Attached files
Exhibit 4.1
EXECUTION VERSION
TELECOMMUNICATION SYSTEMS, INC.
4.5% CONVERTIBLE SENIOR NOTES DUE NOVEMBER 1, 2014
INDENTURE
DATED AS OF NOVEMBER 16, 2009
DATED AS OF NOVEMBER 16, 2009
THE BANK OF NEW YORK MELLON,
AS TRUSTEE
AS TRUSTEE
TABLE OF CONTENTS
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ARTICLE 1 |
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DEFINITIONS AND INCORPORATION BY REFERENCE |
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Section 1.01. |
Definitions | 1 | ||||
Section 1.02. |
Other Definitions | 6 | ||||
Section 1.03. |
Trust Indenture Act Provisions | 7 | ||||
Section 1.04. |
Rules of Construction | 7 | ||||
ARTICLE 2 |
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THE SECURITIES |
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Section 2.01. |
Form and Dating | 8 | ||||
Section 2.02. |
Execution and Authentication | 9 | ||||
Section 2.03. |
Registrar, Paying Agent and Conversion Agent | 10 | ||||
Section 2.04. |
Paying Agent to Hold Money in Trust | 11 | ||||
Section 2.05. |
Securityholder Lists | 11 | ||||
Section 2.06. |
Transfer and Exchange | 11 | ||||
Section 2.07. |
Replacement Securities | 12 | ||||
Section 2.08. |
Outstanding Securities | 13 | ||||
Section 2.09. |
Treasury Securities | 13 | ||||
Section 2.10. |
Temporary Securities | 14 | ||||
Section 2.11. |
Cancellation | 14 | ||||
Section 2.12. |
Legends; Additional Transfer Requirements | 14 | ||||
Section 2.13. |
CUSIP Numbers | 20 | ||||
Section 2.14. |
Ranking | 20 | ||||
Section 2.15. |
Issuance, Transfer and Exchange of Common Stock Issuable Upon Conversion of the Securities | 20 | ||||
Section 2.16. |
Additional Securities | 20 | ||||
Section 2.17. |
Additional Interest | 21 | ||||
Section 2.18. |
Calculations in Respect of Securities | 21 | ||||
ARTICLE 3 |
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PURCHASES OF SECURITIES UPON FUNDAMENTAL CHANGE |
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Section 3.01. |
Purchase of Securities at Option of the Holder Upon Fundamental Change | 22 | ||||
Section 3.02. |
Effect of Fundamental Change Purchase Notice | 25 | ||||
Section 3.03. |
Deposit of Fundamental Change Purchase Price | 26 | ||||
Section 3.04. |
Securities Purchased in Part | 27 | ||||
Section 3.05. |
Compliance with Securities Laws Upon Purchase of Securities | 27 |
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Section 3.06. |
No Fundamental Change Repurchase Following Acceleration | 27 | ||||
Section 3.07. |
Trustees Fundamental Change Purchase Disclaimer | 27 | ||||
ARTICLE 4 |
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PAYMENT OF INTEREST AND ADDITIONAL SHARES |
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Section 4.01. |
Interest Payments | 27 | ||||
Section 4.02. |
Additional Shares | 28 | ||||
ARTICLE 5 |
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CONVERSION |
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Section 5.01. |
Conversion Privilege | 30 | ||||
Section 5.02. |
Conversion Procedure | 30 | ||||
Section 5.03. |
Fractional Shares | 31 | ||||
Section 5.04. |
Taxes on Conversion | 32 | ||||
Section 5.05. |
Issuance of Common Stock Upon Conversion | 32 | ||||
Section 5.06. |
Adjustment of Conversion Price | 33 | ||||
Section 5.07. |
No Adjustment | 39 | ||||
Section 5.08. |
Adjustment for Tax Purposes | 40 | ||||
Section 5.09. |
Temporary Reduction of Conversion Price | 40 | ||||
Section 5.10. |
Notice of Certain Transactions | 40 | ||||
Section 5.11. |
Effect of Reclassification, Consolidation, Merger, Binding Share Exchange or Sale on Conversion Privilege | 41 | ||||
Section 5.12. |
Disclaimer | 42 | ||||
Section 5.13. |
Limitation on Adjustments | 43 | ||||
ARTICLE 6 |
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[RESERVED] |
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ARTICLE 7 |
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COVENANTS |
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Section 7.01. |
Payment of Securities | 43 | ||||
Section 7.02. |
SEC Reports | 44 | ||||
Section 7.03. |
No Resale of Restricted Securities | 44 | ||||
Section 7.04. |
Compliance Certificates | 44 | ||||
Section 7.05. |
Additional Interest Notice | 45 | ||||
Section 7.06. |
Rule 144A Information Requirements | 45 | ||||
Section 7.07. |
Further Instruments and Acts | 45 |
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Section 7.08. |
Maintenance of Corporate Existence | 46 | ||||
Section 7.09. |
Stay, Extension and Usury Laws | 46 | ||||
Section 7.10. |
Additional Interest Payable Upon Failure to Report or to Delegend | 46 | ||||
ARTICLE 8 |
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CONSOLIDATION, MERGER, BINDING SHARE EXCHANGE, CONVEYANCE, TRANSFER OR LEASE |
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Section 8.01. |
Company May Consolidate, etc., only on Certain Terms | 47 | ||||
Section 8.02. |
Successor Substituted | 48 | ||||
ARTICLE 9 |
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DEFAULT AND REMEDIES |
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Section 9.01. |
Events of Default | 48 | ||||
Section 9.02. |
Acceleration | 50 | ||||
Section 9.03. |
Other Remedies | 51 | ||||
Section 9.04. |
Waiver of Defaults and Events of Default | 51 | ||||
Section 9.05. |
Control by Majority | 51 | ||||
Section 9.06. |
Limitations on Suits | 51 | ||||
Section 9.07. |
Rights of Holders to Receive Payment and to Convert | 52 | ||||
Section 9.08. |
Collection Suit by Trustee | 52 | ||||
Section 9.09. |
Trustee May File Proofs of Claim | 52 | ||||
Section 9.10. |
Priorities | 53 | ||||
Section 9.11. |
Undertaking for Costs | 53 | ||||
ARTICLE 10 |
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TRUSTEE |
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Section 10.01. |
Duties of Trustee | 54 | ||||
Section 10.02. |
Rights of Trustee | 55 | ||||
Section 10.03. |
Monies Held in Trust | 56 | ||||
Section 10.04. |
Trustees Disclaimer | 56 | ||||
Section 10.05. |
Notice of Default or Events of Default | 56 | ||||
Section 10.06. |
Reports by Trustee to Holders | 57 | ||||
Section 10.07. |
Compensation and Indemnity | 57 | ||||
Section 10.08. |
Replacement of Trustee | 58 | ||||
Section 10.09. |
Successor Trustee by Merger, etc. | 59 | ||||
Section 10.10. |
Eligibility; Disqualification | 59 | ||||
Section 10.11. |
Preferential Collection of Claims Against Company | 59 | ||||
Section 10.12. |
Trustee or Agents May Hold Securities | 59 |
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TABLE OF CONTENTS
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ARTICLE 11 |
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SATISFACTION AND DISCHARGE |
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Section 11.01. |
Satisfaction and Discharge | 59 | ||||
Section 11.02. |
Application of Trust Money | 60 | ||||
Section 11.03. |
Repayment to Company | 60 | ||||
Section 11.04. |
Reinstatement | 61 | ||||
ARTICLE 12 |
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AMENDMENTS, SUPPLEMENTS AND WAIVERS |
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Section 12.01. |
Without Consent of Holders | 61 | ||||
Section 12.02. |
With Consent of Holders | 62 | ||||
Section 12.03. |
Compliance with Trust Indenture Act | 63 | ||||
Section 12.04. |
Revocation and Effect of Consents | 63 | ||||
Section 12.05. |
Notation on or Exchange of Securities | 63 | ||||
Section 12.06. |
Trustee to Sign Amendments, etc. | 63 | ||||
Section 12.07. |
Effect of Supplemental Indentures | 64 | ||||
ARTICLE 13 |
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MISCELLANEOUS |
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Section 13.01. |
Trust Indenture Act Controls | 64 | ||||
Section 13.02. |
Notices | 64 | ||||
Section 13.03. |
Communications by Holders with Other Holders | 65 | ||||
Section 13.04. |
Certificate and Opinion as to Conditions Precedent | 65 | ||||
Section 13.05. |
Record Date for Vote or Consent of Securityholders | 66 | ||||
Section 13.06. |
Rules by Trustee, Paying Agent, Registrar and Conversion Agent | 66 | ||||
Section 13.07. |
Legal Holidays | 66 | ||||
Section 13.08. |
Governing Law | 66 | ||||
Section 13.09. |
No Adverse Interpretation of Other Agreements | 66 | ||||
Section 13.10. |
No Recourse against Others | 66 | ||||
Section 13.11. |
Successors | 67 | ||||
Section 13.12. |
Multiple Counterparts | 67 | ||||
Section 13.13. |
Severability | 67 | ||||
Section 13.14. |
Table of Contents, Headings, etc. | 67 | ||||
Section 13.15. |
Force Majeure | 67 | ||||
Section 13.16. |
Waiver of Jury Trial | 67 | ||||
Section 13.17. |
Not Security Interest Created | 68 | ||||
Section 13.18. |
Benefits of Indenture | 68 | ||||
SCHEDULE 4.02 | S-1 |
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Page | ||||||
Exhibit A |
Form of Security | A-R-1 | ||||
Exhibit B |
Form of Transfer Certificate for Transfer of Restricted Common Stock | B-1 |
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THIS INDENTURE, dated as of November 16, 2009, is between TeleCommunication Systems, Inc., a
corporation duly organized under the laws of Maryland (the Company), and The Bank of New York
Mellon, a New York banking corporation having its principal office at 101 Barclay Street, Floor 8W,
New York, New York 10286, as Trustee (the Trustee).
In consideration of the premises and the acquisition of the Securities by the Holders thereof,
both parties agree as follows for the benefit of the other and for the equal and ratable benefit of
the registered Holders of the Securities.
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
Additional Interest means any additional interest payable pursuant to Section 7.10 or
Section 9.02(b) hereof.
Affiliate means, with respect to any specified person, any other person directly or
indirectly controlling or controlled by or under direct or indirect common control with such
specified person. For the purposes of this definition, control when used with respect to any
person means the power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or otherwise; and the
terms controlling and controlled have meanings correlative to the foregoing.
Agent means any Registrar, Paying Agent or Conversion Agent.
Applicable Procedures means, with respect to any transfer or exchange of beneficial
ownership interests in a Global Security, the delegending of Global Securities or shares of Common
Stock, or the increase or decrease in the aggregate principal amount of the Global Security from
time to time, the rules and procedures of the Depositary, in each case to the extent applicable to
such transfer, exchange, delegending, or increase or decrease in aggregate principal amount of the
Global Security.
Board of Directors means either the board of directors of the Company or any committee of
the Board of Directors specifically authorized to act for it with respect to this Indenture.
Business Day means each day that is not a Legal Holiday.
Capital Stock of any Person means any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in (however designated)
equity of such Person, but excluding any debt securities convertible into such equity.
Cash or cash means such coin or currency of the United States as at any time of payment is
legal tender for the payment of public and private debts.
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Certificated Security means a Security that is in substantially the form attached hereto as
Exhibit A and that does not include the information or the schedule called for by footnotes
1, 3 and 7 thereof.
Closing Sale Price of the Common Stock means, as of any date of determination, the closing
sale price per share (or, if no such closing sale price is reported on such day, the average of the
bid and asked prices or, if more than one in either case, the average of the average bid and the
average asked prices) at 4:00 p.m. (New York City time) on such date as reported in composite
transactions for the principal U.S. securities exchange on which the Common Stock is traded or, if
the Common Stock is not listed on a U.S. national or regional securities exchange, as reported by
Pink OTC Markets Inc. If the Common Stock is not so reported, the Closing Sale Price of the
Common Stock means the average of the mid-point of the last bid and ask prices for the Common Stock
on the relevant date from each of at least three U.S. nationally recognized independent investment
banking firms selected by the Company for this purpose. The Closing Sale Price shall be determined
without reference to extended or after hours trading.
Common Stock means Class A common stock of the Company, $0.01 par value, as it exists on the
date of this Indenture and any shares of any class or classes of Capital Stock of the Company
resulting from any reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which are not subject to redemption by
the Company; provided, however, that, if at any time there shall be more than one such resulting
class, the shares of each such class then so issuable on conversion of the Securities shall be
substantially in the proportion which the total number of shares of such class resulting from all
such reclassifications bears to the total number of shares of all such classes resulting from all
such reclassifications.
Company means the party named as such in the first paragraph of this Indenture until a
successor replaces it pursuant to the applicable provisions of this Indenture, and thereafter
Company shall mean such successor.
Continuing Directors means, as of any date of determination, any member of the Board of
Directors who (a) was a member of the Board of Directors as of the date hereof or (b) was nominated
for election or elected to the Board of Directors with the approval of a majority of the Continuing
Directors who were members of the Board of Directors at the time of such nomination or election.
Conversion Rate means, as of any date of determination, an amount equal to $1,000 divided by
the then applicable Conversion Price on such date, rounded to the nearest 1/10,000th of a share,
for each $1,000 principal amount of the Securities. As of the date hereof and subject to
adjustment pursuant to Section 5.06, the Conversion Rate with respect to the Securities is
approximately 96.637 shares of Common Stock.
Corporate Trust Office means the office of the Trustee at which at any time the trust
created by this Indenture shall be administered, which office at the date of the execution of this
Indenture is located at 101 Barclay Street, Floor 8W, New York, New York 10286, Attention:
Corporate Trust Administration, or at any other time at such other address as the
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Trustee may
designate from time to time by notice to the Holders and the Company or the principal corporate
trust office of any successor Trustee (or such other address as such successor Trustee may
designate from time to time by notice to the Company).
Default or default means any event which is or, after notice or passage of time or both,
would be an Event of Default.
Ex-Dividend Date means with respect to any issuance, dividend or distribution on the Common
Stock, the first date on which the shares of Common Stock trade, regular way, on the relevant
exchange or in the relevant market without the right to receive such issuance, dividend or
distribution.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, as in effect from time to time.
Fair Market Value means with respect to any asset or property, the price which could be
negotiated in an arms length, free market transaction, for Cash, between a willing seller and a
willing and able buyer, neither of whom is under undue pressure or compulsion to complete the
transaction. For all purposes of this Indenture, Fair Market Value shall be determined in good
faith by the Board of Directors, whose determination will be conclusive and evidenced by a
resolution of the Board of Directors.
Global Security means a permanent Global Security that is in substantially the form attached
hereto as Exhibit A and that includes the information and schedule called for by footnotes
1, 3 and 4 thereof and which is deposited with the Depositary or its custodian and registered in
the name of the Depositary or its nominee.
Holder or Securityholder means the person in whose name a Security is registered on the
Primary Registrars books.
Indenture means this Indenture as amended or supplemented from time to time pursuant to the
terms of this Indenture.
Initial Issue Date means November 16, 2009.
interest, in respect of the Securities, unless the context otherwise requires, refers to
interest payable on the Securities, including Additional Interest, if any.
Make Whole Adjustment Event means the occurrence of any of the following: (a) any Change in
Control included in clause (i), (ii) or (iv) of the definition of Change in Control or (b) any
Termination of Trading, provided that an acquisition, consolidation, merger or binding share
exchange or a sale, assignment, conveyance, transfer, lease or other disposition otherwise
constituting a Change in Control will not constitute a Make Whole Adjustment Event if at least 90%
of the consideration paid for the Common Stock in such transaction or transactions, excluding Cash
payments for fractional shares and Cash payments made pursuant to dissenters appraisal rights,
consists of shares that are traded on the New York Stock Exchange, the
NASDAQ Global Select Market or the NASDAQ Global Market (or any of their respective
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successors) or will be so traded immediately following such transaction or transactions, the
Securities become convertible into such shares of such common stock.
Market Disruption Event means the occurrence or existence for more than one half hour period
in the aggregate on any Scheduled Trading Day for the Common Stock of any suspension or limitation
imposed on trading, by reason of movements in price exceeding limits permitted by NASDAQ or
otherwise, in the Common Stock or in any options, contracts or future contracts relating to the
Common Stock, and such suspension or limitation occurs or exists at any time before 1:00 p.m. (New
York City time) on such day.
Maturity Date means November 1, 2014.
NASDAQ means the NASDAQ Stock Market.
Officer means the Chairman or any Co-Chairman of the Board of Directors, any Vice Chairman
of the Board of Directors, the Chief Executive Officer, the President, any Vice President, the
Chief Financial Officer, the Treasurer, the Secretary or any Assistant Treasurer or Assistant
Secretary of the Company.
Officers Certificate means a certificate signed on behalf of the Company by two or more
Officers of the Company, one of whom must be either the principal executive officer, the principal
financial officer or the principal accounting officer of the Company, delivered to the Trustee,
that meets the requirements of Section 13.04.
Opinion of Counsel means a written opinion that meets the requirements of Section 13.04 from
legal counsel. The counsel may be an employee of or counsel to the Company.
Person or person means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
Principal or principal of a debt security, including the Securities, means the principal
of the security plus, when appropriate, the premium, if any, on the security.
QIB means any qualified institutional buyer (as defined in Rule 144A).
Restricted Common Stock means Common Stock issued upon conversion of a Security that is
Transfer Restricted Common Stock.
Restricted Global Security means a Global Security that is a Transfer Restricted Security.
Restricted Security Legend means the legend set forth in Section 2.12(a).
Restricted Stock Legend means the legend required by Section 2.12(b).
Rule 144A means Rule 144A under the Securities Act (or any successor provision), as it may
be amended from time to time.
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Scheduled Trading Day means any day that is scheduled to be a Trading Day.
SEC means the United States Securities and Exchange Commission.
Securities means the 4.5% Convertible Senior Notes due 2014, or any of them (each, a
Security).
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, as in effect from time to time.
Securities Custodian means the Trustee, as custodian with respect to the Securities in
global form, or any successor thereto.
Significant Subsidiary means, in respect of any Person, a Subsidiary of such Person that
would constitute a significant subsidiary as such term is defined under Rule 1-02(w) of
Regulation S-X under the Exchange Act.
Stated Maturity means, with respect to any Security, the date specified in such security as
the fixed date on which the final payment of principal of such Security is due and payable,
including pursuant to any mandatory redemption provision (but excluding any provision providing for
the repurchase of such security at the option of the Holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has occurred).
Subsidiary means, in respect of any Person, any corporation, association, partnership or
other business entity of which more than 50% of the total voting power of shares of Capital Stock
or other equity interests entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers, general partners or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more
Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.
TIA means the Trust Indenture Act of 1939, as amended, and the rules and regulations
thereunder as in effect on the date of this Indenture, except to the extent any amendment to the
Trust Indenture Act expressly provides for application of the Trust Indenture Act as in effect on
another date.
Trading Day means a day on which (i) trading in the Common Stock generally occurs, (ii)
there is no Market Disruption Event and (iii) a Closing Sale Price for the Common Stock (other than
a Closing Sale Price referred to in the second sentence of the definition thereof) is available for
such day; provided that if the Common Stock is not admitted for trading or quotation on or by any
exchange, bureau or other organization referred to in the definition of Closing Sale Price
(excluding the second sentence of that definition), Trading Day will mean any Business Day. A
Trading Day only includes those days that have a scheduled closing time
of 4:00 p.m. (New York City time) or the then standard closing time for regular trading on the
relevant exchange or trading system.
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Trustee means the party named as such in the first paragraph of this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and, thereafter, means
the successor.
Trust Officer shall mean, when used with respect to the Trustee, any officer within the
corporate trust department of the Trustee, including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who
customarily performs functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred because of such
persons knowledge of and familiarity with the particular subject and who shall have direct
responsibility for the administration of this Indenture.
Vice President, when used with respect to the Company or the Trustee, means any vice
president, whether or not designated by a number or a word or words added before or after the title
vice president.
Voting Stock of a Person means any class or classes of Capital Stock or other interests of
such Person then outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
Wholly Owned Subsidiary means a Significant Subsidiary of the Company all the Capital Stock
of which (other than directors qualifying shares) is owned by the Company or another Wholly Owned
Subsidiary.
Section 1.02. Other Definitions.
Term | Defined in Section | |
Additional Interest Notice |
7.05 | |
Additional Securities |
2.16(a) | |
Additional Shares |
4.02(a) | |
Agent Members |
2.01(b) | |
Bankruptcy Law |
9.01 | |
Change in Control |
3.01(a) | |
Company Order |
2.02 | |
Conversion Agent |
2.03 | |
Conversion Date |
5.02(b) | |
Conversion Obligation |
5.05(a) | |
Conversion Price |
5.06 | |
Custodian |
9.01 | |
Depositary |
2.01(a) | |
DTC |
2.01(a) | |
Effective Date |
4.02(b) | |
Event of Default |
9.01 | |
Expiration Date |
5.06(d) | |
Expiration Time |
5.06(d) | |
Fundamental Change |
3.01(a) |
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Term | Defined in Section | |
Fundamental Change Purchase Date |
3.01(a) | |
Fundamental Change Purchase Notice |
3.01(c) | |
Fundamental Change Purchase Price |
3.01(a) | |
Interest Payment Date |
4.01(a) | |
Legal Holiday |
13.07 | |
Make-Whole Adjustment Event Period |
4.02(a) | |
Maximum Conversion Rate |
4.02(g) | |
Notice of Conversion |
5.02(a) | |
Notice of Default |
9.01(k) | |
Paying Agent |
2.03 | |
Primary Registrar |
2.03 | |
Record Date |
4.01(a) | |
Reference Property |
5.11 | |
Registrar |
2.03 | |
Resale Restriction Termination Date |
2.12(a) | |
Spin-Off |
5.06(d)(iii) | |
Stock Price |
4.02(a) | |
Termination of Trading |
3.01(a) | |
Transfer Restricted Common Stock |
2.12(b) | |
Transfer Restricted Securities |
2.12(a) | |
Unissued Shares |
3.01(a) | |
Valuation Period |
5.06(c) |
Section 1.03. Trust Indenture Act Provisions.
Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by
reference in and made a part of this Indenture. This Indenture shall also include those provisions
of the TIA that would be required to be included herein by the provisions of the Trust Indenture
Reform Act of 1990 if this Indenture had been qualified pursuant to the TIA. The following TIA
terms used in this Indenture have the following meanings:
obligor on the Securities means the Company or any other obligor on the Securities.
All other terms used in this Indenture that are defined in the TIA, defined by TIA reference
to another statute or defined by any SEC rule and not otherwise defined herein have the meanings
assigned to them therein.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(A) a term has the meaning assigned to it herein;
(B) words in the singular include the plural, and words in the plural include the singular;
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(C) provisions apply to successive events and transactions;
(D) the term merger includes a statutory share exchange, and the term merged has a
correlative meaning;
(E) the masculine gender includes the feminine and the neuter;
(F) references to agreements and other instruments include subsequent amendments thereto;
(G) herein, hereof and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision; and
(H) references to the payments on the Securities shall include Additional Interest payable
hereunder, if any.
ARTICLE 2
THE SECURITIES
Section 2.01. Form and Dating.
The Securities and the corresponding Trustees certificate of authentication shall be
substantially in the respective forms set forth in Exhibit A, which Exhibit is incorporated
in and made part of this Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage. The Company shall provide any such notations,
legends or endorsements to the Trustee in writing. The Securities shall be dated the date of their
authentication.
(a) Restricted Global Securities. Securities offered and sold to QIBs in reliance on Rule
144A shall be issued in the form of one or more Restricted Global Securities, substantially in the
form of Exhibit A, which shall be deposited on behalf of the acquirers of the Securities
represented thereby with the Trustee, at its Corporate Trust Office, as custodian for the
depositary, The Depository Trust Company (DTC) (such depositary, or any successor thereto, being
hereinafter referred to as the Depositary), and registered in the name of its nominee, Cede &
Co., duly executed by the Company and authenticated by the Trustee as hereinafter provided. The
aggregate principal amount of the Global Securities may from time to time be increased or decreased
by adjustments made on the records of the Securities Custodian as hereinafter provided, subject in
each case to compliance with the Applicable Procedures.
(b) Global Securities in General. Each Global Security shall represent such of the
outstanding Securities as shall be specified therein, and each shall provide that it shall
represent the aggregate principal amount of outstanding Securities from time to time endorsed
thereon and
that the aggregate principal amount of outstanding Securities represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges, transfers, redemptions,
purchases or conversions of such Securities. Any adjustment of the aggregate principal amount of a
Global Security to reflect the amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Trustee in accordance with
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instructions given
by the Holder thereof as required by Section 2.12 hereof and shall be made on the records of the
Trustee and the Depositary. Payment of principal of and Interest and premium, if any, on any
Global Security shall be made to the Holder of such Security.
Members of, or participants in, the Depositary (Agent Members) shall have no rights under
this Indenture with respect to any Global Security held on their behalf by the Depositary or under
the Global Security, and the Depositary (including, for this purpose, its nominee) may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and
Holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall (A) prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization furnished by the
Depositary or (B) impair, as between the Depositary and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any Security.
(c) Book Entry Provisions. The Company shall execute and the Trustee shall, in accordance
with this Section 2.01(c) and Section 2.02, authenticate and deliver initially one or more Global
Securities that (i) shall be registered in the name of Cede & Co. or as otherwise instructed by the
Depositary, (ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositarys instructions and (iii) shall bear legends substantially to the following effect:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (DTC), TO TELECOMMUNICATION SYSTEMS, INC. (THE COMPANY) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
Section 2.02. Execution and Authentication.
An Officer shall sign the Securities for the Company by manual or facsimile signature.
Typographic and other minor errors or defects in any such facsimile signature shall not affect the
validity or enforceability of any Security which has been authenticated and delivered by the
Trustee.
If an Officer whose signature is on a Security no longer holds that office at the time the
Trustee authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee manually signs the
certificate of authentication on the Security. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
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The Trustee shall authenticate and make available for delivery Securities for original issue
in the aggregate principal amount of up to $103,500,000 (subject to Section 2.16) upon receipt of
(i) a written order or orders of the Company signed by two Officers of the Company (a Company
Order) and delivered to the Trustee, and (ii) an Officers Certificate and Opinion of Counsel
pursuant to Section 13.04 hereof. Additional Securities may thereafter be issued pursuant to
Section 2.16 hereof. Each Company Order shall specify the amount of Securities to be
authenticated, shall provide that all Securities will be represented by a Global Security and the
date on which each original issue of Securities is to be authenticated. The Trustee shall have the
right to decline to authenticate and deliver any Securities under this Section if the Trustee,
being advised by counsel, determines that such action may not lawfully be taken or if the Trustee
in good faith shall determine that such action would expose the Trustee to personal liability to
existing Holders.
The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may
appoint an authenticating agent acceptable to the Company to authenticate Securities. An
authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such agent. An
authenticating agent shall have the same rights as an Agent to deal with the Company or an
Affiliate of the Company.
The Securities shall be issuable only in registered form without coupons and only in
denominations of $1,000 principal amount and any integral multiple thereof.
Section 2.03. Registrar, Paying Agent and Conversion Agent.
The Company shall maintain one or more offices or agencies in The City of New York where
Securities may be presented for registration of transfer or for exchange (each, a Registrar) or
for conversion (each, a Conversion Agent), one or more offices or agencies where Securities may
be presented for payment (each, a Paying Agent) and one or more offices or agencies where notices
and demands to or upon the Company in respect of the Securities and this Indenture may be served.
One of the Registrars (the Primary Registrar) shall keep a register of the Securities and of
their transfer and exchange.
The Company shall enter into an appropriate agency agreement with any Agent not a party to
this Indenture. The agreement shall implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to maintain a Registrar, Paying Agent, or Conversion
Agent, or fails to give the foregoing notice, the Trustee shall act as such. The Company or any
Affiliate of the Company may act as Paying Agent (except for the purposes of Article 11).
The Company hereby initially designates the Trustee as Paying Agent, Registrar, Securities
Custodian and Conversion Agent, and the Corporate Trust Office of the Trustee to be such office or
agency of the Company for each of the aforesaid purposes.
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Section 2.04. Paying Agent to Hold Money in Trust.
Prior to 11:00 a.m. (New York City time) on each due date of the principal of or interest on
any Securities, the Company shall deposit with a Paying Agent a sum sufficient to pay such
principal and interest so becoming due. The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal of or interest on
the Securities and shall notify the Trustee in writing of any default by the Company (or any other
obligor on the Securities) in making any such payment. If the Company or an Affiliate of the
Company acts as Paying Agent, it shall, before 11:00 a.m. (New York City time) on each due date of
the principal of or interest on any Securities, segregate the money and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held by it to the
Trustee, and the Trustee may at any time during the continuance of any default, upon written
request to a Paying Agent, require such Paying Agent to pay forthwith to the Trustee all sums so
held in trust by such Paying Agent. Upon doing so, the Paying Agent (other than the Company) shall
have no further liability for the money.
Section 2.05. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably practicable the most recent
list available to it of the names and addresses of Holders. If the Trustee is not the Primary
Registrar, the Company shall furnish to the Trustee at least five Business Days before each
semiannual interest payment date, and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of the names and
addresses of Holders.
Section 2.06. Transfer and Exchange.
(a) Subject to compliance with any applicable additional requirements contained in Section
2.12, when a Security is presented to a Registrar with a request to register a transfer thereof or
to exchange such Security for an equal principal amount of Securities of other authorized
denominations, the Registrar shall register the transfer or make the exchange as requested;
provided, however, that every Security presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by, if applicable, any legal opinions,
certifications or other evidence required by the Company pursuant to Section 2.12 and, if it is a
Certificated Security, an assignment form in the form included in Exhibit A, all in form
satisfactory to the Registrar duly executed by the Holder thereof or its attorney duly authorized
in writing. To permit registration of transfers and exchanges, upon surrender of any Security
for transfer or exchange at an office or agency maintained pursuant to Section 2.03, the Company
shall execute and the Trustee shall authenticate Securities of a like aggregate principal amount at
the Registrars request. Any exchange or transfer shall be without charge, except that the Company
or the Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; provided that this sentence shall
not apply to any exchange pursuant to Section 2.10, 3.04, 5.02(d) or 12.05.
None of the Company, any Registrar or the Trustee shall be required to exchange or register a
transfer of any Securities or portions thereof (i) in respect of which a Fundamental
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Change
Purchase Notice has been delivered and not withdrawn by the Holder thereof (except, in the case of
the purchase of a Security in part, the portion thereof not to be purchased) or (ii) surrendered
for conversion pursuant to Article 5.
All Securities issued upon any transfer or exchange of Securities shall be valid obligations
of the Company, evidencing the same debt and entitled to the same benefits under this Indenture, as
the Securities surrendered upon such transfer or exchange.
(b) Any Registrar appointed pursuant to Section 2.03 hereof shall provide to the Trustee such
information as the Trustee may reasonably require in connection with the delivery by such Registrar
of Securities upon transfer or exchange of Securities.
(c) Each Holder of a Security agrees to indemnify the Company and the Trustee against any
liability that may result from the transfer, exchange or assignment of such Holders Security in
violation of any provision of this Indenture and/or applicable U.S. federal or state securities
law. Prior to the due presentment of a registration of a transfer of any Security, the Trustee, any
Agent and the Company may deem and treat the Person in whose name any Security is registered as the
absolute owner of such Security for the purpose of all payments with respect to such Securities,
and neither the Trustee, any Agent nor the Company shall be affected by notice to the contrary.
Neither the Trustee nor any Agent shall have any responsibility for any actions taken or not taken
by the Depositary.
The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance
with any restrictions on transfer imposed under this Indenture or under applicable law with respect
to any transfer of any interest in any Security (including any transfers between or among Agent
Members or other beneficial owners of interests in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are expressly required by, and
to do so if and when expressly required by the terms of, this Indenture and to examine the same to
determine substantial compliance as to form with the express requirements hereof.
Section 2.07. Replacement Securities.
If any mutilated Security is surrendered to the Company, a Registrar or the Trustee, or the
Company, a Registrar and the Trustee receive evidence to their satisfaction of the destruction,
loss or theft of any Security, and there is delivered to the Company, the applicable Registrar and
the Trustee such security or indemnity as will be required by them to save each of them from any
loss they may suffer if a Security is replaced, then, in the absence of written notice to the
Company, such Registrar or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute, and upon its written request the Trustee shall authenticate
and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or
stolen Security, a new Security of like tenor and principal amount, bearing a number not
contemporaneously outstanding. The Trustee and the Company each may charge such Holder for
their expenses in replacing such Security.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to
become due and payable, or is about to be purchased by the Company pursuant to Article 3, or
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converted pursuant to Article 5, the Company in its discretion may, instead of issuing a new
Security, pay, purchase or convert such Security, as the case may be.
Upon the issuance of any new Securities under this Section 2.07, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the reasonable fees and expenses of
the Trustee or the Registrar) in connection therewith.
Every new Security issued pursuant to this Section 2.07 in lieu of any mutilated, destroyed,
lost or stolen Security shall constitute an original additional contractual obligation of the
Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 2.07 are (to the extent lawful) exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities.
Section 2.08. Outstanding Securities.
Securities outstanding at any time are all Securities authenticated by the Trustee, except for
those canceled by it, those purchased pursuant to Article 3, those converted pursuant to Article 5,
those delivered to it for cancellation or surrendered for transfer or exchange and those described
in this Section 2.08 as not outstanding.
If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the
Company receives, subsequent to the new Securitys authentication, proof satisfactory to the
Company that the replaced Security is held by a bona fide purchaser unaware that such Security has
been replaced.
If a Paying Agent (other than the Company or an Affiliate of the Company) holds in respect of
Securities on a Fundamental Change Purchase Date or the Maturity Date money sufficient to pay the
principal of (including premium, if any), and any accrued interest on Securities (or portions
thereof) payable on that date, then on and after such Fundamental Change Purchase Date or the
Maturity Date, as the case may be, such Securities (or portions thereof, as the case may be) shall
cease to be outstanding and any interest on them shall cease to accrue.
Subject to the restrictions contained in Section 2.09, a Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Security.
Section 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of Securities have
concurred in any notice, direction, waiver or consent, Securities owned by the Company or any other
obligor on the Securities or by any Affiliate of the Company or of such other obligor shall be
disregarded, except that, for purposes of determining whether the Trustee shall be protected in
relying on any such notice, direction, waiver or consent, only Securities which a Trust Officer of
the Trustee actually knows are so owned shall be so disregarded. Securities so owned which
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have
been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction
of the Trustee the pledgees right so to act with respect to the Securities and that the pledgee is
not the Company or any other obligor on the Securities or any Affiliate of the Company or of such
other obligor.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may prepare and execute, and,
upon receipt of a Company Order, the Trustee shall authenticate and deliver, temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities but may have
variations that the Company considers appropriate for temporary Securities and as shall be
reasonably acceptable to the Trustee. Every temporary Security shall be executed and registered by
the Company and be authenticated by the Trustee upon the same conditions and in substantially the
same manner, and with like effect, as the definitive Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate and deliver definitive Securities in
exchange for temporary Securities.
Section 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for cancellation. The
Registrar, the Paying Agent and the Conversion Agent shall forward to the Trustee or its agent any
Securities surrendered to them for transfer, exchange, redemption, payment or conversion. The
Trustee and no one else shall cancel, in accordance with its standard procedures, all Securities
surrendered for transfer, exchange, payment, conversion or cancellation and shall deliver the
canceled Securities to the Company. The Company may, to the extent permitted by law, purchase
Securities in the open market or by tender offer at any price or by private agreement. Any
Securities purchased or otherwise acquired by the Company or any of its Subsidiaries prior to the
Maturity Date may, to the extent permitted by law, be reissued or resold or may, at the option of
the Company, be surrendered to the Trustee for cancellation. Any Securities surrendered for
cancellation may not be reissued or resold and shall be promptly cancelled by the Trustee, and the
Company may not hold or resell such Securities or issue any new Securities to replace any such
Securities or any Securities that any Holder has converted pursuant to Article 5.
Section 2.12. Legends; Additional Transfer Requirements.
(a) Every Security that bears or is required under this Section 2.12(a) to bear the Restricted
Security Legend set forth in this Section 2.12(a) (the Transfer Restricted Securities) shall be
subject to the restrictions on transfer set forth in Section 2.06 and this
Section 2.12(a) (including those set forth in the Restricted Security Legend set forth below),
and the Holder of each such Transfer Restricted Security, by such Holders acceptance thereof,
agrees to be bound by all such restrictions on transfer. As used in Sections 2.12(a) and 2.12(b),
the term transfer includes any sale, pledge, transfer or other disposition whatsoever of any
Transfer Restricted Security. The Registrar shall not register any transfer of a Transfer
Restricted Security not made in accordance with the restrictions on transfer set forth in this
Section 2.12.
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Subject to the last two paragraphs of this Section 2.12(a), prior to the date upon which the
Trustee removes the Restricted Security Legend from any Security (the Resale Restriction
Termination Date, which shall have a correlative meaning in respect of any Restricted Common
Stock) any certificate evidencing such Security (and all securities issued in exchange therefor or
substitution thereof, including Common Stock, if any, issued upon conversion thereof, which shall
bear the legend set forth in Section 2.12(b), if applicable) shall bear a legend in substantially
the following form:
THIS SECURITY AND THE CLASS A COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
1. REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A QUALIFIED INSTITUTIONAL
BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE
INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
2. AGREES FOR THE BENEFIT OF TELECOMMUNICATION SYSTEMS, INC. (THE COMPANY) THAT IT WILL
NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN
PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR
SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR
PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW,
EXCEPT:
(A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE, THE COMPANY AND
THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR
OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO
-15-
DETERMINE THAT THE PROPOSED TRANSFER IS
BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT;
So long as the Securities are represented by Global Securities that are held by or on behalf
of the Depositary only, the Company may accomplish any delegending of such Securities by:
(i) instructing the Trustee to remove the Restricted Security Legend from the
Securities and instructing the transfer agent for the Common Stock to remove the Restricted
Stock Legend from the Common Stock issued upon conversion of the Securities;
(ii) notifying Holders of the Securities and Common Stock issued upon conversion of the
Securities that the Restricted Security Legend and Restricted Stock Legend have been removed
or deemed removed;
(iii) notifying the Trustee, the transfer agent for the Common Stock and DTC to change
the CUSIP number for the Securities and the Common Stock issued upon conversion of the
Securities to the applicable unrestricted CUSIP number; and
(iv) complying with any Applicable Procedures for delegending;
whereupon the Restricted Security Legend shall be deemed removed from any Global Securities without
further action on the part of Holders.
Any Security (or security issued in exchange or substitution therefor) as to which the
restrictions on transfer shall have expired in accordance with their terms or that has been
transferred, replaced or exchanged on or after the Resale Restriction Termination Date or that has
been transferred pursuant to a registration statement that has been declared effective under the
Securities Act may, upon surrender of such Security to the Registrar for exchange in accordance
with the provisions of this Section 2.12, be exchanged for a new Security or Securities, of like
tenor and aggregate principal amount, which shall not bear the Restricted Security Legend required
by this Section 2.12(a).
(b) Every stock certificate representing Common Stock issued upon conversion of a Transfer
Restricted Security that bears or is required under this Section 2.12(b) to bear the
Restricted Stock Legend set forth in this Section 2.12(b) (the Transfer Restricted Common
Stock) shall be subject to the restrictions on transfer set forth in Section 2.06 and this Section
2.12(b) (including those set forth in the Restricted Stock Legend set forth below), and the Holder
of such Common Stock issued upon conversion of a Transfer Restricted Security, by such Holders
acceptance thereof, agrees to be bound by all such restrictions on transfer and the further
restrictions set forth in Section 2.15. The Company shall not register any transfer of Common
Stock issued upon conversion of such a Transfer Restricted Security not made in accordance with the
restrictions on transfer set forth in this Section 2.12.
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Subject to the last paragraph of this Section 2.12(b) and Section 2.15 with respect to Common
Stock, prior to the Resale Restriction Termination Date, any stock certificate representing Common
Stock issued upon conversion of a Transfer Restricted Security shall bear a legend in substantially
the following form, unless such Common Stock has been sold pursuant to a registration statement
that has been declared effective under the Securities Act (and which continues to be effective at
the time of such issuance) or such Common Stock has been issued upon conversion of Securities that
have been transferred pursuant to a registration statement that has been declared effective under
the Securities Act:
THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE SECURITIES ACT), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE ACQUIRER:
1. REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A QUALIFIED INSTITUTIONAL
BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE
INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
2. AGREES FOR THE BENEFIT OF TELECOMMUNICATION SYSTEMS, INC. (THE COMPANY) THAT IT WILL
NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN
PRIOR TO THE DATE THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE OF THE
SECURITY IN RESPECT OF THE CONVERSION OF WHICH THIS SECURITY WAS ISSUED OR SUCH SHORTER PERIOD
OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER,
AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE,
THE COMPANY AND THE TRANSFER AGENT RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH
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LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN
ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO
THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
Any stock certificate (or security issued in exchange or substitution therefor) as to which
such restrictions on transfer shall have expired in accordance with their terms or that has been
transferred, replaced or exchanged on or after the Resale Restriction Termination Date or that has
been transferred pursuant to a registration statement that has been declared effective under the
Securities Act may, upon surrender of such stock certificate to the transfer agent for the Common
Stock for exchange in accordance with the provisions of this Section 2.12 and Section 2.15, be
exchanged for a new stock certificate, of like tenor and aggregate number of shares, which shall
not bear the Restricted Stock Legend required by this Section 2.12(b).
(c) Any Security or Common Stock issued upon the conversion or exchange of a Security that,
prior to the date upon which the Company instructs the Trustee to remove the Restricted Security
Legend, is purchased or owned by the Company or any Affiliate thereof may not be resold by the
Company or such Affiliate unless registered under the Securities Act or resold pursuant to an
exemption from the registration requirements of the Securities Act in a transaction that results in
such Security or Common Stock, as the case may be, no longer being restricted securities (as
defined under Rule 144).
(d) Notwithstanding any provision of Section 2.06 and Section 2.12 to the contrary, in the
event Rule 144(d) as promulgated under the Securities Act (or any successor rule) is amended to
change the one-year period under Rule 144(d) (or the corresponding period under any successor
rule), from and after receipt by the Trustee of the Officers Certificate and Opinion of Counsel
provided for in this Section 2.12(d), (i) each reference in Section 2.12(a) to one year and in
the Restricted Security Legend set forth in such paragraph to ONE YEAR shall be deemed for all
purposes hereof to be references to such changed period, (ii) each reference in Section 2.12(b) to
one year and in the Restricted Stock Legend set forth in such paragraph to ONE YEAR shall be
deemed for all purposes hereof to be references to such changed period and (iii) all corresponding
references in the Security (including the definition of Resale Restriction Termination Date) and
the Restricted Security Legend thereon shall be deemed for all purposes hereof to be references to
such changed period, provided that such changes shall not
become effective if they are otherwise prohibited by, or would otherwise cause a violation of,
the then-applicable federal securities laws. The provisions of this Section 2.12(d) shall not be
effective until such time as the Opinion of Counsel and Officers Certificate have been received by
the Trustee hereunder. This Section 2.12(d) shall apply to successive amendments to Rule 144(d)
(or any successor rule) changing the holding period thereunder.
(e) A Global Security may not be transferred, in whole or in part, to any Person other than
the Depositary or a nominee or any successor thereof, and no such transfer to any such other Person
may be registered; provided that the foregoing shall not
prohibit any transfer of a Security that
is issued in exchange for a Global Security but is not itself a Global Security. No transfer of
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a
Security to any Person shall be effective under this Indenture or the Securities unless and until
such Security has been registered in the name of such Person. Notwithstanding any other provisions
of this Indenture or the Securities, transfers of a Global Security, in whole or in part, shall be
made only in accordance with this Section 2.12.
(f) The provisions of clauses (i), (ii), (iii) and (iv) below shall apply only to Global
Securities:
(i) Notwithstanding any other provisions of this Indenture or the Securities, a Global
Security shall not be exchanged in whole or in part for a Security registered in the name of
any Person other than the Depositary or one or more nominees thereof; provided that a Global
Security may be exchanged for Securities registered in the names of any person designated by
the Depositary in the event that (A) the Depositary has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or such Depositary
has ceased to be a clearing agency registered under the Exchange Act, and a successor
Depositary is not appointed by the Company within 90 days or (B) an Event of Default has
occurred and is continuing with respect to the Securities. Any Global Security exchanged
pursuant to clause (A) shall be so exchanged in whole and not in part, and any Global
Security exchanged pursuant to clause (B) above may be exchanged in whole or from time to
time in part as directed by the Depositary. Any Security issued in exchange for a Global
Security or any portion thereof shall be a Global Security; provided that any such Security
so issued that is registered in the name of a Person other than the Depositary or a nominee
thereof shall not be a Global Security.
(ii) Securities issued in exchange for a Global Security or any portion thereof shall
be issued in definitive, fully registered form, without interest coupons, shall have an
aggregate principal amount equal to that of such Global Security or portion thereof to be so
exchanged, shall be registered in such names and be in such authorized denominations as the
Depositary shall designate and shall bear the applicable legends provided for herein. Any
Global Security to be exchanged in whole shall be surrendered by the Depositary to the
Trustee, as Registrar. With regard to any Global Security to be exchanged in part, either
such Global Security shall be so surrendered for exchange or, if the Trustee is acting as
custodian for the Depositary or its nominee with respect to such Global Security, the
principal amount thereof shall be reduced by an amount equal to the portion thereof to be so
exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon
any such surrender or adjustment, the Trustee shall
authenticate and deliver the Security issuable on such exchange to or upon the order of
the Depositary or an authorized representative thereof.
(iii) The registered Holder may grant proxies and otherwise authorize any Person,
including Agent Members and persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this Indenture or the Securities.
(iv) In the event of the occurrence of any of the events specified in clause (i) above,
the Company shall promptly make available to the Trustee a reasonable supply of Certificated
Securities in definitive, fully registered form, without interest coupons.
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Section 2.13. CUSIP Numbers.
The Company in issuing the Securities may use one or more CUSIP numbers (if then generally
in use), and, if so, the Trustee shall use CUSIP numbers in notices of purchase as a convenience
to Holders; provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained in any notice of a
purchase and that reliance may be placed only on the other identification numbers printed on the
Securities, and any such purchase shall not be affected by any defect in or omission of such
numbers. The Company shall promptly notify the Trustee in writing of any change in the CUSIP
number.
Section 2.14. Ranking.
The obligations of the Company arising under or in connection with this Indenture and every
outstanding Security issued under this Indenture from time to time constitute and shall constitute
an unsecured general obligation of the Company, ranking equal in right of payment to all other
existing and future senior unsecured and unsubordinated indebtedness of the Company and ranking
senior in right of payment to any future indebtedness of the Company that is expressly made
subordinate to the Securities by the terms of such indebtedness.
Section 2.15. Issuance, Transfer and Exchange of Common Stock Issuable Upon Conversion of
the Securities.
If (i) shares of Common Stock to be issued upon conversion of Securities bearing the
Restricted Security Legend are to be registered in a name other than that of the Holder of such
Securities or (ii) shares of Common Stock represented by a certificate bearing the Restricted Stock
Legend are transferred subsequently by such Holder, then the Holder must deliver to the transfer
agent for the Common Stock and to the Company a certificate in substantially the form of
Exhibit B as to compliance with the restrictions on transfer applicable to such shares of
Common Stock and neither the transfer agent nor the registrar for the Common Stock shall be
required to register any transfer of such Common Stock not so accompanied by a properly completed
certificate.
Section 2.16. Additional Securities.
(a) The Company may, from time to time without the consent of the Holders of outstanding
Securities, increase the aggregate principal amount of the Securities by issuing additional
Securities in the future pursuant to this Indenture (Additional Securities) having terms and
conditions identical to those of the other outstanding Securities, except that Additional
Securities may have a different initial date from which interest begins to accrue thereon so that
the Additional Securities are fungible with outstanding Securities; provided that no differences
pursuant to this Section 2.16(a) shall cause such Additional Securities to constitute a different
class of securities than the Securities issued on the Initial Issue Date for U.S. federal income
tax purposes; and provided, further, that the Additional Securities shall have the same CUSIP
number as the Securities issued on the Initial Issue Date. The Securities issued on the Initial
Issue Date and any Additional Securities shall be treated as a single class for all purposes under
this Indenture, including, without limitation, waivers, amendments, offers to purchase and U.S.
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federal income tax purposes. No Additional Securities may be issued if on the issue date therefor
any Event of Default has occurred and is continuing.
(b) With respect to any Additional Securities, the Company shall set forth in an Officers
Certificate pursuant to a resolution of the Board of Directors of the Company, copies of which
shall be delivered to the Trustee, the following information:
(i) the aggregate principal amount of such Additional Securities to be authenticated
and delivered pursuant to this Indenture;
(ii) the issue date and the issue price of such Additional Securities;
(iii) whether such Additional Securities will be subject to transfer restrictions under
the Securities Act (or other applicable securities laws).
In addition, the Company shall deliver to the Trustee an Opinion of Counsel in accordance with
Section 13.04 hereof certifying as to the satisfaction of all conditions precedent to the
authentication by the Trustee of such Additional Securities.
Section 2.17. Additional Interest.
The Company may be obligated to pay Additional Interest to Holders, as and to the extent set
forth in accordance with Section 7.10 and Section 9.02(b) hereof. Any Additional Interest is
deemed to be interest for purposes of this Indenture. The Trustee has no duty to determine when
Additional Interest under Section 7.10 or Section 9.02(b) hereof should be paid.
Section 2.18. Calculations in Respect of Securities.
Except to the extent provided herein and therein, the Company will be responsible for making
all calculations called for under the Indenture and the Securities. These calculations include,
but are not limited to, determinations of the Closing Sale Price of the Common Stock, adjustments
to the Conversion Price, any accrued interest payable on the Securities, the Conversion Price and
the Conversion Rate. The Company will make these calculations in good
faith and, absent manifest error, the calculations will be final and binding on Holders of the
Securities. The Company will provide to each of the Trustee and the Conversion Agent a schedule of
its calculations, and the Trustee and the Conversion Agent are entitled to rely conclusively upon
the accuracy of such calculations without independent verification. The Trustee will forward the
Companys calculations to any Holder of the Securities upon the request of such Holder.
ARTICLE 3
PURCHASES OF SECURITIES UPON FUNDAMENTAL CHANGE
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Section 3.01. Purchase of Securities at Option of the Holder Upon Fundamental Change.
(a) If at any time that Securities remain outstanding there shall occur a Fundamental Change,
Securities shall be purchased by the Company at the option of the Holders, as of a date, determined
by the Company in its sole discretion, that is not less than 20 Business Days and not more than 35
Business Days after the occurrence of the Fundamental Change (the Fundamental Change Purchase
Date) at a purchase price equal to 100% of the principal amount of the Securities to be purchased,
together with any accrued and unpaid interest to, but excluding, the Fundamental Change Purchase
Date (the Fundamental Change Purchase Price), unless the Fundamental Change Purchase Date is
after a Record Date and on or prior to the related Interest Payment Date, in which case interest
accrued to the Interest Payment Date will be paid to Holders of the Securities as of the preceding
Record Date and the Fundamental Change Purchase Price payable to any Holder surrendering such
Holders Security for purchase pursuant to this Article 3 shall be equal to the principal amount of
Securities subject to purchase and will not include any accrued and unpaid interest. The
Fundamental Change Purchase Price shall be payable in Cash, subject to satisfaction by or on behalf
of any Holder of the requirements set forth in subsection (c) of this Section 3.01.
Notwithstanding the foregoing, the Company may not repurchase the Securities upon the occurrence of
a Fundamental Change if the principal amount of the Securities has been accelerated and such
acceleration has not been rescinded on or prior to the Fundamental Change Purchase Date.
A Fundamental Change shall mean the occurrence of a Change in Control or a Termination of
Trading.
A Change in Control shall be deemed to have occurred if any of the following occurs after
the date hereof:
(i) any person or group (as such terms are defined below) is or becomes the
beneficial owner (as defined below), directly or indirectly, of shares of Voting Stock of
the Company representing 50% or more of the total voting power of all outstanding classes of
Voting Stock of the Company or has the power, directly or indirectly, to elect a majority of
the members of the Board of Directors; or
(ii) the Company consolidates with, enters into a binding share exchange with, or
merges with or into, another Person or the Company sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of the assets of the Company,
or any Person consolidates with, or merges with or into, the Company, in any such event
other than pursuant to a transaction (A) in which the Persons that beneficially owned,
directly or indirectly, shares of Voting Stock of the Company immediately prior to such
transaction beneficially own, directly or indirectly, shares of Voting Stock of the
Company representing at least a majority of the total voting power of all outstanding
classes of Voting Stock of the surviving or transferee Person, with such Holders
proportional voting power immediately after such transaction vis-à-vis each other with
respect to the securities they receive in such transaction being in substantially the same
proportions as their respective voting power vis-à-vis each other immediately prior to such
transaction, or (B) which is effected solely to change the jurisdiction of
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incorporation of
the Company and results in a reclassification, conversion or exchange of outstanding shares
of Common Stock solely into shares of common stock of the surviving Person; or; or
(iii) a majority of the members of the Board of Directors are not Continuing Directors;
or
(iv) the holders of the Capital Stock of the Company approve any plan or proposal for
the liquidation or dissolution of the Company (whether or not otherwise in compliance with
the terms hereof).
For the purpose of the definition of Change in Control, (i) person and group have the
meanings given such terms under Section 13(d) and 14(d) of the Exchange Act or any successor
provision to either of the foregoing, and the term group includes any group acting for the
purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Exchange Act (or any successor provision thereto), (ii) a beneficial owner
shall be determined in accordance with Rule 13d-3 under the Exchange Act, as in effect on the date
of this Indenture, except that the number of shares of Voting Stock of the Company shall be deemed
to include, in addition to all outstanding shares of Voting Stock of the Company and Unissued
Shares deemed to be held by the person or group (as such terms are defined above) or other
Person with respect to which the Change in Control determination is being made, all Unissued Shares
deemed to be held by all other Persons, and (iii) the terms beneficially owned and beneficially
own shall have meanings correlative to that of beneficial owner. The term Unissued Shares
means shares of Voting Stock not outstanding that are subject to options, warrants, rights to
purchase or conversion privileges exercisable within 60 days of the date of determination of a
Change in Control.
Notwithstanding anything to the contrary set forth in this Section 3.01, Holders shall not
have the right to require the Company to purchase any Securities in the event of a Change of
Control resulting from the occurrence of an event described in clauses (i) and (ii) of the
definition of such term, and the Company shall not be required to deliver a written notice of a
Fundamental Change incidental thereto as a result of any acquisition, consolidation, merger or
binding share exchange or a sale, assignment, conveyance, transfer, lease or other disposition if
at least 90% of the consideration paid for the Common Stock (excluding cash payments for fractional
shares and cash payments pursuant to dissenters appraisal rights) in such transaction
or transactions consists of shares of common stock that are traded on the New York Stock
Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective
successors) or which will be so traded immediately following such transaction or transactions and
as a result of such transaction or transactions the Securities become convertible into such shares
of such common stock.
A Termination of Trading means that the Common Stock or other securities into which the
Securities are convertible are not approved for listing on the New York Stock Exchange, the NASDAQ
Global Select Market or the NASDAQ Global Market (or any of their respective successors).
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If any transaction in which the Common Stock is replaced by the securities of another entity
occurs, following completion of any related Make Whole Adjustment Event Period and any related
Fundamental Change Purchase Date, references to the Company in the definitions of Fundamental
Change, Change of Control and Termination of Trading above shall apply to such other entity
instead.
(b) Within 10 Business Days after the occurrence of a Fundamental Change, the Company shall
mail a written notice of the Fundamental Change to the Trustee and to each Holder. The Company
shall also issue a press release announcing the occurrence of such Fundamental Change (and make
such press release available on the Companys website). The notice shall include the form of a
Fundamental Change Purchase Notice to be completed by the Holder and shall state:
(i) briefly, the events causing such Fundamental Change;
(ii) the Effective Date of the Fundamental Change, and whether the Fundamental Change
is a Make Whole Adjustment Event, in which case the Effective Date of the Make Whole
Adjustment Event;
(iii) information about the Holders right to convert the Securities;
(iv) information about the Holders right to require the Company to purchase the
Securities;
(v) the last date on which a Holder may exercise the purchase right;
(vi) the Fundamental Change Purchase Date;
(vii) the Fundamental Change Purchase Price;
(viii) the date by which the Fundamental Change Purchase Notice pursuant to this
Section 3.01 must be given;
(ix) the Conversion Price (giving effect to any applicable Additional Shares) and any
adjustments thereto;
(x) the procedures that the Holder must follow to exercise rights under this Section
3.01;
(xi) the procedures for withdrawing a Fundamental Change Purchase Notice, including a
form of notice of withdrawal; and
(xii) the name and address of each Paying Agent and Conversion Agent;
(xiii) that the Holder must satisfy the requirements set forth in the Indenture and the
Securities in order to convert the Securities.
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If any of the Securities is in the form of a Global Security, then the Company shall modify
such notice to the extent necessary to accord with the procedures of the Depositary applicable to
the repurchase of Global Securities.
(c) A Holder may exercise its rights specified in subsection (a) of this Section 3.01 upon
delivery of a written notice (which shall be in substantially the form included in Exhibit
A hereto and which may be delivered by letter, overnight courier, hand delivery, facsimile
transmission or in any other manner reasonably acceptable to the Paying Agent and, in the case of
Global Securities, may be delivered electronically or by other means in accordance with the
Depositarys customary procedures) of the exercise of such rights (a Fundamental Change Purchase
Notice) to any Paying Agent during the period between the mailing of the Fundamental Change
Purchase Notice and the close of business on the second Scheduled Trading Day next preceding the
Fundamental Change Purchase Date.
The delivery of such Security to any Paying Agent (together with all necessary endorsements)
at the office of such Paying Agent shall be a condition to the receipt by the Holder of the
Fundamental Change Purchase Price therefor.
The Company shall purchase from the Holder thereof, pursuant to this Section 3.01, a portion
of a Security if the principal amount of such portion is $1,000 or an integral multiple of $1,000.
Provisions of the Indenture that apply to the purchase of all of a Security pursuant to Section
3.01 through Section 3.04 also apply to the purchase of such portion of such Security.
Notwithstanding anything herein to the contrary, any Holder delivering to a Paying Agent the
Fundamental Change Purchase Notice contemplated by this subsection (c) shall have the right to
withdraw such Fundamental Change Purchase Notice in whole or in a portion thereof that is a
principal amount of $1,000 or in an integral multiple thereof at any time prior to 5:00 p.m. (New
York City time) on the second scheduled Trading Day next preceding the Fundamental Change Purchase
Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section
3.02.
A Paying Agent shall promptly notify the Company of the receipt by it of any Fundamental
Change Purchase Notice or written withdrawal thereof.
Anything herein to the contrary notwithstanding, in the case of Global Securities, any
Fundamental Change Purchase Notice may be delivered or withdrawn and such Securities may be
surrendered or delivered for purchase in accordance with the Applicable Procedures as in effect
from time to time.
Section 3.02. Effect of Fundamental Change Purchase Notice.
Upon receipt by any Paying Agent of the Fundamental Change Purchase Notice specified in
Section 3.01(c), the Holder of the Security in respect of which such Fundamental Change Purchase
Notice was given shall (unless such Fundamental Change Purchase Notice is withdrawn as specified
below) thereafter be entitled to receive the Fundamental Change Purchase Price with respect to such
Security. Such Fundamental Change Purchase Price shall be paid to such Holder promptly following
the later of (a) the Fundamental Change Purchase Date
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with respect to such Security (provided the conditions in Section 3.01(c) have been satisfied)
and (b) the time of delivery of such Security to a Paying Agent by the Holder thereof in the manner
required by Section 3.01(c). Securities in respect of which a Fundamental Change Purchase Notice
has been given by the Holder thereof may not be converted into shares of Common Stock pursuant to
Article 5 on or after the date of the delivery of such Fundamental Change Purchase Notice unless
such Fundamental Change Purchase Notice has first been validly withdrawn.
A Fundamental Change Purchase Notice may be withdrawn by means of a written notice (which may
be delivered by mail, overnight courier, hand delivery, facsimile transmission or in any other
manner reasonably acceptable to the Paying Agent and, in the case of Global Securities, may be
delivered electronically or by other means in accordance with the Depositarys customary
procedures) of withdrawal delivered by the Holder to a Paying Agent at any time prior to 5:00 p.m.
(New York City time) on the second Scheduled Trading Day immediately preceding the Fundamental
Change Purchase Date, specifying the principal amount of the Security or portion thereof (which
must be a principal amount of $1,000 or an integral multiple of $1,000 in excess thereof) with
respect to which such notice of withdrawal is being submitted.
Section 3.03. Deposit of Fundamental Change Purchase Price.
On or before 11:00 a.m. (New York City time) on the Fundamental Change Purchase Date, the
Company shall deposit with the Trustee or with a Paying Agent (other than the Company or an
Affiliate of the Company) an amount of money (in immediately available funds if deposited on such
Fundamental Change Purchase Date) sufficient to pay the aggregate Fundamental Change Purchase Price
of all the Securities or portions thereof that are to be purchased as of such Fundamental Change
Purchase Date. The manner in which the deposit required by this Section 3.03 is made by the
Company shall be at the option of the Company; provided that such deposit shall be made in a manner
reasonably acceptable to the Trustee and the Paying Agent such that the Trustee or a Paying Agent
shall have immediately available funds on the Fundamental Change Purchase Date.
If a Paying Agent holds, in accordance with the terms hereof, money sufficient to pay the
Fundamental Change Purchase Price of any Security for which a Fundamental Change Purchase Notice
has been tendered and not withdrawn in accordance with this Indenture, then, on the Fundamental
Change Purchase Date, such Security shall cease to be outstanding, interest shall cease to accrue
thereon and the rights of the Holder in respect thereof shall terminate (other than the right to
receive the Fundamental Change Purchase Price as aforesaid). The Company shall publicly announce
the principal amount of Securities purchased as a result of such Fundamental Change on or as soon
as practicable after the Fundamental Change Purchase Date.
To the extent that the aggregate amount of Cash deposited by the Company pursuant to this
Section 3.03 exceeds the aggregate Fundamental Change Purchase Price of the Securities or portions
thereof that the Company is obligated to purchase, then promptly after the Fundamental Change
Purchase Date the Trustee or a Paying Agent, as the case may be, shall return any such excess Cash
to the Company.
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Section 3.04. Securities Purchased in Part.
Any Security that is to be purchased only in part shall be surrendered at the office of a
Paying Agent and, promptly after the Fundamental Change Purchase Date, the Company shall execute
and the Trustee shall authenticate and deliver to the Holder of such Security, without service
charge, a new Security or Securities, of such authorized denomination or denominations as may be
requested by such Holder, in aggregate principal amount equal to, and in exchange for, the portion
of the principal amount of the Security so surrendered that is not purchased.
Section 3.05. Compliance with Securities Laws Upon Purchase of Securities.
In connection with any offer to purchase Securities under Section 3.01, the Company shall (a)
comply with the applicable provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules
under the Exchange Act, (b) file the related Schedule TO (or any successor or similar schedule,
form or report), if required, under the Exchange Act and (c) otherwise comply with all federal and
state securities laws in connection with such offer to purchase or repurchase Securities, all so as
to permit the rights of the Holders and obligations of the Company under Section 3.01 through
Section 3.04 to be exercised in the time and in the manner specified therein.
Section 3.06. No Fundamental Change Repurchase Following Acceleration.
No Securities shall be purchased by the Company under Section 3.01 if the principal amount of
the Securities has been accelerated under Section 9.02, and such acceleration has not been
rescinded, on or prior to the Fundamental Change Purchase Date.
Section 3.07. Trustees Fundamental Change Purchase Disclaimer.
The Trustee has no duty to determine when a Fundamental Change has occurred, or when purchases
of Securities upon a Fundamental Change under Article 3 should be made. The Trustee shall not be
accountable for and makes no representation as to the Fundamental Change Purchase Price payable in
respect of any Fundamental Change. The Trustee shall not be responsible for the Companys failure
to comply with this Article 3.
ARTICLE 4
PAYMENT OF INTEREST AND ADDITIONAL SHARES
Section 4.01. Interest Payments.
(a) The Company shall pay interest on the Securities at a rate of 4.5% per annum, payable
semi-annually in arrears on May 1 and November 1 of each year (each, an Interest Payment Date),
or if any such day is not a Business Day, the immediately following Business Day, commencing May
1, 2010. Interest on a Security shall be paid to the Holder of such Security at the close of
business on April 15 or October 15 (each, a Record Date), as the case may be, next preceding the
related Interest Payment Date, and shall be computed on the basis of a 360-day year comprised of
twelve 30-day months. In the event of the maturity, conversion, or purchase of a Security by the
Company at the option of the Holder, interest shall cease to accrue
on such Security. Notwithstanding any other provision of this Indenture, however, the Company
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shall pay interest on the Maturity Date to Holders on the Record Date immediately preceding the
Maturity Date in respect of the period ending with the Maturity Date regardless of whether such
Holders convert their Securities.
(b) Upon conversion of a Security, (i) a Holder shall not receive any Cash payment of interest
(unless such Holder is the Holder on a Record Date and such conversion occurs between such Record
Date and the Interest Payment Date to which it relates, in which case a Holder on the Record Date
shall receive on the Interest Payment Date accrued and unpaid interest) and the Conversion Rate
shall not be adjusted to account for accrued and unpaid interest and (ii) except as set forth in
clause (c) below, the Companys delivery to a Holder of Common Stock and (in the case of fractional
shares) Cash in settlement of the Conversion Obligation as set forth in Section 5.05 shall be
deemed to satisfy its obligation with respect to such Security, and any accrued but unpaid interest
shall be deemed to be paid in full upon conversion, rather than cancelled, extinguished or
forfeited.
(c) Securities surrendered for conversion by a Holder after the close of business on any
Record Date but prior to the next Interest Payment Date must be accompanied by payment of an amount
equal to the interest that shall be payable on the Securities; provided, however, that no such
payment need be made (1) if the Company has specified a Fundamental Change Purchase Date that is
after a Record Date and on or prior to the next Interest Payment Date, (2) with respect to any
Securities surrendered for conversion following the Record Date for the payment of interest
immediately preceding the Maturity Date or (3) only to the extent of overdue interest, if any
overdue interest exists at the time of conversion with respect to such Securities.
Section 4.02. Additional Shares.
(a) Notwithstanding anything herein to the contrary, in the event a Holder elects to surrender
its Securities for conversion in accordance with Article 5, at any time from, and including, the
Effective Date of a Make Whole Adjustment Event to, and including, the close of business on the
second Scheduled Trading Day immediately preceding the related Fundamental Change Purchase Date, or
(in the case of a Make Whole Adjustment Event that does not also constitute a Fundamental Change)
the 40th Scheduled Trading Day immediately following the Effective Date of such Make Whole
Adjustment Event (such period, the Make Whole Adjustment Event Period), the Company will increase
the Conversion Rate for the Securities surrendered for conversion by the applicable number of
additional shares of Common Stock set forth in Schedule 4.02 (the Additional Shares), as
described in this Section 4.02.
(b) For purposes of determining the applicable number of Additional Shares pursuant to
Schedule 4.02:
(i)
Effective Date shall mean the date the Make Whole Adjustment Event occurs or
becomes effective; and
(ii)
Stock Price shall mean:
(x) in the case of a Make Whole Adjustment Event described in clause
(ii) of the definition of Change in Control in which the holders of
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Common
Stock receive only Cash in such Make Whole Adjustment Event, the Cash amount
paid or deemed paid per share of Common Stock in such Change of Control
converted, if necessary, into U.S. dollars at the exchange rate in effect on
such date; or
(y) in the case of any other Make Whole Adjustment Event, the average
of the last reported Closing Sale Price over the five consecutive Trading
Day period ending on the Trading Day immediately preceding the Effective
Date of such other Make Whole Adjustment Event.
(c) If the Stock Price is between two Stock Price amounts in the table attached as Schedule
4.02 hereto, the number of Additional Shares shall be determined by a straight-line interpolation
between the number of Additional Shares set forth for the higher and lower Stock Price amounts,
based on a 365-day year.
(d) If the Effective Date falls between two Effective Dates in the table attached as Schedule
4.02 hereto, the number of Additional Shares shall be determined by a straight-line interpolation
between the number of Additional Shares set forth for the two dates, based on a 365-day year.
(e) No increase in the Conversion Rate shall be made pursuant to this Section 4.02 if the
Stock Price (i) exceeds $36.00 per share (subject to adjustment) or (ii) is less than $7.96 per
share (subject to adjustment).
(f) The Stock Price amounts set forth in the first row of the table (i.e., column headers) in
Schedule 4.02 hereto shall be adjusted as of any date on which the Conversion Price of the
Securities is adjusted pursuant to Section 5.06. The Stock Price amounts set forth in the table
shall be adjusted by the same adjustment factor applied to the Conversion Price pursuant to Section
5.06. The number of Additional Shares indicated in the table shall be adjusted by the inverse of
the adjustment factor applied to the Conversion Price pursuant to Section 5.06.
(g) In no event shall the Conversion Rate be increased to more than 125.616 shares per $1,000
principal amount of Securities (the Maximum Conversion Rate) pursuant to the events described in
this Section 4.02. The Maximum Conversion Rate shall be adjusted as of any date on which the
Conversion Price of the Securities is adjusted pursuant to Section 5.06, by the inverse of the
adjustment factor applied to the Conversion Price pursuant to such section.
(h) The Company shall use commercially reasonable efforts to notify Holders of the anticipated
Effective Date of a Make Whole Adjustment Event not less than 10 Scheduled Trading Days prior to
the anticipated Effective Date of such Make Whole Adjustment Event.
ARTICLE 5
CONVERSION
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Section 5.01. Conversion Privilege.
(a) Subject to the further provisions of this Article 5 and paragraph 6 of the Securities, a
Holder may surrender a Security for conversion at any time prior to the close of business on the
second Scheduled Trading Date immediately preceding the Maturity Date.
(b) A Security in respect of which a Holder has delivered a Fundamental Change Purchase Notice
pursuant to Section 3.01(c) exercising the option of such Holder to require the Company to purchase
such Security may be converted only if such Fundamental Change Purchase Notice is withdrawn by a
written notice of withdrawal delivered to a Paying Agent prior to 5:00 p.m. (New York City time) on
the second Scheduled Trading Day immediately preceding the Fundamental Change Purchase Date in
accordance with Section 3.02.
(c) Securities may be surrendered for conversion only in principal amounts that are integral
multiples of $1,000.
Section 5.02. Conversion Procedure.
(a) The right to convert any Security may be exercised only if such Holder shall (i) in the
case of a Global Security, comply with the Applicable Procedures of the Depositary in effect at
that time and, if required, pay funds equal to interest payable on the next Interest Payment Date
to which such Holder is not entitled as set forth in Section 4.01(c) and, if required, all transfer
or similar taxes, if any, and (ii) in the case of a Certificated Security, (1) complete and
manually sign and deliver an irrevocable notice to the Conversion Agent in the form on the reverse
of such Certificated Security (or a facsimile thereof) (included in Exhibit A hereto) (a Notice of
Conversion) at the office of the Conversion Agent and state in writing therein the principal
amount of Securities to be converted and the name or names (with addresses) in which such Holder
wishes the certificate or certificates for any shares of Common Stock, if any, to be delivered upon
settlement of the Conversion Obligation to be registered, (2) surrender such Securities, duly
endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer
documents), at the office of the Conversion Agent, (3) if required, pay funds equal to interest
payable on the next Interest Payment Date to which such Holder is not entitled as set forth in
Section 4.01(c), (4) if required, furnish appropriate endorsements and transfer documents, and (5)
if required, pay all transfer or similar taxes, if any, as set forth in Section 5.04. The Trustee
(and if different, the relevant Conversion Agent) shall notify the Company of any conversion
pursuant to this Article 5 on the date of such conversion. No Notice of Conversion with respect to
any Securities may be surrendered by a Holder thereof if such Holder has also delivered a
Fundamental Change Repurchase Notice to the Company in respect of such Securities and has not
validly withdrawn such Fundamental Change Repurchase Notice in accordance with Article 3.
If more than one Security shall be surrendered for conversion at one time by the same Holder,
the Conversion Obligation with respect to such Securities, if any, that shall be payable upon
conversion shall be computed on the basis of the aggregate principal amount of the Securities (or
specified portions thereof to the extent permitted thereby) so surrendered.
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(b) A Security shall be deemed to have been converted (the Conversion Date) immediately
prior to the close of business on the date that the Holder has complied with the requirements set
forth in Section 5.02(a), if such requirements are satisfied by 11:00 a.m. (New York City time) on
that date, or immediately prior to the close of business on the next succeeding Business Day if
such requirements are satisfied after 11:00 a.m. (New York City time) on that date.
(c) The Company shall cause the Holder of such Securities on the Conversion Date to become the
holder of record of the deliverable number of shares of Common Stock constituting the Conversion
Obligation on the Conversion Date. The Company shall issue or cause to be issued, and deliver to
the Conversion Agent or to such Holder, or such Holders nominee or nominees, certificates or a
book-entry transfer through the Depositary for the number of full shares of Common Stock to which
such Holder shall be entitled in satisfaction of such Conversion Obligation.
(d) In case any Security shall be surrendered for partial conversion, the Company shall
execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder
of the Security so surrendered, without charge to such Holder, a new Security or Securities in
authorized denominations in an aggregate principal amount equal to the unconverted portion of the
surrendered Security.
(e) Except as provided in Section 5.06, no adjustment shall be made for dividends on any
shares issued upon the conversion of any Security as provided in this Article.
(f) Upon the conversion of an interest in a Global Security, the Trustee, or the Custodian at
the direction of the Trustee, shall make a notation on such Global Security as to the reduction in
the principal amount represented thereby. The Company shall notify the Trustee in writing of any
conversion of Securities effected through any Conversion Agent other than the Trustee.
(g) The Person in whose name the certificate for any shares of Common Stock delivered upon
conversion is registered shall be treated as a stockholder of record as of the close of business on
the relevant Conversion Date.
(h) The Company shall not be required to deliver any Additional Shares pursuant to Section
4.02 hereof until the Effective Date of the Make Whole Adjustment Event causing such increase has
occurred. The Company shall deliver the Additional Shares as soon as practicable, but in no event
after the third Business Day after the later of:
(i) the Conversion Date; and
(ii) the Effective Date of the Make Whole Adjustment Event.
Section 5.03. Fractional Shares.
The Company shall not issue fractional shares of Common Stock upon conversion of Securities.
In lieu thereof, the Company shall deliver Cash equal to the remainder multiplied by the Closing
Sale Price of Common Stock on the relevant Conversion Date.
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Section 5.04. Taxes on Conversion.
If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue
or transfer tax due on the issue of shares of Common Stock upon such conversion. However, the
Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a
name other than the Holders name. The Conversion Agent may refuse to deliver the certificate
representing the Common Stock being issued in a name other than the Holders name until the
Conversion Agent receives a sum sufficient to pay any tax which shall be due because the shares are
to be issued in a name other than the Holders name. Nothing herein shall preclude any tax
withholding required by law or regulation.
Section 5.05. Issuance of Common Stock Upon Conversion.
(a) Subject to Section 5.02, upon any conversion of any Security, the Company shall deliver to
converting Holders on the third Business Day immediately following the relevant Conversion Date
(unless such Conversion Date occurs on or following August 1, 2014, in which case the Company shall
make such delivery on the Maturity Date), in respect of each $1,000 principal amount of Securities
being converted, the number of shares of Common Stock (the Conversion Obligation) equal to the
then applicable Conversion Rate. The Company shall also deliver to each converting Holder of the
Securities Cash in lieu of fractional shares of Common Stock as set forth pursuant to Section 5.03.
(b) The Company shall, prior to the issuance of any Securities hereunder, and from time to
time as may be necessary, reserve at all times and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, a sufficient number of shares of Common Stock
deliverable upon conversion of all of the Securities.
(c) All shares of Common Stock that may be issued upon conversion of the Securities shall be
duly authorized, validly issued, fully paid and nonassessable and shall be free of any preemptive
rights and free of any lien or adverse claim.
(d) The Company shall endeavor to comply with all applicable securities laws regulating the
offer and delivery of any Common Stock upon conversion of Securities and shall list or cause to
have quoted such shares of Common Stock on each national or regional securities exchange or other
over-the-counter market or such other market on which the Common Stock is then listed or quoted;
provided, however, that, if the rules of such automated quotation system or exchange permit the
Company to defer the listing of such Common Stock until the first conversion of the Securities into
Common Stock in accordance with the provisions of this Indenture, the Company covenants to list
such Common Stock issuable upon conversion of the Securities in accordance with the requirements of
such automated quotation system or exchange at such time. Any Common Stock issued upon conversion
of a Security hereunder which at the
time of conversion was a Transfer Restricted Security shall also be a Transfer Restricted
Security.
(e) Notwithstanding anything herein to the contrary, nothing herein shall give to any Holder
any rights as a creditor in respect of its right to conversion.
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Section 5.06. Adjustment of Conversion Price.
The conversion price as stated in paragraph 6 of the Securities (the Conversion Price) shall
be adjusted from time to time by the Company as follows:
(a) If the Company issues solely shares of Common Stock as a dividend or distribution on all
or substantially all of the shares Common Stock, or if the Company subdivides or combine
outstanding shares of Common Stock, the Conversion Price will be adjusted based on the following
formula:
CP = CP0 × | OS0 | |||||
OS |
where,
CP0 = the conversion price in effect immediately prior to the open of
business on the Ex-Dividend Date for such dividend or distribution, or immediately prior to
the open of business on the effective date of such subdivision or combination of Common
Stock, as the case may be;
CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for such dividend or distribution, or immediately after the open of
business on the effective date of such subdivision or combination of Common Stock, as the
case may be;
OS0 = the number of shares of Common Stock outstanding immediately prior to
the open of business on the Ex-Dividend Date for such dividend or distribution, or
immediately prior to the open of business on the effective date of such subdivision or
combination of Common Stock, as the case may be; and
OS = the number of shares of Common Stock outstanding immediately after such dividend
or distribution, or immediately after the effective date of such subdivision or combination
of Common Stock, as the case may be.
Such adjustment shall become effective immediately after the opening of business on the
Ex-Dividend Date for such dividend or distribution or the effective date for such subdivision or
combination of Common Stock. If any dividend or distribution of the type described in this Section
5.06(a) is declared but not so paid or made, or the outstanding shares of Common Stock are not
split or combined, as the case may be, the Conversion Price shall be immediately readjusted,
effective as of the date the Board of Directors determines not to pay such dividend or
distribution, or subdivide or combine the outstanding shares of Common Stock, as the case may
be, to the Conversion Price that would then be in effect if such dividend, distribution,
subdivision or combination of Common Stock had not been declared or announced.
(b) If the Company distributes to all or substantially all holders of Common Stock any rights,
options or warrants entitling them for a period of not more than 60 calendar days from the record
date for such distribution to subscribe for or purchase shares of the Common Stock (or securities
convertible into Common Stock), at a price per share (or a conversion price per share)
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less than
the average of the Closing Sale Prices for the 10 consecutive Trading Day period ending on, and
including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution, the
Conversion Price will be decreased based on the following formula:
CP = CP0 × | OS0 + Y | |||||
OS0 + X |
where,
CP0 = the Conversion Price in effect immediately prior to the open of
business on the Ex-Dividend Date for such distribution;
CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for such distribution;
OS0 = the number of shares of Common Stock outstanding immediately prior to
the open of business on the Ex-Dividend Date for such distribution;
X = the total number of shares of Common Stock issuable pursuant to such rights,
options or warrants; and
Y = the number of shares of Common Stock equal to the aggregate price payable to
exercise such rights, options or warrants divided by the average of the Closing Sale Prices
over the 10 consecutive Trading Day period ending on, and including, the trading day
immediately preceding the Ex-Dividend Date for such distribution.
Such adjustment shall be successively made whenever any such rights, options or warrants are
distributed and shall become effective immediately after the opening of business on the Ex-Dividend
Date for each such distribution. To the extent that shares of the Common Stock are not delivered
after the expiration of such rights, options or warrants, the Conversion Price shall be readjusted
to the Conversion Price that would then be in effect had the adjustments made upon the issuance of
such rights, options or warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. If such rights, options or warrants are not so issued, the
Conversion Price shall again be adjusted to be the Conversion Price that would then be in effect if
such Ex-Dividend Date for such distribution had not been fixed.
For purposes of this Section 5.06(b), in determining whether any rights, options or warrants
entitle the holders to subscribe for or purchase shares of the Common Stock at less than the
average of the Closing Sale Prices for each Trading Day in the applicable 10-consecutive Trading
Day period, there shall be taken into account any consideration received by the
Company for such rights, options or warrants and any amount payable on exercise or conversion
thereof, the value of such consideration, if other than cash, to be determined by the Board of
Directors. In no event shall the Conversion Price be increased pursuant to this Section 5.06(b).
(c) If the Company distributes shares of its Capital Stock, evidences of its indebtedness or
other assets or property of the Company to all or substantially all holders of Common Stock other
than (i) dividends or distributions (including subdivision of Common
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Stock) covered by Section
5.06(a) or Section 5.06(b), (ii) dividends or distributions paid exclusively in cash referred to in
Section 5.06(d), (iii) Spin-Offs to which the provisions set forth below in this Section 5.06(c)
shall apply, and (iv) distributions of rights to all or substantially all holders of Common Stock
pursuant to the adoption of a shareholder rights plan, then, in each such case the Conversion Price
shall be decreased based on the following formula:
CP = CP0 × | SP0 - FMV | |||||
SP0 |
where,
CP0 = the Conversion Price in effect immediately prior to the open of
business on the Ex-Dividend Date for such distribution;
CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for such distribution;
SP0 = the average of the Closing Sale Prices over the 10 consecutive Trading
Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend
Date for such distribution; and
FMV = the Fair Market Value of the shares of Capital Stock, evidences of indebtedness,
assets or property distributed with respect to each outstanding share of Common Stock as of
the open of business on the Ex-Dividend Date for such distribution.
If the then- Fair Market Value of the portion of the shares of Capital Stock, evidences of
indebtedness or other assets or property so distributed applicable to one share of Common Stock is
equal to or greater than the average of the Closing Sale Prices over the 10 consecutive Trading Day
period ending on the Trading Day immediately preceding the Ex-Dividend Date for such distribution,
in lieu of the foregoing adjustment, adequate provisions shall be made so that each Holder of a
Security shall have the right to receive on conversion in respect of each Security held by such
Holder, in addition to the number of shares of Common Stock that such Holder is entitled to
receive, the amount and kind of securities and assets such Holder would have received had such
Holder already owned a number of shares of Common Stock equal to the Conversion Rate immediately
prior to the record date for the distribution of the securities or assets.
With respect to an adjustment pursuant to this Section 5.06(c) where there has been a dividend
or other distribution on the Common Stock of shares of Capital Stock of any class or series, or
similar equity interest, of or relating to a Subsidiary or other business unit of the
Company (a Spin-Off), the Conversion Price will be decreased based on the following formula:
CP = CP0 × | MP0 | |||||
FMV + MP0 |
where,
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CP0 = the Conversion Price in effect immediately prior to the open of
business on the Ex-Dividend Date for the Spin-Off;
CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for the Spin-Off;
FMV = the average of the closing sale prices of the Capital Stock or similar equity
interests distributed to holders of Common Stock applicable to one share of Common Stock
over the first 10 consecutive Trading Day period immediately following, and including, the
Ex-Dividend Date for the Spin-Off (such period, the Valuation Period); and
MP0 = the average of the Closing Sale Price of the Common Stock over the
Valuation Period.
The adjustment to the Conversion Price under the preceding paragraph of this Section 5.06(c)
shall be made immediately after the open of business on the day after the last day of the Valuation
Period, but shall become effective as of the open of business on the Ex-Dividend Date for the
Spin-Off. For purposes of determining the Conversion Price, in respect of any conversion during
the 10 Trading Days commencing on the Ex-Dividend Date of any Spin-Off, references in the portion
of this Section 5.06(c) related to Spin-Offs to 10 Trading Days shall be deemed replaced with such
lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date for such
Spin-Off to, but excluding, the Conversion Date for such conversion.
For purposes of this Section 5.06(c), Section 5.06(a) and Section 5.06(b), any dividend or
distribution to which this Section 5.06(c) is applicable that also includes shares of Common Stock,
or rights, options or warrants to subscribe for or purchase shares of Common Stock to which Section
5.06(a) or Section 5.06(b) applies (or both), shall be deemed instead to be (1) a dividend or
distribution of the evidences of indebtedness, assets or shares of Capital Stock other than such
shares of Common Stock or rights, options or warrants to which this Section 5.06(c) applies (and
any Conversion Price adjustment required by this Section 5.06(c) with respect to such dividend or
distribution shall then be made) immediately followed by (2) a dividend or distribution of such
shares of Common Stock or such rights, options or warrants (and any further Conversion Price
adjustment required by Section 5.06(a) and Section 5.06(b) with respect to such dividend or
distribution shall then be made), except (A) the Ex-Dividend Date of such dividend or distribution
shall be substituted as the Ex-Dividend Date, the Ex-Dividend Date relating to such distribution
of such rights, options or warrants and the Ex-Dividend Date for
such distribution within the meaning of Section 5.06(a) and Section 5.06(b) and (B) any
shares of Common Stock included in such dividend or distribution shall not be deemed outstanding
immediately prior to the open of business on the Ex-Dividend Date for such dividend or
distribution, or immediately prior to the open of business on the effective date of such
subdivision or share combination, as the case may be within the meaning of Section 5.06(a) or
outstanding immediately prior to the Ex-Dividend Date for such distribution within the meaning of
Section 5.06(b).
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In no event shall the Conversion Price be increased pursuant to this Section 5.06(c).
(d) If the Company makes or pays any cash dividend or distribution to all or substantially all
holders of outstanding Common Stock (other than distributions pursuant to Section 5.06(e) and any
dividend or distribution in connection with the liquidation, dissolution or winding up on the
Company), the applicable Conversion Price shall be decreased based on the following formula:
CP = CP0 × | SP0 - C | |||||
SP0 |
where,
CP0 = the Conversion Price in effect immediately prior to the open of
business on the Ex-Dividend Date for such dividend or distribution;
CP = the Conversion Price in effect immediately after the open of business on the
Ex-Dividend Date for such dividend or distribution;
SP0 = the average of the Closing Sale Prices for the Common Stock over the
10 consecutive Trading Day period ending on, and including, the Trading Day immediately
preceding the Ex-Dividend Date for such dividend or distribution; and
C = the amount in cash per share the Company pays or distributes to holders of Common
Stock.
If any dividend or distribution described in this Section 5.06(d) is declared but not so paid
or made, the new Conversion Price shall again be readjusted to be the Conversion Price that would
then be in effect if such dividend or distribution had not been declared.
For the avoidance of doubt, for purposes of this Section 5.06(d), in the event of any
reclassification of the Common Stock, as a result of which the Securities become convertible into
more than one class of common stock, if an adjustment to the Conversion Price is required pursuant
to this Section 5.06(d), references in this Section to one share of Common Stock or Closing Sale
Prices of one share of Common Stock shall be deemed to refer to a unit or to the price of a unit
consisting of the number of shares of each class of common stock into which the Securities are then
convertible equal to the number of shares of such class issued in respect of one share of Common
Stock in such reclassification. The above provisions of this paragraph shall similarly apply to
successive reclassifications.
In no event shall the Conversion Price be increased pursuant to this Section 5.06(d).
(e) If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or
exchange offer for the Common Stock and if the Cash and value of any other consideration included
in the payment per share of the Common Stock exceeds the average of the Closing Sale Prices of the
Common Stock over the 10 consecutive Trading-Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders
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or exchanges may be made pursuant to such tender or exchange offer (the Expiration Date), the Conversion Price shall be decreased based on the following formula:
CP = CP0 × | OS0 × SP | |||||
AC + (OS × SP) |
where,
CP0 = the Conversion Price in effect immediately prior to the open of
business on the Trading Day next succeeding the Expiration Date;
CP = the Conversion Price in effect immediately after the open of business on the
Trading Day next succeeding the Expiration Date;
AC = the aggregate value of all cash and any other consideration (as determined by the
Board of Directors) paid or payable for shares purchased in such tender or exchange offer;
OS0 = the number of shares of Common Stock (including Class B common stock
on an as converted basis) outstanding immediately prior to the time (the Expiration Time)
such tender or exchange offer expires (prior to giving effect to such tender offer or
exchange offer);
OS = the number of shares of Common Stock (including Class B common stock on an as
converted basis) outstanding immediately after the Expiration Time (after giving effect to
such tender offer or exchange offer); and
SP = the average of the Closing Sale Prices of Common Stock over the 10 consecutive
Trading Day period commencing on, and including, the Trading Day next succeeding the
Expiration Date.
Such adjustment under this Section 5.06(e) shall become effective at the opening of business
on the Trading Day next succeeding the Expiration Date. For purposes of determining the Conversion
Price, in respect of any conversion during the 10 Trading Days commencing on the Trading Day next
succeeding the Expiration Date, references within this Section 5.06(e) to 10 Trading Days shall be
deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the
Trading Day next succeeding the Expiration Date to, but excluding, the Conversion Date for such
conversion. If the Company is obligated to purchase shares pursuant to any such tender or exchange
offer, but the Company is permanently prevented by applicable law from effecting any or all or any
portion of such purchases or all such purchases are rescinded, the Conversion Rate shall again be
adjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer
had not been made or had been made only in respect of the purchases that had been effected. In no
event shall the Conversion Price be increased pursuant to this Section 5.06(e).
(f) Notwithstanding this Section 5.06 or any other provision of this Indenture or the
Securities, if any Conversion Price adjustment becomes effective, or any Ex-Dividend Date for
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any issuance, dividend or distribution (relating to a required Conversion Price adjustment) occurs on a
Conversion Date, the Board of Directors shall make adjustments to the Conversion Price and the
amount of cash or number of shares of Common Stock issuable upon conversion of the Securities, as
the case may be, as are necessary or appropriate to effect the intent of this Section 5.06 and the
other provisions of this Article 5 and to avoid unjust or inequitable results, as determined in
good faith by the Board of Directors. Any adjustment made pursuant to this Section 5.06(f) shall
apply in lieu of the adjustment or other term that would otherwise be applicable.
(g) If the Company adjusts the Conversion Price pursuant to the above provisions, the Company
will deliver to the Conversion Agent a certificate setting forth the Conversion Price, detailing
the calculation of the Conversion Price and describing the facts upon which the adjustment is
based. In addition, the Company will issue a press release containing the relevant information and
make the press release available on its website.
Section 5.07. No Adjustment.
(a) All calculations and other determinations under this Article 5 shall be made by the
Company and shall be made to the nearest one-ten thousandth (1/10,000) of a share. Notwithstanding
the provisions of Section 5.06, no adjustment in the Conversion Rate shall be required unless the
adjustment would result in a change of at least 1% in the Conversion Price as last adjusted;
provided, however, that any adjustments which by reason of this Section 5.07 are not required to be
made shall be carried forward and taken into account in any subsequent adjustment, regardless of
whether the aggregate adjustment is less than 1%, (i) upon any conversion of Securities, (ii) upon
any required purchases of the Securities in connection with a fundamental change, and (iii) with
respect to any conversions occurring after August 15, 2014, as the case may be.
(b) No adjustment to the Conversion Rate shall be required in respect of any transaction in
which Holders participate (as a result of holding the Securities, at the same time as holders of
the Common Stock participate) as if such Holders held the number of shares of Common Stock equal to
the applicable Conversion Rate, multiplied by the principal amount of Securities held by such
Holder, divided by 1,000, without conversion of the Securities.
(c) No adjustment to the Conversion Rate shall be required upon the issuance of any shares of
Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or
interest payable on Companys securities and the investment of additional optional amounts in
shares of Common Stock under any plan;
(d) No adjustment to the Conversion Rate shall be required upon the issuance of any shares of
Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of, or assumed by, us or any
of our subsidiaries;
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(e) No adjustment to the Conversion Rate shall be required upon the issuance of any shares of
Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible
security not described in Section 5.07(d) and outstanding as of the date the Securities were first
issued.
(f) No adjustment to the Conversion Rate shall be required for a change in the par value of
the Common Stock.
(g) No adjustment to the Conversion Rate shall be required for accrued and unpaid interest, if
any.
Section 5.08. Adjustment for Tax Purposes.
The Company shall be entitled to make such reductions in the Conversion Price, for the
remaining term of the Securities or any shorter term, in addition to those required by Section
5.06, as the Board of Directors shall determine to be advisable in order to avoid or diminish any
tax to any holders of shares of Common Stock or rights to purchase Common Stock resulting from any
stock dividends, subdivisions of shares, distributions of rights or warrants to purchase or
subscribe for stock or securities, distributions of securities convertible into or exchangeable for
stock hereafter made by the Company to its stockholders or from any event treated as such for
income tax purposes.
Section 5.09. Temporary Reduction of Conversion Price.
To the extent permitted by applicable law, the Company from time to time may reduce the
Conversion Price by any amount for any period of time if the period is at least 20 Business Days,
the reduction is irrevocable during such period, and the Board of Directors shall have made a
determination that such reduction would be in the best interest of the Company. Whenever the
Conversion Price is reduced pursuant to the preceding sentence, the Company shall provide notice of
any reduction in the Conversion Price to the Holders in the manner provided in Section 13.02, with
a copy to the Trustee and Conversion Agent, at least 15 days prior to the date such reduced
Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the
period during which it will be in effect.
Section 5.10. Notice of Certain Transactions.
In the event that:
(1) the Company takes any action which would require an adjustment in the Conversion Price;
(2) the Company consolidates or enters into a binding share exchange with, merges with or
into, or transfers all or substantially all of its property and assets to, another corporation and
shareholders of the Company must approve the transaction; or
(3) there is a dissolution or liquidation of the Company,
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the Company shall mail to Holders and file with the Trustee a notice stating the proposed record or
effective date, as the case may be, and mail the notice at least 10 days before such date;
provided, further, that upon occurrence of an event referred to in clause (1) of this Section 5.10,
the Company shall file with the Trustee (and deliver a copy to the Conversion Agent) an Officers
Certificate briefly stating the facts requiring the adjustment and the manner of computing it and
promptly mail to Holders a notice of the adjustment. Failure to mail such notice or any defect
therein shall not affect the validity of any transaction referred to in clause (1), (2) or (3) of
this Section 5.10; provided, however, that unless and until the Trustee and the Conversion Agent
shall have received an Officers Certificate setting forth an adjustment of the Conversion Price in
connection with the event referred to in clause (1), the Trustee may assume without inquiry that
the Conversion Price has not been adjusted and that the last Conversion Price of which it has
knowledge remains in effect.
Section 5.11. Effect of Reclassification, Consolidation, Merger, Binding Share Exchange or
Sale on Conversion Privilege.
If any of the following shall occur, namely: (a) any reclassification or change of shares of
Common Stock issuable upon conversion of the Securities (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of a subdivision or
combination, or any other change for which an adjustment is provided in Section 5.06); (b) any
consolidation, merger, binding share exchange or combination to which the Company is a party other
than a merger or binding share exchange in which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than in par value, or from par
value to no par value, or from no par value to par value, or as a result of a subdivision or
combination) in, outstanding shares of Common Stock; or (c) any sale, assignment, conveyance,
transfer, lease or other disposition as an entirety or substantially as an entirety of the property
and assets of the Company, directly or indirectly, to any person, then the Company, or such
successor, purchasing or transferee corporation, as the case may be, shall, as a condition
precedent to such reclassification, change, combination, consolidation, merger, binding share
exchange, sale, assignment, conveyance, transfer, lease or other disposition, execute and deliver
to the Trustee a supplemental indenture providing that the Holder of each Security then outstanding
shall have the right to convert such Security into the kind and amount of shares of stock and other
securities and property (including Cash) receivable upon such reclassification, change,
combination, consolidation, merger, binding share exchange, sale, assignment, conveyance, transfer,
lease or other disposition by a holder of the number of shares of Common Stock deliverable upon
conversion of such Security immediately prior to such reclassification, change, combination,
consolidation, merger, binding share exchange, sale, assignment, conveyance, transfer, lease or
other disposition (the Reference Property). For purposes of the foregoing, if holders of the
Common Stock receive or have the right to receive more than one form of consideration in connection
with such reclassification, change, combination, consolidation, merger, binding share exchange,
sale, assignment, conveyance, transfer, lease or other disposition, then the Reference Property
shall be based on weighted average of elections as to consideration made by holders of the Common
Stock (such as pro rata reductions made to any portion of consideration payable). If the Common
Stock is replaced by Reference Property, thereafter all references to Common Stock in this Indenture shall be references to such
Reference Property, except as the context otherwise requires. The determination of the Reference
Property shall apply to all of the Securities and the Company shall notify the Trustee of the
composition
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of the Reference Property promptly after it is determined. Such supplemental indenture
shall provide for adjustments of the Conversion Price which shall be as nearly equivalent as may be
practicable to the adjustments of the Conversion Price provided for in this Article 5. If, in the
case of any such consolidation, merger, binding share exchange, combination, sale, assignment,
conveyance, transfer, lease or other disposition, the stock or other securities and property
(including Cash) receivable thereupon by a holder of Common Stock include shares of stock or other
securities and property of a person other than the successor, purchasing or transferee corporation,
as the case may be, in such consolidation, merger, binding share exchange, combination, sale,
assignment, conveyance, transfer, lease or other disposition, then such supplemental indenture
shall also be executed by such other person and shall contain such additional provisions to protect
the interests of the Holders of the Securities as the Board of Directors shall reasonably consider
necessary by reason of the foregoing. The provisions of this Section 5.11 shall similarly apply to
successive reclassifications, changes, combinations, consolidations, mergers, binding share
exchanges, sales, assignments, conveyances, transfers, leases and other dispositions. The Trustee
has no duty to determine whether a supplemental indenture under this Section 5.11 need be entered
into.
In the event the Company shall execute a supplemental indenture pursuant to this Section 5.11,
the Company shall promptly file with the Trustee (x) an Officers Certificate briefly stating the
reasons therefor, the kind or amount of Reference Property receivable by Holders of the Securities
upon the conversion of their Securities after any such reclassification, change, combination,
consolidation, merger, binding share exchange, sale, assignment, conveyance, transfer, lease or
other disposition, any adjustment to be made with respect thereto and that all conditions precedent
have been complied with and (y) an Opinion of Counsel that all conditions precedent have been
complied with, and shall promptly mail notice thereof to all Holders.
Section 5.12. Disclaimer.
Nether the Trustee nor any Conversion Agent (other than the Company or an Affiliate of the
Company) shall have any duty to determine when an adjustment under this Article 5 should be made,
how it should be made or what such adjustment should be, but may accept as conclusive evidence of
that fact or the correctness of any such adjustment, and shall be protected in relying upon, an
Officers Certificate, including the Officers Certificate with respect thereto, which the Company
is obligated to file with the Trustee (and to deliver a copy thereof to the Conversion Agent)
pursuant to Section 5.10. Neither the Trustee nor any Conversion Agent (other than the Company or
an Affiliate of the Company) makes any representation as to the validity or value of any securities
or assets issued upon conversion of Securities, and neither shall be responsible for the Companys
failure to comply with any provisions of this Article 5.
The Trustee shall not be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture executed pursuant to Section 5.11, but may
accept as conclusive evidence of the correctness thereof, and shall be fully protected in relying
upon, the Officers Certificate with respect thereto which the Company is obligated to file
with the Trustee pursuant to Section 5.11.
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Section 5.13. Limitation on Adjustments.
(a) The Company shall not take any action that would result in an adjustment pursuant to the
foregoing provisions in this Article 5 without complying with the shareholder approval rules of the
NASDAQ Stock Market (including NASDAQ Market Rule 5635), or any similar rules of any other stock
exchange on which the Common Stock may be listed, if applicable.
(b) The Company shall not take any action that would result in an adjustment pursuant to the
foregoing provisions in this Article 5 if that adjustment would reduce the Conversion Price below
the then par value of the shares of Common Stock issuable upon conversion of the Securities.
ARTICLE 6
[Reserved]
ARTICLE 7
COVENANTS
Section 7.01. Payment of Securities.
The Company shall promptly make all payments in respect of the Securities on the dates and in
the manner provided in the Securities and this Indenture. An installment of principal or interest
shall be considered paid on the date it is due if the Paying Agent (other than the Company) holds
by 11:00 a.m. (New York City time) on that date money, deposited by the Company or an Affiliate
thereof, sufficient to pay such installment. The Company shall (in immediately available funds),
to the fullest extent permitted by law, pay interest on overdue principal and overdue installments
of interest at the rate borne by the Securities per annum.
Payment of the principal of and interest on the Securities shall be made at the office or
agency of the Company maintained for that purpose in New York, New York (which shall initially be
The Bank of New York Mellon), or at the Corporate Trust Office of the Trustee in such coin or
currency of the United States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company payment of interest
may be made by check mailed to the address of the Person entitled thereto as such address appears
in the Register; provided, further, that a Holder holding an aggregate principal amount of the
Securities in excess of $1,000,000 shall be paid by wire transfer in immediately available funds at
the election of such Holder if such Holder has provided wire transfer instructions to the Trustee
and the Paying Agent at least 10 Business Days prior to the payment date; provided, further, that all payments made to the Depositary or its nominee shall
be made by wire transfer in immediately available funds.
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Section 7.02. SEC Reports.
So long as any Securities are outstanding, the Company shall (i) file with the SEC within the
time periods prescribed by its rules and regulations and (ii) furnish to the Trustee and the
Holders of the Securities within 15 days after the date on which the Company would be required to
file the same with the SEC pursuant to its rules and regulations (giving effect to any grace period
provided by Rule 12b-25 under the Exchange Act), all quarterly and annual financial information
required to be contained in Forms 10-Q and 10-K and, with respect to the annual consolidated
financial statements only, a report thereon by the Companys independent auditors.
Delivery of such reports, information and documents to the Trustee is for informational
purposes only, and the Trustees receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained therein, including the
Companys compliance with any of its covenants hereunder (as to which the Trustee is entitled to
rely exclusively on Officers Certificates). The Company shall not be required to file any report
or other information with the SEC if the SEC does not permit such filing, although such reports
shall be furnished to the Trustee. Documents filed by the Company with the SEC via the SECs EDGAR
system (or any successor thereto) will be deemed furnished to the Trustee and the Holders of the
Securities as of the time such documents are filed via EDGAR (or such successor). The Trustee is
hereby directed, which direction may be changed by the Company at any time, upon a three Business
Day prior written notice, to access the EDGAR system for purposes of retrieving the reports so
filed. The Trustee shall have no duty to search for or obtain any electronic or other filings that
the Company makes with the SEC, regardless of whether such filings are periodic, supplemental or
otherwise.
Section 7.03. No Resale of Restricted Securities.
During the period of one year after the last original issuance of the Securities, the Company
shall not, and shall not permit any of its Affiliates to, resell any of the Securities that
constitute Transfer Restricted Securities that have been reacquired by any of them. The Securities
will be issued with a restricted CUSIP number. Until such time as the Company notifies the Trustee
to remove the Restricted Security Legend from the Securities, the restricted CUSIP will be the
CUSIP number for the Securities. At such time as the Company notifies the Trustee to remove the
Restricted Security Legend from the Securities, such Restricted Security Legend will be deemed
removed from any Global Securities and an unrestricted CUSIP number for the Securities will be
deemed to be the CUSIP number for the Securities.
Section 7.04. Compliance Certificates.
The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of
the Company (beginning with the fiscal year ending December 31, 2009), an Officers Certificate as
to the signers knowledge of the Companys compliance with all conditions and covenants on its part
contained in this Indenture and stating whether or not the signer knows of any default or Event of
Default. If such signer knows of such a default or Event of Default, the Officers Certificate shall describe the default or Event of Default and the efforts to remedy
the same. For the purposes of this Section 7.04, compliance shall be determined without regard to
any grace period or requirement of notice provided pursuant to the terms of this Indenture.
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The Company shall deliver to the Trustee, as soon as possible and in any event within thirty
days after the Company becomes aware of the occurrence of any Event of Default or an event which,
with notice or the lapse of time or both, would constitute an Event of Default, an Officers
Certificate setting forth the details of such Event of Default or default and the action which the
Company proposes to take with respect thereto.
Section 7.05. Additional Interest Notice.
In the event that the Company is required to pay Additional Interest to Holders of Securities
pursuant to Sections 7.10 or 9.02(b) hereof, the Company shall provide a direction or order in the
form of a written notice (Additional Interest Notice) to the Trustee (and if the Trustee is not
the Paying Agent, the Paying Agent) of the Companys obligation to pay Additional Interest no later
than ten Business Days prior to the proposed payment date set for the payment of Additional
Interest, and the Additional Interest Notice shall set forth the amount of Additional Interest to
be paid by the Company on such payment date and direct the Trustee (or, if the Trustee is not the
Paying Agent, the Paying Agent) to make payment to the extent it receives funds from the Company to
do so. The Trustee shall not at any time be under any duty or responsibility to any holder of
Securities to determine whether Additional Interest is payable, or with respect to the nature,
extent, or calculation of the amount of Additional Interest owed, or with respect to the method
employed in such calculation of Additional Interest.
Section 7.06. Rule 144A Information Requirements.
For so long as any of the Securities or the Common Stock issuable upon the conversion thereof
are restricted securities within the meaning of Rule 144(a)(3) under the Securities Act (or any
successor provision), the Company covenants and agrees that it shall, during any period in which it
is not subject to and in compliance with Section 13 or 15(d) under the Exchange Act, upon the
request of any Holder or beneficial holder of the Securities or any Common Stock issued upon
conversion thereof bearing a Restricted Security Legend or Restricted Stock Legend, as the case may
be, make available to such Holder or beneficial holder of such Securities or any Common Stock
issued upon conversion thereof in connection with any sale thereof and any prospective purchaser of
Securities or such Common Stock designated by such Holder or beneficial holder, the information
required pursuant to Rule 144A(c)(2) under the Securities Act and it shall take such further action
as any Holder or beneficial holder of such Securities or such Common Stock may reasonably request,
all to the extent required from time to time to enable such Holder or beneficial holder to sell its
Securities or Common Stock without registration under the Securities Act within the limitation of
the exemption provided by Rule 144A, as such Rule may be amended from time to time. Upon the
request of any Holder or any beneficial holder of the Securities or such Common Stock, the Company
shall deliver to such Holder a written statement as to whether such Holder and prospective
purchaser have complied with such requirements.
Section 7.07. Further Instruments and Acts.
Upon request of the Trustee, the Company shall execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out more effectively the
purposes of this Indenture.
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Section 7.08. Maintenance of Corporate Existence.
Subject to Article 8, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence.
Section 7.09. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it shall not at any time
insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any
stay, extension or usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of, or premium, if any, or interest on, the Securities as
contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect
the covenants or the performance of this Indenture, and the Company (to the extent it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law and covenants that it shall
not, by resort to any such law, hinder, delay or impede the execution of any power herein granted
to the Trustee, but shall suffer and permit the execution of every such power as though no such law
had been enacted.
Section 7.10. Additional Interest Payable Upon Failure to Report or to Delegend.
(a) If at any time during the six months to one-year period following the last original
issuance date of the Securities, the Company fails to timely file any document or report that it is
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act (other than any
Current Report on Form 8-K), as applicable, or the Securities are not otherwise freely tradable by
the Holders, other than Holders who are Affiliates of the Company (as a result of restrictions
imposed pursuant to U.S. securities law or the terms of this Indenture or the Securities), the
Company shall make a one time payment in respect of the Securities in the amount of 0.50% of their
principal amount, provided that the Company will have 14 days, in the aggregate, to cure all such
missed filings.
(b) Unless:
(i) the Restricted Security Legend on the Securities has been removed, and
(ii) the Securities are freely tradable pursuant to Rule 144 under the Securities Act
without volume restrictions by Holders other than Affiliates of the Company (without
restrictions pursuant to U.S. securities law or the terms of this Indenture or the
Securities)
as of the 375th day after the last date of original issuance of the Securities, the Company shall
either (i) pay Additional Interest on the Securities at an annual rate equal to 0.50% of the
aggregate principal amount of the outstanding Securities until the Securities are freely tradable
as described above or pursuant to the next clause or (y) designate an effective shelf registration
statement useable for the resale of such Securities and any Common Stock issuable upon conversion
of the Securities. So long as a condition described in either (i) or (ii) of this Section 7.10(b)
continues, the Company shall pay such Additional Interest in Cash on May 1 and November 1 of each
year to the Person who is the Holder of record of the Securities on the immediately preceding April
15 and October 15. When such registration default ceases to continue, accrued and unpaid Additional
Interest through the date of cessation shall be paid in
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Cash on the subsequent Interest Payment Date to the record Holder. In no event shall Additional Interest accrue at an annual rate in excess
of 0.50%, in the aggregate, pursuant to this Section 7.10 and Section 9.02(b).
ARTICLE 8
CONSOLIDATION, MERGER, BINDING SHARE EXCHANGE, CONVEYANCE,
TRANSFER OR LEASE
TRANSFER OR LEASE
Section 8.01. Company May Consolidate, etc., only on Certain Terms.
The Company shall not consolidate with, enter into a binding share exchange or merge with or
into another Person or sell, assign, convey, transfer, lease or otherwise dispose of its properties
and assets substantially as an entirety to any Person, unless:
(1) in case the Company shall consolidate or enter into a binding share exchange with, or
merge with or into, another Person or sell, assign, convey, transfer, lease or otherwise dispose of
its properties and assets substantially as an entirety to any Person, the Person formed by such
consolidation or binding share exchange or with or into which the Company is merged or the Person
which acquires by sale, assignment, conveyance, transfer, lease, or which otherwise acquires, the
properties and assets of the Company substantially as an entirety shall be a corporation organized
and validly existing under the laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the
principal of and interest on all the Securities and the performance or observance of every covenant
of this Indenture on the part of the Company to be performed or observed, and the conversion rights
shall be provided for in accordance with Article 5, by supplemental indenture satisfactory in form
to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Company)
formed by such consolidation, binding share exchange or into which or with whom the Company shall
have been merged or by the Person which shall have acquired the Companys assets;
(2) immediately after giving effect to such transaction, no Event of Default, and no default
which, after notice or lapse of time or both, would become an Event of Default, shall have happened
and be continuing; and
(3) the Company has delivered to the Trustee an Officers Certificate and an Opinion of
Counsel, each in a form reasonably satisfactory to the Trustee and stating that such consolidation,
merger with or into another person, binding share exchange, sale, assignment, conveyance, transfer, lease or other disposal and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture complies with this Article and that
all conditions precedent herein provided for relating to such transaction have been complied with.
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Section 8.02. Successor Substituted.
Upon any consolidation of the Company or binding share exchange with, or merger of the Company
into or with, any other Person or any sale, assignment, conveyance, transfer, lease or other
disposal of the properties and assets of the Company substantially as an entirety in accordance
with Section 8.01, the successor Person formed by such consolidation or binding share exchange or
into which or with whom the Company is merged or to which such assignment, sale, conveyance,
transfer, lease or other disposal is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants under this
Indenture and the Securities.
ARTICLE 9
DEFAULT AND REMEDIES
Section 9.01. Events of Default.
An Event of Default with respect to Securities shall occur if:
(a) the Company defaults in the payment of any principal of any Security when the same becomes
due and payable (whether at maturity, on a Fundamental Change Purchase Date or otherwise);
(b) the Company defaults in the payment of Cash and the delivery of shares of Common Stock
owing upon conversion of any Security (including any Additional Shares), within the time period
required under Article 5;
(c) the Company defaults in the payment of interest (including any Additional Interest) when
the same becomes due and payable and the default continues for a period of 30 days;
(d) The Company fails to perform or comply with any of its other covenants or agreements
contained in the Securities or in this Indenture (other than a covenant or agreement a default in
whose performance or whose breach is specifically dealt with in clauses (a), (b) or (c) of this
Section 9.01) and the default continues for 60 days after notice is given as specified below;
(e) the Company defaults in the payment of the purchase price of any Security when the same
becomes due and payable;
(f) the Company fails to provide on a timely basis written notice of a Fundamental Change as
required by Section 3.01(b);
(g) any indebtedness for money borrowed by the Company, or any of the Significant Subsidiary
of the Company (or any group of Subsidiaries that, taken together, would constitute a
Significant Subsidiary), in an outstanding principal amount, individually or in the aggregate,
in
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excess of $5.0 million is not paid at final maturity (or when otherwise due) or is accelerated,
and such indebtedness is not discharged (or such default in payment or acceleration is not cured or
rescinded) within 30 days after written notice as provided in this Indenture;
(h) the Company or any Significant Subsidiary of the Company (or any group of Subsidiaries
that, taken together, would constitute a Significant Subsidiary) fails to pay one or more final and
non-appealable judgments entered by a court or courts of competent jurisdiction, the aggregate
uninsured or unbonded portion of which is in excess of $5.0 million, if the judgments are not paid,
discharged or stayed within 30 days;
(i) the Company or any Significant Subsidiary of the Company, pursuant to or within the
meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against it in an involuntary case or
proceeding;
(iii) consents to the appointment of a Custodian of it or for all or substantially all
of its property; or
(iv) makes a general assignment for the benefit of its creditors; or
(j) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:
(i) is for relief against the Company or any Significant Subsidiary of the Company in
an involuntary case or proceeding;
(ii) appoints a Custodian of the Company or any Significant Subsidiary of the Company
for all or substantially all of the property of the Company or any such Significant
Subsidiary; or
(iii) orders the liquidation of the Company or any Significant Subsidiary of the
Company;
and in each case the order or decree remains unstayed and in effect for 60 consecutive days.
The term Bankruptcy Law means Title 11 of the United States Code (or any successor thereto)
or any similar federal or state law for the relief of debtors. The term Custodian means any
receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law.
(k) A default under clause (d) above is not an Event of Default until the Trustee notifies the
Company, or the Holders of at least 25% in aggregate principal amount of the Securities then
outstanding notify the Company and the Trustee, in writing of the default, and the
Company does not cure the default within 60 days after receipt of such notice. The notice
given
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pursuant to this Section 9.01 must specify the default, demand that it be remedied and state
that the notice is a Notice of Default. When any default under this Section 9.01 is cured, it
ceases.
(l) The Trustee shall not be charged with knowledge of any Event of Default unless written
notice thereof shall have been given to a Trust Officer at the Corporate Trust Office of the
Trustee by the Company, a Paying Agent, any Holder or any agent of any Holder.
Section 9.02. Acceleration.
(a) If an Event of Default (other than an Event of Default specified in clause (i) or (j) of
Section 9.01) occurs and is continuing with respect to any Securities, the Trustee may, by notice
to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then
outstanding may, by notice to the Company and the Trustee, declare all unpaid principal to the date
of acceleration on the Securities then outstanding (if not then due and payable) to be due and
payable upon any such declaration, and the same shall become and be immediately due and payable.
If an Event of Default specified in clause (i) or (j) of Section 9.01 occurs, all unpaid principal
of the Securities then outstanding shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder. The Holders of a
majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee
may rescind an acceleration of Securities and its consequences if (a) all existing Events of
Default, other than the nonpayment of the principal of the Securities which has become due solely
by such declaration of acceleration, have been cured or waived; (b) interest which has become due
otherwise than by such declaration of acceleration, has been paid; (c) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction; and (d) all payments due
to the Trustee and any predecessor Trustee under Section 10.07 have been made. No such rescission
shall affect any subsequent default or impair any right consequent thereto.
(b) Notwithstanding anything in the Indenture to the contrary, if the Company so elects, the
sole remedy for any failure comply with Section 7.02 hereof shall, for 180 days following the
occurrence of such an Event of Default, be limited to the payment of Additional Interest as
provided in the following sentence. If the Company fails to comply with Section 7.02 hereof to
file periodic or other reports, the Company shall pay Additional Interest to all Holders at a rate
per annum equal to 0.50% of the principal amount of the Securities to, but not including, the 181st
day thereafter (or, if applicable, the earlier date on which such Event of Default is waived). In
no event shall Additional Interest accrue at an annual rate in excess of 0.50%, in the aggregate,
pursuant to Section 7.10 hereof and this Section 9.02(b). If the Event of Default is continuing on
the 181st day after an Event of Default relating to a failure to comply with Section 7.02 first
occurs, the Securities shall be subject to acceleration as provided in Section 9.02(a) hereof. All
accrued and unpaid Additional Interest arising under this paragraph, if any, shall be paid in
arrears in Cash to Holders of the Securities by the Company on the Interest Payment Date on which
interest in respect of the Securities for the same accrual period is paid, to the Holders receiving
such interest. The provisions of this Indenture described in this paragraph shall not affect the
rights of the Holders in the event of the occurrence of any other Events of Default.
In order to elect to pay additional interest as the sole remedy during the first 180 days
after the occurrence of an Event of Default relating to the failure to comply with Section 7.02 in
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accordance with the immediately preceding paragraph, the Company shall notify all Holders and the
Trustee and Paying Agent of such election on or before the close of business on the fifth Business
Day after the date on which such Event of Default otherwise would occur. Upon a failure by the
Company to timely give such notice or pay additional interest, the Securities will be immediately
subject to acceleration as otherwise provided in this Section 9.02.
Section 9.03. Other Remedies.
If an Event of Default with respect to Securities occurs and is continuing, the Trustee may,
but shall not be obligated to, pursue any available remedy by proceeding at law or in equity to
collect the payment of the principal of or any interest on, the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Securities or
does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder
in exercising any right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive
of any other remedy. All available remedies are cumulative to the extent permitted by law.
Section 9.04. Waiver of Defaults and Events of Default.
Subject to Section 9.02, 9.07 and 12.02, the Holders of a majority in aggregate principal
amount of the Securities then outstanding by notice to the Trustee may waive an existing default or
Event of Default and its consequence, except a default or Event of Default in the payment of the
principal of or interest on, any Security, a failure by the Company to pay the Cash and deliver the
shares of Common Stock owing upon conversion of any Security (including Additional Shares, if any)
within the time period required by this Indenture or any default or Event of Default in respect of
any provision of this Indenture or the Securities which, under Section 12.02, cannot be modified or
amended without the consent of the Holder of each Security affected. When a default or Event of
Default is waived, it is cured and ceases.
Section 9.05. Control by Majority.
The Holders of a majority in aggregate principal amount of the Securities then outstanding may
direct the time, method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of another Holder or the Trustee or that may involve the Trustee
in personal liability unless the Trustee is offered indemnity satisfactory to it; provided,
however, that the Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 9.06. Limitations on Suits.
A Holder of a Security may not pursue any remedy with respect to this Indenture or the
Securities (except actions for payment of overdue principal, premium, if any, or interest or for
the conversion of the Securities pursuant to Article 5) unless:
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(a) the Holder personally gives to the Trustee written notice of a continuing Event of
Default;
(b) the Holders of at least 25% in aggregate principal amount of the then outstanding
Securities make a written request to the Trustee to pursue the remedy;
(c) such Holder or Holders offer to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after receipt of the request
and the offer of indemnity; and
(e) no direction inconsistent with such written request has been given to the Trustee during
such 60-day period by the Holders of a majority in aggregate principal amount of the Securities
then outstanding.
A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a
preference or priority over such other Holder, it being understood that the Trustee does not have
an affirmative duty to ascertain whether or not a Holders actions or forbearances constitute such
prejudicial use.
Section 9.07. Rights of Holders to Receive Payment and to Convert.
Notwithstanding any other provision of this Indenture, the right of any Holder of a Security
to receive payment of the principal of and interest on the Security, on or after the respective due
dates expressed in the Security and this Indenture, to convert such Security in accordance with
Article 5 and to bring suit for the enforcement of any such payment on or after such respective
dates or the right to convert, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
Section 9.08. Collection Suit by Trustee.
If an Event of Default in the payment of principal, premium, if any, or interest specified in
clause (a) or (b) of Section 9.01 occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company or another obligor on the
Securities for the whole amount of principal and accrued interest remaining unpaid, and such
further amount as shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and
counsel.
Section 9.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any other obligor on the
Securities), its creditors or its property and shall be entitled and empowered to collect and
receive any money or other property payable or deliverable on any such claims and
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to distribute the
same, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any
other amounts due the Trustee under Section 10.07, and to the extent that such payment of the
reasonable compensation, expenses, disbursements and advances in any such proceedings shall be
denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of,
any and all distributions, dividends, money, securities and other property which the Holders may be
entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization
or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to, or, on behalf of any Holder, to authorize, accept or adopt, any plan of
reorganization, arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
Section 9.10. Priorities.
If the Trustee collects any money pursuant to this Article 9, it shall pay out the money in
the following order:
First, to the Trustee for amounts due under Section 10.07;
Second, to Holders for amounts due and unpaid on the Securities for principal and interest
ratably, without preference or priority of any kind, according to the amounts due and payable on
the Securities for principal and interest, respectively; and
Third, the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this
Section 9.10.
Section 9.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys
fees and expenses (whether incurred before trial, at trial or on appeal or in any bankruptcy,
arbitration or other administrative proceeding), against any party litigant in the suit, having due
regard to the
merits and good faith of the claims or defenses made by the party litigant. This Section 9.11
does not apply to a suit made by the Trustee, a suit by a Holder pursuant to Section 9.07 or a suit
by Holders of more than 10% in aggregate principal amount of the Securities then outstanding.
ARTICLE 10
TRUSTEE
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Section 10.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture and use the same degree of care and skill in
its exercise as a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee need perform only those duties as are specifically set forth in this
Indenture and no others and no implied covenants or obligations shall be read into this
Indenture or the TIA against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively rely,
without investigation as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and conforming to
the requirements of this Indenture but need not verify the content thereof. The Trustee,
however, shall examine any certificates and opinions which by any provision hereof are
specifically required to be delivered to the Trustee to determine whether or not they
conform to the requirements of this Indenture, but need not confirm or investigate the
accuracy of mathematical calculations or other facts stated therein.
(c) The Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of subsection (b) of this Section 10.01;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a
Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it takes or omits to
take in good faith in accordance with a direction received by it pursuant to Section 9.02,
9.04 or 9.05.
(d) No provision of this Indenture shall require the Trustee to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers unless the Trustee shall have received
adequate indemnity in its opinion against potential costs and liabilities incurred by it relating
thereto.
(e) Every provision of this Indenture that in any way relates to the Trustee is subject to
subsections (a), (b), (c) and (d) of this Section 10.01.
(f) The Trustee shall not be liable for interest on any money received by it except as the
Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
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Section 10.02. Rights of Trustee.
Subject to Section 10.01:
(a) The Trustee may rely conclusively on any document believed by it to be genuine and to have
been signed or presented by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an Officers Certificate
or an Opinion of Counsel or both, which shall conform to Section 13.04(b). The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on such Officers
Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents, attorneys, or independent contractors and shall
not be responsible for any misconduct or negligence on the part of any agent, attorney or
independent contractor appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights or powers.
(e) The Trustee may consult with counsel of its selection, and the advice or opinion of such
counsel as to matters of law shall be full and complete authorization and protection in respect of
any such action taken, omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in
it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee security or indemnity satisfactory to the
Trustee against the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction.
(g) The Trustee shall not be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document,
but the Trustee, in its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books, records and premises of
the Company, personally or by agent or attorney at the sole cost of the Company, and shall incur no
liability or additional liability of any kind by reason of such inquiry or investigation.
(h) The Trustee shall not be deemed to have knowledge of any Default or Event of Default
unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any
event which is in fact such a default is received by the Trustee at the Corporate Trust Office, and
such notice references the Securities and this Indenture. The Trustee shall not be charged with
the knowledge of the Companys obligation to pay Additional Interest, or the cessation of such
obligation, unless the Trustee receives written notice thereof from the Company or any Holder.
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(i) The rights, privileges, protections, immunities and benefits given to the Trustee,
including, without limitation, its right to be indemnified, are extended to, and shall be
enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and
other Person employed to act hereunder (including, but not limited to, the Paying Agent or
Conversion Agent).
(j) Unless otherwise specifically provided in this Indenture, any demand, request, direction
or notice from the Company shall be sufficiently evidenced by a written order signed by one Officer
of the Company.
(k) In no event shall the Trustee be responsible or liable for special, indirect, or
consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit)
irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and
regardless of the form of action.
(l) The Trustee may request that the Company deliver a certificate setting forth the names of
individuals and/or titles of officers authorized at such time to take specified actions pursuant to
this Indenture.
Section 10.03. Monies Held in Trust.
Subject to the provisions of Section 11.03, all monies and properties received by the Trustee
shall, until used or applied as herein provided, be held in trust for the purposes for which they
were received. Money held by the Trustee in trust hereunder need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no liability for interest on
any money received by it hereunder except as may be agreed in writing from time to time by the
Company and the Trustee.
Section 10.04. Trustees Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this Indenture or the
Securities, it shall not be accountable for the Companys use of the proceeds from the Securities,
and it shall not be responsible for any statement herein or in the Securities or any other document
in connection with the sale of the Securities or pursuant to this Indenture other than its
certificate of authentication.
Section 10.05. Notice of Default or Events of Default.
If a default or an Event of Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Holder notice of the default or Event of Default within 90
days after it becomes known to the Trustee. However, the Trustee may withhold the notice if and so
long as a committee of its Trust Officers in good faith determines that withholding notice is in
the interests of Holders, except in the case of a default or an Event of Default in payment of the
principal of or interest on any Security, including the failure to make Cash payments due upon
conversion.
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Section 10.06. Reports by Trustee to Holders.
If such report is required by TIA Section 313, within 60 days after each May 1, beginning with
the May 1 following the date of this Indenture, the Trustee shall mail to each Holder a brief
report dated as of such May 1 that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Section 313(b)(2) and (c).
A copy of each report at the time of its mailing to Holders shall be mailed to the Company and
filed with the SEC and each stock exchange, if any, on which the Securities are listed. The
Company shall notify the Trustee whenever the Securities become listed on any stock exchange or
listed or admitted to trading on any quotation system and any changes in the stock exchanges or
quotation systems on which the Securities are listed or admitted to trading and of any delisting
thereof.
Section 10.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such compensation (as agreed to from
time to time by the Company and the Trustee in writing) for its services (which compensation shall
not be limited by any provision of law in regard to the compensation of a trustee of an express
trust). The Company shall reimburse the Trustee upon request for all reasonable disbursements,
expenses and advances incurred or made by it. Such expenses may include the reasonable
compensation, disbursements and expenses of the Trustees agents and counsel.
The Company shall indemnify the Trustee or any predecessor Trustee (which for purposes of this
Section 10.07 shall include its officers, directors, employees and agents) for, and hold it
harmless against, any and all loss, claim, damage, liability or expense, including taxes (other
than taxes based upon, measured by or determined by the income of the Trustee), including
reasonable legal fees and expenses, incurred by it in connection with the acceptance or
administration of its duties under this Indenture or any action or failure to act as authorized or
within the discretion or rights or powers conferred upon the Trustee hereunder, including the
reasonable costs and expenses of the Trustee and its counsel in defending itself against any claim
or liability in connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee
for which it may seek indemnity. The Company need not pay for any settlement without its written
consent, which shall not be unreasonably withheld.
The Company need not reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by it resulting from its gross negligence or bad faith.
To secure the Companys payment obligations in this Section 10.07, the Trustee shall have a
lien prior to the Securities as to all money or property held or collected by the Trustee for any
amount owing it or any predecessor Trustee pursuant to this Section 10.07, except such money or
property held in trust for the benefit of holders of particular Securities. The obligations of the
Company under this Section 10.07 shall survive the satisfaction and discharge of this Indenture or
the resignation or removal of the Trustee.
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When the Trustee incurs expenses or renders services after an Event of Default specified in
clause (i) or (j) of Section 9.01 occurs, the expenses and the compensation for the services are
intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this
Section shall survive the termination of this Indenture.
Section 10.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company. The Holders of a majority in aggregate
principal amount of the Securities then outstanding may remove the Trustee by so notifying the
Trustee and may, with the Companys written consent, appoint a successor Trustee. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 10.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
(c) a receiver or other public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any
reason, the Company shall promptly appoint a successor Trustee. The resignation or removal of a
Trustee shall not be effective until a successor Trustee shall have delivered the written
acceptance of its appointment as described below.
If a successor Trustee does not take office within 45 days after the retiring Trustee resigns
or is removed, the retiring Trustee, the Company or the Holders of 10% in principal amount of the
Securities then outstanding may petition any court of competent jurisdiction for the appointment of
a successor Trustee at the expense of the Company.
If the Trustee fails to comply with Section 10.10, any Holder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring
Trustee and to the Company. Immediately after that, the retiring Trustee shall, upon payment of
any fees and expenses due and owing to it hereunder, transfer all property held by it as Trustee to
the successor Trustee and be released from its obligations (exclusive of any liabilities that the
retiring Trustee may have incurred while acting as Trustee) hereunder, the resignation or
removal of the retiring Trustee shall become effective, and the successor Trustee shall have all
the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
A retiring Trustee shall not be liable for the acts or omissions of any successor Trustee
after its succession.
Notwithstanding replacement of the Trustee pursuant to this Section 10.08, the Companys
obligations under Section 10.07 shall continue for the benefit of the retiring Trustee.
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Section 10.09. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust assets (including the administration of this Indenture) to, another
corporation, the resulting, surviving or transferee corporation, without any further act, shall be
the successor Trustee, provided such transferee corporation shall qualify and be eligible under
Section 10.10. Such successor Trustee shall promptly mail notice of its succession to the Company
and each Holder.
Section 10.10. Eligibility; Disqualification.
The Trustee shall always satisfy the requirements of paragraphs (1), (2) and (5) of TIA
Section 310(a). The Trustee (or its parent holding company) shall have a combined capital and
surplus of at least $50,000,000. If at any time the Trustee shall cease to satisfy any such
requirements, it shall resign immediately in the manner and with the effect specified in this
Article 10. The Trustee shall be subject to the provisions of TIA Section 310(b). Nothing herein
shall prevent the Trustee from filing with the SEC the application referred to in the penultimate
paragraph of TIA Section 310(b).
Section 10.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed
in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section
311(a) to the extent indicated therein.
Section 10.12. Trustee or Agents May Hold Securities
The Trustee, any Paying Agent, any Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities and, subject to
Sections 10.10 and 10.11, may otherwise deal with the Company with the same rights it would have if
it were not Trustee, Paying Agent, Registrar or such other agent.
ARTICLE 11
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge.
(a) This Indenture shall cease to be of further effect, and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
(i) all Securities theretofore authenticated and delivered (other than (i) Securities
which have been destroyed, lost or stolen and which have been replaced or paid as provided
in Section 2.07 and (ii) Securities for whose payment money has theretofore been deposited
in trust and thereafter repaid to the Company as provided in Section 11.03) have been
delivered to the Trustee for cancellation;
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(ii) the Company has paid or caused to be paid all other sums payable hereunder by the
Company; and
(iii) the Company has delivered to the Trustee an Officers Certificate and an Opinion
of Counsel, each stating that all conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the
Company to the Trustee under Section 10.07 shall survive.
(b) The Company may discharge its obligations to pay principal of and interest on the
Securities when all Securities not theretofore delivered to the Trustee for cancellation have
become due and payable and the Company has irrevocably, subject to the limitations set forth in the
following sentence, deposited or caused to be irrevocably, subject to the limitations set forth in
the following sentence, deposited with the Trustee or a Paying Agent (other than the Company or any
of its Affiliates) as trust funds in trust for such purpose Cash or Cash and shares of Common
Stock, if any (solely to satisfy outstanding conversions, if applicable), in an amount sufficient
to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation for principal and interest, to the date of such deposit; provided,
however, that the foregoing shall not affect the obligations of the Company to the Trustee under
Section 10.07 hereof.
Section 11.02. Application of Trust Money.
Subject to the provisions of Section 11.03, the Trustee or a Paying Agent shall hold in trust,
for the benefit of the Holders of Securities, all money deposited with it pursuant to Section
11.01(b) with respect to Securities and shall apply the deposited money in accordance with this
Indenture and the Securities to the payment of the principal of and any interest on the Securities.
Section 11.03. Repayment to Company.
The Trustee and each Paying Agent shall promptly pay to the Company upon request any excess
money (i) deposited with them pursuant to Section 11.01(b) and (ii) held by them at any time.
The Trustee and each Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal or interest that remains unclaimed for two years after a right to such
money has matured; provided, however, that the Trustee or such Paying Agent, before being required
to make any such payment, may at the expense of the Company cause to be mailed to each Holder
entitled to such money notice that such money remains unclaimed and that after a date specified
therein, which shall be at least 30 days from the date of such mailing, any unclaimed balance of
such money then remaining shall be repaid to the Company. After payment to the Company, Holders
entitled to money must look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.
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Section 11.04. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in accordance with Section
11.02 by reason of any legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such application, then the
Companys obligations under this Indenture and the Securities shall be revived and reinstated as
though no deposit had occurred pursuant to Section 11.01(b) until such time as the Trustee or such
Paying Agent is permitted to apply all such money in accordance with Section 11.02; provided,
however, that, if the Company has made any payment of the principal of or interest on any
Securities because of the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Securities to receive any such payment from the money held by the
Trustee or such Paying Agent.
ARTICLE 12
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 12.01. Without Consent of Holders.
The Company, when authorized by a resolution of the Board of Directors, and the Trustee may
amend or supplement the Indenture or the Securities without notice to or consent of any Holder:
(a) to comply with Section 5.11 and 8.01;
(b) to cure any ambiguity, or correct any defect or inconsistency; provided that any amendment
or supplement to cure any ambiguity or correct any defect or inconsistency in the Indenture or the
Securities that is made solely to conform the provisions of the Indenture and the Securities to the
descriptions thereof contained in the offering memorandum relating to the Securities dated November
10, 2009, shall be deemed not to adversely affect the rights of any Holder;
(c) to make any other change that does not adversely affect the rights of any Holder;
(d) to comply with the provisions of the TIA;
(e) to add to the covenants of the Company for the equal and ratable benefit of the Holders or
to surrender any right, power or option conferred upon the Company;
(f) to appoint a successor Trustee; or
(g) to provide for the issuance of Additional Securities as permitted by Section 2.16, which
will have terms substantially identical to the other outstanding Securities except as specified in
Section 2.16, and which will be treated, together with any other outstanding Securities, as a
single issue of securities.
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Section 12.02. With Consent of Holders.
The Company and the Trustee may amend or supplement the Securities or this Indenture with the
written consent of the Holders of at least a majority in aggregate principal amount of the
Securities then outstanding. The Holders of at least a majority in aggregate principal amount of
the Securities then outstanding may waive compliance in a particular instance by the Company with
any provision of the Securities or this Indenture without notice to any Holder. However,
notwithstanding the foregoing but subject to Section 12.04, without the written consent of each
Holder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 9.04,
may not:
(a) change the Stated Maturity of, or the date any installment of interest (including any
Additional Interest) is due on, any Security;
(b) reduce the principal amount of or interest (including any Additional Interest) on, any
Security;
(c) reduce the amount of principal payable upon acceleration of the maturity of any Security;
(d) change the place or currency of payment of principal of or interest (including any
Additional Interest) on, any Security;
(e) impair the right of any Holder to receive payment of principal and of interest on such
Holders Securities on or after the due date therefore or to institute suit for the enforcement of
any payment on, or with respect to, any Security;
(f) modify the provisions with respect to the purchase right of Holders pursuant to Article 3
upon a Fundamental Change in a manner adverse to the Holders of Securities;
(g) change the ranking of the Securities;
(h) modify the provisions of this Indenture with respect to conversion of the Securities in a
manner adverse to the Holders of Securities; and
(i) modify any of the provisions of this Section or Section 9.04, except to increase any such
percentage or to provide that certain provisions of this Indenture cannot be modified, amended or
waived without the consent of the Holder of each outstanding Security affected thereby.
It shall not be necessary for the consent of the Holders under this Section 12.02 to approve
the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if
such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 12.02 becomes effective, the
Company shall mail to the Holders affected thereby a notice briefly describing the amendment,
supplement or waiver. Any failure of the Company to mail such notice, or any
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defect therein, shall not, however, in any way impair or affect the validity of any such
amendment, supplement or waiver.
Section 12.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA
as applicable to indentures qualified thereunder at the date of such amendment or supplement.
Section 12.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security
that evidences the same debt as the consenting Holders Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent
as to its Security or portion of a Security if the Trustee receives the notice of revocation before
the date the amendment, supplement or waiver becomes effective.
After an amendment, supplement or waiver becomes effective, it shall bind every applicable
Holder, unless it makes a change described in any of clauses (a) through (j) of Section 12.02. In
that case the amendment, supplement or waiver shall bind each Holder of a Security who has
consented to it and every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holders Security.
Section 12.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security about the changed terms and return it to the Holder. Alternatively, if
the Company or the Trustee so determines, the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects the changed terms.
Section 12.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this
Article 12 if the amendment or supplemental indenture does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, in its sole discretion, but
need not sign it. In signing or refusing to sign such amendment or supplemental indenture, the
Trustee shall be provided with, and, subject to Section 10.01, shall be fully protected in relying
upon, an Officers Certificate (accompanied by a resolution of the Board of Directors of the
Company) and an Opinion of Counsel in accordance with Section 13.04 hereof, each stating that such
amendment or supplemental indenture is authorized or permitted by this Indenture. The Company may
not sign an amendment or supplement indenture until the Board of Directors approves it.
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Section 12.07. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby.
ARTICLE 13
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with any duties imposed by
any of Sections 310 to 317, inclusive, of the TIA through operation of Section 318(c) thereof, such
imposed duties shall control.
Section 13.02. Notices.
Any demand, authorization, notice, request, consent or communication shall be given in writing
and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or
transmitted by facsimile transmission (confirmed by delivery in person or mail by first-class mail,
postage prepaid, or by guaranteed overnight courier) to the following facsimile numbers:
If to the Company, to:
TeleCommunication Systems, Inc.
275 West Street,
Annapolis, Maryland
21401
Attention: Chief Legal Officer
Facsimile No.: (410) 263-7617
275 West Street,
Annapolis, Maryland
21401
Attention: Chief Legal Officer
Facsimile No.: (410) 263-7617
if to the Trustee, to:
The Bank of New York Mellon
101 Barclay Street, 8 West
New York, New York 10286
Attention: Corporate Trust Administration
Facsimile No.: (212) 815-5704
101 Barclay Street, 8 West
New York, New York 10286
Attention: Corporate Trust Administration
Facsimile No.: (212) 815-5704
Such notices or communications shall be effective when received.
The Company or the Trustee by notice to the other may designate additional or different
addresses for subsequent notices or communications.
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Any notice or communication mailed to a Holder shall be mailed by first-class mail or
delivered by an overnight delivery service to it at its address shown on the register kept by the
Primary Registrar.
Failure to mail a notice or communication to a Holder or any defect in it shall not affect its
sufficiency with respect to other Holders. If a notice or communication to a Holder is mailed in
the manner provided above, it is duly given, whether or not the addressee receives it.
Section 13.03. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to
their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and
any other person shall have the protection of TIA Section 312(c).
Section 13.04. Certificate and Opinion as to Conditions Precedent.
(a) Upon any request or application by the Company to the Trustee to take any action under
this Indenture, if required, the Company shall furnish to the Trustee:
(i) an Officers Certificate stating that, in the opinion of the signers, all
conditions precedent (including any covenants, compliance with which constitutes a condition
precedent), if any, provided for in this Indenture relating to the proposed action have been
complied with; and
(ii) an Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent (including any covenants, compliance with which constitutes a condition
precedent) have been complied with.
(b) Each Officers Certificate and Opinion of Counsel with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that the person making such certificate or opinion has read such
covenant or condition;
(ii) a brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of such person, he or she has made such
examination or investigation as is necessary to enable him or her to express an informed
opinion as to whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an
Officers Certificate or certificates of public officials.
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Section 13.05. Record Date for Vote or Consent of Securityholders.
The Company (or, in the event deposits have been made pursuant to Section 11.01, the Trustee)
may set a record date for purposes of determining the identity of Holders entitled to vote or
consent to any action by vote or consent authorized or permitted under this Indenture, which record
date shall not be more than 30 days prior to the date of the commencement of solicitation of such
action. Notwithstanding the provisions of Section 12.04, if a record date is fixed, those persons
who were Holders of Securities at the close of business on such record date (or their duly
designated proxies), and only those persons, shall be entitled to take such action by vote or
consent or to revoke any vote or consent previously given, whether or not such persons continue to
be Holders after such record date.
Section 13.06. Rules by Trustee, Paying Agent, Registrar and Conversion Agent.
The Trustee may make reasonable rules (not inconsistent with the terms of this Indenture) for
action by or at a meeting of Holders. Any Registrar, Paying Agent or Conversion Agent may make
reasonable rules for its functions.
Section 13.07. Legal Holidays.
A Legal Holiday is a Saturday, Sunday or a day on which state or federally chartered banking
institutions in New York, New York are not required to be open. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
Section 13.08. Governing Law.
This Indenture and the Securities shall be governed by, and construed in accordance with, the
laws of the State of New York applicable to contracts made and to be performed in such state.
Section 13.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt agreement of the
Company or a Subsidiary of the Company. Any such indenture, loan or debt agreement may not be used
to interpret this Indenture.
Section 13.10. No Recourse Against Others.
No recourse for the payment of the principal of or premium, if any, or interest on any
Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental
indenture or in any Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, agent, officer, director or
subsidiary, as such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
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penalty or otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Securities.
Section 13.11. Successors.
All agreements of the Company in this Indenture and the Securities shall bind its successors.
All agreements of the Trustee in this Indenture shall bind its successors.
Section 13.12. Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall
be deemed an original, but all of them together represent the same agreement.
Section 13.13. Severability.
In case any provisions in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 13.14. Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions hereof.
Section 13.15. Force Majeure.
In no event shall the Trustee be responsible or liable for any failure or delay in the
performance of its obligations hereunder arising out of or caused by, directly or indirectly,
forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts
of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of
God, and interruptions, loss or malfunctions of utilities, communications or computer (software and
hardware) services; it being understood that the Trustee shall use reasonable efforts which are
consistent with accepted practices in the banking industry to resume performance as soon as
practicable under the circumstances.
Section 13.16. Waiver of Jury Trial.
EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS INDENTURE, THE SECURITIES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
-67-
Section 13.17. No Security Interest Created.
Nothing in this Indenture or in the Securities, expressed or implied, shall be construed to
constitute a security interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction in which property of the Company or its
Subsidiaries is located.
Section 13.18. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto, any Paying Agent, any authenticating agent, any Security Registrar
and their successors hereunder and the holders of Securities any benefit or any legal or equitable
right, remedy or claim under this Indenture.
[SIGNATURE PAGE FOLLOWS]
-68-
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the date and year
first above written.
TELECOMMUNICATION SYSTEMS, INC. |
||||
By: | /s/ Thomas M. Brandt, Jr. | |||
Name: | Thomas M. Brandt, Jr. | |||
Title: | Senior Vice President and Chief Financial Officer |
|||
THE BANK OF NEW YORK MELLON, as Trustee |
||||
By: | /s/ Cheryl L. Clarke | |||
Name: | Cheryl L. Clarke | |||
Title: | Vice President | |||
-69-
SCHEDULE 4.02
The following table sets forth the increase in the Conversion Rate, expressed as a number of
Additional Shares to be received per $1,000 principal amount of Securities:
Stock price | ||||||||||||||||||||||||||||||||||||||||||||||||
Effective date | 7.960 | 8.500 | 10.000 | 11.500 | 13.000 | 14.500 | 16.000 | 20.000 | 24.000 | 28.000 | 32.000 | 36.000 | ||||||||||||||||||||||||||||||||||||
November 16, 2009 |
28.979 | 25.435 | 18.374 | 13.874 | 10.839 | 8.692 | 7.107 | 4.420 | 2.879 | 1.899 | 1.240 | 0.785 | ||||||||||||||||||||||||||||||||||||
November 1, 2010 |
28.979 | 23.698 | 16.585 | 12.214 | 9.369 | 7.418 | 6.016 | 3.706 | 2.406 | 1.581 | 1.025 | 0.640 | ||||||||||||||||||||||||||||||||||||
November 1, 2011 |
28.979 | 21.669 | 14.424 | 10.198 | 7.595 | 5.898 | 4.729 | 2.884 | 1.871 | 1.225 | 0.785 | 0.478 | ||||||||||||||||||||||||||||||||||||
November 1, 2012 |
28.979 | 20.306 | 12.384 | 8.104 | 5.702 | 4.277 | 3.370 | 2.050 | 1.348 | 0.890 | 0.570 | 0.342 | ||||||||||||||||||||||||||||||||||||
November 1, 2013 |
28.979 | 19.252 | 9.724 | 5.238 | 3.194 | 2.232 | 1.728 | 1.088 | 0.740 | 0.499 | 0.322 | 0.190 | ||||||||||||||||||||||||||||||||||||
November 1, 2014 |
28.979 | 21.010 | 3.363 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 |
EXHIBIT A
[FORM OF FACE OF SECURITY]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (DTC), TO TELECOMMUNICATION SYSTEMS, INC. (THE COMPANY) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]1
[THIS SECURITY AND THE CLASS A COMMON STOCK, IF ANY, ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING
SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER:
1. REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A QUALIFIED INSTITUTIONAL
BUYER (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE
INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND
2. AGREES FOR THE BENEFIT OF TELECOMMUNICATION SYSTEMS, INC. THAT IT WILL NOT OFFER, SELL,
PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN PRIOR TO THE DATE
THAT IS THE LATER OF (X) ONE YEAR AFTER THE LAST ORIGINAL ISSUE DATE HEREOF OR SUCH SHORTER
PERIOD OF TIME AS PERMITTED BY RULE 144 UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION
THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT:
(A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR
(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BECOME EFFECTIVE UNDER THE
SECURITIES ACT, OR
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, OR
1 | This paragraph should be included only if the Security is a Global Security. |
A-F-1
(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH CLAUSE (2)(D) ABOVE, THE COMPANY AND
THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR
OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS
BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO
REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT.] 2
2 | These paragraphs should be included only if the Security is a Transfer Restricted Security. |
A-F-2
TELECOMMUNICATION SYSTEMS, INC.
CUSIP:
|
No. |
4.5% CONVERTIBLE SENIOR NOTES DUE 2014
TeleCommunication Systems, Inc., a Maryland corporation (the Company, which term shall include
any successor corporation under the Indenture referred to on the reverse hereof), promises to pay
to Cede & Co., or registered assigns, the principal sum of ($ ) on November 1, 2014 [or
such greater or lesser amount as is indicated on the Schedule of Exchanges of Securities on the
reverse of this Security].3
The Company shall pay interest at a rate of 4.5% per annum, on the principal amount of this
Security payable as provided in the Indenture. The Company further agrees to pay Additional
Interest as provided for, and under the circumstances specified in, Sections 7.10 and 9.02(b) of
the Indenture.
This Security is convertible as specified on the reverse of this Security. Additional provisions of
this Security are set forth on the reverse of this Security.
[SIGNATURE PAGE FOLLOWS]
3 | This phrase should be included only if the Security is a Global Security. |
A-F-3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
TELECOMMUNICATION SYSTEMS, INC. |
||||
By: | ||||
Name: | ||||
Title: | ||||
Trustees Certificate of Authentication: This is one of the
Securities referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK MELLON, as Trustee |
||||
By: | ||||
Name: | ||||
Title: | ||||
A-F-4
[FORM OF REVERSE OF SECURITY]
TELECOMMUNICATION SYSTEMS, INC.
4.5% CONVERTIBLE SENIOR NOTES DUE 2014
1. INTEREST AMOUNTS
TeleCommunication Systems, Inc., a Maryland corporation (the Company, which term shall
include any successor corporation under the Indenture hereinafter referred to), shall pay interest,
at a rate of 4.5% per annum, on the principal amount of this Security payable as provided in the
Indenture. The Company further agrees to pay Additional Interest as provided for, and under the
circumstances specified in, Sections 7.10 and 9.02(b) of the Indenture.
2. METHOD OF PAYMENT
The Company shall pay any interest on this Security to the person who is the Holder of this
Security at the close of business on April 15 or October 15, as the case may be, next preceding the
related interest payment date. The Holder must surrender this Security to a Paying Agent to collect
payment of principal. Interest on the Security will be paid at a rate of 4.5% per annum, payable
semi-annually in arrears on May 1 and November 1 of each year, or if any such day is not a Business
Day, the immediately following Business Day, commencing May 1, 2010. Interest is computed on the
basis of a 360-day year comprised of twelve 30-day months. In the event of the maturity, conversion
or purchase of the Security by the Company at the option of the Holder, interest shall cease to
accrue on the Security. Notwithstanding any other provision hereof, however, the Company shall pay
interest on the Maturity Date to the Holder of this Security on the Record Date immediately
preceding the Maturity Date in respect of the period ending with the Maturity Date regardless of
whether such Holder converts this Security.
3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT
Initially, The Bank of New York Mellon (the Trustee, which term shall include any successor
trustee under the Indenture hereinafter referred to) will act as Paying Agent, Registrar and
Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without
notice to the Holder.
4. INDENTURE, LIMITATIONS
This Security is one of a duly authorized issue of Securities of the Company designated as its
4.5% Convertible Senior Notes due 2014 (the Securities), issued under an Indenture, dated as of
November 16, 2009 (together with any supplemental indentures thereto, the Indenture), between the
Company and the Trustee. The terms of this Security include those stated in the Indenture and those
required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended, as in effect on the date of the Indenture. This Security is subject to all such terms, and
the Holder of this Security is referred to the Indenture and said Act for a statement of them.
A-R-1
5. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE
At the option of the Holder and subject to the terms and conditions of the Indenture, the
Company shall become obligated to purchase all or any part specified by the Holder (so long as the
principal amount of such part is $1,000 or an integral multiple of $1,000 in excess thereof) of the
Securities held by such Holder on the date of the Companys choosing that is not less than 20 or
more than 35 Business Days after the date on which the Company notifies the Holders of the
Securities of the occurrence of the effective time of a Fundamental Change, at a purchase price
equal to 100% of the principal amount thereof, together with any accrued and unpaid interest up to,
but excluding, the Fundamental Change Purchase Date, payable in Cash. The Holder shall have the
right to withdraw any Fundamental Change Purchase Notice (in whole or in a portion thereof that is
$1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to 5:00 p.m. (New
York City time) on the second Scheduled Trading Day next preceding the Fundamental Change Purchase
Date by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms
of the Indenture.
6. CONVERSION
A Holder of a Security may convert the principal amount of such Security (or any portion
thereof equal to $1,000 or any integral multiple of $1,000 in excess thereof) into Common Stock at
any time prior to the close of business on the second scheduled Trading Date immediately preceding
the maturity date pursuant to Section 5.01 of the Indenture.
The initial Conversion Price is $10.348 per share, and the initial Conversion Rate is
approximately 96.637 shares of Common Stock, in each case subject to adjustment under certain
circumstances as provided in the Indenture. Upon conversion, the Company shall deliver to holders
in respect of each $1,000 principal amount of Securities being converted a number of shares of
Common Stock equal to the applicable Conversion Rate, together with a Cash payment in lieu of any
fractional share of Common Stock issuable upon conversion based on the Closing Sale Price of Common
Stock on the relevant Conversion Date.
A Security in respect of which a Holder had delivered a Fundamental Change Purchase Notice
exercising the option of such Holder to require the Company to purchase such Security may be
converted only if the Fundamental Change Purchase Notice is withdrawn in accordance with the terms
of the Indenture.
7. DENOMINATIONS, TRANSFER, EXCHANGE
The Securities are in registered form, without coupons, in denominations of $1,000 and
integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes or other governmental charges that may be
imposed in relation thereto by law or permitted by the Indenture.
8. | PERSONS DEEMED OWNERS |
A-R-2
The Holder of a Security may be treated as the owner of it for all purposes.
9. UNCLAIMED MONEY
If money for the payment of principal or interest remains unclaimed for two years, the Trustee
or Paying Agent will pay the money back to the Company at its written request, subject to
applicable unclaimed property law. After any such payment, Holders entitled to money must look to
the Company for payment as general creditors unless an applicable abandoned property law designates
another person.
10. AMENDMENT, SUPPLEMENT AND WAIVER
Subject to the exceptions set forth in the Indenture, the Securities and the Indenture may be
amended or supplemented with the written consent of the Holders of at least a majority in aggregate
principal amount of the Securities then outstanding, and an existing default or Event of Default
with respect to the Securities and its consequence or compliance with any provision of the
Securities or the Indenture may be waived in a particular instance with the consent of the Holders
of a majority in aggregate principal amount of the Securities then outstanding. Without notice to
or the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or
the Securities to, among other things, cure any ambiguity, correct any defect or inconsistency or
make any other change that does not adversely affect the rights of any Holder.
11. SUCCESSOR ENTITY
When a successor corporation assumes all the obligations of its predecessor under the
Securities and the Indenture in accordance with the terms and conditions of the Indenture, the
predecessor corporation (except in the circumstances specified in the Indenture) shall be released
from those obligations.
12. CALCULATIONS IN RESPECT OF SECURITIES
Except to the extent provided therein, the Company will be responsible for making all
calculations called for under the Indenture and the Securities. These calculations include, but
are not limited to, determinations of the Closing Sale Price of the Common Stock, adjustments to
the Conversion Price, any accrued interest payable on the Securities, the Conversion Price and the
Conversion Rate. The Company will make these calculations in good faith and, absent manifest
error, the calculations will be final and binding on Holders of the Securities. The Company will
provide to each of the Trustee and the Conversion Agent a schedule of its calculations, and the
Trustee and the Conversion Agent are entitled to rely conclusively upon the accuracy of such
calculations without independent verification. The Trustee will forward the Companys calculations
to any Holder of the Securities upon the request of such Holder.
13. DEFAULTS AND REMEDIES
Under the Indenture, an Event of Default with respect to the Securities includes: (i) default
in the payment of any principal of any Security when the same becomes due and payable; (ii)
defaults in the payment of Cash and delivery of shares of Common Stock owing
A-R-3
upon conversion of any Security (including any Additional Shares), when the same becomes due and
payable; (iii) default for 30 days in the payment of interest (including any Additional Interest)
when the same becomes due and payable; (iv) failure by the Company for 60 days after notice to it
to comply with any of its other agreements contained in the Securities or in the Indenture with
respect to the Securities (other than a default set forth in clauses (1) through (3) above); (v)
default in payment of the purchase price of any Security when the same becomes due and payable;
(vi) failure to provide a Fundamental Change Purchase Notice when required; (vii) any indebtedness
for money borrowed of the Company or a Significant Subsidiary in an outstanding principal amount,
individually or in the aggregate, in excess of $5.0 million is not paid at stated maturity (or when
otherwise due) or is accelerated and such indebtedness is not discharged (or such default in
payment or acceleration is not cured or rescinded) within 30 days after written notice as provided
in the Indenture; (viii) the Company or a Significant Subsidiary fails to pay one or more final and
non-appealable judgments entered by a court or courts of competent jurisdiction, the aggregate
uninsured or unbonded portion of which is in excess of $5.0 million, if the judgments are not paid,
discharged or stayed within 30 days; and (xi) certain events of bankruptcy, insolvency or
reorganization of the Company or any Significant Subsidiary. If an Event of Default with respect to
the Securities (other than as a result of certain events of bankruptcy, insolvency or
reorganization specified in the Indenture) occurs and is continuing, the Trustee or the Holders of
at least 25% in aggregate principal amount of the Securities then outstanding may declare all
unpaid principal to the date of acceleration on the Securities then outstanding to be due and
payable immediately, all as and to the extent, and subject to the exceptions, provided in the
Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or
reorganization specified in the Indenture, all unpaid principal of the Securities then outstanding
shall become due and payable immediately without any declaration or other act on the part of the
Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce
the Indenture or the Securities except as provided in the Indenture. The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the Securities then outstanding
may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders
notice of any continuing default (except a default in payment of principal or interest, including
the failure to make Cash payments and deliver shares of Common Stock due upon conversion) if it
determines that withholding notice is in their interests.
14. TRUSTEE DEALINGS WITH THE COMPANY
The Bank of New York Mellon, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the Company or an
Affiliate of the Company and may otherwise deal with the Company or an Affiliate of the Company, as
if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS
A director, officer, employee or shareholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. The Holder of this
A-R-4
Security by accepting this Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of this Security.
16. AUTHENTICATION
This Security shall not be valid until the Trustee or an authenticating agent manually or by
facsimile signs the certificate of authentication on the face of this Security.
17. ABBREVIATIONS AND DEFINITIONS
Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM
(= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors
Act).
All terms defined in the Indenture and used in this Security but not specifically defined
herein are used herein as so defined.
18. INDENTURE TO CONTROL; GOVERNING LAW
In the case of any conflict between the provisions of this Security and the Indenture, the
provisions of the Indenture shall control. This Security shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made and to be performed
in such state.
The Company will furnish to any Holder, upon written request and without charge, a copy of the
Indenture. Requests may be made to: TeleCommunication Systems, Inc., 275 West Street, Annapolis,
Maryland 21401, Attention: Chief Legal Officer.
A-R-5
ASSIGNMENT FORM4
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
and irrevocably appoint
Your Signature: |
||||
Date: | ||||
(Sign exactly as your name appears on the other side of this Security) | ||||
*Signature guaranteed by: | ||||
By: |
||||
* | The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee. | |
4 | This form should be included only if the Security is a Certificated Security. |
A-R-6
CONVERSION NOTICE5
To convert this Security into Common Stock of the Company, check the box: o
To convert only part of this Security, state the principal amount to be converted (must be $1,000
or a integral multiple of $1,000): $ .
If you want the stock certificate made out in another persons name, fill in the form below:
Your Signature: |
||||
Date: | ||||
(Sign exactly as your name appears on the other side of this Security) | ||||
*Signature guaranteed by: | ||||
By: |
||||
* | The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee. | |
5 | This form should be included only if the Security is a Certificated Security. |
A-R-7
OPTION TO ELECT REPURCHASE
UPON A FUNDAMENTAL CHANGE6
UPON A FUNDAMENTAL CHANGE6
To: TeleCommunication Systems, Inc.
The undersigned registered owner of this Security hereby irrevocably acknowledges receipt of a
notice from TeleCommunication Systems, Inc. (the Company) as to the occurrence of a Fundamental
Change with respect to the Company and requests and instructs the Company to repurchase the entire
principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple
thereof) below designated, in accordance with the terms of the Indenture referred to in this
Security at a purchase price equal to the Fundamental Change Purchase Price, payable in Cash.
Dated: | ||||
Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature
guarantee program pursuant to Rule 17Ad-15 under the
Securities Exchange Act of 1934. |
||||
Principal amount to be repurchased (in an
integral multiple of $1,000, if less than
all):
integral multiple of $1,000, if less than
all):
NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the
face of this Security in every particular, without alteration or any change whatsoever.
6 | This form should be included only if the Security is a Certificated Security. |
A-R-8
SCHEDULE OF EXCHANGES OF SECURITIES7
The following exchanges, increases/decreases in principal amount, repurchases or conversions
of a part of this Global Security have been made:
Principal Amount | ||||||||||||
of this Global Security | Authorized | Amount of | Amount of | |||||||||
Following Such Decrease | Signatory of | Decrease in | Increase in | |||||||||
Date of Exchange | Securities | Principal Amount | Principal Amount | |||||||||
(or Increase) | Custodian | of this Global Security | of this Global Security | |||||||||
7 | This schedule should be included only if the Security is a Global Security. |
A-R-9
EXHIBIT B
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
OF RESTRICTED COMMON STOCK
OF RESTRICTED COMMON STOCK
[NAME AND ADDRESS OF COMMON STOCK TRANSFER AGENT]
Re: | TeleCommunication Systems, Inc. 4.5% Convertible Senior Notes Due 2014 (the Securities) |
Reference is hereby made to the Indenture dated as of November 16, 2009 between the Company and the
Trustee (the Indenture). Capitalized terms used but not defined herein shall have the meanings
given them in the Indenture.
This letter relates to shares of Common Stock [that are to be] [represented by the accompanying certificate(s) that were] issued upon conversion of Securities and
which are held in the name of [name of transferor] (the Transferor) to effect the transfer of
such Common Stock.
In connection with the transfer of such shares of Common Stock, the undersigned confirms that such
shares of Common Stock are being transferred:
CHECK ONE BOX BELOW:
o To the Company or any Subsidiary thereof.
o To a person the undersigned reasonably believes is a qualified institutional buyer (as
defined in Rule 144A under the Securities Act of 1933, as amended (the Securities Act)), in
accordance with Rule 144A under the Securities Act.
o Pursuant to another available exemption from the registration requirements of the
Securities Act.
B-1
Unless one of the boxes is checked, the transfer agent will refuse to register any of the Common
Stock evidenced by this certificate in the name of any person other than the registered holder
thereof; provided , however , that if the third box is checked, the transfer agent may require,
prior to registering any such transfer of the Common Stock such certifications and other
information, including opinions of counsel, as the Company has reasonably requested in writing, by
delivery to the transfer agent of a standing letter of instruction, to confirm that such transfer
is being made pursuant to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act.
[Name of Transferor], |
||||
By: | ||||
Name: | ||||
Title: | ||||
Dated: | ||||
A-R-2