EXECUTION COPY
EXHIBIT 4.2
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VERIZON GLOBAL FUNDING CORP.,
Issuer
VERIZON COMMUNICATIONS INC.,
Parent
and
FIRST UNION NATIONAL BANK,
Trustee
____________________________________
FIRST SUPPLEMENTAL INDENTURE
Dated as of May 15, 2001
TO
INDENTURE
Dated as of December 1, 2000
____________________________________
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FIRST SUPPLEMENTAL INDENTURE, dated as of May 15, 2001 (herein called the
"Supplemental Indenture"), among VERIZON GLOBAL FUNDING CORP., a corporation
duly organized and existing under the laws of Delaware and having its principal
executive office at 0000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxx
00000 (hereinafter referred to as the "Company"), VERIZON COMMUNICATIONS INC., a
corporation duly organized and existing under the laws of Delaware and having
its principal executive office at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (hereinafter referred to as the "Parent"), and FIRST UNION NATIONAL
BANK, a banking association organized and existing under the laws of the United
States of America (hereinafter referred to as the "Trustee"), under the
Indenture dated as of December 1, 2000, among the Company, the Parent and the
Trustee (hereinafter referred to as the "Original Indenture").
RECITALS
WHEREAS, the Company has duly authorized the issuance from time to time of
its securities, in one or more series, evidencing its unsecured indebtedness
(the "Securities") pursuant to the Original Indenture;
WHEREAS, the Parent has entered into a Support Agreement, dated as of
October 31, 2000 (the "Support Agreement"), pursuant to which the Parent has
agreed with the Company, subject to the terms thereof, to assure the timely
payment of principal of and interest and premium, if any, on the Securities;
WHEREAS, in accordance with Section 901 of the Original Indenture, the
Company, the Parent and the Trustee may enter into supplemental indentures to
the Original Indenture without the consent of the Holders of Securities to,
among other things, (i) issue and establish the form and terms of any series of
Securities and (ii) cure any ambiguity or correct or supplement any provision
which may be defective or inconsistent with the Original Indenture, or to make
such other provisions in regard to matters or questions arising under the
Original Indenture as shall not be inconsistent with the provisions of the
Original Indenture and not adversely affect the interests of the Holders of the
Securities of any series;
WHEREAS, the Company desires to issue and establish the form and terms of a
series of Securities under the Original Indenture to be designated as the "Zero-
Coupon Convertible Notes due 2021" (hereinafter referred to as the "Notes") and
to otherwise amend and supplement the Original Indenture in accordance with the
terms thereof; and
WHEREAS, the Company and the Parent have determined that the requirements
of the Original Indenture have been satisfied and have requested the Trustee to
join with them in the execution and delivery of this Supplemental Indenture; all
requirements necessary to make this Supplemental Indenture a valid instrument in
accordance with its terms have been met; and the execution and delivery hereof
have been in all respects duly authorized;
NOW, THEREFORE, for good and valuable consideration the sufficiency of
which is hereby acknowledged, the Company and the Parent covenant and agree with
the Trustee as follows:
ARTICLE ONE
TERMS AND ISSUANCE OF THE NOTES
SECTION 1.01. Issuance and Designation.
A series of Securities which shall be designated as the Company's "Zero-
Coupon Convertible Notes due 2021" is hereby duly established and shall be
executed, authenticated and delivered in accordance with the provisions of, and
shall in all respects be subject to, the terms, conditions and covenants of, the
Original Indenture and this Supplemental Indenture. The aggregate principal
amount at maturity of the Notes which may be authenticated and delivered under
this Supplemental Indenture shall not, except as permitted by the provisions of
the Original Indenture, exceed $6,258,390,000, as the same may be increased from
time to time in connection with an increased accretion rate pursuant to
paragraph 1 of the Securities.
The Notes are "OID Securities" within the meaning of the Original
Indenture. If an Event of Default with respect to the Notes occurs and is
continuing, then, upon a declaration of acceleration pursuant to Section 502 of
the Original Indenture, the amount of principal that shall become due and
payable shall equal the Accreted Principal Amount; provided, however, that if
the Company exercises its option to pay cash interest instead of accreting the
principal amount of the Notes following a Tax Event, the Notes shall no longer
be considered "OID Securities" within the meaning of the Original Indenture and
the principal amount of the Notes, commencing on the date on which the principal
of the Notes is restated in accordance with the terms of the Notes, shall equal
the Restated Principal Amount.
SECTION 1.02. Form and Other Terms of Notes; Incorporation of Terms.
The Notes shall be substantially in the form attached hereto as Exhibit A.
The terms of such Notes are herein incorporated by reference and form a part of
this Supplemental Indenture.
ARTICLE TWO
AMENDMENTS TO TERMS OF THE ORIGINAL INDENTURE
SECTION 2.01. Certain Definitions.
(a) Section 101 of the Original Indenture is hereby amended with respect
to the Notes only to add the following definitions in alphabetical order :
"Accreted Conversion Price" has the meaning specified in the
Securities.
"Accreted Principal Amount" has the meaning specified in the
Securities.
"Accreted Value Conversion" has the meaning specified in the
Securities.
"Administrative Action" has the meaning specified in the Securities.
"Applicable Percentage" has the meaning specified in the Securities.
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"Average Sale Price" has the meaning specified in Section 1407.
"Capital Stock" for any corporation means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) stock issued by that
corporation.
"cash" has the meaning specified in Section 1107(b).
"Change in Control" has the meaning specified in Section 1108(a).
"Change in Control Purchase Date" has the meaning specified in Section
1108(a).
"Change in Control Purchase Notice" has the meaning specified in
Section 1108(c).
"Change in Control Purchase Price" has the meaning specified in
Section 1108(a).
"Closing Sales Price" has the meaning specified in Section 1107(d).
"Company Notice" has the meaning specified in Section 1107(e).
"Company Notice Date" has the meaning specified in Section 1107(c).
"Conversion Agent" means the office or agency where Securities may be
presented for conversion, and shall initially be First Union National Bank.
"Conversion Date" has the meaning specified in Section 1402.
"Conversion Rate" has the meaning specified in Section 1401.
"Ex-Dividend Time" has the meaning specified in Section 1407.
"Extraordinary Cash Dividends" has the meaning specified in Section
1408.
"Five-Year Reset Rate" has the meaning specified in the Securities.
"Interest Payment Date" has the meaning specified in the Securities.
"Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is
issued as set forth on the face of the Security.
"Market Price" has the meaning specified in Section 1107(d).
"Notes" means any of the Company's Zero-Coupon Convertible Notes due
2021, as amended or supplemented from time to time, issued under this
Indenture.
"NYSE" means The New York Stock Exchange, Inc.
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"One-Year Reset Rate" has the meaning specified in the Securities.
"Parent Common Stock" shall mean the shares of common stock, $0.10 par
value per share, of the Parent existing on the date of the issuance of the
Securities or any other shares of Capital Stock of the Parent into which
such common stock shall be reclassified or changed.
"Purchase Date" has the meaning specified in Section 1107(a).
"Purchase Notice" has the meaning specified in Section 1107(a).
"Purchase Price" has the meaning specified in Section 1107(a).
"quarterly conversion period" has the meaning specified in the
Securities.
"Redemption Price" has the meaning specified in the Securities.
"Reset Rate" has the meaning specified in the Securities.
"Reset Rate Agent" has the meaning specified in the Securities.
"Reset Rate Determination Date" has the meaning specified in the
Securities.
"Restated Principal Amount" means, if a Tax Event occurs and the
Company thereafter elects to pay cash interest on the Securities, the
amount equal to the Accreted Principal Amount on the date of restatement of
the principal amount of the Securities in connection therewith.
"Share Contribution Agreement" means the Share Contribution Agreement
dated as of the date hereof between the Parent and the Company.
"Spin-off" has the meaning specified in Section 1408.
"Subsidiary" means any person of which at least a majority of the
outstanding Voting Stock shall at the time directly or indirectly be owned
or controlled by the Parent or by one or more Subsidiaries or by the Parent
and one or more Subsidiaries.
"Tax Event" has the meaning specified in the Securities.
"Time of Determination" has the meaning specified in Section 1407.
"trading day" means a day during which trading in securities generally
occurs on the NYSE or, if the Parent Common Stock is not listed on the
NYSE, on the principal other national or regional securities exchange on
which the Parent Common Stock then is listed or, if the Parent Common Stock
is not listed on a national or regional securities exchange, on the
National Association of Securities Dealers Automated Quotation System or,
if the Parent Common Stock is not quoted on the National Association of
Securities Dealers Automated Quotation System, on the principal other
market on which the Parent Common Stock is then traded.
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"trading price" has the meaning specified in the Securities.
"Two-Year Reset Rate" has the meaning specified in the Securities.
"Voting Stock" of a person means Capital Stock of such person of the
class or classes pursuant to which the holders thereof have the general
voting power under ordinary circumstances to elect at least a majority of
the board of directors, managers or trustees of such person (irrespective
of whether or not at the time Capital Stock of any other class or classes
shall have or might have voting power by reason of the happening of any
contingency).
(b) For all purposes of this Supplemental Indenture:
(i) capitalized terms used herein without definition shall have the
meanings specified in the Original Indenture;
(ii) all references herein to Articles and Sections, unless otherwise
specified, refer to the corresponding Articles and Sections of the Original
Indenture;
(iii) the terms "herein", "hereof", "hereunder" and other words of
similar import refer to this Supplemental Indenture; and
(iv) in the event of a conflict between any definition set forth in
the Original Indenture and any definition set forth in this Supplemental
Indenture, the definition set forth in this Supplemental Indenture shall
control.
SECTION 2.02. Amendments.
Section 902 of the Original Indenture is hereby amended in its entirety,
with respect to the Notes only, to read as follows:
SECTION 902. With Consent of Holders.
The Company, the Parent and the Trustee, with the written consent of
the Holders of at least a majority in aggregate principal amount of the
Securities at the time outstanding, may amend this Indenture or the
Securities. However, without the consent of each Holder affected, an
amendment or supplement to this Indenture or the Securities may not:
(1) reduce the principal of or premium on or change the Stated
Maturity of any Security;
(2) reduce the rate of or change the time for payment of cash
interest on, or reduce the accretion rate of, any Security;
(3) reduce or alter the method of computation of the Redemption
Price, Purchase Price or Change in Control Purchase Price of any
Security or the time when such Redemption Price, Purchase Price or
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Change in Control Purchase Price is payable;
(4) make the principal of, or cash interest on, any Security
payable in money or securities other than that stated in the Security
or change the place of payment;
(5) make any change that would impair any of the rights granted
in Section 508 in any material respect;
(6) modify any provisions of the Support Agreement or the Share
Contribution Agreement, except for such modifications which do not
adversely affect the interests of Holders in any material respect; or
(7) reduce the percentage of principal amount of the outstanding
Securities of a series required to amend or supplement the Indenture
or waive any of its provisions.
It shall not be necessary for the consent of the Holders under this
Section 902 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 902 becomes effective, the
Trustee shall mail to each Holder a notice briefly describing the
amendment.
SECTION 2.03. Redemption and Purchases.
Article Eleven of the Original Indenture is hereby amended in its entirety,
with respect to the Notes only, to read as follows:
ARTICLE XI
REDEMPTION AND PURCHASES
SECTION 1101. Company's Right to Redeem; Notices to Trustee.
The Company, at its option, may redeem the Securities in accordance
with the provisions of Paragraph 5 of the Securities. If the Company elects
to redeem Securities pursuant to Paragraph 5 of the Securities, it shall
notify the Trustee in writing of the Redemption Date, the principal amount
of Securities to be redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 1101 by a Company Order at least 35 days before the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee).
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SECTION 1102. Selection of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, unless the
procedures of the Depositary provide otherwise, the Trustee shall select
the Securities to be redeemed by lot, on a pro rata basis or by another
method the Trustee considers fair and appropriate (so long as such method
is not prohibited by the rules of any stock exchange on which the
Securities are then listed). The Trustee shall make the selection at least
15 days but not more than 60 days before the Redemption Date from
outstanding Securities not previously called for redemption. The Trustee
may select for redemption portions of the principal amount at maturity of
Securities that have denominations larger than $1,000.
Securities and portions of Securities that the Trustee selects shall
be in principal amounts at maturity of $1,000 or an integral multiple of
$1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
the Securities to be redeemed.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of
the Security so selected, the converted portion of such Security shall be
deemed (so far as may be) to be the portion selected for redemption.
Securities which have been converted during a selection of Securities to be
redeemed may be treated by the Trustee as outstanding for the purpose of
such selection.
SECTION 1103. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Rate;
(4) the name and address of the Paying Agent and Conversion Agent;
(5) that Securities called for redemption may be converted at any
time before the close of business one Business Day prior to the
Redemption Date;
(6) that Holders who want to convert their Securities must satisfy
the requirements set forth in Paragraph 7 of the Securities;
(7) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
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(8) if fewer than all of the outstanding Securities are to be
redeemed, the certificate numbers, if any, and principal amounts
of the particular Securities to be redeemed;
(9) that, unless the Company defaults in making payment of such
Redemption Price, cash interest, if any, on Securities called for
redemption will cease to accrue and the Securities will not
accrete in value on and after the Redemption Date; and
(10) the CUSIP number(s) of the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense, provided
that the Company makes such request at least three Business Days prior to
the date by which such notice of redemption must be given to Holders in
accordance with this Section 1103.
SECTION 1104. Effect of Notice of Redemption.
Once notice of redemption is given, Securities called for redemption
become due and payable on the Redemption Date and at the Redemption Price
stated in the notice except for Securities which are converted in
accordance with the terms of this Indenture. Upon surrender to the Paying
Agent, such Securities shall be paid on the Redemption Date at the
Redemption Price stated in the notice.
SECTION 1105. Deposit of Redemption Price.
Prior to 10:00 a.m. (New York City time), on the Redemption Date, the
Company shall deposit with the Paying Agent (or if the Company or a
Subsidiary or an Affiliate of either of them is the Paying Agent, shall
segregate and hold in trust as provided in Section 606) money sufficient to
pay the Redemption Price of all Securities to be redeemed on that date
other than Securities or portions of Securities called for redemption which
on or prior thereto have been delivered by the Company to the Trustee for
cancellation or have been converted. The Paying Agent shall as promptly as
practicable return to the Company any money not required for that purpose
because of conversion of Securities pursuant to Article Fourteen. If such
money is then held by the Company in trust and is not required for such
purpose it shall be discharged from such trust.
SECTION 1106. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder
a new Security in an authorized denomination equal in principal amount to
the unredeemed portion of the Security surrendered.
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SECTION 1107. Purchase of Securities by the Company at Option of the
Holder.
(a) Securities shall be purchased by the Company pursuant to Paragraph
6 of the Securities at the option of the Holder on May 15, 2004, May 15,
2006, May 15, 2011 and May 15, 2016 (each, a "Purchase Date"), at a
purchase price equal to the Accreted Principal Amount plus accrued and
unpaid cash interest through the Purchase Date or, if the Company has
previously exercised its option to pay cash interest instead of accreting
the principal amount of the Securities following a Tax Event, at a purchase
price equal to the Restated Principal Amount plus any accrued and unpaid
cash interest through the Purchase Date (the "Purchase Price"). Purchases
of Securities hereunder shall be made, at the option of the Holder thereof,
upon:
(1) delivery to the Paying Agent by the Holder of a written
notice of purchase (a "Purchase Notice") during the period beginning
at any time from the opening of business on the date that is 20
Business Days prior to the relevant Purchase Date until one Business
Day prior to such Purchase Date stating:
(A) if Definitive Securities have been issued, the
certificate number of the Security which the Holder will deliver
to be purchased or, if Definitive Securities have not been
issued, such Purchase Notice must comply with appropriate
Depositary procedures,
(B) the portion of the principal amount at maturity of the
Security which the Holder will deliver to be purchased, which
portion must be in principal amounts at maturity of $1,000 or an
integral multiple thereof,
(C) that such Security shall be purchased by the Company as
of the Purchase Date pursuant to the terms and conditions
specified in Paragraph 6 of the Securities and in this Indenture,
and
(D) in the event the Company elects, pursuant to Section
1107(b), to pay the Purchase Price in shares of Parent Common
Stock, in whole or in part, but such portion of the Purchase
Price is ultimately to be paid to such Holder entirely in cash
because any of the conditions specified in this Indenture to
payment of the Purchase Price or portion of the Purchase Price in
shares of Parent Common Stock is not satisfied prior to the close
of business on the last day prior to the Purchase Date, as set
forth in Section 1107(d), whether such Holder elects (i) to
withdraw such Purchase Notice as to some or all of the Securities
to which such Purchase Notice relates (stating the principal
amount and certificate numbers, if any, of the Securities as to
which such withdrawal shall relate), or (ii) to receive cash in
respect of the entire Purchase Price for all Securities or
portions of Securities subject to the Purchase Notice to which
such Purchase Notice relates; and
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(2) delivery of such Security to the Paying Agent prior to, on or
after the Purchase Date (together with all necessary endorsements) at
the offices of the Paying Agent, such delivery being a condition to
receipt by the Holder of the Purchase Price therefor; provided,
however, that such Purchase Price shall be so paid pursuant to this
Section 1107 only if the Security so delivered to the Paying Agent
shall conform in all respects to the description thereof in the
related Purchase Notice, as determined by the Company.
If a Holder, in such Holder's Purchase Notice and in any written
notice of withdrawal delivered by such Holder pursuant to the terms of
Section 1109, fails to indicate such Holder's choice with respect to the
election set forth in clause (D) of Section 1107(a)(1), such Holder shall
be deemed to have elected to receive cash in respect of the entire Purchase
Price for all Securities subject to such Purchase Notice in the
circumstances set forth in such clause (D).
The Company shall purchase from the Holder thereof, pursuant to this
Section 1107, a portion of a Security, if the principal amount at maturity
of such portion is $1,000 or an integral multiple of $1,000. Provisions of
this Indenture that apply to the purchase of all of a Security also apply
to the purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions of
this Section 1107 shall be consummated by the delivery of the consideration
to be received by the Holder promptly following, but in no event more than
five Business Days after, the later of the Purchase Date and the time of
delivery of the Security. Unless the Company defaults in making payment on
Securities for which a Purchase Notice has been submitted when due, cash
interest, if any, on such Securities will cease to accrue and the
Securities will cease to accrete in value on the Purchase Date.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Purchase Notice contemplated by this Section
1107(a) shall have the right to withdraw such Purchase Notice at any time
prior to the close of business one Business Day prior to the Purchase Date
by delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 1109.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price for
Payment. The Securities to be purchased on any Purchase Date pursuant to
Section 1107(a) may be paid for, in whole or in part, at the election of
the Company, in U.S. legal tender ("cash") or, subject to the conditions
set forth in Section 1107(d), shares of Parent Common Stock, or in any
combination of cash and shares of Parent Common Stock; provided that the
Company will pay cash for fractional interests in shares of Parent Common
Stock. The cash payment for fractional shares will be based on the Closing
Sales Price of the Parent Common Stock on the trading day immediately prior
to the Purchase Date. For purposes of determining the existence of
potential fractional interests, all Securities subject to purchase by the
Company held by a Holder shall be considered together (no matter how many
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separate certificates are to be presented). Each Holder whose Securities
are purchased pursuant to this Section 1107 shall receive the same
percentage of cash or shares of Parent Common Stock in payment of the
Purchase Price for such Securities, except (i) as provided in Section
1107(d) with regard to the payment of cash in lieu of fractional shares of
Parent Common Stock and (ii) in the event that the Company is unable to
purchase the Securities of a Holder or Holders for shares of Parent Common
Stock because any necessary qualifications or registrations of the shares
of Parent Common Stock under applicable federal or state securities laws
cannot be obtained, the Company shall purchase the Securities of such
Holder or Holders for cash. If the Company elects to pay the Purchase Price
of the Securities with shares of Parent Common Stock or a combination of
cash and shares of Parent Common Stock, the Company will deliver the
Company Notice required by Section 1107(e) by the Company Notice Date. The
Company may not change its election with respect to the consideration (or
components or percentages of components thereof) to be paid once the
Company has given its Company Notice to Holders, except pursuant to Section
1107(d) in the event of a failure to satisfy, prior to the close of
business on the last day prior to the Purchase Date, any condition to the
payment of the Purchase Price, in whole or in part, in shares of Parent
Common Stock.
At least three Business Days before each Company Notice Date, the
Company shall deliver an Officers' Certificate to the Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 1107(e) in the Company
Notice,
(iii) if the Company elects to pay the Purchase Price, or a
specified percentage thereof, in shares of Parent Common Stock, that
the conditions to such manner of payment set forth in Section 1107(d)
have been or will be complied with and
(iv) whether the Company desires the Trustee to give the Company
Notice required by Section 1107(e).
(c) Purchase with Cash. At the option of the Company, the Purchase
Price of Securities in respect of which a Purchase Notice pursuant to
Section 1107(a) has been given may be paid by the Company with cash equal
to the aggregate Purchase Price of such Securities.
(d) Payment by Delivery of Shares of Parent Common Stock. At the
option of the Company, the Purchase Price of Securities in respect of which
a Purchase Notice pursuant to Section 1107(a) has been given, or a
specified percentage thereof, may be paid by the Company by the delivery of
a number of shares of Parent Common Stock equal to the quotient obtained by
dividing (i) the portion of the Purchase Price to be paid in shares of
Parent Common Stock by (ii) the Market Price of one share of Parent Common
Stock as determined by the Company in the Company Notice; provided that the
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Company will pay cash for fractional shares of Parent Common Stock as
provided in Section 1107(b).
If the Company elects to purchase the Securities by the issuance of
shares of Parent Common Stock, the Company Notice, as provided in Section
1107(e), shall be sent to the Holders (and to beneficial owners as required
by applicable law) not later than the Company Notice Date.
The Company's right to exercise its election to purchase Securities
through the issuance of shares of Parent Common Stock shall be conditioned
upon:
(i) the Company's timely giving of the Company Notice of an
election to purchase all or a specified percentage of the Securities
with shares of Parent Common Stock as provided herein;
(ii) the registration of such shares of Parent Common Stock under
the Securities Act, or the Exchange Act, in each case, if required;
(iii) the listing of such shares of Parent Common Stock on the
principal national securities exchange on which the shares of Parent
Common Stock are listed;
(iv) any necessary qualification or registration under applicable
state securities laws or the availability of an exemption from such
qualification and registration; and
(v) the receipt by the Trustee of an Officers' Certificate and an
Opinion of Counsel each stating that the shares of Parent Common Stock
to be delivered by the Company in payment of the Purchase Price in
respect of Securities are validly issued, fully paid and non-
assessable and, to the best of such counsel's knowledge, free from
preemptive rights, and, in the case of such Officers' Certificate,
stating that the conditions above and the condition set forth in the
second succeeding sentence have been satisfied and, in the case of
such Opinion of Counsel, stating that the conditions in clauses (i)
through (iv) above have been satisfied.
Such Officers' Certificate shall also set forth the number of shares
of Parent Common Stock to be issued for each $1,000 principal amount at
maturity of the Securities. The Company may pay the Purchase Price (or any
portion thereof) in shares of Parent Common Stock only if the information
necessary to calculate the Market Price is published in a daily newspaper
of national circulation or other widely disseminated public source. If the
foregoing conditions are not satisfied with respect to a Holder or Holders
prior to the close of business on the Business Day prior to the Purchase
Date, and the Company has elected to purchase the Securities pursuant to
this Section 1107 through the issuance of shares of Parent Common Stock,
the Company shall pay the entire Purchase Price of the Securities of such
Holder or Holders in cash.
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The "Market Price" means the average of the Closing Sales Prices of
the Parent Common Stock for the five trading day period ending on the third
Business Day prior to the applicable Purchase Date (if the third Business
Day prior to the applicable Purchase Date is a trading day, or if not, then
on the last trading day prior to the third Business Day), appropriately
adjusted to take into account the occurrence, during the period commencing
on the first of the trading days during the five trading day period and
ending on the Purchase Date, of any event described in Sections 1406, 1407,
1408 or 1409 that would require adjustment of the Conversion Rate in
respect of the Parent Common Stock; subject, however, to the conditions set
forth in Sections 1410 and 1411.
The "Closing Sales Price" of Parent Common Stock on any date means the
closing per share sale price (or, if no closing sales price is reported,
the average of the bid and ask prices or, if more than one in either case,
the average of the average bid and the average asked prices) on such date
as reported in composite transactions for the principal U.S. securities
exchange on which Parent Common Stock is traded or, if Parent Common Stock
is not listed on a U.S. national or regional securities exchange, as
reported by the Nasdaq system. In the absence of such quotations, the
Company shall be entitled to determine the Closing Sales Price on the basis
of such quotations as it considers appropriate.
Upon determination of the actual number of shares of Parent Common
Stock to be issued upon repurchase of Securities, the Company will
disseminate a press release through Reuters Economic Services or Bloomberg
Business News containing this information or publish the information on the
Parent's web site or through such other public medium as the Parent may use
at that time.
(e) Notice of Election. If the Company elects to pay the Purchase
Price of Securities to be purchased pursuant to Section 1107(a) with shares
of Parent Common Stock or a combination of cash and shares of Parent Common
Stock, the Company shall give notice to Holders setting forth information
specified in this Section 1107(e) (the "Company Notice"). The Company
Notice shall:
(1) state that each Holder will receive shares of Parent Common
Stock with a Market Price determined as of a specified date prior to
the Purchase Date equal to the Purchase Price of the Securities held
by such Holder or a specified percentage thereof (except any cash
amount to be paid in lieu of fractional shares);
(2) set forth the method of calculating the Market Price of the
shares of Parent Common Stock;
(3) state that because the Market Price of shares of Parent
Common Stock will be determined prior to the Purchase Date, Holders of
the Securities will bear the market risk with respect to the value of
the shares of Parent Common Stock to be received from the date such
Market Price is determined to the Purchase Date; and
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(4) set forth the procedures that a Holder must follow to
exercise its put rights under this Section 1107 and the procedures for
withdrawing a Purchase Notice (including, without limitation, a
conditional withdrawal pursuant to the terms of Section 1107(a)(1)(D)
or Section 1109).
The Company Notice shall be sent to Holders (and to beneficial owners
as required by applicable law) not less than 20 Business Days prior to the
Purchase Date (the "Company Notice Date").
At the Company's request, the Trustee shall give such Company Notice
in the Company's name and at the Company's expense; provided, however,
that, in all cases, the text of such Company Notice shall be prepared by
the Company.
Simultaneously with such Company Notice, the Company shall disseminate
a press release through Reuters Economic Services or Bloomberg Business
News containing this information or publish the information on the Parent's
web site or through such other public medium as the Parent may use at that
time.
(f) Covenants of the Company. All shares of Parent Common Stock
delivered upon purchase of the Securities shall be newly issued shares or
treasury 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.
(g) Procedure upon Purchase. The Company shall deposit cash (in
respect of a cash purchases under this Section 1107 or for fractional
interests, as applicable) or shares of Parent Common Stock, or a
combination thereof, as applicable, at the time and in the manner as
provided in Section 1110, sufficient to pay the aggregate Purchase Price of
all Securities to be purchased pursuant to this Section 1107. As soon as
practicable after the Purchase Date, the Company shall deliver to each
Holder entitled to receive shares of Parent Common Stock through the Paying
Agent, a certificate for the number of full shares of Parent Common Stock
issuable in payment of the Purchase Price and cash in lieu of any
fractional interests. The person in whose name the certificate for the
shares of Parent Common Stock is registered shall be treated as a holder of
record of Parent Common Stock on the Business Day following the Purchase
Date. Subject to Section 1107(d), no payment or adjustment will be made for
dividends on the shares of Parent Common Stock the record date for which
occurred on or prior to the Purchase Date.
(h) Taxes. If a Holder of a purchased Security is paid in shares of
Parent Common Stock, the Company shall pay any documentary, stamp or
similar issue or transfer tax due on such issue of Parent Common Stock.
However, the Holder shall pay any such tax which is due because the Holder
requests the Parent Common Stock to be issued in a name other than the
Holder's name. The Paying Agent may refuse to deliver the certificates
representing the shares of Parent Common Stock being issued in a name other
than the Holder's name until the Paying Agent receives a sum sufficient to
pay any tax which will be due because the shares of Parent Common Stock are
to be issued in a name other than the Holder's name. Nothing herein shall
preclude any income tax withholding required by law or regulations.
14
SECTION 1108. Purchase of Securities at Option of the Holder upon Change
in Control.
(a) If a Change in Control occurs, the Securities not previously
purchased by the Company or any portion of the principal amount thereof
shall be purchased by the Company, at the option of the Holder thereof, at
a purchase price equal to the Accreted Principal Amount plus any accrued
and unpaid cash interest to the date that is 45 days after the date the
Company shall have mailed notice of the occurrence of a Change in Control
pursuant to Section 1108(b) (the "Change in Control Purchase Date") or, if
the Company has previously exercised its option to pay cash interest
instead of accreting the principal amount of the Securities following a Tax
Event, at a purchase price equal to the Restated Principal Amount plus any
accrued and unpaid cash interest to the Change in Control Purchase Date
(the "Change in Control Purchase Price"), subject to satisfaction by or on
behalf of the Holder of the requirements set forth in Section 1108(c).
A "Change in Control" shall be deemed to have occurred at such time
after the Securities are originally issued as either of the following
events shall occur:
(i) any person, including any syndicate or group deemed to be a
"person" under Section 13(d)(3) of the Exchange Act, acquires
beneficial ownership, directly or indirectly, through a purchase,
merger or other acquisition transaction or series of transactions, of
shares of Parent Common Stock entitling the person to exercise 50% or
more of the total voting power of all shares of the Parent Common
Stock that is entitled to vote generally in elections of directors,
other than an acquisition by the Parent, any of its Subsidiaries or
any of its employee benefit plans; or
(ii) the Parent merges or consolidates with or into any other
person, any merger of another person into the Parent, or the Parent
conveys, sells, transfers or leases all or substantially all of its
assets to another person, other than any transaction: (A) that does
not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of the Parent's Capital Stock, (B)
pursuant to which the holders of Parent Common Stock immediately prior
to the transaction have the entitlement to exercise, directly or
indirectly, 50% or more of the total voting power of all shares of
Parent Common Stock entitled to vote generally in the election of
directors of the continuing or surviving corporation immediately after
the transaction or (C) which is effected solely to change the Parent's
jurisdiction of incorporation and results in a reclassification,
conversion or exchange of outstanding shares of Parent Common Stock
solely into shares of common stock of the surviving corporation.
Notwithstanding the foregoing provisions of this Section 1108, a Change in
Control shall not be deemed to have occurred if (A) the Closing Sales Price
of Parent Common Stock for any five trading days within the period of 10
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 the
period of 10 consecutive trading days ending immediately before the Change
15
in Control, in the case of a Change in Control relating to a merger,
consolidation or asset sale, equals or exceeds 105% of the Accreted
Conversion Price of the Securities in effect on each of those trading days
or (B) all of the consideration in a merger or consolidation otherwise
constituting a Change in Control under clause (i) and/or clause (ii) above
(other than cash payments not to exceed 5% of the total value of such
merger or consolidation (excluding cash payments for fractional shares and
cash payments made pursuant to dissenters' appraisal rights)) consists of
shares of common stock traded on a national securities exchange or quoted
on the Nasdaq National Market (or will be so traded or quoted immediately
following the merger or consolidation) and as a result of the merger or
consolidation the Securities become convertible into common stock of the
surviving corporation.
For purposes of this Section 1108, whether a person is a "beneficial
owner" shall be determined in accordance with Rule 13d-3 under the Exchange
Act and "person" includes any syndicate or group that would be deemed to be
a "person" under Section 13(d)(3) of the Exchange Act.
(b) No later than 30 days after the occurrence of a Change in Control,
the Company shall mail a written notice of the Change in Control by first-
class mail to the Trustee and to each Holder (and to beneficial owners as
required by applicable law). The notice shall include a form of Change in
Control Purchase Notice to be completed by the Holder and shall state:
(1) briefly, the events causing a Change in Control and the date
of such Change in Control;
(2) the date by which the Change in Control Purchase Notice
pursuant to this Section 1108 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the name and address of the Paying Agent;
(6) that the Securities as to which a Change in Control Purchase
Notice has been given may be converted if they are otherwise
convertible pursuant to Article Fourteen hereof only if the
Change in Control Purchase Notice has been withdrawn in
accordance with the terms of this Indenture;
(7) the procedures for withdrawing a Change in Control Purchase
Notice;
(8) that the Securities must be surrendered to the Paying Agent
to collect payment;
16
(9) that the Change in Control Purchase Price for any Security
as to which a Change in Control Purchase Notice has been
duly given and not withdrawn will be paid promptly following
the later of the Change in Control Purchase Date and the
time of surrender of such Security;
(10) that, unless the Company defaults in making payment of such
Change in Control Purchase Price when due, cash interest, if
any, on Securities surrendered for purchase by the Company
will cease to accrue and the Securities will cease to
accrete in value on and after the Change in Control Purchase
Date; and
(11) the CUSIP number(s) of the Securities.
(c) In order to exercise its rights specified in Section 1108(a), a
Holder must deliver a written notice requesting purchase of all or a
portion of its Securities (a "Change in Control Purchase Notice") to the
Paying Agent at any time on or prior to the 30th day after the date the
Company delivers its written notice of the occurrence of a Change in
Control, stating:
(1) the certificate number(s) of the Securities which the Holder
will deliver to be purchased or, if Definitive Securities
have not been issued, such information as shall be provided
pursuant to appropriate Depositary procedures;
(2) the portion of the principal amount of the Security which
the Holder will deliver to be purchased, which portion must
be $1,000 or an integral multiple thereof; and
(3) that such Security shall be purchased pursuant to the terms
and conditions specified in Paragraph 6 of the Securities.
The timely delivery to the Paying Agent of the Change in Control
Purchase Notice and the delivery of such Security (together with all
necessary endorsements) at the offices of the Paying Agent shall be a
condition to the receipt by the Holder of the Change in Control Purchase
Price therefor; provided, however, that, in the case of delivery of such
Security to the Paying Agent, such Change in Control Purchase Price shall
be so paid pursuant to this Section 1108 only if the Security so delivered
to the Paying Agent shall conform in all respects to the description
thereof set forth in the related Change in Control Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this
Section 1108, a portion of a Security if the principal amount at maturity
of such portion is $1,000 or an integral multiple of $1,000. Provisions of
this Indenture that apply to the purchase of all of a Security also apply
to the purchase of such portion of such Security.
17
Any purchase by the Company contemplated pursuant to the provisions of
this Section 1108 shall be consummated by the delivery of the consideration
to be received by the Holder on the Change of Control Purchase Date.
Notwithstanding anything herein to the contrary, any Holder delivering
to the Paying Agent the Change in Control Purchase Notice contemplated by
this Section 1108(c) shall have the right to withdraw such Change in
Control Purchase Notice at any time prior to the close of business one
Business Day prior to the Change in Control Purchase Date by delivery of a
written notice of withdrawal to the Paying Agent in accordance with Section
1109.
The Paying Agent shall promptly notify the Company of the receipt by
it of any Change in Control Purchase Notice or written withdrawal thereof.
SECTION 1109. Effect of Purchase Notice or Change in Control Purchase
Notice.
Upon receipt by the Paying Agent of the Purchase Notice or Change in
Control Purchase Notice specified in Section 1107(a) or Section 1108(c), as
applicable, the Holder of the Security in respect of which such Purchase
Notice or Change in Control Purchase Notice, as the case may be, was given
shall (unless such Purchase Notice or Change in Control Purchase Notice, as
the case may be, is withdrawn as specified in the following two paragraphs)
thereafter be entitled to receive solely the Purchase Price or Change in
Control Purchase Price, as the case may be, with respect to such Security.
Such Purchase Price shall be paid to such Holder, subject to receipts of
funds and/or securities by the Paying Agent, promptly following, but in no
event more than five Business Days after, the later of (x) the Purchase
Date with respect to such Security (provided that the conditions in Section
1107(a) have been satisfied) and (y) the time of delivery of such Security
to the Paying Agent by the Holder thereof in the manner required by Section
1107(a), and such Change in Control Purchase Price shall be paid to such
Holder, subject to receipts of funds and/or securities by the Paying Agent,
on the later of (x) the Change in Control Purchase Date with respect to
such Security (provided that the conditions in Section 1108(c) have been
satisfied) and (y) the time of delivery of such Security to the Paying
Agent by the Holder thereof in the manner required by Section 1108(c).
Securities in respect of which a Purchase Notice or Change in Control
Purchase Notice has been given by the Holder thereof may not be converted
pursuant to Article Fourteen hereof on or after the date of the delivery of
such Purchase Notice or Change in Control Purchase Notice unless such
Purchase Notice or Change in Control Purchase Notice has first been validly
withdrawn as specified in the following paragraph.
A Purchase Notice or Change in Control Purchase Notice may be
withdrawn by the Holder by means of a written notice of withdrawal
delivered to the office of the Paying Agent at any time prior to the close
of business one Business Day prior to the Purchase Date or the Change in
Control Purchase Date, as the case may be, specifying:
(1) the certificate number, if any, of the Security in respect
of which such notice of withdrawal is being submitted or, if
Definitive Securities have not been issued, such information
18
as shall be provided pursuant to appropriate Depositary
procedures,
(2) the principal amount at maturity of the Security with
respect to which such notice of withdrawal is being
submitted, and
(3) the principal amount at maturity, if any, of such Security
which remains subject to the original Purchase Notice or
Change in Control Purchase Notice, as the case may be, and
which has been or will be delivered for purchase by the
Company.
There shall be no purchase of any Securities pursuant to Section 1107
or 1108 if there has occurred (prior to, on or after, as the case may be,
the giving, by the Holders of such Securities, of the required Purchase
Notice or Change in Control Purchase Notice, as the case may be) and is
continuing an Event of Default (other than a default in the payment of the
Purchase Price or Change in Control Purchase Price, as the case may be,
with respect to such Securities). The Paying Agent will promptly return to
the respective Holders thereof any Securities (x) with respect to which a
Purchase Notice or Change in Control Purchase Notice, as the case may be,
has been withdrawn in compliance with this Indenture, or (y) held by it
during the continuance of an Event of Default (other than a default in the
payment of the Purchase Price or Change in Control Purchase Price, as the
case may be, with respect to such Securities) in which case, upon such
return, the Purchase Notice or Change in Control Purchase Notice with
respect thereto shall be deemed to have been withdrawn.
SECTION 1110. Deposit of Purchase Price or Change in Control Purchase
Price.
Prior to 10:00 a.m. (local time in the City of New York) on the fifth
Business Day following the Purchase Date or prior to 10:00 a.m. (local time
in the City of New York) on the Change in Control Purchase Date, as the
case may be, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 606)
an amount of cash (in immediately available funds if deposited on such
Business Day) or Parent Common Stock, if permitted hereunder, or both,
sufficient to pay the aggregate Purchase Price or Change in Control
Purchase Price, as the case may be, of all the Securities or portions
thereof which are to be purchased as of the Purchase Date or Change in
Control Purchase Date, as the case may be.
SECTION 1111. Securities Purchased in Part.
Any Security which is to be purchased only in part shall be
surrendered at the office of the Paying Agent (with, if the Company or the
Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or such Holder's attorney duly authorized in
writing) and 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 any authorized denomination as requested by such
Holder in aggregate principal amount equal to, and in exchange for, the
19
portion of the
principal amount of the Security so surrendered which is not purchased.
SECTION 1112. Repayment to the Company.
The Paying Agent and the Trustee shall return to the Company any cash
or shares of Parent Common Stock that remain unclaimed for two years,
subject to applicable unclaimed property laws, held by them for the payment
of the Purchase Price or Change in Control Purchase Price, as the case may
be; provided, however, that to the extent that the aggregate amount of cash
or shares of Parent Common Stock deposited by the Company pursuant to
Section 1110 exceeds the aggregate Purchase Price or Change in Control
Purchase Price, as the case may be, of the Securities or portions thereof
which the Company is obligated to purchase as of the Purchase Date or
Change in Control Purchase Date, as the case may be, then, unless otherwise
agreed in writing with the Company, promptly after the Business Day
following the Purchase Date or Change in Control Purchase Date, as the case
may be, the Paying Agent and the Trustee shall return any such excess to
the Company.
SECTION 2.04. Conversion.
The Original Indenture is hereby amended, with respect to the Notes only,
by adding a new Article Fourteen immediately following Article Thirteen of the
Original Indenture, to read as follows:
ARTICLE XIV
CONVERSION
SECTION 1401. Conversion Privilege.
A Holder of a Security may convert such Security into shares of Parent
Common Stock at any time during the periods stated in paragraph 7 of the
Securities. The number of shares of Parent Common Stock issuable upon
conversion of a Security per $1,000 of principal amount at maturity thereof
(the "Conversion Rate") shall be that set forth in paragraph 7 in the
Securities, subject to adjustment as herein set forth.
A Holder may convert a portion of the principal amount at maturity of
a Security if the portion is $1,000 or an integral multiple of $1,000.
Provisions of this Indenture that apply to conversion of all of a Security
also apply to conversion of a portion of the Security.
SECTION 1402. Conversion Procedure.
To convert a Security, a Holder must satisfy the requirements in
paragraph 7 of the Securities. The first Business Day on which the Holder
satisfies all those requirements is the conversion date (the "Conversion
Date"). As soon as practicable after the Conversion Date, the Company
shall deliver to the Holder, through the Conversion Agent, a certificate
for the number of whole shares of Parent Common Stock issuable upon the
20
conversion and cash in lieu of any fractional share determined pursuant to
Section 1403. The Person in whose name the certificate is registered shall
be treated as the stockholder of record as of the close of business on the
Conversion Date. 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 on, or other
distributions with respect to, any Parent Common Stock except as provided
in this Article Fourteen. On conversion of a Security, no accrued and
unpaid cash interest, if any, or amounts reflecting accretion of the
Securities included in the Accreted Principal Amount or the Restated
Principal Amount (as the case may be), in each case through the Conversion
Date, will be payable with respect to the converted Security and no such
cash interest or amounts reflecting accretion of the Securities shall be
deemed to be canceled, extinguished or forfeited, but rather shall be
deemed to be paid in full to the Holder thereof through delivery of the
shares of Parent Common Stock (together with the cash payment, if any, in
lieu of fractional shares) in exchange for the Security being converted
pursuant to the provisions hereof; and the fair market value of such shares
of Parent Common Stock (together with any such cash payment in lieu of
fractional shares) shall be treated as issued, to the extent thereof, first
in exchange for accrued and unpaid cash interest, if any, through the
Conversion Date, and the balance, if any, of such fair market value of such
shares of Parent Common Stock (and any such cash payment) shall be treated
as issued for the Accreted Principal Amount or the Restated Principal
Amount (as the case may be) of the Security being converted pursuant to the
provisions hereof. The Company will not adjust the conversion ratio to
account for accrued and unpaid cash interest, if any, or for amounts
reflecting accretion of the Securities included in the Accreted Principal
Amount or the Restated Principal Amount (as the case may be). If a Holder
converts more than one Security at the same time, the number of shares of
Parent Common Stock issuable upon the conversion shall be based on the
total principal amount of the Securities converted.
If the last day on which a Security may be converted is a not a
Business Day in a place where a Conversion Agent is located, the Security
may be surrendered on the next succeeding day that is a Business Day.
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 in an authorized denomination equal in principal
amount to the unconverted portion of the Security surrendered.
If a Holder submits a Security for conversion after the Company has
elected to exercise its option to pay cash interest instead of accreting
the principal amount of the Securities following a Tax Event, or if the
Company is required to make a cash payment pursuant to an increased
accretion rate, in either case between a record date and the opening of
business on the next Interest Payment Date (except for Securities or
portions of Securities called for redemption on a Purchase Date occurring
during the period from the close of business on a record date and ending on
the close of business on the next Interest Payment Date, or if such
Interest Payment Date is not a Business Day, the next Business Day after
21
the Interest Payment Date), such Holder shall pay to the Company an amount
equal to cash interest payable on the converted principal amount.
SECTION 1403. Fractional Shares.
Holders will not receive fractional shares upon conversion of a
Security. Instead, the Holder will receive a cash payment for fractional
shares based on the Closing Sales Price of the Parent Common Stock on the
trading day immediately preceding the Conversion Date.
SECTION 1404. Taxes on Conversion.
If a Holder submits a Security for conversion, the Company shall pay
any documentary, stamp or similar issue or transfer tax due on the delivery
of shares of Parent Common Stock upon the conversion. However, the Holder
shall pay any such tax which is due because the Holder requests the shares
to be registered in a name other than the Holder's name. The Conversion
Agent may refuse to deliver the certificates representing the shares of
Parent Common Stock being registered 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 registered in a name other than
the Holder's name. Nothing herein shall preclude any tax withholding
required by law or regulations.
SECTION 1405. Parent Common Stock.
All shares of Parent Common Stock delivered by the Conversion Agent on
behalf of the Company upon conversion of the Securities shall be duly and
validly issued and fully paid and nonassessable, and shall be free from
preemptive rights and free of any lien or adverse claim. Each of the
Company and the Parent will endeavor promptly to comply with all federal
and state securities laws regulating the offer and delivery of shares of
Parent Common Stock upon conversion of Securities, if any, and the Parent
will list or cause to have quoted such shares of Parent Common Stock on
each national securities exchange or in the over-the-counter market or such
other market on which the shares of Parent Common Stock are then listed or
quoted.
SECTION 1406. Adjustment for Change in Capital Stock.
If, after the Issue Date of the Securities, the Parent:
(1) pays a dividend or makes another distribution to all holders
of the Parent Common Stock on the Parent Common Stock payable
exclusively in shares of Parent Common Stock;
(2) subdivides the outstanding shares of Parent Common Stock into
a greater number of shares of Parent Common Stock;
(3) combines the outstanding shares of Parent Common Stock into a
smaller number of shares Parent Common Stock; or
22
(4) pays a dividend or makes other distributions to all holders
of the Parent Common Stock consisting of Capital Stock of the Parent
(other than those rights and warrants referred to in Section 1411
relating to stockholders rights plans),
then the Conversion Rate in effect immediately prior to such action shall
be adjusted so that the Holder of a Security thereafter converted will
receive the number of shares of Capital Stock of the Parent which such
Holder would have owned immediately following such action if such Holder
had converted the Security immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or
reclassification.
If after an adjustment a Holder of a Security upon conversion of such
Security may receive shares of two or more classes of Capital Stock of the
Parent, the Conversion Rate shall thereafter be subject to adjustment upon
the occurrence of an action taken with respect to any such class of Capital
Stock as is contemplated by this Article Fourteen with respect to the
shares of Parent Common Stock, on terms comparable to those applicable to
shares of Parent Common Stock in this Article Fourteen.
SECTION 1407. Adjustment for Rights Issue.
If after the Issue Date of the Securities, the Parent distributes any
rights or warrants to all holders of shares of its Parent Common Stock
entitling them to purchase shares of Parent Common Stock at a price per
share less than the Average Sale Price as of the Time of Determination, the
Conversion Rate shall be adjusted in accordance with the formula:
R' = R x (O + N)
-------------------
(O + (N x P)/M)
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
O = the number of shares of Parent Common Stock outstanding on the
record date for the distribution to which this Section 1407 is
being applied.
N = the number of additional shares of Parent Common Stock offered
pursuant to the distribution.
P = the offering price per share of the additional shares.
M = the Average Sale Price, minus, in the case of (i) a
distribution to which Section 1406(4) applies or (ii) a
distribution to which Section 1408 applies, for which, in each
23
case, (x) the record date shall occur on or before the record
date for the distribution to which this Section 1407 applies
and (y) the Ex-Dividend Time shall occur on or after the date
of the Time of Determination for the distribution to which this
Section 1407 applies, the fair market value (on the record date
for the distribution to which this Section 1407 applies) of:
(1) the Capital Stock of the Parent distributed in respect of
each share of Parent Common Stock in such Section 1406(4)
distribution; and
(2) the assets of the Parent or debt securities or any rights,
warrants or options to purchase securities of the Parent
distributed in respect of each share of Parent Common Stock in
such Section 1408 distribution.
The Board of Directors shall determine fair market values for the
purposes of this Section 1407, except as Section 1408 otherwise provides in
the case of a Spin-off.
"Average Sale Price" means the average of the Closing Sales Prices of
the shares of Parent Common Stock for the shorter of:
(i) 30 consecutive trading days ending on the last full trading
day prior to the Time of Determination with respect to the rights,
warrants or options or distribution in respect of which the Average
Sale Price is being calculated;
(ii) the period (x) commencing on the date next succeeding the
first public announcement of (a) the issuance of rights, warrants or
options or (b) the distribution, in each case, in respect of which the
Average Sale Price is being calculated and (y) proceeding through the
last full trading day prior to the Time of Determination with respect
to the rights, warrants or options or distribution in respect of which
the Average Sale Price is being calculated (excluding days within such
period, if any, which are not trading days); or
(iii) the period, if any, (x) commencing on the date next
succeeding the Ex-Dividend Time with respect to the next preceding (a)
issuance of rights, warrants or options or (b) distribution, in each
case, for which an adjustment is required by the provisions of Section
1406(4), 1407, 1408 or 1409 and (y) proceeding through the last full
trading day prior to the Time of Determination with respect to the
rights, warrants or options or distribution in respect of which the
Average Sale Price is being calculated (excluding days within such
period, if any, which are not trading days).
In the event that the Ex-Dividend Time (or in the case of a
subdivision, combination or reclassification, the effective date with
respect thereto) with respect to a dividend, subdivision, combination or
reclassification to which Section 1406(1), (2) or (3) applies occurs during
the period applicable for calculating "Average Sale Price" pursuant to the
definition in the preceding sentence, "Average Sale Price" shall be
calculated for such period in a manner determined by the Board of Directors
to reflect the impact of such dividend, subdivision, combination or
24
reclassification on the Closing Sales Price of the shares of Parent Common
Stock during such period.
"Time of Determination" means the time and date of the earlier of (i)
the determination of shareholders entitled to receive rights, warrants or
options or a distribution, in each case, to which Section 1407 or 1408
applies and (ii) the Ex-Dividend Time.
"Ex-Dividend Time" means the time immediately prior to the
commencement of "ex-dividend" trading for such rights, warrants or options
or distribution on a national or regional exchange or market on which the
shares of Parent Common Stock are then listed or quoted.
The adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive the rights,
warrants or options to which this Section 1407 applies. If all of the
shares of Parent Common Stock subject to such rights, warrants or options
have not been issued when such rights, warrants or options expire, then the
Conversion Rate shall promptly be readjusted to the Conversion Rate which
would then be in effect had the adjustment upon the issuance of such
rights, warrants or options been made on the basis of the actual number of
shares of Parent Common Stock issued upon the exercise of such rights,
warrants or options.
No adjustment shall be made under this Section 1407 if the application
of the formula stated above in this Section 1407 would result in a value of
R' that is equal to or less than the value of R.
SECTION 1408. Adjustment for Other Distributions.
If, after the Issue Date of the Securities, the Parent distributes to
all holders of its shares of Parent Common Stock any of its debt,
securities or assets or any rights, warrants or options to purchase
securities of the Parent (including securities or cash, but excluding (x)
distributions of Capital Stock referred to in Section 1406 and
distributions of rights, warrants or options referred to in Section 1407
and (y) cash dividends or other cash distributions unless such cash
dividends or other cash distributions are Extraordinary Cash Dividends) the
Conversion Rate shall be adjusted, subject to the provisions of the last
paragraph of this Section 1408, in accordance with the formula:
R' = R x M
-----
(M - F)
where:
R' = the adjusted Conversion Rate.
R = the current Conversion Rate.
M = the Average Sale Price, minus, in the case of a distribution to
which Section 1406(4) applies, for which (i) the record date
shall occur on or before the record date for the distribution
25
to which this Section 1408 applies and (ii) the Ex-Dividend Time
shall occur on or after the date of the Time of Determination for
the distribution to which this Section 1408 applies, the fair
market value (on the record date for the distribution to which
this Section 1408 applies) of any Capital Stock of the Parent
distributed in respect of each share of Parent Common Stock in
such Section 1406(4) distribution.
F = the fair market value (on the record date for the distribution to
which this Section 1408 applies) of the assets, securities,
rights, warrants or options to be distributed in respect of each
share of Parent Common Stock in the distribution to which this
Section 1408 is being applied (including, in the case of cash
dividends or other cash distributions giving rise to an
adjustment, all such cash distributed concurrently).
In the event the Parent distributes shares of Capital Stock of a
Subsidiary, the Conversion Rate will be adjusted, if at all, based on the
market value of the Subsidiary stock so distributed relative to the market
value of the Parent Common Stock, as discussed below. The Board of
Directors shall determine fair market values for the purposes of this
Section 1408, except that in respect of a dividend or other distribution of
shares of Capital Stock of any class or series, or similar equity
interests, of or relating to a Subsidiary or other business unit of the
Parent (a "Spin-off"), the fair market value of the securities to be
distributed shall equal the average of the daily Closing Sales Prices of
those securities for the five consecutive trading days commencing on and
including the sixth day of trading of those securities after the
effectiveness of the Spin-off and the average of the Closing Sales Prices
shall mean the average Closing Sales Prices for the Parent Common Stock for
the same five trading days. In the event, however, that an underwritten
initial public offering of the securities in the Spin-off occurs
simultaneously with the Spin-off, fair market value of the securities
distributed in the Spin-off shall mean the initial public offering price of
such securities and the Average Sale Price, for purposes of this sentence,
shall mean the Closing Sales Price for the Parent Common Stock on the same
trading day.
Assuming that a distribution referred to in this Section 1408 shall
have occurred, the adjustment referred to in this Section 1408 shall become
effective as of a date and time immediately after the record date for the
determination of shareholders entitled to receive the distribution to which
this Section 1408 applies, except that an adjustment related to a Spin-off
shall become effective at the earlier to occur of (i) 10 trading days after
the effective date of the Spin-off and (ii) the initial public offering of
the securities distributed in the Spin-off.
For purposes of this Section 1408, the term "Extraordinary Cash
Dividend" shall mean any all-cash distributions in an aggregate amount
that, together with (i) any cash and the fair market value of any other
consideration payable in respect of any tender offer by the Parent or any
of its Subsidiaries for shares of Parent Common Stock consummated within
the preceding 12 months not triggering a Conversion Rate adjustment and
(ii) all other all-cash distributions to all or substantially all holders
of Parent Common Stock made within the preceding 12 months not triggering a
Conversion Rate adjustment, exceeds an amount equal to 15% of the market
26
capitalization of Parent Common Stock on the Business Day immediately
preceding the day on which the Parent declares the distribution.
If, upon the date prior to the Ex-Dividend Time with respect to a cash
dividend on the shares of Parent Common Stock, the aggregate amount of such
cash dividend together with the amounts of all other cash dividends or cash
distributions gives rise to an adjustment of the Conversion Rate pursuant
to Section 1406, then such cash dividend together with all such other cash
dividends or cash distributions shall, for purposes of applying the formula
set forth above in this Section 1408, cause the value of "F" to equal (y)
the aggregate amount of such cash dividend together with the amounts of
such other cash dividends or cash distributions, minus (z) the aggregate
amount of all cash dividends or cash distributions for which a prior
adjustment in the Conversion Rate was previously made.
In the event that, with respect to any distribution to which this
Section 1408 would otherwise apply, the difference "M-F" as defined in the
above formula is less than $1.00 or "F" is equal to or greater than "M",
then the adjustment provided by this Section 1408 shall not be made and in
lieu thereof the provisions of Section 1415 shall apply to such
distribution.
SECTION 1409. Adjustment for Self-Tender Offer.
If, after the Issue Date of the Securities, the Parent or any
Subsidiary of the Parent pays holders of the Parent Common Stock in respect
of a tender or exchange offer, other than an odd-lot offer, by the Parent
or any of its Subsidiaries for Parent Common Stock to the extent that the
offer involves aggregate consideration that, together with (i) any cash and
the fair market value of any other consideration payable in respect of any
tender offer by the Parent or any of its Subsidiaries for shares of Parent
Common Stock consummated within the preceding 12 months not triggering a
Conversion Rate adjustment and (ii) all-cash distributions to all or
substantially all holders of Parent Common Stock made within the preceding
12 months not triggering a Conversion Rate adjustment, exceeds an amount
equal to 15% of the market capitalization of Parent Common Stock on the
expiration date of the tender offer, the Conversion Rate shall be adjusted
in an equitable manner, as determined by the Parent's Board of Directors in
consultation with Xxxxxxx, Xxxxx & Co. or such other nationally recognized
investment banking institution satisfactory to the Parent.
SECTION 1410. When Adjustment May Be Deferred.
No adjustment in the Conversion Rate need be made unless the
adjustment would require an increase or decrease of at least 1% in the
Conversion Rate. Any adjustments that are not made shall be carried
forward and taken into account in any subsequent adjustment.
All calculations under this Article Fourteen shall be made to the
nearest cent or to the nearest 1/1,000th of a share, as the case may be.
27
SECTION 1411. When No Adjustment Is Required.
If the Parent adopts a stockholders rights plan under which the Parent
issues rights providing that each share of Parent Common Stock issued upon
conversion of the Security at any time prior to the distribution of
separate certificates representing the rights will be entitled to receive
the rights, no adjustment need be made as a result of: (i) the issuance of
the rights; (ii) the distribution of separate certificates representing the
rights; (iii) the exercise or redemption of the rights in accordance with
any rights agreement; or (iv) the termination or invalidation of the
rights.
No adjustment need be made for a transaction referred to in Section
1407 if Holders of the Securities may participate in the transaction on a
basis and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of shares of
Parent Common Stock participate in the transaction. No adjustment need be
made for a transaction referred to in Section 1408 if all Holders of the
Securities may participate in the transaction.
No adjustment need be made for a change in the par value or no par
value of the shares of Parent Common Stock.
To the extent the Securities become convertible pursuant to this
Article Fourteen in whole or in part into cash, no adjustment need be made
thereafter as to the cash. Interest will not accrue on the cash.
SECTION 1412. Notice of Adjustment.
Whenever the Conversion Rate is adjusted, the Company shall promptly
mail to Holders a notice of the adjustment. The Company shall file with
the Trustee and the Conversion Agent such notice and a certificate from the
Company's independent public accountants briefly stating the facts
requiring the adjustment and the manner of computing it. The certificate
shall be conclusive evidence that the adjustment is correct. Neither the
Trustee nor any Conversion Agent shall be under any duty or responsibility
with respect to any such certificate except to exhibit the same to any
Holder desiring inspection thereof.
SECTION 1413. Voluntary Increase.
The Company from time to time may increase the Conversion Rate by any
amount at any time for at least 20 days, so long as the increase is
irrevocable during such period. Whenever the Conversion Rate is increased,
the Company shall mail to Holders and file with the Trustee and the
Conversion Agent a notice of the increase. The Company shall mail the
notice at least 15 days before the date the increased Conversion Rate takes
effect. The notice shall state the increased Conversion Rate and the period
it will be in effect. A voluntary increase of the Conversion Rate does not
change or adjust the Conversion Rate otherwise in effect for purposes of
Section 1406, 1407, 1408 or 1409.
28
SECTION 1414. Notice of Certain Transactions.
If:
(1) the Parent takes any action that would require an adjustment in
the Conversion Rate pursuant to Section 1406, 1407, 1408 or 1409 (unless no
adjustment is to occur pursuant to Section 1411); or
(2) the Parent takes any action that would require a supplemental
indenture pursuant to Section 1415; or
(3) there is a liquidation or dissolution of the Parent;
then the Company shall mail to Holders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend
or distribution or the proposed effective date of a subdivision,
combination, reclassification, consolidation, merger, binding share
exchange, transfer, liquidation or dissolution. The Company shall file and
mail the notice at least 15 days before such date. Failure to file or mail
the notice or any defect in it shall not affect the validity of the
transaction.
SECTION 1415. Reorganization of the Parent.
If the Parent is a party to a transaction subject to Section 801
(other than a sale of all or substantially all of the assets of the Parent
in a transaction in which the holders of shares of Parent Common Stock
immediately prior to such transaction do not receive securities, cash or
other assets of the Parent or any other person) or a merger or binding
share exchange which reclassifies or changes its outstanding shares of
Parent Common Stock, the person obligated to deliver securities, cash or
other assets upon conversion of Securities shall enter into a supplemental
indenture. If the issuer of securities deliverable upon conversion of
Securities is an Affiliate of the successor company, that issuer shall join
in the supplemental indenture.
The supplemental indenture shall provide that the Holder of a Security
may convert it into the kind and amount of securities, cash or other assets
which such Holder would have received immediately after the consolidation,
merger, binding share exchange or transfer if such Holder had converted the
Security immediately before the effective date of the transaction, assuming
(to the extent applicable) that such Holder (i) was not a constituent
person or an Affiliate of a constituent person to such transaction; (ii)
made no election with respect thereto; and (iii) was treated alike with the
plurality of non-electing Holders. The supplemental indenture shall provide
for adjustments which shall be as nearly equivalent as may be practical to
the adjustments provided for in this Article Fourteen. The successor
company shall mail to Holders a notice briefly describing the supplemental
indenture.
If this Section applies, neither Section 1406 nor Section 1407
applies.
29
If the Parent makes a distribution to all holders of its shares of
Parent Common Stock of any of its assets, or debt securities or any rights,
warrants or options to purchase securities of the Parent that, but for the
provisions of the last paragraph of Section 1408, would otherwise result in
an adjustment in the Conversion Rate pursuant to the provisions of Section
1408, then, from and after the record date for determining the holders of
shares of Parent Common Stock entitled to receive the distribution, a
Holder of a Security that converts such Security in accordance with the
provisions of this Indenture shall upon such conversion be entitled to
receive, in addition to the shares of shares of Parent Common Stock into
which the Security is convertible, the kind and amount of securities, cash
or other assets comprising the distribution that such Holder would have
received if such Holder had converted the Security immediately prior to the
record date for determining the holders of shares of Parent Common Stock
entitled to receive the distribution.
SECTION 1416. Company Determination Final.
Any determination that the Company, the Parent or the Board of
Directors must make pursuant to Section 1405, 1406, 1407, 1408, 1409, 1410,
1411, 1415 or 1417 is conclusive, absent manifest error.
SECTION 1417. Simultaneous Adjustments.
In the event that this Article Fourteen requires adjustments to the
Conversion Rate under more than one of Sections 1406(4), 1407, 1408 or
1409, and the record dates for the distributions giving rise to such
adjustments shall occur on the same date, then such adjustments shall be
made by applying, first, the provisions of Section 1406(4), second, the
provisions of Section 1408, third, the provisions of Section 1407, and
fourth, the provisions of Section 1409.
SECTION 1418. Successive Adjustments.
After an adjustment to the Conversion Rate under this Article
Fourteen, any subsequent event requiring an adjustment under this Article
Fourteen shall cause an adjustment to the Conversion Rate as so adjusted.
ARTICLE THREE
MISCELLANEOUS
SECTION 3.01. Execution of Supplemental Indenture.
This Supplemental Indenture is executed and shall be construed as an
indenture supplemental to the Original Indenture and, as provided in the
Original Indenture, this Supplemental Indenture forms a part thereof. The
Original Indenture, as supplemented and amended by this Supplemental Indenture,
is in all respects hereby adopted, ratified and confirmed.
30
SECTION 3.02. Conflict with Trust Indenture Act.
If and to the extent that any provision hereof limits, qualifies or
conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act of 1939, as amended, such imposed duties shall control.
SECTION 3.03. Successors and Assigns.
All covenants and agreements in this Supplemental Indenture by the Company
and the Parent shall bind their respective successors and assigns, whether so
expressed or not.
SECTION 3.04. Separability Clause.
In case any one or more of the provisions contained in this Supplemental
Indenture, the Original Indenture or in the Securities of any series shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Supplemental Indenture, the Original Indenture or of such Securities,
but this Supplemental Indenture, the Original Indenture and such Securities
shall be construed as if such invalid or illegal or unenforceable provision had
never been contained herein or therein.
SECTION 3.05. Benefits of Supplemental Indenture.
Nothing in this Supplemental Indenture or in the Original Indenture,
express or implied, shall give to any person, other than the parties hereto and
their successors hereunder and the Holders (to the extent specified herein or
therein), any benefit or any legal or equitable right, remedy or claim under
this Supplemental Indenture.
SECTION 3.06. Governing Law.
This Supplemental Indenture shall be deemed to be a contract made under the
laws of the State of New York, and for all purposes shall be construed in
accordance with the laws of said State.
SECTION 3.07. Execution and Counterparts.
This Supplemental Indenture may be executed in any number of counterparts,
each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.
SECTION 3.08. Notices.
Any request, demand, authorization, notice, waiver, consent or
communication shall be in writing and delivered in person or mailed by first-
class mail, postage prepaid, addressed as follows:
31
if to the Company:
Verizon Global Funding Corp.
0000 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President and Treasurer
if to the Parent:
Verizon Communications Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Senior Vice President and Treasurer
if to the Trustee:
First Union National Bank
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Corporate Trust Services
The Company, the Parent or the Trustee by notice given to the other in the
manner provided above may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication given to a Holder shall be mailed to the
Holder, by first-class mail, postage prepaid, at the Holder's address as it
appears on the registration books of the Security Registrar and shall be
sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not received by the addressee.
If the Company mails a notice or communication to the Holders, it shall
mail a copy to the Trustee and each Security Registrar, Paying Agent, Conversion
Agent or co-registrar.
32
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this First Supplemental Indenture on behalf of the respective parties hereto as
of the date first above written.
VERIZON GLOBAL FUNDING CORP.
By: /s/ Xxxxx X. Xxxxxxx
______________________________
Name: Xxxxx X. Xxxxxxx
Title: President and Treasurer
Attest:
/s/ Xxxxxx X. Xxx
___________________________
Name: Xxxxxx X. Xxx
Title: Secretary
VERIZON COMMUNICATIONS INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President and
Treasurer
Attest:
/s/ Xxxxxx X. Xxx
___________________________
Name: Xxxxxx X. Xxx
Title: Assistant Corporate
Secretary
FIRST UNION NATIONAL BANK
By: /s/ Xxxx Xxxxxxx
______________________________
Name: Xxxx Xxxxxxx
Title: Vice President
Attest:
/s/ Xxxxxx X. Xxxxxxx
___________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
(SEAL)
EXHIBIT A
[FORM OF FACE OF SECURITY]
THIS SECURITY IS ISSUED WITH ORIGINAL ISSUE DISCOUNT AND IS SUBJECT TO
THE RULES FOR DEBT INSTRUMENTS WITH CONTINGENT PAYMENTS UNDER TREASURY
REGULATIONS (S) 1.1275-4(b). FOR INFORMATION REGARDING THE ISSUE PRICE, ISSUE
DATE, "COMPARABLE YIELD" AND PROJECTED PAYMENT SCHEDULE FOR THIS SECURITY, YOU
SHOULD CONTACT: INVESTOR RELATIONS, VERIZON COMMUNICATIONS INC., 0000 XXXXXX XX
XXX XXXXXXXX, 00XX XXXXX, XXX XXXX, XX 00000, TELEPHONE (000) 000-0000.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER 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.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO
NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
ARTICLE THREE OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.]
THIS SECURITY AND ANY COMMON STOCK OF VERIZON COMMUNICATIONS INC.
ISSUABLE UPON THE CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
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.
THIS SECURITY AND ANY COMMON STOCK OF VERIZON COMMUNICATIONS INC.
ISSUABLE UPON CONVERSION OF THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHO THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
A-1
THE SECURITIES ACT UNDER ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (2) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR
THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3)
OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER
JURISDICTIONS.
THIS SECURITY, ANY SHARES OF COMMON STOCK OF VERIZON COMMUNICATIONS
INC. ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED
OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND
OTHER TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN
APPLICABLE LAW OR REGULATION (OR INTERPRETATION THEREOF) OR IN PRACTICES
RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE
HOLDER OF THIS SECURITY AND ANY SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF
THIS SECURITY AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR
SUPPLEMENT.
The foregoing legend may be removed from this Security on satisfaction
of the conditions specified in the Indenture.
The undersigned hereby certifies that each of the Support Agreement
and the Share Contribution Agreement endorsed hereon is a true and complete copy
of the manually executed Support Agreement and the manually executed Share
Contribution Agreement, respectively.
A-2
VERIZON GLOBAL FUNDING CORP.
Zero-Coupon Convertible Notes due 2021
No. CUSIP:
Issue Date: May 15, 2001
Issue Price: $551.26
(for each $1,000 principal amount at maturity)
VERIZON GLOBAL FUNDING CORP., a Delaware corporation, promises to pay
to [IF GLOBAL SECURITY--Cede & Co.] [IF DEFINITIVE SECURITY--________________]
or registered assigns, the principal amount of [
($ )] on May 15, 2021, subject to adjustment as provided herein.
This Security shall not bear cash interest except as specified on the
other side of this Security. This Security is convertible as specified on the
other side of this Security.
Additional provisions of this Security are set forth on the other side
of this Security.
Dated: VERIZON GLOBAL FUNDING CORP.
By: __________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
FIRST UNION NATIONAL BANK,
as Trustee, certifies that this is one
of the Securities referred to in the
within-mentioned Indenture.
By: __________________________________
Authorized Signatory
Dated:
A-3
[FORM OF REVERSE OF SECURITY]
Zero-Coupon Convertible Notes due 2021
1. Cash Interest and Accretion Rate.
Except as provided in this paragraph 1, this Security shall not bear
cash interest. This Security shall initially represent the Issue Price and
shall accrete in value at an accretion rate of 3% per annum through the Stated
Maturity.
Increased Accretion Rate. Beginning on May 15, 2004, if the Closing
Sales Price of the Parent Common Stock is equal to or less than 60% of the
Accreted Conversion Price of the Securities for any 20 trading days out of the
last 30 consecutive trading days ending three Business Days prior to such date
or three Business Days prior to any May 15 or November 15 thereafter, then the
accretion rate on the Securities for the semi-annual period commencing on such
date will be subject to an increased accretion rate equal to the applicable per
annum Reset Rate in effect at that time. Any increased accretion rate made
pursuant to the preceding sentence will remain in effect until the May 15 or
November 15 thereafter when the Closing Sales Price of the Parent Common Stock
is not equal to or less than 60% of the Accreted Conversion Price of the
Securities for any 20 trading days out of the last 30 consecutive trading days
ending three Business Days prior to such date, at which time the accretion rate
will revert to 3% per annum.
The "Reset Rate" will be established by the Reset Rate Agent, as of
each Reset Rate Determination Date. The "Reset Rate Determination Date" shall be
the date three Business Days preceding each of:
(i) May 15, 2004, in which case the Reset Rate will be the Two-
Year Reset Rate;
(ii) May 15, 2006, in which case the Reset Rate will be the Five-
Year Reset Rate;
(iii) May 15, 2008, in which case the Reset Rate will be the
Two-Year Reset Rate;
(iv) November 15, 2009, in which case the Reset Rate will be the
One-Year Reset Rate;
(v) May 15, 2011, in which case the Reset Rate will be the Five-
Year Reset Rate;
A-4
(vi) May 15, 2013, in which case the Reset Rate will be the Two-
Year Reset Rate;
(vii) November 15, 2014, in which case the Reset Rate will be
the One-Year Reset Rate;
(viii) May 15, 2016, in which case the Reset Rate will be the
Five-Year Reset Rate;
(ix) May 15, 2018, in which case the Reset Rate will be the Two-
Year Reset Rate; and
(x) November 15, 2019, in which case the Reset Rate will be the
One-Year Reset Rate.
The Reset Rate determined as of each Reset Rate Determination Date
will be equal to the rate that would, in the sole judgment of the Reset Rate
Agent, result in a trading price of par with a hypothetical issue of senior,
nonconvertible, noncontingent, fixed rate debt securities of the Company with
(i) a final maturity equal to, in the case of the Five-Year Reset Rate, five
years; in the case of the Two-Year Reset Rate, two years; and in the case of the
One-Year Reset Rate, one year; (ii) an aggregate principal amount equal to the
Accreted Principal Amount of the Securities; and (iii) covenants and other
provisions that are, insofar as would be practicable for an issue of senior,
nonconvertible, noncontingent, fixed rate debt securities, substantially
identical to those of the Securities. In no case, however, shall the Reset Rate
exceed 11% per annum or be less than 3% per annum. If the Reset Rate Agent has
not established the Reset Rate for the applicable semi-annual period, or if the
Reset Rate Agent determines in its sole judgment that there is no suitable
reference rate from which the Reset Rate may be determined, the Reset Rate for
that period will be the Reset Rate most recently determined (except that if
there is no Reset Rate most recently determined, the Reset Rate shall be a rate
mutually agreed upon by the Reset Rate Agent and the Company reflecting current
market conditions), such Reset Rate to remain in effect until the Reset Rate
Agent determines that there is a suitable reference rate at which time the Reset
Rate Agent shall determine a new Reset Rate for the period ending on the next
Reset Rate Determination Date.
The applicable per annum Reset Rate for a Security that is subject to
an increased accretion rate shall be determined as to any period for which such
increase is applicable as follows in each case until a new Reset Rate is in
effect:
(i) effective May 15, 2004, the applicable per annum Reset Rate
on such Security will be the Two-Year Reset Rate established on the Reset
Rate Determination Date three Business Days preceding May 15, 2004;
(ii) effective May 15, 2006, the applicable per annum Reset Rate
on such Security will be the Five-Year Reset Rate established on the Reset
Rate Determination Date three Business Days preceding May 15, 2006;
A-5
(iii) effective May 15, 2010 the applicable per annum Reset Rate
on such Security will be the One-Year Reset Rate established on the Reset
Rate Determination Date three Business Days preceding November 15, 2009;
(iv) effective May 15, 2011 the applicable per annum Reset Rate
on such Security will be the Five-Year Reset Rate established on the Reset
Rate Determination Date three Business Days preceding May 15, 2011;
(v) effective May 15, 2015, the applicable per annum Reset Rate
on such Security will be the One-Year Reset Rate established on the Reset
Rate Determination Date three Business Days preceding November 15, 2014;
(vi) effective May 15, 2016, the applicable per annum Reset Rate
on such Security will be the Five-Year Reset Rate established on the Reset
Rate Determination Date three Business Days preceding May 15, 2016; and
(vii) effective May 15, 2020, the applicable per annum Reset
Rate on such Security will be the One-Year Reset Rate established on the
Reset Rate Determination Date three Business Days preceding November 15,
2019.
Notwithstanding the foregoing:
(x) if a Security first becomes subject to an increased accretion
rate (or first becomes subject to an increased accretion rate following a
reversion of the accretion rate to 3%) on or after May 15, 2008, but not
later than November 15, 2009, the initial Reset Rate will be the Two-Year
Reset Rate established on the Reset Rate Determination Date three Business
Days preceding May 15, 2008 and thereafter the applicable Reset Rate will
be determined in accordance with the prior sentence;
(y) if a Security first becomes subject to an increased accretion
rate (or first becomes subject to an increased accretion rate following a
reversion of the accretion rate to 3%) on or after May 15, 2013, but not
later than November 15, 2014, the initial Reset Rate will be the Two-Year
Reset Rate established on the Reset Rate Determination Date three Business
Days preceding May 15, 2013 and thereafter the applicable Reset Rate will
be determined in accordance with the prior sentence; and
(z) if a Security first becomes subject to an increased accretion
rate (or first becomes subject to an increased accretion rate following a
reversion of the accretion rate to 3%) on or after May 15, 2018, but not
later than November 15, 2019, the initial Reset Rate will be the Two-Year
Reset Rate established on the Reset Rate Determination Date three Business
Days preceding May 15, 2018 and thereafter the applicable Reset Rate will
be determined in accordance with the prior sentence.
If an increased accretion rate is in effect for a particular semi-
annual period, the Company will pay a portion of the increased accretion rate as
cash interest at an annualized rate of 0.25% per annum (or 0.125% per semi-
annual period) on the Applicable Principal Amount and the remaining increased
A-6
accretion rate will be accrued and payable at maturity, redemption or
repurchase.
For the determination of the Reset Rate, the Reset Rate Agent shall
seek indicative reference rates from three nationally recognized investment
banks. The determination of any Reset Rate will be conclusive and binding upon
the Reset Rate Agent, the Parent, the Company, the Trustee and the Holders, in
the absence of manifest error.
The Reset Rate Agent may be removed at any time by the Parent giving
at least sixty days' written notice to the Reset Rate Agent. The Reset Rate
Agent may resign at any time upon giving at least thirty days' written notice.
For purposes of this Paragraph 1, the following defined terms shall
have the respective meanings provided below.
"Accreted Conversion Price" means, as of any date, the Accreted
Principal Amount of this Security divided by the Conversion Rate (as defined in
the Indenture).
"Accreted Principal Amount" means, for any date, the Issue Price (as
defined in the Indenture) of the Securities adjusted to reflect the accretion of
the Securities at the applicable accretion rate to such date.
"Applicable Principal Amount" means, for any semi-annual period, the
Issue Price of the Securities adjusted to reflect the accretion of the
Securities at the applicable accretion rate to the beginning of such semi-annual
period (excluding any accrued and unpaid cash interest).
"Reset Rate Agent" means a nationally recognized financial institution
to be appointed by the Company to establish the applicable Reset Rate as of each
Reset Rate Determination Date.
In the event of an increased accretion rate, the Company will
disseminate a press release through Reuters Economic Services or Bloomberg
Business News containing this information or publish the information on the
Parent's web site on the World Wide Web or through such other public medium as
the Parent may use at that time.
Tax Event. From and after the date of the occurrence of a Tax Event,
the Company will have the option to pay cash interest on the Securities instead
of accreting the principal amount thereof, including any cash interest payable
pursuant to an increased accretion rate. Following the Company's election to
pay cash interest following a Tax Event, the principal amount on which cash
interest is payable will be restated and will equal the Restated Principal
Amount, and cash interest will accrue from the date of such restatement. The
Restated Principal Amount shall be the amount due at maturity of the Securities.
Cash interest will be paid on the Restated Principal Amount at a rate equal to
the accretion rate that would be in effect from time to time if the Company had
not elected to pay cash interest.
A-7
A "Tax Event" means that the Company shall have received an opinion
from a nationally-recognized independent tax counsel experienced in such matters
to the effect that, as a result of:
(i) any amendment to, or change (including any announced
prospective change (which will not include a proposed change)) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority of the United States or any political
subdivision, provided that a Tax Event will not occur more than 90 days
before the effective date of any prospective change in such laws or
regulations;
(ii) any judicial decision or official administrative
pronouncement, ruling, regulatory procedure, notice or announcement,
including any notice or announcement of intent to adopt such procedures or
regulations (an "Administrative Action''); or
(iii) any amendment to or change in the administrative position
or interpretation of any Administrative Action or judicial decision that
differs from the theretofore generally accepted position, in each case, by
any legislative body, court, government agency or regulatory body,
irrespective of the manner in which such amendment or change is made known,
which amendment or change is effective or such Administrative Action or
decision is announced, in each case, on or after the Issue Date;
there is more than an insubstantial risk that interest payable on this Security,
including amounts reflecting accretion of the Securities included in the
Accreted Principal Amount and any cash interest payable pursuant to an increased
accretion rate, either:
(i) would not be deductible on a current accrual basis; or
(ii) would not be deductible under any other method, in either
case in whole or in part, by the Company for United States federal income
tax purposes.
Cash Interest and Accretion Computation and Method of Payment. Any
cash interest payable hereunder and any accretion of the Securities will be
computed based on a 360-day year of twelve 30-day months. Cash interest, if
any, will be payable semi-annually in arrears on each May 15 and November 15
(each an "Interest Payment Date") through maturity; provided that, in the event
the Company elects to pay cash interest upon the occurrence of a Tax Event as of
a date less than 60 days prior to any Interest Payment Date, the first payment
of cash interest shall be made on the Interest Payment Date next succeeding such
Interest Payment Date. The record date for the payment of cash interest to
Holders will be the close of business on May 1 and November 1 of each year
(whether or not a Business Day); provided that cash interest payable at Stated
Maturity or upon redemption or repurchase will be payable to the person to whom
principal is payable. The Company will give notice to the Holders, no later
than 15 days prior to each record date, of the amount of cash interest to be
paid as of the next Interest Payment Date. Cash interest on the Securities will
be paid to registered holders of the Securities as of the record date.
2. Method of Payment at Redemption, Repurchase or Maturity.
A-8
Subject to the terms and conditions of the Indenture, the Company will
make payments (1) in cash in respect of a Redemption Price, Change in Control
Purchase Price and at Stated Maturity and (2) in cash, shares of Parent Common
Stock or a combination thereof in respect of a Purchase Price, in each case to
Holders who surrender Securities to a Paying Agent to collect such payments in
respect of the Securities. The Company will pay cash amounts in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay such cash amounts by check
payable in such money.
3. Paying Agent, Conversion Agent, Security Registrar and Reset Rate Agent.
First Union National Bank (the "Trustee") will initially act as Paying
Agent, Conversion Agent and Security Registrar. The Company may appoint and
change any Paying Agent, Conversion Agent, Security Registrar or Reset Rate
Agent without notice, other than notice to the Trustee; provided that the
Company will maintain at least one Paying Agent in the State of New York, The
City of New York, The Borough of Manhattan, which shall initially be an office
or agency of the Trustee. The Company or any of its Subsidiaries or any of their
Affiliates may act as Paying Agent, Conversion Agent, Security Registrar or
Reset Rate Agent.
4. Indenture.
The Company issued the Securities under an Indenture dated as of
December 1, 2000, as amended (the "Indenture"), among the Company, the Parent
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act. The Securities are subject to all such terms, and Holders are
referred to the Indenture and the Trust Indenture Act for a statement of those
terms. Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture.
The Securities are general unsecured obligations of the Company
limited to $6,258,390,000 aggregate principal amount at maturity, subject to
upward adjustment from time to time in the event there is an increased accretion
rate in effect pursuant to paragraph 1 hereof.
The Indenture does not limit other indebtedness of the Company,
secured or unsecured.
5. Redemption at the Option of the Company.
The Securities are redeemable at the option of the Company in whole or
in part, at any time or from time to time on, or after May 15, 2006 upon not
less than 30 nor more than 60 days' notice by mail to Holders for a cash price
equal to the Accreted Principal Amount plus any accrued and unpaid cash
interest, up to the Redemption Date (the "Redemption Price"). No sinking fund
is provided for the Securities.
Notice of redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Securities to be redeemed
at the Holder's registered address.
A-9
6. Purchase By the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company
shall become obligated to purchase, at the option of the Holder, all or any
portion of the Securities held by such Holder on May 15, 2004, May 15, 2006, May
15, 2011 and May 15, 2016, in integral multiples of $1,000 principal amount at
maturity, at a Purchase Price equal to the Accreted Principal Amount plus any
accrued and unpaid cash interest to the Purchase Date or, if the Company has
previously exercised its option to pay cash interest instead of accreting the
principal amount of the Securities following a Tax Event, at a purchase price
equal to the Restated Principal Amount plus accrued and unpaid cash interest to
the Purchase Date. To exercise such right, a Holder shall deliver to the
Company a Purchase Notice containing the information set forth in the Indenture,
at any time from the opening of business on the date that is 20 Business Days
prior to such Purchase Date until the close of business on the Business Day
prior to such Purchase Date, and shall deliver the Securities to the Paying
Agent as set forth in the Indenture.
The Purchase Price may be paid, at the option of the Company, in cash
or by delivery of shares of Parent Common Stock, or in any combination thereof.
If the Company elects to pay the Purchase Price in shares of Parent Common Stock
or a combination of Parent Common Stock and cash, the Company shall notify
Holders of such election 20 Business Days prior to the Purchase Date.
Subject to the terms and conditions of the Indenture, if a Change in
Control occurs, the Company shall become obligated to purchase, at the option of
the Holder, all or any portion of the Securities held by such Holder, at a
purchase price equal to the Accreted Principal Amount plus any accrued and
unpaid cash interest to the Change in Control Purchase Date or, if the Company
has previously exercised its option to pay cash interest instead of accreting
the principal amount of the Securities following a Tax Event, at a purchase
price equal to the Restated Principal Amount plus any accrued and unpaid cash
interest to the Change in Control Purchase Date. To exercise such right, a
Holder shall deliver to the Company a Change in Control Purchase Notice
containing the information set forth in the Indenture, at any time until the
close of business on the 30th day after the date the Company delivers its
written notice of the occurrence of a Change in Control, and shall deliver the
Securities to the Paying Agent as set forth in the Indenture.
Holders have the right to withdraw any Purchase Notice or Change in
Control Purchase Notice, as the case may be, by delivering to the Paying Agent a
written notice of withdrawal in accordance with the provisions of the Indenture.
If cash (and/or Parent Common Stock if permitted under the Indenture)
sufficient to pay the Purchase Price or Change in Control Purchase Price, as the
case may be, of all Securities or portions thereof to be purchased as of the
Purchase Date or the Change in Control Purchase Date, as the case may be, is
deposited with the Paying Agent on the fifth Business Day following the Purchase
Date or prior to 10:00 a.m. (local time in the City of New York) on the Change
in Control Purchase Date and cash interest ceases to accrue on such Securities
(or portions thereof) and the Securities cease to accrete in value immediately
after such Purchase Date or Change in Control Purchase Date, the Holder thereof
shall have no other rights as such other than the right to receive the Purchase
A-10
Price or Change in Control Purchase Price upon surrender of such Security.
7. Conversion.
Holders may surrender Securities for conversion into shares of Parent
Common during any quarterly conversion period if the Closing Sales Price of the
Parent Common Stock for at least 20 trading days in the 30 consecutive trading
days ending on the first day of the quarterly conversion period is more than the
percentage which shall initially be 120% and shall decline by .25% per semi-
annual period over the life of the Securities to 110% (the "Applicable
Percentage") of the Accreted Conversion Price on the first day of such quarterly
conversion period. A "quarterly conversion period" will be the period from and
including the 12th trading day in a fiscal quarter of the Parent to but not
including the 12th trading day in the immediately following fiscal quarter of
the Parent.
Holders may also surrender Securities for conversion into shares of
Parent Common Stock during the five Business Day period following the ten
Business Days after any nine consecutive trading day period in which for each
day the trading price of the Securities (as determined by the Trustee) is less
than 95% of the product of the Closing Sales Price of the Parent Common Stock
multiplied by the number of shares into which a Security is convertible for that
period. The "trading price" of the Securities on any date of determination
means the average of the secondary market bid quotations per Security obtained
by the Conversion Agent for $10,000,000 principal amount at maturity of the
Securities at approximately 3:30 p.m., New York City time, on such determination
date from three independent nationally recognized securities dealers selected by
the Company; provided that if at least three such bids cannot reasonably be
obtained by the Conversion Agent, but two such bids are obtained, then the
average of the two bids shall be used, and if only one such bid can reasonably
be obtained by the Conversion Agent, this one bid shall be used; and provided
further that if there are different secondary market quotations for Securities
that have been resold in transactions registered under any registration
statement filed with the Commission (as defined in the Indenture) and Securities
that have been resold pursuant to the exemption from registration under the
Securities Act provided by Rule 144 thereunder, the "trading price" of the
Securities will be determined based on the higher of the two sets of market
quotations. If the Conversion Agent cannot reasonably obtain at least one bid
for $10,000,000 principal amount of maturity of the Securities from a nationally
recognized securities dealer or, in the reasonable judgment of the Company, the
bid quotations are not indicative of the secondary market value of the
Securities, then the trading price of the Securities will equal (a) the then-
applicable Conversion Rate of the Securities multiplied by (b) the closing price
on the New York Stock Exchange of Parent Common Stock on such determination
date.
For the purposes of the immediately preceding paragraph, the term
"nine consecutive trading day period" means any nine consecutive trading days
during which the Conversion Agent determines the trading price of the
Securities; provided that the Conversion Agent shall have no obligation to
determine the trading price of the Securities unless requested by the Company;
and provided further that the Company shall have no obligation to make such
request unless a Holder provides the Company with reasonable evidence that the
trading price of the Securities would be less than 95% of the product of the
Closing Sales Price of the Parent Common Stock multiplied by the number of
A-11
shares into which a Security is convertible; and at which time, the Company
shall instruct the Conversion Agent to determine the trading price of the
Securities beginning on the next trading day and on each successive trading day
until the trading price is greater than or equal to 95% of the product of the
Closing Sales Price of the Parent Common Stock and the number of shares into
which a Security is convertible.
If at the time of conversion pursuant to the second paragraph of this
Paragraph 7 the Closing Sales Price of Parent Common Stock is greater than 100%
of the Accreted Conversion Price but equal to or less than the Applicable
Percentage of the Accreted Conversion Price, then the Holders will receive, in
lieu of shares of Parent Common Stock based on the applicable Conversion Rate,
at the Company's option, cash or shares of Parent Common Stock, or a combination
of both cash and shares, with a value equal to the Accreted Principal Amount of
the Securities on the Conversion Date ("Accreted Value Conversion"). If there
is an Accreted Value Conversion, the shares of Parent Common Stock will be
valued at the average Closing Sales Price for the five trading days ending on
the third trading day prior to the date of conversion. If the Company elects to
pay all or a portion of the Accreted Principal Amount upon an Accreted Value
Conversion in shares of Parent Common Stock, the Company will notify holders not
less than nine trading days prior to the beginning of the five Business Day
period in which Holders can convert their Securities pursuant to an Accreted
Value Conversion.
A Holder may also surrender for conversion a Security or portion of a
Security which has been called for redemption pursuant to Paragraph 5 hereof,
even if the foregoing provisions have not been satisfied. Such Securities may
be surrendered for conversion at any time following receipt of a notice of
redemption until the close of business on the Business Day prior to the
Redemption Date.
In the event that the Parent distributes to all holders of Parent
Common Stock certain rights, for a period expiring within 60 days, as described
in Section 1407 of the Indenture, or a dividend or a distribution, as described
in Section 1408 of the Indenture where the fair market value of such dividend or
distribution per share of Parent Common Stock, as determined in the Indenture,
exceeds 15% of the Closing Sales Price of a share of Parent Common Stock as of
the trading day prior to the date of declaration for such distribution, the
Securities may be surrendered for conversion beginning on the date the Company
gives notice to the Holders of such right, which shall be not less than 20 days
prior to the Ex-Dividend Time for such dividend or distribution, and at any time
thereafter until the close of business on the Business Day prior to the Ex-
Dividend Time or until the Company announces that such distribution will not
take place. No adjustment to the ability of a Holder to convert will be made if
such Holder will otherwise participate in the dividend or distribution without
conversion.
In addition, in the event the Parent is a party to a consolidation,
merger or binding share exchange pursuant to which the shares of Parent Common
Stock would be converted into cash, securities or other property as set forth in
Section 1415 of the Indenture, the Securities may be surrendered for conversion
at any time from and after the date which is 15 days prior to the date the
Parent announces as the anticipated effective time until 15 days after the
actual date of such transaction.
A-12
If the Parent is a party to a consolidation, merger or binding share
exchange pursuant to which the Parent Common Stock is converted into cash,
securities or other property, at the effective time of the transaction, the
right to convert a Security into shares of Parent Common Stock will be changed
into a right to convert it into the kind and amount of cash, securities or other
property which the Holder would have received if the Holder had converted its
Securities immediately prior to the transaction.
A Security in respect of which a Holder has delivered a Purchase
Notice or a Change in Control Purchase Notice exercising the option of such
Holder to require the Company to purchase such Security may be converted only if
such notice of exercise is withdrawn in accordance with the terms of the
Indenture.
The Conversion Rate is 7.9318 shares of Parent Common Stock per $1,000
principal amount at maturity, subject to adjustment in certain events described
in the Indenture. A Holder which surrenders Securities for conversion will
receive cash in lieu of any fractional share of Parent Common Stock.
To surrender a Security for conversion, a Holder must (1) complete and
manually sign the irrevocable conversion notice below (or complete and manually
sign a facsimile of such notice) and deliver such notice to the Conversion
Agent, (2) furnish appropriate endorsements and transfer documents and (3) pay
any transfer or similar tax, if required.
A Holder may convert a portion of a Security if the principal amount
at maturity of such portion is $1,000 at maturity or an integral multiple of
$1,000 at maturity, subject to an upward adjustment in the event there is an
increased accretion rate. No payment or adjustment will be made for dividends
on the shares of Parent Common Stock except as provided in the Indenture. Except
as provided herein and in the Indenture, on conversion of a Security, the Holder
will not receive any cash payment representing the Accreted Principal Amount
with respect to the converted Securities. Instead, upon conversion the Company
will deliver to the Holder a fixed number of shares of Parent Common Stock and
any cash payment to account for fractional shares. The cash payment for
fractional shares will be based on the Closing Sales Price of the Parent Common
Stock on the trading day immediately prior to the Conversion Date. Delivery of
shares of Parent Common Stock will be deemed to satisfy the Company's obligation
to pay the principal amount of the Securities, including accrued cash interest.
Accrued cash interest will be deemed paid in full rather than canceled,
extinguished or forfeited. The Company will not adjust the Conversion Rate to
account for accrued interest.
The Conversion Rate will be adjusted as provided in Article Fourteen
of the Indenture. The Company may increase the Conversion Rate for at least 20
days, so long as the increase is irrevocable during such period.
8. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons, in
denominations of $1,000 of principal amount and integral multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Security Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any taxes and
A-13
fees required by law or permitted by the Indenture. The Security Registrar need
not transfer or exchange any Securities selected for redemption (except, in the
case of a Security to be redeemed in part, the portion of the Security not to be
redeemed) or any Securities in respect of which a Purchase Notice or Change in
Control Purchase Notice has been given and not withdrawn (except, in the case of
a Security to be purchased in part, the portion of the Security not to be
purchased) or any Securities for a period of 15 days before the mailing of a
notice of redemption of Securities to be redeemed.
9. Persons Deemed Owners.
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
10. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years,
subject to applicable unclaimed property law. After return to the Company,
Holders entitled to the money or securities must look only to the Company for
payment as general creditors unless an applicable abandoned property law
designates another person.
11. Amendment; Waiver.
The Company, the Parent and the Trustee, with the written consent of
the Holders of at least a majority in aggregate principal amount of the
Securities at the time outstanding, may amend the Indenture or the Securities.
However, without the consent of each Holder affected, an amendment or supplement
to the Indenture or the Securities may not:
(1) reduce the principal of or premium on or change the Stated
Maturity of any Security;
(2) reduce the rate of or change the time for payment of cash interest
on, or reduce the accretion rate of, any Security;
(3) reduce or alter the method of computation of the Redemption Price,
Purchase Price or Change in Control Purchase Price of any Security or the
time when such Redemption Price, Purchase Price or Change in Control
Purchase Price is payable;
(4) make the principal of, or cash interest on, any Security payable
in money or securities other than that stated in the Security or change the
price of payment;
(5) make any change that would impair any of the rights granted in
Section 508 of the Indenture in any material respect;
(6) modify any provisions of the Support Agreement or the Share
Contribution Agreement, except for such modifications which do not
adversely affect the interests of Holders in any material respect; or
A-14
(7) reduce the percentage of principal amount of the outstanding
Securities of a series required to amend or supplement the Indenture or
waive any of its provisions.
It shall not be necessary for the consent of the Holders under this
paragraph 11 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this paragraph 11 becomes effective, the
Trustee will mail to each Holder a notice briefly describing such amendment.
12. Defaults and Remedies.
Under the Indenture, Events of Default include:
(1) the Company's failure for 90 days to pay when due any cash
interest
on the Securities (after any increased accretion rate or after
the Company's election to pay cash interest on the Securities following a
Tax Event);
(2) the Company's failure to pay principal on the Securities (or,
if the Company has elected to pay cash interest on the Securities following
a Tax Event, the Restated Principal Amount) when due, whether at Stated
Maturity, by declaration, xxxx xxxxxxxxxx, xxxx xxxxxxxxxx or otherwise;
(3) the Company's failure to perform, or breach of, any covenant
or warranty in the Securities or in the Indenture and applicable to the
Securities for 90 days after notice to the Company by the Trustee or by
Holders of at least 25% in principal amount at maturity of the outstanding
Securities; and
(4) certain events involving bankruptcy, insolvency or
reorganization of the Parent or the Company.
Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate principal amount of the
Securities at the time outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders notice of any continuing
default under the Indenture (except a default in payment of amounts specified in
clauses (1) or (2) above) if it determines that withholding notice is in their
interests; and provided, further, that in the case of any default of the
character specified in clause (3) above no such notice to Holders shall be given
until at least 60 days after the occurrence thereof.
13. Trustee Dealings with the Company.
Subject to certain limitations imposed by the Trust Indenture Act, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
A-15
with the Company or its Affiliates with the
same rights it would have if it were not Trustee.
14. No Recourse Against Others.
A director, officer, employee or shareholder, as such, of either the
Company or the Parent shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Holder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
15. Authentication.
This Security shall not be valid until an authorize signatory of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
16. Abbreviations.
Customary abbreviations may be used in the name of a 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 U/G/M/A (=Uniform Gift to Minors
Act).
17. GOVERNING LAW.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
SECURITY.
18. Registration Rights.
The Holders of the Securities are entitled to the benefits of a
Registration Rights Agreement, dated as of May 15, 2001, among Company and
Xxxxxxx, Xxxxx & Co. and Credit Suisse First Boston Corporation, including the
receipt of liquidated damages upon a registration default (as defined in such
agreement).
A-16
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ASSIGNMENT FORM CONVERSION NOTICE
------------------------------------------------------------------------------------
To assign this Security, fill in the To convert this Security into
form below: Parent Common Stock, check the
box [ ]
------------------------------------------------------------------------------------
I or we assign and transfer this To convert only part of this
Security to Security, state the principal
_________________________ amount to be converted (which must
_________________________ be $1,000 or an integral multiple
(Insert assignee's soc. sec. or tax of $1,000):
ID no.)
_________________________ If you want the stock certificate
_________________________ made out in another person's name
_________________________ fill in the form below:
(Print or type assignee's name, _________________________
address and zip code) _________________________
(Insert the other person's soc.
and irrevocably appoint sec. tax ID no.)
____________________ agent to __________________________
transfer this Security on the books __________________________
of the Company. The agent may __________________________
substitute another to act for him. __________________________
__________________________
(Print or type other person's name,
address and zip code)
------------------------------------------------------------------------------------
Date: __________ Your Signature: ____________________________________
_______________________________________________________________________
(Sign exactly as your name appears on the other side of this Security)
Signature Guaranteed
__________________________________
Participant in a Recognized Signature
Guarantee Medallion Program
By:_______________________________
Authorized Signatory
A-17
SCHEDULE OF INCREASES AND DECREASES OF GLOBAL SECURITY
Initial Principal Amount of Global Security: ____________($___________).
Date Amount of Increase Amount of Decrease Principal Amount Notation by
in Principal in Principal of Global Security Security Registrar
Amount of Global Amount of Global After Increase or or Security
Security Security Decrease Custodian
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A-18
Zero-Coupon Convertible Notes due 2021
Transfer Certificate
In connection with any transfer of any of the Securities within the
period prior to the expiration of the holding period applicable to the sales
thereof under Rule 144(k) under the Securities Act of 1933, as amended (the
"Securities Act") (or any successor provision), the undersigned registered owner
of this Security hereby certifies with respect to $____________ principal amount
of the above-captioned Securities presented or surrendered on the date hereof
(the "Surrendered Securities") for registration of transfer, or for exchange or
conversion where the securities issuable upon such exchange or conversion are to
be registered in a name other than that of the undersigned registered owner
(each such transaction being a "transfer"), that such transfer complies with the
restrictive legend set forth on the face of the Surrendered Securities for the
reason checked below:
[_] A transfer of the Surrendered Securities is made to the
Company or any subsidiaries; or
[_] The transfer of the Surrendered Securities complies with
Rule 144A under the U.S. Securities Act of 1933, as amended
(the "Securities Act"); or
[_] The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act,
or
[_] The transfer of the Surrendered Securities is pursuant to
another available exemption from the registration
requirement of the Securities Act.
and unless the box below is checked, the undersigned confirms that, to the
undersigned's knowledge, such Securities are not being transferred to an
"affiliate" of the Company as defined in Rule 144 under the Securities Act (an
"Affiliate").
[_] The transferee is an Affiliate of the Company.
DATE: __________________________________
Signature(s)
(If the registered owner is a corporation, partnership or fiduciary,
the title of the person signing on behalf of such registered owner must be
stated.)
A-19
Signature Guaranteed
_____________________________________
Participant in a Recognized Signature
Guarantee Medallion Program
By: _____________________________
Authorized Signatory
A-20
