be unavailable to us on acceptable terms, or at all. In
addition, some licenses may be nonexclusive, and allow our competitors to access
the same technology we license. If we fail to obtain a required license or are
unable to design our product so as not to infringe on the proprietary rights of
others, we may be unable to sell some of our products, which could have a
material adverse effect on our revenues and profitability.
It May Be Difficult To Replace Some Of Our Suppliers.
Outside vendors, some of whom are sole-source suppliers, provide key
components and raw materials used in the manufacture of our products. Although
we believe that alternative sources for many of these components and raw
materials are available, any supply interruption in a limited or sole source
component or raw material could harm our ability to manufacture our products
until a new source of supply is identified and qualified. In addition, an
uncorrected defect or supplier's variation in a component or raw material,
either unknown to us or incompatible with our manufacturing process, could harm
our ability to manufacture products. We may not be able to find a sufficient
alternative supplier in a reasonable time period, or on commercially reasonable
terms, if at all, and our ability to produce and supply our products could be
impaired. We believe that these factors are most likely to affect our Camino(R)
and Ventrix(R) lines of intracranial pressure monitors and catheters, which we
assemble using many different electronic parts from numerous suppliers. While we
are not dependent on sole-source suppliers, if we were suddenly unable to
purchase products from one or more of these companies, we could need time a
significant period of time to qualify a replacement, and the production of any
affected products could be disrupted. While it is our policy to maintain
sufficient inventory of components so that our production will not be
significantly disrupted even if a particular component or material is not
available for a period of time, we remain at risk that we will not be able to
qualify new components or materials quickly enough to prevent a disruption if
one or more of our suppliers ceases production of important components or
materials.
If Any Of Our Manufacturing Facilities Were Damaged And/Or Our Manufacturing
Processes Interrupted, We Could Experience Lost Revenues And Our Business Could
Be Seriously Harmed.
We manufacture our products in a limited number of facilities. Damage to
our manufacturing, development or research facilities due to fire, natural
disaster, power loss, communications failure, unauthorized entry or other events
could cause us to cease development and manufacturing of some or all of our
products. In particular, our San Diego, California facility that manufactures
our Camino(R) and Ventrix(R) product line is as susceptible to earthquake damage
and power losses from electrical shortages as are other businesses in the
Southern California area. Our silicone manufacturing plant in Anasco, Puerto
Rico is vulnerable to hurricane damage. Although we maintain property damage and
business interruption insurance coverage on these facilities, we may not be able
to renew or obtain such insurance in the future on acceptable terms with
adequate coverage or at reasonable costs.
We May Be Involved In Lawsuits To Protect Or Enforce Our Intellectual Property
Rights, Which May Be Expensive.
In order to protect or enforce our intellectual property rights, we may
have to initiate legal proceedings against third parties, such as infringement
suits or interference proceedings. Intellectual property litigation is costly,
and, even if we prevail, the cost of that litigation could affect our
profitability. In addition, litigation is time consuming and could divert
management attention and resources away from our business. We may also provoke
these third parties to assert claims against us.
We Are Exposed To A Variety Of Risks Relating To Our International Sales And
Operations, Including Fluctuations In Exchange Rates, Local Economic Conditions,
And Delays In Collection Of Accounts Receivable.
We generate significant revenues outside the United States, a substantial
portion of which are U.S. dollar-denominated transactions conducted with
customers who generate revenue in currencies other than the U.S. dollar. As a
result, currency fluctuations between the U.S. dollar and the currencies in
which those customers do business may have an impact on the demand for our
products in foreign countries where the U.S. dollar has increased in value
compared to the local currency. We cannot predict the effects of exchange rate
fluctuations upon our future operating results because of the number of
currencies involved, the variability of currency exposure and the potential
volatility of currency exchange rates.
Because we have operating subsidiaries based in Europe and we generate
certain revenues and incur certain operating expenses in British Pounds and the
Euro, we experience currency exchange risk with respect to those foreign
currency denominated revenues or expenses.
Our sales to foreign markets may be affected by local economic conditions.
Relationships with customers and effective terms of sale frequently vary by
country, often with longer-term receivables than are typical in the United
States.
Changes In The Health Care Industry May Require Us To Decrease The Selling Price
For Our Products Or Could Result In A Reduction In The Size Of The Market For
Our Products, And Limit The Means By Which We May Discount Our Products, Each Of
Which Could Have A Negative Impact On Our Financial Performance.
Trends toward managed care, health care cost containment, and other changes
in government and private sector initiatives in the United States and other
countries in which we do business are placing increased emphasis on the delivery
of more cost-effective medical therapies that could adversely affect the sale
and/or the prices of our products. For example:
o major third-party payors of hospital services, including Medicare,
Medicaid and private health care insurers, have substantially revised
their payment methodologies, which has resulted in stricter standards
for reimbursement of hospital charges for certain medical procedures;
o Medicare, Medicaid and private health care insurer cutbacks could
create downward price pressure on our products; o numerous legislative
proposals have been considered that would result in major reforms in
the U.S. health care system that could have an adverse effect on our
business;
o there has been a consolidation among health care facilities and
purchasers of medical devices in the United States who prefer to limit
the number of suppliers from whom they purchase medical products, and
these entities may decide to stop purchasing our products or demand
discounts on our prices;
o there is economic pressure to contain health care costs in
international markets;
o there are proposed and existing laws and regulations in domestic and
international markets regulating the sales and marketing practices and
the pricing and profitability of companies in the health care
industry; and
o there have been initiatives by third-party payors to challenge the
prices charged for medical products that could affect our ability to
sell products on a competitive basis.
Both the pressures to reduce prices for our products in response to these
trends and the decrease in the size of the market as a result of these trends
could adversely affect our levels of revenues and profitability of sales.
In addition, there are laws and regulations that regulate the means by
which companies in the health care industry may market their products to health
care professionals and may compete by discounting the prices of their products.
Although we exercise care in structuring our sales and marketing practices and
customer discount arrangements to comply with those laws and regulations, we
cannot assure you that:
o government officials charged with responsibility for enforcing those
laws will not assert that our sales and marketing practices or
customer discount arrangements are in violation of those laws or
regulations; or
o government regulators or courts will interpret those laws or
regulations in a manner consistent with our interpretation.
We May Have Significant Product Liability Exposure And Our Insurance May Not
Cover All Potential Claims.
We are exposed to product liability and other claims in the event that our
technologies or products are alleged to have caused harm. We may not be able to
obtain insurance for the potential liability on acceptable terms with adequate
coverage or at reasonable costs. Any potential product liability claims could
exceed the amount of our insurance coverage or may be excluded from coverage
under the terms of the policy. Our insurance may not be renewed at a cost and
level of coverage comparable to that then in effect.
We Are Subject To Other Regulatory Requirements Relating To Occupational Health
And Safety And The Use Of Hazardous Substances Which May Impose Significant
Compliance Costs On Us.
We are subject to regulation under federal and state laws regarding
occupational health and safety, laboratory practices, and the use, handling and
disposal of toxic or hazardous substances. Our research, development and
manufacturing processes involve the controlled use of certain hazardous
materials. Although we believe that our safety procedures for handling and
disposing of those materials comply with the standards prescribed by the
applicable laws and regulations, the risk of accidental contamination or injury
from these materials cannot be eliminated. In the event of such an accident, we
could be held liable for any damages that result and any related liability could
exceed the limits or fall outside the coverage of our insurance and could exceed
our resources. We may not be able to maintain insurance on acceptable terms or
at all. We may incur significant costs to comply with environmental laws and
regulations in the future. We may also be subject to other present and possible
future local, state, federal and foreign regulations.
The Loss Of Key Personnel Could Harm Our Business.
We believe our success depends on the contributions of a number of our key
personnel, including Stuart M. Essig, our President and Chief Executive Officer.
If we lose the services of key personnel, those losses could materially harm our
business. We maintain key person life insurance on Mr. Essig.
RISKS RELATING TO AN INVESTMENT IN OUR CONTINGENT CONVERTIBLE NOTES (THE
"Notes") AND OUR COMMON STOCK.
Investors Should Consider The U.S. Federal Income Tax Consequences Of Owning The
Notes And The Shares Of Common Stock Issuable Upon Conversion Of The Notes.
We and each holder agree in the indenture to treat the notes as
indebtedness that is subject to U.S. Treasury regulations governing contingent
payment debt instruments. The following discussion assumes that the notes will
be so treated, though we cannot assure investors that the Internal Revenue
Service will not assert that the notes should be treated differently. Under the
contingent payment debt regulations, a holder will be required to include
amounts in income, as original issue discount, in advance of cash such holder
receives on a note, and to accrue interest on a constant yield to maturity basis
at a rate comparable to the rate at which we would borrow in a noncontingent,
nonconvertible borrowing, even though the note will have a significantly lower
stated rate of interest. A holder will recognize taxable income significantly in
excess of cash received while the notes are outstanding. In addition, under the
indenture, a holder will recognize ordinary income, if any, upon a sale,
exchange, conversion or redemption of the notes at a gain. In computing such
gain, the amount realized by a holder will include, in the case of a conversion,
the amount of cash and the fair market value of shares received. Holders are
urged to consult their own tax advisors as to the U.S. federal, state and other
tax consequences of acquiring, owning and disposing of the notes and the shares
of common stock issuable upon conversion of the notes.
We May Be Unable To Raise Additional Financing Necessary To Conduct Our
Business, Make Payments When Due Or Refinance Our Debt.
We may need to raise additional funds in the future in order to implement
our business plan, to refinance our debt, to conduct research and development,
to fund marketing programs or to acquire complementary businesses, technologies
or services. Any required additional financing may be unavailable on terms
favorable to us, or at all. If we raise additional funds by issuing equity
securities, holders of common stock may experience significant dilution of their
ownership interest and these securities may have rights senior to those of the
holders of our common stock. If we cannot obtain additional financing when
required on acceptable terms, we may be unable to fund our expansion, develop or
enhance our products and services, take advantage of business opportunities or
respond to competitive pressure.
Our Subsidiaries Are Under No Obligation To Distribute Any Of Their Available
Cash Flow To Us, Which We Will Need To Service The Notes.
The notes are obligations of Integra LifeSciences Holdings Corporation,
which is a holding company. As of March 31, 2003, we owned no significant assets
other than marketable securities, stock, equity and other interests in our
subsidiaries. Because we derive substantially all of our revenues and operating
cash flows from our operating subsidiaries and do not have significant
operations of our own, we are dependent upon the ability of our subsidiaries to
provide us with cash, in the form of dividends or intercompany credits, loans,
or, otherwise, to meet our debt service obligations, including our obligations
under the notes. This creates risks regarding our ability to conduct future
activities, repay any interest and principal which we might owe on the notes or
on other borrowings, pay cash dividends to our preferred and common stock
holders in the future and our ability, and the ability of our subsidiaries, to
respond to changing business and economic conditions and to get new loans. Our
subsidiaries will have no obligation to pay any amounts due on the notes or to
make any funds available to us for payment of the notes, whether by dividends,
loans distributions or other payments. In addition, creditors of our
subsidiaries (including trade creditors) will generally be entitled to payment
from the assets of our subsidiaries before those assets can be distributed to
us. As a result, the notes will effectively be subordinate to the prior payment
of all debts (including trade payables) and preferred stock of our subsidiaries.
Our Indebtedness And Interest Expense Will Limit Our Cash Flow And Could
Adversely Affect Our Operations And Our Ability To Make Full Payment On the
Notes.
We have an increased level of debt and interest expense. Our aggregate
level of indebtedness and our debt service requirements have increased in
connection with the recent issuance of contingent convertible notes.
Our indebtedness poses risks to our business, including the risks that:
o we could use a substantial portion of our consolidated cash flow from
operations to pay principal and interest on our debt, thereby reducing
the funds available for working capital, capital expenditures,
acquisitions and other general corporate purposes, including executing
our business strategy of expanding sales organizations, making
additional strategic acquisitions, continuing to form strategic
alliances for our private label products and continuing to develop new
and innovative medical products;
o insufficient cash flow from operations may force us to sell assets, or
seek additional capital, which we may be unable to do at all or on
terms favorable to us;
o our level of indebtedness may make us more vulnerable to economic or
industry downturns; and
o our debt service obligations increase our vulnerabilities to
competitive pressures, because many of our competitors are less
leveraged than we will be.
We May Be Unable To Repurchase The Notes Upon A Change in Control.
Upon a change in control as defined in the indenture for the notes, holders
may require us to repurchase all or a portion of the notes. If a change in
control were to occur, we may not have enough funds to pay the repurchase price
for all tendered notes. Our obligation to offer to repurchase the notes upon a
change in control would not necessarily afford holders protection in the event
of a highly leveraged transaction, reorganization, merger or similar transaction
because those transactions could be structured in a manner whereby they would
not be considered a "change in control" for purposes of the indenture for the
notes.
No Public Market Exists For The Notes And The Notes Are Subject To Transfer
Restrictions. The Failure Of A Market To Develop Could Affect a Holders Ability
To, And The Price At Which a Holder May, Resell the Notes.
No public market exists for the notes and no public market for the notes
will develop because the notes are being sold pursuant to an exemption from
registration under applicable securities laws. The initial purchasers of the
notes have informed us they intend to make a market in the notes, as permitted
by applicable laws and regulations. However, the initial purchasers are not
obligated to do so and may cease market making at any time. In addition, we
expect the notes to be eligible for trading in the PORTAL market, but we cannot
predict whether an active trading market for the notes will develop or will be
sustained. Accordingly, we cannot assure holders as to the liquidity of any
trading market for the notes. If the notes are traded after their initial
issuance, they may trade at prices lower than their initial offering price as a
result of, among other things, prevailing interest rates, the market for similar
securities, our financial condition, results of operations and prospects, the
publication of earnings estimates or other research reports and speculation in
the press or investment community, the market price of our common stock, changes
in our industry and competition, and general economic conditions. As a result,
we cannot assure holders that they will be able to sell the notes at attractive
prices or at all.
Holders Right To Receive Payment On The Notes May Be Junior To Our Future
Indebtedness.
Holders right to receive payments on the notes may be junior to all of our
future indebtedness. These notes rank behind all of our future indebtedness
(other than trade payables), except any future indebtedness that expressly
provides that it ranks equal with, or subordinated in right of payment to, the
notes. As a result, upon any distribution to our creditors in a bankruptcy,
liquidation or reorganization or similar proceeding relating to us or our
property, the holders of our senior debt, if any, will be entitled to be paid in
full and before any payment may be made with respect to the notes. In addition,
all payments on the notes will be blocked in the event of a payment default on
senior debt and may be blocked for up to 179 consecutive days in the event of
certain non-payment defaults on senior debt.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us, holders of the notes will participate with trade
creditors and all other holders of our subordinated indebtedness in the assets
remaining after we have paid all of our senior indebtedness. However, because
the indenture requires that amounts otherwise payable to holders of the notes in
a bankruptcy or similar proceeding be paid to holders of senior indebtedness
instead, holders of the notes may receive less, ratably, than holders of trade
payables in any such proceeding. In any of these cases, we may not have
sufficient funds to pay all of our creditors and holders of notes may receive
less, ratably, than the holders of our senior indebtedness.
Future Sales Of Our Common Stock May Depress Our Stock Price.
Many of our stockholders will have an opportunity to sell their stock.
Also, many of our employees and directors may exercise their stock options in
order to sell the stock underlying their options in the market under a
registration statement we have filed with the Securities and Exchange
Commission. Sales of a substantial number of shares of our common stock in the
public market could depress the market price of the notes or our common stock,
or both, and impair our ability to raise capital through the sale of additional
equity securities. Furthermore, we have registered approximately 9,000,000
shares of common stock reserved for issuance to our employees, directors and
consultants under our stock award and employee benefit plans. Of this amount, as
of March 31, 2003, approximately 1,409,000 shares were held in reserve for
future issuance.
Our Reported Earnings Per Share May Be More Volatile Because of the Conversion
Contingency Provision of the Notes
Holders of the notes are entitled to convert the notes into our common
stock, among other circumstances, if the common stock price on the trading day
prior to the conversion date is more than 110% of the conversion price per share
of our common stock on such trading day. Until this contingency or another
conversion contingency is met, the shares underlying the notes are not included
in the calculation of our basic or fully diluted earnings per share. Should this
contingency be met, fully diluted earnings per share would be expected to
decrease as a result of the inclusion of the underlying shares in the fully
diluted earnings per share calculation. Volatility in our stock price could
cause this condition to be met in one quarter and not in a subsequent quarter,
increasing the volatility of fully diluted earnings per share.
Our Stock Price May Continue To Be Highly Volatile, Which May Significantly
Affect The Market Price Of Our Common Stock.
The stock market in general, and the stock prices of medical device
companies, biotechnology companies and other technology-based companies in
particular, have experienced significant volatility that often has been
unrelated to the operating performance of and beyond the control of any specific
public company. The market price of our common stock has fluctuated widely in
the past and is likely to continue to fluctuate in the future. Factors that may
have a significant impact on the market price of our common stock include:
o our actual financial results differing from guidance provided by
management;
o our actual financial results differing from that expected by
securities analysts;
o future announcements concerning us or our competitors, including the
announcement of acquisitions;
o changes in the prospects of our business partners or suppliers;
o developments regarding our patents or other proprietary rights or
those of our competitors;
o quality deficiencies in our products;
o competitive developments, including technological innovations by us or
our competitors;
o government regulation, including the FDA's review of our products and
developments;
o changes in recommendations of securities analysts and rumors that may
be circulated about us or our competitors;
o public perception of risks associated with our operations;
o conditions or trends in the medical device and biotechnology
industries;
o additions or departures of key personnel; and
o sales of our common stock.
Any of these factors could immediately, significantly and adversely affect
the trading price of the notes and our common stock and holders could lose a
substantial amount of their investment.
We Have Not Paid Any Cash Dividends On Our Common Stock Since Our Formation.
We have not paid any cash dividends on our common stock since our
formation. Any future determinations to pay cash dividends on the common stock
will be at the discretion of our board of directors and will depend upon our
results of operations and financial condition and other factors deemed relevant
by the board of directors. If we do not pay cash dividends in the future,
holders may not receive a return on their investment in our common stock through
the payment of dividends and holders may not realize a return on their
investment even if they sell their shares. As a result, holders may not be able
to resell their shares at or above the price they paid for them.
We May Issue Additional Equity Securities, Which Would Lead To Dilution Of Our
Issued And Outstanding Common Stock.
The issuance of additional equity securities or securities convertible into
equity securities would result in dilution of existing stockholders' equity
interests in us. We are authorized to issue, without stockholder approval,
15,000,000 shares of preferred stock, $.01 par value per share, in one or more
series, which may give other stockholders dividend, conversion, voting, and
liquidation rights, among other rights, which may be superior to the rights of
holders of our common stock. Our board of directors has the authority to issue,
without vote or action of stockholders, shares of preferred stock in one or more
series, and has the ability to fix the rights, preferences, privileges and
restrictions of any such series. Any such series of preferred stock could
contain dividend rights, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences or other rights superior to the
rights of holders of our common stock. Our board of directors has no present
intention of issuing any such preferred series, but reserves the right to do so
in the future. In addition, we are authorized to issue, without stockholder
approval, up to 60,000,000 shares of common stock, $.01 par value per share, of
which 25,973,457 were outstanding as of March 31, 2003. We are also authorized
to issue, without stockholder approval, securities convertible into either
common stock or preferred stock.
Our Major Stockholders Could Make Decisions Adverse To Your Interests.
Our directors and executive officers and affiliates of certain directors
own or control more than thirty percent of our outstanding voting securities and
generally have significant influence over the election of all directors, the
outcome of any corporate action requiring stockholder approval, and other
aspects of the business. The ability of the board of directors to issue
preferred stock, while providing flexibility in connection with financing,
acquisitions and other corporate purposes, could have the effect of
discouraging, deferring or preventing a change in control or an unsolicited
acquisition proposal, since the issuance of preferred stock could be used to
dilute the share ownership of a person or entity seeking to obtain control of
us. This significant influence could preclude any unsolicited acquisition of
Integra and consequently adversely affect the market price of the common stock.
Furthermore, we are subject to Section 203 of the Delaware General Corporation
Law, which could have the effect of delaying or preventing a change of control.
Our Management Will Have Broad Discretion In Using The Proceeds From the Recent
Notes Offering And, Therefore, Investors Will Be Relying On The Judgment Of Our
Management To Invest Those Funds Effectively.
We used a portion of the net proceeds of the recent notes offering to
purchase approximately $35.3 million of our common stock. We intend to use the
remaining net proceeds in the future for general corporate purposes, including
additional repurchases of our common stock and the development of new products.
The amounts and timing of certain of these expenditures will vary significantly
depending upon a number of factors, including the amount of cash generated or
consumed by our operations, the progress of our research and development
activities and the market response to the introduction of any new products and
services. Our management will retain broad discretion with respect to the
expenditure of remaining proceeds. Investors will be relying on the judgment of
our management regarding the application of the remaining proceeds of this
offering.
