Document:

Exhibit 4.2

	
 
    	
 
    	
 
    

 

MERRIMACK PHARMACEUTICALS, INC.

 

AND

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

as Trustee

 

FIRST SUPPLEMENTAL INDENTURE

 

Dated as of July 17, 2013

 

4.50% Convertible Senior Notes due 2020

	
 
    	
 
    	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
PAGE
    
	
 
    	
 
    
	
ARTICLE 1
    
	
SCOPE OF FIRST SUPPLEMENTAL INDENTURE
    
	
 
    
	
Section 1.01.   Scope
    	
2
    
	
 
    	
 
    
	
ARTICLE 2
    
	
DEFINITIONS
    
	
 
    
	
Section 2.01.   Definitions and Other Provisions of General   Application
    	
2
    
	
Section 2.02. References to Interest
    	
11
    
	
 
    	
 
    
	
ARTICLE 3
    
	
ISSUE,   DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES
    
	
 
    
	
Section 3.01. Designation and Amount
    	
11
    
	
Section 3.02. Form of Notes
    	
11
    
	
Section 3.03. Date and Denomination of Notes; Payments of Interest and Defaulted   Amounts
    	
12
    
	
Section 3.04. [Reserved]
    	
13
    
	
Section 3.05. Exchange and Registration of Transfer of Notes; Restrictions on   Transfer; Depositary
    	
13
    
	
Section 3.06. Mutilated, Destroyed, Lost or Stolen Notes
    	
15
    
	
Section 3.07. [Reserved]
    	
15
    
	
Section 3.08. Cancellation of Securities
    	
15
    
	
Section 3.09. CUSIP Numbers
    	
15
    
	
Section 3.10. Additional Notes; Repurchases
    	
16
    
	
 
    	
 
    
	
ARTICLE 4
    
	
SATISFACTION   AND DISCHARGE
    
	
 
    	
 
    
	
Section 4.01. Applicability of Article 10 of the Base Indenture
    	
16
    
	
Section 4.02. Satisfaction and Discharge
    	
16
    
	
Section 4.03. Provisions as to Paying Agent
    	
17
    
	
 
    	
 
    
	
ARTICLE 5
    
	
PARTICULAR   COVENANTS OF THE ISSUER
    
	
 
    	
 
    
	
Section 5.01. Payment of Principal and Interest
    	
18
    
	
Section 5.02. Offices for Payments, Etc.
    	
18
    
	
Section 5.03. [Reserved]
    	
18
    
	
Section 5.04. Paying Agents
    	
18
    

 

i

 

	
Section 5.05. Existence
    	
18
    
	
Section 5.06. Reports
    	
18
    
	
Section 5.07. Stay, Extension and Usury Laws
    	
19
    
	
Section 5.08. Statements as to Defaults
    	
19
    
	
Section 5.09. Further Instruments and Acts
    	
19
    
	
 
    	
 
    
	
ARTICLE 6
    
	
DEFAULTS   AND REMEDIES
    
	
 
    	
 
    
	
Section 6.01.   Applicability of Article 5 of the Base   Indenture
    	
19
    
	
Section 6.02. Events of Default
    	
19
    
	
Section 6.03.   Acceleration; Rescission and Annulment
    	
21
    
	
Section 6.04.   Additional Interest
    	
22
    
	
Section 6.05. Amendments to Article 5 of the Base Indenture
    	
22
    
	
Section 6.06. Waiver of Defaults by Majority of Holders
    	
23
    
	
 
    	
 
    
	
ARTICLE 7
    
	
[INTENTIONALLY   OMITTED]
    
	
 
    	
 
    
	
ARTICLE 8
    
	
CONCERNING   THE HOLDERS
    
	
 
    	
 
    
	
Section 8.01. Holders to Be Treated as Owners
    	
23
    
	
 
    	
 
    
	
ARTICLE 9
    
	
[INTENTIONALLY   OMITTED]
    
	
 
    	
 
    
	
ARTICLE 10
    
	
SUPPLEMENTAL   INDENTURES
    
	
 
    	
 
    
	
Section 10.01. Applicability of Article 8, Section 8.01 and   Section 8.02 of the Base Indenture
    	
24
    
	
Section 10.02. Supplemental Indentures Without Consent of Holders
    	
24
    
	
Section 10.03. Supplemental Indentures with Consent of Holders
    	
25
    
	
 
    	
 
    
	
ARTICLE 11
    
	
CONSOLIDATION,   MERGER, SALE, CONVEYANCE AND LEASE
    
	
 
    	
 
    
	
Section 11.01. Applicability of Article 9 of the Base Indenture
    	
25
    
	
Section 11.02. Issuer May Consolidate, Etc. on Certain Terms
    	
25
    
	
Section 11.03. Successor Corporation to Be Substituted
    	
26
    
	
Section 11.04. Opinion of Counsel to Be Given to Trustee
    	
26
    

 

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ARTICLE 12
    
	
[INTENTIONALLY   OMITTED]
    
	
 
    
	
ARTICLE 13
    
	
[INTENTIONALLY   OMITTED]
    
	
 
    
	
ARTICLE 14
    
	
CONVERSION   OF NOTES
    
	
 
    
	
Section 14.01. Conversion Privilege
    	
27
    
	
Section 14.02. Conversion Procedure; Settlement Upon Conversion
    	
29
    
	
Section 14.03. Increased Conversion   Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole   Fundamental Changes
    	
34
    
	
Section 14.04. Adjustment of Conversion Rate
    	
36
    
	
Section 14.05. Adjustments of Prices
    	
44
    
	
Section 14.06. Shares to Be Fully Paid
    	
45
    
	
Section 14.07. Effect of Recapitalizations, Reclassifications and Changes of the   Common Stock
    	
45
    
	
Section 14.08. Certain Covenants
    	
47
    
	
Section 14.09. Responsibility of Trustee
    	
47
    
	
Section 14.10. Notice to Holders Prior to Certain Actions
    	
48
    
	
Section 14.11. Stockholder Rights Plans
    	
48
    
	
 
    	
 
    
	
ARTICLE 15
    
	
REPURCHASE OF NOTES AT OPTION OF HOLDERS
    
	
 
    	
 
    
	
Section 15.01. Repurchase at Option of Holders Upon a Fundamental Change
    	
48
    
	
Section 15.02. Withdrawal of Fundamental Change Repurchase Notice
    	
51
    
	
Section 15.03. Deposit of Fundamental Change Repurchase Price
    	
51
    
	
Section 15.04.   Covenant to Comply with Applicable Laws Upon   Repurchase of Notes
    	
52
    
	
 
    	
 
    
	
ARTICLE 16
    
	
NO   OPTIONAL REDEMPTION
    
	
 
    	
 
    
	
Section 16.01.   No Redemption; Applicability of Article 12   of the Base Indenture
    	
52
    
	
 
    	
 
    
	
ARTICLE 17
    
	
MISCELLANEOUS   PROVISIONS
    
	
 
    	
 
    
	
Section 17.01. Jurisdiction
    	
52
    
	
Section 17.02. No Security Interest Created
    	
53
    
	
Section 17.03. Table of Contents, Headings, Etc.
    	
53
    
	
Section 17.04. Authenticating Agent
    	
53
    
	
Section 17.05. Execution in Counterparts
    	
54
    
	
Section 17.06. Waiver of Jury Trial
    	
54
    
	
Section 17.07. Force Majeure
    	
55
    

 

iii

 

	
Section 17.08. Calculations
    	
55
    
	
Section 17.09.   USA PATRIOT Act
    	
55
    
	
 
    	
 
    
	
EXHIBIT
    
	
 
    	
 
    
	
Exhibit A         Form of Note 
    	
A-1
    

 

iv

 

FIRST SUPPLEMENTAL INDENTURE dated as of July 17, 2013 between MERRIMACK PHARMACEUTICALS, INC., a Delaware corporation, as issuer (the “Issuer,” as more fully set forth in Section 2.01) and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as trustee (the “Trustee,” as more fully set forth in Section 2.01).

 

W I T N E S S E T H:

 

WHEREAS, the Issuer and the Trustee executed and delivered an Indenture, dated as of July 17, 2013 (the “Base Indenture” and as supplemented by this First Supplemental Indenture and as may be further supplemented or amended with respect to the Notes, the “Indenture”), to provide for the issuance by the Issuer from time to time of its senior unsecured debentures, notes or other evidences of indebtedness (the “Securities”);

 

WHEREAS, Section 2.01, Section 2.03 and Section 8.01 of the Base Indenture provide that the Issuer, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental to the Base Indenture, without the consent of any Holders, to, among other things, establish the form or terms of Securities of any series as permitted by the Base Indenture;

 

WHEREAS, for its lawful corporate purposes, the Issuer has duly authorized the issuance of its 4.50% Convertible Senior Notes due 2020 (the “Notes”), initially in an aggregate principal amount not to exceed $125,000,000 (as increased by an amount equal to the aggregate principal amount of any additional Notes purchased by the Underwriters pursuant to the exercise of their over-allotment option as set forth in the Underwriting Agreement), and in order to provide the terms and conditions upon which the Notes are to be authenticated, issued and delivered, the Issuer has duly authorized the execution and delivery of this First Supplemental Indenture; and

 

WHEREAS, the Issuer desires to issue $125,000,000 (as increased by an amount equal to the aggregate principal amount of any additional Notes purchased by the Underwriters pursuant to the exercise of their over-allotment option as set forth in the Underwriting Agreement) aggregate principal amount of the Notes as of the date hereof;

 

WHEREAS, the Issuer desires to establish the form and terms of the Notes;

 

WHEREAS, all things necessary to make this First Supplemental Indenture a legal and binding supplement to the Base Indenture in accordance with its terms and the terms of the Base Indenture have been done;

 

WHEREAS, the Form of Note, the certificate of authentication to be borne by each Note, the Form of Notice of Conversion, the Form of Fundamental Change Repurchase Notice and the Form of Assignment and Transfer to be borne by the Notes are to be substantially in the forms hereinafter provided; and

 

 

WHEREAS, all acts and things necessary to make the Notes, when executed by the Issuer and authenticated and delivered by the Trustee or a duly authorized authenticating agent, as in the Indenture provided, the valid, binding and legal obligations of the Issuer have been done and performed, and the execution of the Indenture and the issuance of the Notes have in all respects been duly authorized.

 

WHEREAS, the Issuer has complied with all conditions precedent provided for in the Indenture relating to this First Supplemental Indenture; and

 

WHEREAS, the Issuer has requested that the Trustee execute and deliver this First Supplemental Indenture.

 

NOW, THEREFORE:

 

In order to declare the terms and conditions upon which the Notes are, and are to be, authenticated, issued and delivered, and in consideration of the premises and of the purchase and acceptance of the Notes by the Holders thereof, the Issuer covenants and agrees with the Trustee for the equal and proportionate benefit of the respective Holders from time to time of the Notes, as follows:

 

ARTICLE 1
  SCOPE OF FIRST SUPPLEMENTAL INDENTURE

 

Section 1.01.  Scope.  This First Supplemental Indenture constitutes a supplement to the Base Indenture and an integral part of the Indenture and shall be read together with the Base Indenture as though all the provisions thereof are contained in one instrument.  Except as expressly amended by this First Supplemental Indenture, the terms and provisions of the Base Indenture shall remain in full force and effect.  Notwithstanding the foregoing, this First Supplemental Indenture shall only apply to the Notes.  For all purposes under the Base Indenture, the Notes shall constitute a single series of Securities.  With respect to the Notes, if the terms of the Base Indenture are inconsistent with the terms of this First Supplemental Indenture, then the terms of this First Supplemental Indenture shall control.

 

ARTICLE 2
  DEFINITIONS

 

Section 2.01.  Definitions and Other Provisions of General Application.  For all purposes of this First Supplemental Indenture unless otherwise specified herein:

 

(a)                                 all terms used in this First Supplemental Indenture that are not otherwise defined herein shall have the meanings they are given in the Base Indenture;

 

(b)                                 the provisions of general application stated in Section 1.01 of the Base Indenture shall apply to this First Supplemental Indenture, except that the words “herein,” “hereof,” “hereto” and “hereunder” and other words of similar import refer to this First Supplemental 

 

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Indenture as a whole and not to the Base Indenture or any particular Article, Section or other subdivision of the Base Indenture or this First Supplemental Indenture;

 

(c)                                  Section 1.01 of the Base Indenture is amended and supplemented, solely with respect to the Notes, by inserting the following additional defined terms in their appropriate alphabetical positions and deleting any defined terms therein that are also defined in this Section 2.01:

 

“Additional Interest” means all amounts, if any, payable pursuant to Section 6.04.

 

“Additional Shares” shall have the meaning specified in Section 14.03(a).

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control,” when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Bid Solicitation Agent” means the Person appointed by the Issuer to solicit bids for the Trading Price of the Notes in accordance with Section 14.01(b)(i).  The Trustee shall initially act as the Bid Solicitation Agent.

 

“Capital Stock” means, for any entity, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by that entity.

 

“Cash Settlement” shall have the meaning specified in Section 14.02(a).

 

“Clause A Distribution” shall have the meaning specified in Section 14.04(c).

 

“Clause B Distribution” shall have the meaning specified in Section 14.04(c).

 

“Clause C Distribution” shall have the meaning specified in Section 14.04(c).

 

“close of business” means 5:00 p.m. (New York City time).

 

“Combination Settlement” shall have the meaning specified in Section 14.02(a).

 

“Common Equity” of any Person means Capital Stock of such Person that is generally entitled (a) to vote in the election of directors of such Person or (b) if such Person is not a corporation, to vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.

 

“Common Stock” means the common stock of the Issuer, par value $0.01 per share, at the date of this First Supplemental Indenture, subject to Section 14.07.

 

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“Conversion Agent” shall have the meaning specified in Section 5.02.

 

“Conversion Date” shall have the meaning specified in Section 14.02(c).

 

“Conversion Obligation” shall have the meaning specified in Section 14.01(a).

 

“Conversion Price” means as of any date, $1,000, divided by the Conversion Rate as of such date.

 

“Conversion Rate” shall have the meaning specified in Section 14.01(a).

 

“Custodian” means the Trustee, as custodian for The Depository Trust Company, with respect to the Global Securities, or any successor entity thereto.

 

“Daily Conversion Value” means, for each of the 20 consecutive Trading Days during the Observation Period, 5% of the product of (a) the Conversion Rate on such Trading Day and (b) the Daily VWAP for such Trading Day.

 

“Daily Measurement Value” means the Specified Dollar Amount (if any), divided by 20.

 

“Daily Settlement Amount,” for each of the 20 consecutive Trading Days during the Observation Period, shall consist of:

 

(a)                                 cash in an amount equal to the lesser of (i) the Daily Measurement Value and (ii) the Daily Conversion Value on such Trading Day; and

 

(b)                                 if the Daily Conversion Value on such Trading Day exceeds the Daily Measurement Value, a number of shares of Common Stock equal to (i) the difference between the Daily Conversion Value and the Daily Measurement Value, divided by (ii) the Daily VWAP for such Trading Day.

 

“Daily VWAP” means, for each of the 20 consecutive Trading Days during the relevant Observation Period, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “MACK <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of the Common Stock on such Trading Day determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the Issuer).  The “Daily VWAP” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.

 

“Default” means any event that is, or after notice or passage of time, or both, would be, an Event of Default.  Solely for purposes of the Notes, references to “default” in the Base Indenture shall be deemed instead to be references to “Default” as such term is defined in this First Supplemental Indenture.

 

4

 

“Defaulted Amounts” means any amounts on any Note (including, without limitation, the Fundamental Change Repurchase Price, principal and interest) that are payable but are not punctually paid or duly provided for.

 

“Definitive Agreement” means, for purposes of Section 14.01(b)(iii), any agreement that provides for obligations that are material to and enforceable against the Issuer, or rights that are material to the Issuer and enforceable by the Issuer against one or more other parties to the agreement, in each case, (x) whether or not subject to conditions and (y) that would be required to be publicly disclosed on Form 8-K (or otherwise under the Exchange Act), under the rules of any exchange on which the Issuer’s securities are then listed or otherwise.

 

“Distributed Property” shall have the meaning specified in Section 14.04(c).

 

“Effective Date” shall have the meaning specified in Section 14.03(c), except that, as used in Section 14.04, “Effective Date” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable.

 

“Event of Default” shall have the meaning specified in Section 6.01.

 

“Ex-Dividend Date” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Issuer or, if applicable, from the seller of Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.

 

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

 

“Form of Fundamental Change Repurchase Notice” means the “Form of Fundamental Change Repurchase Notice” attached as Attachment 2 to the Form of Note attached hereto as Exhibit A.

 

“Form of Note” means the “Form of Note” attached hereto as Exhibit A.

 

“Form of Notice of Conversion” means the “Form of Notice of Conversion” attached as Attachment 1 to the Form of Note attached hereto as Exhibit A.

 

“Fundamental Change” shall be deemed to have occurred at the time after the Notes are originally issued if any of the following occurs:

 

(a)                                 a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than the Issuer, its Subsidiaries and the employee benefit plans of the Issuer and its Subsidiaries, files a Schedule 13D or Schedule TO (or any successor schedule, form or report) pursuant to the Exchange Act disclosing that such person or group, as the case may be, has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Issuer’s Common Equity representing more than 50% of the voting power of the Issuer’s Common Equity;

 

5

 

(b)                                 the consummation of (A) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination) as a result of which the Common Stock would be converted into, or exchanged for, stock,  other securities, other property or assets; (B) any share exchange, consolidation or merger of the Issuer pursuant to which the Common Stock will be converted into cash, securities or other property or assets; or (C) any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Issuer and its Subsidiaries, taken as a whole, to any Person other than one of the Issuer’s Subsidiaries; provided, however, that a transaction described in clause (B) in which the holders of all classes of the Issuer’s Common Equity immediately prior to such transaction own, directly or indirectly, more than 50% of the voting power of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction in substantially the same proportions as such ownership immediately prior to such transaction shall not be a Fundamental Change pursuant to this clause (b);

 

(c)                                  the stockholders of the Issuer approve any plan or proposal for the liquidation or dissolution of the Issuer; or

 

(d)                                 the Common Stock (or other common stock underlying the Notes) ceases to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors);

 

provided, however, that a transaction or transactions described in clause (b) above shall not constitute a Fundamental Change if at least 90% of the consideration received or to be received by the common stockholders of the Issuer, excluding cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights, in connection with such transaction or transactions consists of shares of common stock that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and as a result of such transaction or transactions the Notes become convertible into such consideration, excluding cash payments for fractional shares and cash payments made in respect of dissenters’ appraisal rights (subject to the provisions of Section 14.02(a)).

 

“Fundamental Change Issuer Notice” shall have the meaning specified in Section 15.01(c).

 

“Fundamental Change Repurchase Date” shall have the meaning specified in Section 15.01(a).

 

“Fundamental Change Repurchase Notice” shall have the meaning specified in Section 15.01(b)(i).

 

“Fundamental Change Repurchase Price” shall have the meaning specified in Section 15.01(a).

 

6

 

“Hercules Loan and Security Agreement” means that certain Loan and Security Agreement dated as of November 8, 2012 by and between the Issuer and Hercules Technology Growth Capital, Inc., as such agreement may be amended from time to time.

 

“Hercules Notice” shall have the meaning specified in Section 14.02(a).

 

“Indenture” shall have the meaning specified in the first paragraph of the recitals of this First Supplemental Indenture.

 

“Interest Payment Date” means each January 15 and July 15 of each year, beginning on January 15, 2014.

 

“Issuer” shall have the meaning specified in the first paragraph of this First Supplemental Indenture, and subject to the provisions of Article 11, shall include its successors and assigns.

 

“Last Reported Sale Price” of the Common Stock on any date means the closing sale price per share (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is traded.  If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “Last Reported Sale Price” shall be the last quoted bid price for the Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization.  If the Common Stock is not so quoted, the “Last Reported Sale Price” shall be 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 nationally recognized independent investment banking firms selected by the Issuer for this purpose.

 

“Make-Whole Fundamental Change” means any transaction or event that constitutes a Fundamental Change (as defined above and determined after giving effect to any exceptions to or exclusions from such definition, but without regard to the proviso in clause (b) of the definition of Fundamental Change).

 

“Market Disruption Event” means, for the purposes of determining amounts due upon conversion (a) a failure by the primary U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted for trading to open for trading during its regular trading session or (b) the occurrence or existence prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for the Common Stock for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Common Stock or in any options contracts or future contracts relating to the Common Stock.

 

“Maturity Date” means July 15, 2020.

 

“Measurement Period” shall have the meaning specified in Section 14.01(b)(i).

 

7

 

“Merger Event” shall have the meaning specified in Section 14.07(a).

 

“Note” or “Notes” shall have the meaning specified in the third paragraph of the recitals of this First Supplemental Indenture.

 

“Notice of Conversion” shall have the meaning specified in Section 14.02(b).

 

“Observation Period” with respect to any Note surrendered for conversion means: (i) if the relevant Conversion Date occurs prior to April 15, 2020, the 20 consecutive Trading Day period beginning on, and including, the second Trading Day immediately succeeding such Conversion Date; and (ii) if the relevant Conversion Date occurs on or after April 15, 2020, the 20 consecutive Trading Days beginning on, and including, the 22nd Scheduled Trading Day immediately preceding the Maturity Date.

 

“open of business” means 9:00 a.m. (New York City time).

 

“outstanding,” when used with reference to Notes, shall, subject to the provisions of Section 7.04 of the Base Indenture, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under the Indenture, except:

 

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

 

(b)                                 Notes, or portions thereof, that have become due and payable and in respect of which monies in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than the Issuer) or shall have been set aside and segregated in trust by the Issuer (if the Issuer shall act as its own paying agent);

 

(c)                                  Notes that have been paid pursuant to Section 2.09 of the Base Indenture or Notes in lieu of which, or in substitution for which, other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.09 of the Base Indenture;

 

(d)                                 Notes converted pursuant to Article 14 and required to be cancelled pursuant to Section 2.10 of the Base Indenture; and

 

(e)                                  Notes repurchased by the Issuer pursuant to the penultimate sentence of Section 3.10(b) (other than Notes repurchased pursuant to cash-settled swaps or other derivatives).

 

The definition of “Outstanding” in the Base Indenture shall not apply to the Notes, and, solely for purposes of the Notes, references to “Outstanding” in the Base Indenture shall be deemed instead to be references to “outstanding” as such term is defined in this First Supplemental Indenture.

 

“Physical Settlement” shall have the meaning specified in Section 14.02(a).

 

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and,

 

8

 

for the purposes of this definition, any Security authenticated and delivered under Section 2.09 of the Base Indenture in lieu of or in exchange for a mutilated, lost, destroyed or stolen Security  shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Security that it replaces.

 

“principal” of a Note means the stated principal amount of (including the Fundamental Change Repurchase Price, if any) such Note.  The definition of “principal” in the Base Indenture shall not apply to the Notes, and, solely for purposes of the Notes, references to “principal” in the Base Indenture shall be deemed instead to be references to “principal” as such term is defined in this First Supplemental Indenture.

 

“Prospectus Supplement” means the preliminary prospectus supplement dated July 10, 2013, as supplemented by the related pricing term sheet dated July 11, 2013, relating to the offering and sale of the Notes.

 

“Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock (or such other security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors, by statute, by contract or otherwise).  The definition of “record date” in the Base Indenture shall not apply to the Notes, and, solely for purposes of the Notes, references to “record date” in the Base Indenture shall be deemed instead to be references to “Regular Record Date” as such term is defined in this First Supplemental Indenture.

 

“Reference Property” shall have the meaning specified in Section 14.07(a).

 

“Regular Record Date,” with respect to any Interest Payment Date, means the January 1 or July 1 (whether or not such day is a Business Day) immediately preceding the applicable January 15 or July 15 Interest Payment Date, respectively.

 

“Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the principal U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted for trading.  If the Common Stock is not so listed or admitted for trading, “Scheduled Trading Day” means a Business Day.

 

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

 

“Settlement Amount” has the meaning specified in Section 14.02(a)(iv).

 

“Settlement Method” means, with respect to any conversion of Notes, Physical Settlement, Cash Settlement or Combination Settlement, as elected (or deemed to have been elected) by the Issuer.

 

“Settlement Notice” has the meaning specified in Section 14.02(a)(iii).

 

9

 

“Significant Subsidiary” means a Subsidiary of the Issuer that meets the definition of “significant subsidiary” in Article 1, Rule 1-02 of Regulation S-X under the Exchange Act.

 

“Specified Dollar Amount” means the maximum cash amount per $1,000 principal amount of Notes to be received upon conversion as specified in the Settlement Notice related to any converted Notes.

 

“Spin-Off” shall have the meaning specified in Section 14.04(c).

 

“Stock Price” shall have the meaning specified in Section 14.03(c).

 

“Successor Company” shall have the meaning specified in Section 11.02(a).

 

“Trading Day” means a day on which (i) trading in the Common Stock (or other security for which a closing sale price must be determined) generally occurs on The NASDAQ Global Market or, if the Common Stock (or such other security) is not then listed on The NASDAQ Global Market, on the principal other U.S. national or regional securities exchange on which the Common Stock (or such other security) is then listed or, if the Common Stock (or such other security) is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock (or such other security) is then traded and (ii) a Last Reported Sale Price for the Common Stock (or such other security) is available on such securities exchange or market; provided that if the Common Stock (or such other security) is not so listed or traded, “Trading Day” means a Business Day; and provided further that, for purposes of determining amounts due upon conversion only, “Trading Day” means a day on which (x) there is no Market Disruption Event and (y) trading in the Common Stock generally occurs on The NASDAQ Global Market or, if the Common Stock is not then listed on The NASDAQ Global Market, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then listed or admitted for trading, except that if the Common Stock is not so listed or admitted for trading, “Trading Day” means a Business Day.

 

“Trading Price” of the Notes on any date of determination means the average of the secondary market bid quotations obtained by the Bid Solicitation Agent for $1,000,000 principal amount of Notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers the Issuer selects for this purpose; provided that if three such bids cannot reasonably be obtained by the Bid Solicitation Agent but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the Bid Solicitation Agent, that one bid shall be used.  If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $1,000,000 principal amount of Notes from a nationally recognized securities dealer on any determination date, then the Trading Price per $1,000 principal amount of Notes on such determination date shall be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock on such determination date and the Conversion Rate on such determination date.

 

“Trigger Event” shall have the meaning specified in Section 14.04(c).

 

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“Underwriters” means J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Cowen & Company, LLC.

 

“Underwriting Agreement” means that certain Underwriting Agreement, dated as of July 11, 2013, among the Issuer and the Underwriters.

 

“unit of Reference Property” shall have the meaning specified in Section 14.07(a).

 

“Valuation Period” shall have the meaning specified in Section 14.04(c).

 

Section 2.02.  References to Interest.  Unless the context otherwise requires, any reference to interest on, or in respect of, any Note in the Indenture shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to Section 6.04.  Unless the context otherwise requires, any express mention of Additional Interest in any provision of the Indenture shall not be construed as excluding Additional Interest in those provisions of the Indenture where such express mention is not made.

 

ARTICLE 3
  ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

 

Section 3.01.  Designation and Amount.  The Notes shall be designated as the “4.50% Convertible Senior Notes due 2020.” The aggregate principal amount of Notes that may be authenticated and delivered under the Indenture is initially limited to $125,000,000 (as increased by an amount equal to the aggregate principal amount of any additional Notes purchased by the Underwriters pursuant to the exercise of their over-allotment option as set forth in the Underwriting Agreement), subject to Section 3.10 and except for Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes pursuant to Section 2.08, Section 2.09, Section 2.11 and Section 8.05 of the Base Indenture and (as amended, if applicable, by) Section 3.05, Section 3.06, Section 14.02 and Section 15.03.

 

Section 3.02.  Form of Notes.  The Notes and the Trustee’s certificate of authentication to be borne by such Notes shall be substantially in the respective forms set forth in Exhibit A, the terms and provisions of which shall constitute, and are hereby expressly incorporated in and made a part of the Indenture.  To the extent applicable, the Issuer and the Trustee, by their execution and delivery of the Indenture, expressly agree to such terms and provisions and to be bound thereby.

 

Any Note evidenced by a Global Security may be endorsed with or have incorporated in the text thereof such legends or recitals or changes not inconsistent with the provisions of the Indenture as may be required by the Custodian or the Depositary, or as may be required to comply with any applicable law or any regulation thereunder or with the rules and regulations of any securities exchange or automated quotation system upon which the Notes may be listed or traded or designated for issuance or to conform with any usage with respect thereto, or to indicate any special limitations or restrictions to which any particular Notes are subject.

 

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Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends or endorsements as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of the Indenture, or as may be required to comply with any law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or  automated quotation system on which the Notes may be listed or designated for issuance, or to conform to usage or to indicate any special limitations or restrictions to which any particular Notes are subject.

 

Each Note evidenced by a Global Security shall represent such principal amount of the outstanding Notes as shall be specified therein and shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be increased or reduced to reflect repurchases, cancellations, conversions, transfers or exchanges permitted hereby.  Any endorsement of a Note evidenced by a Global Security to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in such manner and upon instructions given by the Holder of such Notes in accordance with the Indenture.  Payment of principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, a Note evidenced by a Global Security shall be made to the Holder of such Note on the date of payment, unless a record date or other means of determining Holders eligible to receive payment is provided for herein.

 

Section 3.03.  Date and Denomination of Notes; Payments of Interest and Defaulted Amounts.  (a) The Notes shall be issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof.  Each Note shall be dated the date of its authentication and shall bear interest from the date specified on the face of such Note.  Accrued interest on the Notes shall be computed on the basis of a 360-day year composed of twelve 30-day months and, for partial months, on the basis of actual days elapsed over a 30-day month.

 

(b)                                 The Person in whose name any Note (or its Predecessor Note) is registered on the Security register at the close of business on any Regular Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date.  Interest shall be payable at the office or agency of the Issuer maintained by the Issuer for such purposes in the Borough of Manhattan, The City of New York, which shall initially be the Corporate Trust Office.  The Issuer shall pay interest (i) on any Notes evidenced by definitive Securities (A) to Holders holding such Securities having an aggregate principal amount of $5,000,000 or less, by check mailed to the Holders of these Notes at their address as it appears in the Security register and (B) to Holders holding such Securities having an aggregate principal amount of more than $5,000,000, either by check mailed to each Holder or, upon application by such a Holder to the Security Registrar not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holder’s account within the United States, which application shall remain in effect until the Holder notifies, in writing, the Security Registrar to the contrary or (ii) on any Note evidenced by a Global Security held by the Depositary by wire transfer of immediately available funds to the account of the Depositary or its nominee.

 

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(c)                                  Any Defaulted Amounts shall forthwith cease to be payable to the Holder on the relevant payment date but shall accrue interest per annum at the rate borne by the Notes plus one percent (1%), subject to the enforceability thereof under applicable law, from, and including, such relevant payment date, and such Defaulted Amounts together with such interest thereon shall be paid by the Issuer to the Persons in whose names the Notes (or their respective  Predecessor Notes) are registered at the close of business on a special record date for the payment of such Defaulted Amounts, which shall be fixed in the following manner.  The Issuer shall notify the Trustee in writing of the amount of the Defaulted Amounts proposed to be paid on each Note and the date of the proposed payment (which shall be not less than 25 days after the receipt by the Trustee of such notice, unless the Trustee shall consent to an earlier date), and at the same time the Issuer shall deposit with the Trustee an amount of money equal to the aggregate amount to be paid in respect of such Defaulted Amounts or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Amounts as in this clause provided.  Thereupon the Issuer shall fix a special record date for the payment of such Defaulted Amounts which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Issuer shall promptly notify the Trustee (but in no event less than two days before the notice is required to be sent to the Holders) of such special record date and the Trustee, in the name and at the expense of the Issuer, shall cause notice of the proposed payment of such Defaulted Amounts and the special record date therefor to be sent either by mail, first-class postage prepaid, or pursuant to the applicable procedures of the Depositary to each Holder at its address as it appears in the Security register, not less than 10 days prior to such special record date.  Notice of the proposed payment of such Defaulted Amounts and the special record date therefor having been so sent, such Defaulted Amounts shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such special record date.

 

(d)                                 The third paragraph of Section 2.07 of the Base Indenture shall not apply to the Notes.

 

Section 3.04.  [Reserved].

 

Section 3.05.  Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary.  (a) (i) The Trustee is hereby initially appointed the “Security Registrar” for the purpose of registering Notes and transfers of Notes as provided in the Indenture.

 

(ii)                                  Solely for purposes of the Notes, the fourth paragraph of Section 2.08 of the Base Indenture is hereby amended by inserting the parenthetical “(including for any repurchase or conversion of Notes)” immediately after the word “payment” therein.

 

(iii)                               The fifth and sixth paragraphs of Section 2.08 of the Base Indenture shall not apply to the Notes.  No service charge shall be imposed by the Issuer, the Trustee, the Security Registrar or the paying agent for any exchange or registration of transfer of Notes, but the Issuer may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax required in connection therewith as a result of the name of the Holder of new Notes

 

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issued upon such exchange or registration of transfer being different from the name of the Holder of the old Notes surrendered for exchange or registration of transfer.

 

None of the Issuer, the Trustee or the Security Registrar shall be required to exchange or register a transfer of (x) any Notes surrendered for conversion or, if a portion of any Note is surrendered for conversion, such portion thereof surrendered for conversion or (y) any Notes, or  a portion of any Note, surrendered for repurchase (and not withdrawn) in accordance with Article 15.

 

(iv)                              The ninth paragraph of Section 2.08 of the Base Indenture shall not apply to the Notes.

 

(b)                                 The seventh paragraph of Section 2.08 of the Base Indenture shall not apply to the Notes.  Instead, the provisions contained in this paragraph shall apply to the Notes.  Notwithstanding any other provisions of the Indenture (other than the provisions set forth in this Section 3.05(b)), a Note evidenced by a Global Security may not be transferred as a whole or in part except (i) by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary and (ii) for transfers of portions of a Note evidenced by a Global Security in certificated form made upon request of a member of, or a participant in, the Depositary (for itself or on behalf of a beneficial owner) by written notice given to the Trustee by or on behalf of the Depositary in accordance with customary procedures of the Depositary and in compliance with this Section 3.05(b).

 

The Issuer initially appoints The Depository Trust Company to act as Depositary with respect to each Note evidenced by a Global Security.  Initially, each Note evidenced by a Global Security shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee as custodian for Cede & Co.

 

The tenth paragraph of Section 2.08 of the Base Indenture shall not apply to the Notes.  In addition to the provisions set forth in the eighth paragraph of Section 2.08 of the Base Indenture, solely for purposes of the Notes, if an Event of Default with respect to the Notes has occurred and is continuing and a beneficial owner of any Note requests that its beneficial interest therein be issued as a physical, certificated Security in such beneficial owner’s name, the Issuer shall execute, and the Trustee, upon receipt of an Officer’s Certificate for the authentication and delivery of definitive Securities, shall authenticate and deliver a Security in definitive registered form to such beneficial owner in a principal amount equal to the principal amount of such Note corresponding to such beneficial owner’s beneficial interest.

 

At such time as all interests in a Note evidenced by a Global Security have been converted, canceled, repurchased or transferred, such Note evidenced by a Global Security shall be, upon receipt thereof, canceled by the Trustee in accordance with its customary procedures.  At any time prior to such cancellation, if any interest in a Note evidenced by a Global Security is exchanged for one or more Notes evidenced by definitive Securities, converted, canceled, repurchased or transferred to a transferee who receives definitive Securities therefor or any Note evidenced by a definitive Security is exchanged or transferred for part of such Global Security, the principal amount of such Note evidenced by a Global Security shall, in accordance with the

 

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Trustee’s customary procedures and instructions existing between the Depositary and the Custodian, be appropriately reduced or increased, as the case may be, and an endorsement shall be made on such Global Security, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction or increase.

 

None of the Issuer, the Trustee or any agent of the Issuer or the Trustee shall have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Note evidenced by a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

 

(c)                                  Any Note or Common Stock issued upon the conversion or exchange of a Note that is repurchased or owned by any Affiliate of the Issuer (or any Person who was an Affiliate of the Issuer at any time during the three months preceding) may not be resold by such Affiliate (or such Person, as the case may be) unless resold in a transaction that results in such Note or Common Stock, as the case may be, no longer being a “restricted security” (as defined under Rule 144 under the Securities Act) in the hands of the purchaser thereof.  The Issuer shall cause any Note that is repurchased or owned by it to be surrendered to the Trustee for cancellation in accordance with Section 2.10 of the Base Indenture as amended by Section 3.08.

 

Section 3.06.  Mutilated, Destroyed, Lost or Stolen Notes.  The first sentence of the second paragraph of Section 2.09 of the Base Indenture shall not apply to the Notes.  Instead, the provisions contained in this paragraph shall apply to the Notes.  No service charge shall be imposed by the Issuer, the Trustee, the Security Registrar or the paying agent upon the issuance of any substitute Security in accordance with Section 2.09 of the Base Indenture, but the Issuer may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax required in connection therewith as a result of the name of the Holder of the new substitute Security being different from the name of the Holder of the old Security that became mutilated or was destroyed, lost or stolen.

 

Solely for purposes of the Notes, the phrase “called for redemption in full” in the second sentence of the second paragraph of Section 2.09 of the Base Indenture shall be deemed to be replaced with the phrase “surrendered for required repurchase”.

 

Solely for purposes of the Notes, the third paragraph of Section 2.09 of the Base Indenture is hereby amended by inserting the words “or repurchase” immediately following the word “conversion” in the second sentence thereof.

 

Section 3.07.  [Reserved].

 

Section 3.08.  Cancellation of Securities.  Solely for purposes of the Notes, the Section 2.10 of the Base Indenture is hereby amended by (x) inserting the words “required repurchase,” immediately prior to the word “conversion” in the first sentence thereof and (y) deleting in their entirety the second and third sentences thereof.

 

Section 3.09.  CUSIP Numbers.  The Issuer has issued the Notes with “CUSIP” numbers and will issue any additional Notes with “CUSIP” numbers (if then generally in use).  The Trustee shall use “CUSIP” numbers in all notices issued to Holders as a convenience to such

 

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Holders (unless not used in connection with any additional Notes issued pursuant to this First Supplemental Indenture); provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or on such notice and that reliance may be placed only on the other identification numbers printed on the Notes.  The Issuer shall promptly notify the Trustee in writing of any change in the “CUSIP” numbers.

 

Section 3.10.  Additional Notes; Repurchases.  (a) The final paragraph of Section 2.03 of the Base Indenture shall not apply to the Notes.  Solely for purposes of the Notes, the provisions of this Section 3.10 shall supersede in its entirety the final paragraph of Section 2.03 of the Base Indenture, and all references in the Base Indenture to such provisions contained in such paragraph shall, with respect to the Notes, be deemed to be references to the provisions set forth in this Section 3.10.

 

(b)                                 The Issuer may, without the consent of the Holders and notwithstanding Section 3.01, reopen this First Supplemental Indenture and issue additional Notes hereunder with the same terms as the Notes initially issued hereunder (other than differences in the issue price and interest accrued prior to the issue date of such additional Notes) in an unlimited aggregate principal amount; provided that if any such additional Notes are not fungible with the Notes initially issued hereunder for U.S. federal income tax purposes, such additional Notes shall have a separate CUSIP number.  Prior to the issuance of any such additional Notes, the Issuer shall deliver to the Trustee an Issuer Order, an Officer’s Certificate and an Opinion of Counsel, such Officer’s Certificate and Opinion of Counsel to cover such matters, in addition to those required by Section 11.05 of the Base Indenture, as the Trustee shall reasonably request.  In addition, the Issuer may, to the extent permitted by law, and directly or indirectly (regardless of whether such Notes are surrendered to the Issuer), repurchase Notes in the open market or otherwise, whether by the Issuer or its Subsidiaries or through a private or public tender or exchange offer or through counterparties to private agreements, including by cash-settled swaps or other derivatives.  The Issuer shall cause any Notes so repurchased (other than Notes repurchased pursuant to cash-settled swaps or other derivatives) to be surrendered to the Trustee for cancellation in accordance with Section 2.10 of the Base Indenture (as amended by Section 3.08).

 

ARTICLE 4
  SATISFACTION AND DISCHARGE

 

Section 4.01.  Applicability of Article 10 of the Base Indenture.  Section 10.01, Section 10.04 and Section 10.05 of the Base Indenture shall not apply to the Notes.  Instead, the satisfaction and discharge provisions set forth in this Article 4 shall, with respect to the Notes, supersede in their entirety Section 10.01, Section 10.04 and Section 10.05 of the Base Indenture, and all references in the Base Indenture to such Sections and satisfaction and discharge provisions therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this Article 4 and the satisfaction and discharge provisions set forth in this Article 4.

 

Section 4.02.  Satisfaction and Discharge.  This First Supplemental Indenture (and the Base Indenture with respect to the Notes) shall upon request of the Issuer contained in an Officer’s Certificate cease to be of further effect, and the Trustee, at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of the Indenture,

 

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when (a) (i) all Notes theretofore authenticated and delivered (other than (x) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.09 of the Base Indenture (as amended by Section 3.06) and (y) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 4.03(c)) have been delivered to the Trustee for cancellation; or (ii) the Issuer has deposited with the Trustee or  delivered to Holders, as applicable, after the Notes have become due and payable, whether on the Maturity Date, any Fundamental Change Repurchase Date, upon conversion or otherwise, cash or cash, shares of Common Stock or a combination thereof, as applicable, solely to satisfy the Issuer’s Conversion Obligation, sufficient to pay all of the outstanding Notes and all other sums due and payable under the Indenture by the Issuer; and (b) the Issuer has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this First Supplemental Indenture have been complied with.  Notwithstanding the satisfaction and discharge of this First Supplemental Indenture (and the Base Indenture with respect to the Notes), the obligations of the Issuer to the Trustee under Section 6.06 of the Base Indenture shall survive with respect to the Notes.

 

Section 4.03.  Provisions as to Paying Agent.  (a) Solely for purposes of the Notes, Section 10.02 and Section 10.03 of the Base Indenture are hereby amended by inserting the phrase “and shares of Common Stock” after each instance of the word “money” or “moneys” therein.

 

(b)                                 Solely for purposes of the Notes, Section 10.02 of the Base Indenture is hereby amended by inserting the phrase “, any consideration due upon conversion” after the word “principal” therein.

 

(c)                                  Any money and shares of Common Stock deposited with the Trustee or any paying agent, or then held by the Issuer, in trust for the payment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, accrued and unpaid interest on and the consideration due upon conversion of any Note and remaining unclaimed for two years after such principal (including the Fundamental Change Repurchase Price, if applicable), interest or consideration due upon conversion has become due and payable shall be paid to the Issuer on request of the Issuer contained in an Officer’s Certificate, or (if then held by the Issuer) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof, and all liability of the Trustee or such paying agent with respect to such trust money and shares of Common Stock, and all liability of the Issuer as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such paying agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The Borough of Manhattan, The City of New York, notice that such money and shares of Common Stock remain unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money and shares of Common Stock then remaining will be repaid or delivered to the Issuer.

 

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ARTICLE 5
  PARTICULAR COVENANTS OF THE ISSUER

 

Section 5.01.  Payment of Principal and Interest.  (a)  Section 3.01 of the Base Indenture shall not apply to the Notes.

 

(b)                                 The Issuer covenants and agrees that it will cause to be paid the principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, each of the Notes at the places, at the respective times and in the manner provided herein and in the Notes.

 

Section 5.02.  Offices for Payments, Etc.  Pursuant to Section 2.03 and Section 3.02 of the Base Indenture, the Issuer hereby initially designates the Trustee as the paying agent, Security Registrar, Custodian and Conversion Agent (the “Conversion Agent”) and the Corporate Trust Office as the office or agency in the Borough of Manhattan, The City of New York, where Notes may be surrendered for registration of transfer or exchange or for presentation for payment or repurchase or for conversion and where notices and demands to or upon the Issuer in respect of the Notes and the Indenture may be served.  The Issuer may change the paying agent, Security Registrar, Custodian or Conversion Agent, in each case, at any time without prior notice to the Holders.

 

Section 5.03.  [Reserved].

 

Section 5.04.  Paying Agents.  (a) Solely for purposes of the Notes, Section 3.04(c) of the Base Indenture is hereby amended by adding the words “or an Event of Default” immediately following the word “failure” therein.

 

(b)                                 Solely for purposes of the Notes, the first paragraph immediately following Section 3.04(c) of the Base Indenture is hereby amended by adding the words “11:00 a.m., New York City Time, of” immediately following the words “on or prior to” therein.

 

Section 5.05.  Existence.  Subject to Article 11, the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.

 

Section 5.06.  Reports.  (a)  The Issuer shall file with the Trustee, within 15 days after the same are required to be filed with the Commission, copies of any documents or reports that the Issuer is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act).  Any such document or report that the Issuer files with the Commission via the Commission’s EDGAR system shall be deemed to be filed with the Trustee for purposes of this Section 5.06(a) at the time such documents are filed via the EDGAR system.

 

(b)                                 Delivery of the reports and documents described in subsection (a) above to the Trustee is for informational purposes only, and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Issuer’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to conclusively rely on an Officer’s Certificate) or under the Notes.

 

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The Trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise, the Issuer’s compliance with any of its covenants under the Indenture or with respect to any reports or other documents filed with EDGAR under the Indenture.

 

Section 5.07.  Stay, Extension and Usury Laws.  The Issuer covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Issuer from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of the Indenture; and the Issuer (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

Section 5.08.  Statements as to Defaults.  The Issuer shall deliver to the Trustee, as soon as possible, and in any event within 30 days after the occurrence of any Event of Default or Default, an Officer’s Certificate setting forth the details of such Event of Default or Default, its status and the action that the Issuer is taking or proposing to take in respect thereof.

 

Section 5.09.  Further Instruments and Acts.  Upon request of the Trustee, the Issuer will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of the Indenture.

 

ARTICLE 6
  DEFAULTS AND REMEDIES

 

Section 6.01.  Applicability of Article 5 of the Base Indenture.  (a) Section 5.01 and Section 5.10 of the Base Indenture shall not apply to the Notes.  Instead, the Event of Default provisions set forth in this Article 6 shall, with respect to the Notes, supersede in their entirety Section 5.01 and Section 5.10 of the Base Indenture, and all references in the Base Indenture to such Sections and Event of Default provisions therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this Article 6 and the Event of Default provisions set forth in this Article 6.

 

Section 6.02.  Events of Default.  Each of the following events shall be an “Event of Default” with respect to the Notes:

 

(a)                                 default in any payment of interest on any Note when due and payable, and the default continues for a period of 30 days;

 

(b)                                 default in the payment of principal of any Note when due and payable on the Maturity Date, upon any required repurchase, upon declaration of acceleration or otherwise;

 

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(c)                                  failure by the Issuer for five Business Days to comply with its obligation to convert the Notes in accordance with this First Supplemental Indenture upon exercise of a Holder’s conversion right;

 

(d)                                 failure by the Issuer to issue a Fundamental Change Issuer Notice in accordance with Section 15.01(c) or notice of a specified corporate event in accordance with Section 14.01(b)(ii) or Section 14.01(b)(iii), in each case when due;

 

(e)                                  failure by the Issuer to comply with its obligations under Article 11;

 

(f)                                   failure by the Issuer for 60 days after written notice from the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding has been received by the Issuer to comply with any of its other agreements contained in the Notes or the Indenture;

 

(g)                                  default by the Issuer or any Subsidiary of the Issuer with respect to any mortgage, agreement or other instrument (other than the Notes) under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in excess of $20,000,000 (or its foreign currency equivalent) in the aggregate of the Issuer and/or any such Subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable without such indebtedness having been discharged or the acceleration of payment of such indebtedness having been cured, rescinded, waived or annulled within 30 days after written notice to the Issuer by the Trustee or Holders of at least 25% in aggregate principal amount of the outstanding Notes or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable after any applicable grace period at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise;

 

(h)                                 a final judgment for the payment of $20,000,000 (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) rendered against the Issuer or any Subsidiary of the Issuer, which judgment is not discharged or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished;

 

(i)                                     the Issuer or any Significant Subsidiary shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to the Issuer or any such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Issuer or any such Significant Subsidiary or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors; or

 

(j)                                    an involuntary case or other proceeding shall be commenced against the Issuer or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to the Issuer or such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Issuer or such Significant Subsidiary or any substantial

 

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part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 consecutive days.

 

Section 6.03.  Acceleration; Rescission and Annulment.  If one or more Events of Default shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body), then, and in each and every such case (other than an Event of Default  specified in Section 6.02(i) or Section 6.02(j) with respect to the Issuer or any of its Significant Subsidiaries), unless the principal of all of the Notes shall have already become due and payable, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding determined in accordance with Section 7.04 of the Base Indenture, by notice in writing to the Issuer (and to the Trustee if given by Holders), may declare 100% of the principal of, and accrued and unpaid interest on, all the Notes to be due and payable immediately, and upon any such declaration the same shall become and shall automatically be immediately due and payable, anything contained in the Indenture or in the Notes to the contrary notwithstanding.  If an Event of Default specified in Section 6.02(i) or Section 6.02(j) with respect to the Issuer or any of its Significant Subsidiaries occurs and is continuing, 100% of the principal of, and accrued and unpaid interest, if any, on, all Notes shall become and shall automatically be immediately due and payable.

 

The immediately preceding paragraph, however, is subject to the conditions that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of such monies due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay installments of accrued and unpaid interest upon all Notes and the principal of any and all Notes that shall have become due otherwise than by acceleration (with interest on overdue installments of accrued and unpaid interest to the extent that payment of such interest is enforceable under applicable law, and on such principal at the rate borne by the Notes plus one percent (1%) at such time) and amounts due to the Trustee pursuant to Section 6.06 of the Base Indenture, the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Issuer and to the Trustee, may waive all Defaults or Events of Default with respect to the Notes and rescind and annul such declaration and its consequences and such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of the Indenture so long as (1) such rescission, annulment and/or waiver would not conflict with any judgment or decree of a court of competent jurisdiction and (2) any and all existing Events of Default under the Indenture, other than the nonpayment of the principal of and accrued and unpaid interest, if any, on Notes that shall have become due solely by such acceleration, shall have been cured or waived pursuant to Section 6.06, then and in every such case (except as provided in the immediately succeeding sentence); provided that no such waiver, rescission and/or annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon.  Notwithstanding anything to the contrary herein, no such waiver, rescission and/or annulment shall extend to or shall affect any Default or Event of Default resulting from (i) the nonpayment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, any Notes or (ii) a

 

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failure to pay or deliver, as the case may be, the consideration due (or deemed to be due) upon conversion of the Notes.

 

Section 6.04.  Additional Interest.  Notwithstanding anything in the Indenture or in the Notes to the contrary, to the extent the Issuer elects, the sole remedy for an Event of Default relating to the Issuer’s failure to comply with its obligations as set forth in Section 4.02(a) of the Base Indenture or Section 5.06(a), in either case, shall after the occurrence of such an Event of Default consist exclusively of the right to receive Additional Interest on the Notes at a rate equal to 0.25% per annum of the principal amount of the Notes outstanding for each day during the 90-day period on which such Event of Default is continuing beginning on, and including, the date on which such an Event of Default first occurs.  If the Issuer so elects, such Additional Interest shall be payable in the same manner and on the same dates as the stated interest payable on the Notes.  On the 91st day after such Event of Default (if the Event of Default relating to the Issuer’s failure to file is not cured or waived prior to such 91st day), the Notes shall be immediately subject to acceleration as provided in Section 6.03.  In the event the Issuer does not elect to pay Additional Interest following an Event of Default in accordance with this Section 6.04 or the Issuer elected to make such payment but does not pay the Additional Interest when due, the Notes shall be immediately subject to acceleration as provided in Section 6.03.

 

In order to elect to pay Additional Interest as the sole remedy during the first 90 days after the occurrence of any Event of Default described in the immediately preceding paragraph, the Issuer must notify all Holders of the Notes, the Trustee and the paying agent of such election prior to the beginning of such 90-day period.  Upon the failure to timely give such notice, the Notes shall be immediately subject to acceleration as provided in Section 6.03.

 

Section 6.05.  Amendments to Article 5 of the Base Indenture.  Solely for purposes of the Notes:

 

(a)                                 Section 5.02 of the Base Indenture is hereby amended by inserting the phrase “plus one percent (1%)” immediately following the phrase “specified in the Securities of such series” in the first paragraph thereof.

 

(b)                                 Section 5.03 of the Base Indenture is hereby amended by:

 

(i)                                     inserting the phrase “and any cash due upon conversion” immediately following the phrase “to the payment of interest on” in the second indented subclause thereof,

 

(ii)                                  inserting the phrase “plus one percent (1%)” immediately following the phrase “specified in such Securities” in the second indented subclause thereof;

 

(iii)                               inserting the phrase “and any cash due upon conversion” immediately following each occurrence of the phrases “for principal and interest”, “such principal and interest” and “such principal and accrued and unpaid interest” in the third indented subclause thereof; and

 

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(iv)                              inserting the phrase “plus one percent (1%)” immediately following the phrase “specified in the Securities of such series” in the third indented subclause thereof.

 

(c)                                  Section 5.07 of the Base Indenture is hereby amended by (i) inserting the phrase “and the payment or delivery, as the case may be, of the consideration due upon conversion of such Security, in each case,” immediately following the phrase “payment of the principal of and interest on” therein and (ii) inserting the phrase “or delivery, as the case may be,” immediately following the phrase “any such payment” therein.

 

(d)                                 Section 5.11 of the Base Indenture is hereby amended by inserting the phrase “in the payment or delivery of the consideration due upon conversion” immediately prior to the phrase “or in the payment of any sinking fund installment” in the proviso thereto.

 

(e)                                  Section 5.12 of the Base Indenture is hereby amended by inserting the phrase “or to any suit for the enforcement of the right to convert any Note in accordance with the provisions of Article 14” immediately prior to the period at the end thereof.

 

Section 6.06.  Waiver of Defaults by Majority of Holders.  The Holders of a majority in aggregate principal amount of the Notes at the time outstanding determined in accordance with Section 7.04 of the Base Indenture may on behalf of the Holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences except (i) a default in the payment of accrued and unpaid interest, if any, on, or the principal (including any Fundamental Change Repurchase Price) of, the Notes when due that has not been cured pursuant to the provisions of Section 6.01, (ii) a failure by the Issuer to pay or deliver, as the case may be, the consideration due upon conversion of the Notes or (iii) a default in respect of a covenant or provision hereof which under Article 10 cannot be modified or amended without the consent of each Holder of an outstanding Note affected.  Upon any such waiver the Issuer, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.  Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 6.06, said Default or Event of Default shall for all purposes of the Notes and the Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

 

ARTICLE 7
  [INTENTIONALLY OMITTED]

 

ARTICLE 8
  CONCERNING THE HOLDERS

 

Section 8.01.  Holders to Be Treated as Owners.  Solely for purposes of the Notes, Section 7.03 of the Base Indenture is hereby amended by (x) inserting the phrase “, for conversion of such Security” immediately prior to the phrase “and for all other purposes” in the

 

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first sentence thereof, (y) inserting the phrase “or deliveries” immediately following the phrase “such payments” in the second sentence thereof and (z) inserting the phrase “or delivered” immediately following the phrase “so paid” in the second sentence thereof.

 

ARTICLE 9
  [INTENTIONALLY OMITTED]

 

ARTICLE 10
  SUPPLEMENTAL INDENTURES

 

Section 10.01.  Applicability of Article 8, Section 8.01 and Section 8.02 of the Base Indenture.  References in the Base Indenture to any supplemental indenture authorized under Article 8, Section 8.01 or Section 8.02, as the case may be, of the Base Indenture shall be deemed to include any supplemental indenture authorized under Article 10, Section 10.02 or Section 10.03, as the case may be, of this First Supplemental Indenture.

 

Section 10.02.  Supplemental Indentures Without Consent of Holders.  Section 8.01(b), Section 8.01(d), Section 8.01(h) and Section 8.01(j) of the Base Indenture shall not apply to the Notes.  Solely for purposes of the Notes, in addition to the amendments or supplements authorized under Section 8.01 of the Base Indenture (other than Section 8.01(b), Section 8.01(d), Section 8.01(h) and Section 8.01(j) of the Base Indenture as described above), the Issuer, when authorized by a resolution of its Board of Directors, and the Trustee, at the Issuer’s expense, may from time to time and at any time, without the consent of any of the Holders, enter into an indenture or indentures supplemental hereto in form satisfactory to the Trustee for one or more of the following purposes:

 

(a)                                 to cure any ambiguity, omission, defect or inconsistency that does not adversely affect Holders of the Notes;

 

(b)                                 to provide for the assumption by a Successor Company of the obligations of the Issuer under the Indenture pursuant to Article 11;

 

(c)                                  to secure the Notes;

 

(d)                                 to add to the covenants or Events of Default of the Issuer for the benefit of the Holders or surrender any right or power conferred upon the Issuer;

 

(e)                                  to make any change that does not adversely affect the rights of any Holder;

 

(f)                                   to provide for an increase of the Conversion Rate;

 

(g)                                  to evidence any change in the Trustee;

 

(h)                                 to reflect the issuance of additional Notes as permitted by Section 3.10;

 

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(i)                                     to comply with any requirement of the Commission in connection with the qualification of the Indenture under the Trust Indenture Act;

 

(j)                                    in connection with any Merger Event, provide that the notes are convertible into Reference Property, subject to the provisions of Section 14.02, and make such related changes to the terms of the Notes to the extent expressly required by Section 14.07; or

 

(k)                                 to conform the provisions of the Indenture or the Notes to the “Description of Notes” section of the Prospectus Supplement.

 

Section 10.03.  Supplemental Indentures with Consent of Holders.  Solely for purposes of the Notes, in addition to, and notwithstanding, the provisions set forth in Section 8.02 of the Base Indenture, without the consent of each Holder affected thereby, a supplemental indenture hereto may not:

 

(a)                                 make any change that adversely affects the conversion rights of any Notes;

 

(b)                                 reduce the Fundamental Change Repurchase Price of any Note or amend or modify in any manner adverse to the Holders the Issuer’s obligation to make such payments, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;

 

(c)                                  make any Note payable in a currency, or at a place of payment, other than that stated in the Note; or

 

(d)                                 change the ranking of the Notes.

 

ARTICLE 11
  CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

 

Section 11.01.  Applicability of Article 9 of the Base Indenture.  (a) Article 9 of the Base Indenture shall not apply to the Notes.  Instead, the consolidation, merger, sale, conveyance and lease provisions set forth in this Article 11 shall, with respect to the Notes, supersede in their entirety Article 9 of the Base Indenture, and all references in the Base Indenture to Article 9 and the consolidation, merger, sale, conveyance and lease provisions therein shall, with respect to the Notes, be deemed to be references to this Article 11 and the consolidation, merger, sale, conveyance and lease provisions set forth in this Article 11.

 

Section 11.02.  Issuer May Consolidate, Etc. on Certain Terms.  Subject to the provisions of Section 11.03, the Issuer shall not consolidate with, merge with or into, or sell, convey, transfer or lease all or substantially all of its properties and assets to another Person, unless:

 

(a)                                 the resulting, surviving or transferee Person (the “Successor Company”), if not the Issuer, shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia, and the Successor Company (if not the Issuer) shall expressly assume, by supplemental indenture all of the obligations of the Issuer under the Notes and the Indenture; and

 

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(b)        immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing under the Indenture.

 

For purposes of this Section 11.02, the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of one or more Subsidiaries of the Issuer to another Person, which properties and assets, if held by the Issuer instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Issuer on a consolidated basis, shall be deemed to be the sale, conveyance, transfer or lease of all or substantially all of the properties and assets of the Issuer to another Person.

 

Section 11.03.  Successor Corporation to Be Substituted.  In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by the Successor Company, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and accrued and unpaid interest on all of the Notes, the due and punctual delivery or payment, as the case may be, of any consideration due upon conversion of the Notes and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Issuer, such Successor Company (if not the Issuer) shall succeed to and, except in the case of a lease of all or substantially all of the Issuer’s properties and assets, shall be substituted for the Issuer, with the same effect as if it had been named herein as the party of the first part.  Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of the Issuer any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Issuer and delivered to the Trustee; and, upon the order of such Successor Company instead of the Issuer and subject to all the terms, conditions and limitations in the Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the officers of the Issuer to the Trustee for authentication, and any Notes that such Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose.  All the Notes so issued shall in all respects have the same legal rank and benefit under the Indenture as the Notes theretofore or thereafter issued in accordance with the terms of the Indenture as though all of such Notes had been issued at the date of the execution hereof.  In the event of any such consolidation, merger, sale, conveyance or transfer (but not in the case of a lease), upon compliance with this Article 11 the Person named as the “Issuer” in the first paragraph of this First Supplemental Indenture (or any successor that shall thereafter have become such in the manner prescribed in this Article 11) may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall be released from its liabilities as obligor and maker of the Notes and from its obligations under the Indenture and the Notes.

 

In case of any such consolidation, merger, sale, conveyance, transfer or lease, such changes in phraseology and form (but not in substance) may be made in the Notes thereafter to be issued as may be appropriate.

 

Section 11.04.  Opinion of Counsel to Be Given to Trustee.  No such consolidation, merger, sale, conveyance, transfer or lease shall be effective unless the Trustee shall receive an Officer’s Certificate and an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or lease and any such assumption and, if a 

 

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supplemental indenture is required in connection with such transaction, such supplemental indenture, complies with the provisions of this Article 11.

 

ARTICLE 12
  [INTENTIONALLY OMITTED]

 

ARTICLE 13
  [INTENTIONALLY OMITTED]

 

ARTICLE 14
  CONVERSION OF NOTES

 

Section 14.01.  Conversion Privilege.  (a) Subject to and upon compliance with the provisions of this Article 14, each Holder of a Note shall have the right, at such Holder’s option, to convert all or any portion (if the portion to be converted is $1,000 principal amount or an integral multiple thereof) of such Note (i) subject to satisfaction of the conditions described in Section 14.01(b), at any time prior to the close of business on the Business Day immediately preceding April 15, 2020 under the circumstances and during the periods set forth in Section 14.01(b), and (ii) regardless of the conditions described in Section 14.01(b), on or after April 15, 2020 and prior to the close of business on the Business Day immediately preceding the Maturity Date, in each case, at an initial conversion rate of 160.0000 shares of Common Stock (subject to adjustment as provided in this Article 14, the “Conversion Rate”) per $1,000 principal amount of Notes (subject to, and in accordance with, the settlement provisions of Section 14.02, the “Conversion Obligation”).

 

(b)           (i) Prior to the close of business on the Business Day immediately preceding April 15, 2020, a Holder may surrender all or any portion of its Notes for conversion at any time during the five Business Day period immediately after any five consecutive Trading Day period (the “Measurement Period”) in which the Trading Price per $1,000 principal amount of Notes, as determined following a request by a Holder of Notes in accordance with this subsection (b)(i), for each Trading Day of the Measurement Period was less than 98% of the product of the Last Reported Sale Price of the Common Stock on each such Trading Day and the Conversion Rate on each such Trading Day.  The Trading Prices shall be determined by the Bid Solicitation Agent pursuant to this subsection (b)(i) and the definition of Trading Price set forth in this First Supplemental Indenture.  The Issuer shall provide written notice to the Bid Solicitation Agent of the three independent nationally recognized securities dealers selected by the Issuer pursuant to the definition of Trading Price, along with appropriate contact information for each.  The Bid Solicitation Agent shall have no obligation to determine the Trading Price per $1,000 principal amount of Notes unless the Issuer has requested such determination, and the Issuer shall have no obligation to make such request unless a Holder provides the Issuer with reasonable evidence that the Trading Price per $1,000 principal amount of Notes on any Trading Day would be less than 98% of the product of the Last Reported Sale Price of the Common Stock on such Trading Day and the Conversion Rate on such Trading Day, at which time the Issuer shall instruct the 

 

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Bid Solicitation Agent to determine the Trading Price per $1,000 principal amount of Notes beginning on the next Trading Day and on each successive Trading Day until the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate.  If the Issuer does not instruct the Bid Solicitation Agent to determine the Trading Price per $1,000 principal amount of Notes when obligated as provided in the preceding sentence, or if the Issuer instructs the Bid Solicitation Agent to obtain bids and the Bid Solicitation Agent fails to make such determination, then, in either case, the Trading Price per $1,000 principal amount of Notes shall be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate on each Trading Day of such failure.  If the Trading Price condition set forth above has been met, the Issuer shall so notify in writing the Holders, the Trustee and the Conversion Agent (if other than the Trustee).  If, at any time after the Trading Price condition set forth above has been met and the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate for such date, then the Issuer shall so notify in writing the Holders of the Notes, the Trustee and the Conversion Agent (if other than the Trustee).

 

(ii)           If, prior to the close of business on the Business Day immediately preceding April 15, 2020, the Issuer elects to:

 

(A)            issue to all or substantially all holders of the Common Stock any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of the Common Stock at a price per share that is less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance; or

 

(B)            distribute to all or substantially all holders of the Common Stock the Issuer’s assets, securities or rights to purchase securities of the Issuer, which distribution has a per share value, as reasonably determined by the Board of Directors, exceeding 10% of the Last Reported Sale Price of the Common Stock on the Trading Day preceding the date of announcement for such distribution,

 

then, in either case, the Issuer shall notify in writing all Holders of the Notes, the Trustee and the Conversion Agent (if other than the Trustee) at least 30 Scheduled Trading Days prior to the Ex-Dividend Date for such issuance or distribution.  Once the Issuer has given such notice, a Holder may surrender all or any portion of its Notes for conversion at any time until the earlier of (1) the close of business on the Business Day immediately preceding the Ex-Dividend Date for such issuance or distribution and (2) the Issuer’s announcement that such issuance or distribution will not take place, in each case, even if the Notes are not otherwise convertible at such time.

 

Holders shall not have the right to convert their Notes pursuant to this Section 14.01(b)(ii) if Holders are entitled to participate (solely as a result of holding the Notes and without having to convert their Notes), at the same time and upon the same terms as holders of the Common Stock, in such transaction as if they held a number of shares of Common Stock equal to the Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Holder.

 

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(iii)          If a transaction or event that constitutes a Fundamental Change or a Make-Whole Fundamental Change that does not constitute a Fundamental Change occurs prior to the close of business on the Business Day immediately preceding April 15, 2020, regardless of whether a Holder has the right to require the Issuer to repurchase the Notes pursuant to Section 15.01, or if the Issuer is a party to a consolidation, merger, binding share exchange, or transfer or lease of all or substantially all of its assets, in each case, pursuant to which the Common Stock would be converted into cash, securities or other assets, all or any portion of a Holder’s Notes may be surrendered for conversion at any time from or after the date that is 30 Scheduled Trading Days prior to the anticipated effective date of the transaction (or, if later, the Business Day after the Issuer gives notice of such transaction) until 35 Trading Days after the actual effective date of such transaction or, if such transaction also constitutes a Fundamental Change, until the related Fundamental Change Repurchase Date.  The Issuer shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) (i) as promptly as practicable following the date the Issuer publicly announces such transaction but in no event, except as provided below, less than 30 Scheduled Trading Days prior to the anticipated effective date of such transaction or (ii) if the Issuer does not have knowledge of such transaction or, in the case of any merger, consolidation, binding share exchange or transfer or lease of all or substantially all of the Issuer’s assets, the Issuer has not entered into a Definitive Agreement with respect to such transaction to which it is a party, in each case, at least 30 Scheduled Trading Days prior to the anticipated effective date of such transaction, within one Business Day of the date upon which the Issuer receives notice, or otherwise becomes aware, of or (in the case of any merger, consolidation, binding share exchange or transfer or lease of all or substantially all of the Issuer’s assets) enters into a Definitive Agreement with respect to such transaction, but in no event later than the actual effective date of such transaction.

 

(iv)          Prior to the close of business on the Business Day immediately preceding April 15, 2020, a Holder may surrender all or any portion of its Notes for conversion at any time during any calendar quarter commencing after September 30, 2013 (and only during such calendar quarter), if the Last Reported Sale Price of the Common Stock for at least 20 Trading Days (whether or not consecutive) during the period of 30 consecutive Trading Days ending on the last Trading Day of the immediately preceding calendar quarter is greater than or equal to 130% of the Conversion Price on each applicable Trading Day.  The Conversion Agent, on behalf of the Issuer, shall determine at the beginning of each calendar quarter commencing after September 30, 2013 whether the Notes may be surrendered for conversion in accordance with this clause (iv) and shall notify the Issuer and the Trustee if the Notes become convertible in accordance with this clause (iv).  If the Notes may be surrendered for conversion pursuant to this clause (iv), the Issuer shall so notify the Holders.

 

Section 14.02.  Conversion Procedure; Settlement Upon Conversion.

 

(a)           Subject to this Section 14.02, Section 14.03(b) and Section 14.07(a), upon conversion of any Note, the Issuer shall pay or deliver, as the case may be, to the converting Holder, in respect of each $1,000 principal amount of Notes being converted, cash (“Cash Settlement”), shares of Common Stock, together with cash, if applicable, in lieu of delivering 

 

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any fractional share of Common Stock in accordance with subsection (j) of this Section 14.02 (“Physical Settlement”) or a combination of cash and shares of Common Stock, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection (j) of this Section 14.02 (“Combination Settlement”), at its election, subject to the immediately succeeding paragraph, as set forth in this Section 14.02.

 

Notwithstanding the immediately preceding paragraph, for any conversions of Notes for which the relevant Conversion Date occurs prior to the date on which the Issuer notifies Holders, the Trustee and the Conversion Agent (if other than the Trustee) that the Hercules Loan and Security Agreement has been repaid in full or is no longer outstanding or that the restriction on payments of cash (other than cash in lieu of any fractional share) thereunder upon conversion of the Notes does not otherwise apply (the “Hercules Notice”), the Issuer shall not be permitted to deliver a Settlement Notice and elect a Settlement Method as described below under Section 14.02(a)(iii), and the Issuer shall be deemed to have elected Physical Settlement in respect of each such conversion of Notes.  Following delivery of the Hercules Notice, the settlement provisions set forth in this Section 14.02 shall apply, and the Issuer may elect a Settlement Method subject to the other conditions set forth in this Section 14.02.

 

(i)            All conversions for which the relevant Conversion Date occurs on or after April 15, 2020 shall be settled using the same Settlement Method.

 

(ii)           For conversions for which the relevant Conversion Date occurs prior to April 15, 2020, the Issuer shall use the same Settlement Method for all conversions with the same Conversion Date, but (subject to the second introductory paragraph to this Section 14.02(a) above) the Issuer shall not have any obligation to use the same Settlement Method with respect to conversions with different Conversion Dates.

 

(iii)          If, in respect of any Conversion Date that occurs on or after the date of delivery of the Hercules Notice (or the period described in the third immediately succeeding set of parentheses, as the case may be), the Issuer elects to deliver a notice (the “Settlement Notice”) of the relevant Settlement Method in respect of such Conversion Date (or such period, as the case may be), the Issuer, through the Trustee, shall deliver such Settlement Notice to converting Holders no later than the close of business on the Trading Day immediately following the relevant Conversion Date (or, in the case of any conversions for which the relevant Conversion Date occurs on or after April 15, 2020, no later than April 15, 2020).  If the Issuer does not elect a Settlement Method for any conversions of Notes for which the relevant Conversion Date occurs on or after the date of delivery of the Hercules Notice and prior to the deadline set forth in the immediately preceding sentence, the Issuer shall no longer have the right to elect Cash Settlement or Physical Settlement and the Issuer shall be deemed to have elected Combination Settlement in respect of its Conversion Obligation, and the Specified Dollar Amount per $1,000 principal amount of Notes shall be equal to $1,000.  Such Settlement Notice shall specify the relevant Settlement Method and in the case of an election of Combination Settlement, the relevant Settlement Notice shall indicate the Specified Dollar Amount per $1,000 principal amount of Notes.  If the Issuer validly delivers a Settlement Notice electing Combination Settlement in respect of its Conversion Obligation for any conversions of Notes for which the relevant Conversion Date occurs 

 

30

 

on or after the date of delivery of the Hercules Notice but does not indicate a Specified Dollar Amount per $1,000 principal amount of Notes in such Settlement Notice, the Specified Dollar Amount per $1,000 principal amount of Notes shall be deemed to be $1,000.

 

(iv)          The cash, shares of Common Stock or combination of cash and shares of Common Stock in respect of any conversion of Notes (the “Settlement Amount”) shall be computed as follows:

 

(A)            if the Issuer elects (or is deemed to have elected) to satisfy its Conversion Obligation in respect of such conversion by Physical Settlement, the Issuer shall deliver to the converting Holder in respect of each $1,000 principal amount of Notes being converted a number of shares of Common Stock equal to the Conversion Rate in effect on the Conversion Date (and cash in lieu of any fractional share in accordance with Section 14.02(j));

 

(B)            if the Issuer elects to satisfy its Conversion Obligation in respect of such conversion by Cash Settlement, the Issuer shall pay to the converting Holder in respect of each $1,000 principal amount of Notes being converted cash in an amount equal to the sum of the Daily Conversion Values for each of the 20 consecutive Trading Days during the related Observation Period; and

 

(C)            if the Issuer elects (or is deemed to have elected) to satisfy its Conversion Obligation in respect of such conversion by Combination Settlement, the Issuer shall pay or deliver, as the case may be, in respect of each $1,000 principal amount of Notes being converted, a Settlement Amount equal to the sum of the Daily Settlement Amounts for each of the 20 consecutive Trading Days during the related Observation Period.

 

(v)           The Daily Settlement Amounts (if applicable) and the Daily Conversion Values (if applicable) shall be determined by the Issuer promptly following the last day of the Observation Period.  Promptly after such determination of the Daily Settlement Amounts or the Daily Conversion Values, as the case may be, and the amount of cash payable in lieu of delivering any fractional share of Common Stock, the Issuer shall notify the Trustee and the Conversion Agent (if other than the Trustee) of the Daily Settlement Amounts or the Daily Conversion Values, as the case may be, and the amount of cash payable in lieu of delivering fractional shares of Common Stock.  The Trustee and the Conversion Agent (if other than the Trustee) shall have no responsibility for any such determination.

 

(b)           Subject to Section 14.02(e), before any Holder of a Note shall be entitled to convert a Note as set forth above, such Holder shall (i) in the case of a Note evidenced by a Global Security, comply with the procedures of the Depositary in effect at that time and, if required, pay funds equal to interest payable on the next Interest Payment Date as set forth in Section 14.02(h) and (ii) in the case of a Note evidenced by a definitive Security (1) complete, manually sign and deliver an irrevocable notice to the Conversion Agent as set forth in the Form of Notice of Conversion (or a facsimile thereof) (a “Notice of Conversion”) at the office of the Conversion 

 

31

 

Agent and state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for any shares of Common Stock to be delivered upon settlement of the Conversion Obligation to be registered, (2) surrender such Notes, duly endorsed to the Issuer or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Conversion Agent, (3) if required, furnish appropriate endorsements and transfer documents and (4) 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 14.02(h).  The Trustee (and if different, the Conversion Agent) shall notify the Issuer of any conversion pursuant to this Article 14 on the Conversion Date for such conversion.  No Notice of Conversion with respect to any Notes may be surrendered by a Holder thereof if such Holder has also delivered a Fundamental Change Repurchase Notice to the Issuer in respect of such Notes and has not validly withdrawn such Fundamental Change Repurchase Notice in accordance with Section 15.02.

 

If more than one Note shall be surrendered for conversion at one time by the same Holder, the Conversion Obligation with respect to such Notes shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered.

 

(c)           A Note shall be deemed to have been converted immediately prior to the close of business on the date (the “Conversion Date”) that the Holder has complied with the requirements set forth in subsection (b) above.  The Issuer shall pay or deliver, as the case may be, the consideration due in respect of the Conversion Obligation on the third Business Day immediately following the relevant Conversion Date, if the Issuer elects (or is deemed to have elected) Physical Settlement, or on the third Business Day immediately following the last Trading Day of the Observation Period, in the case of any other Settlement Method (except as provided for in Section 14.03(b) or Section 14.07(a)).  If any shares of Common Stock are due to converting Holders, the Issuer shall issue or cause to be issued, and deliver to the Conversion Agent or to such Holder, or such Holder’s nominee or nominees, certificates or a book-entry transfer through the Depositary for the full number of shares of Common Stock to which such Holder shall be entitled in satisfaction of the Issuer’s Conversion Obligation.

 

(d)           In case any Note shall be surrendered for partial conversion, the Issuer shall execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder of the Note so surrendered a new Note or Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Note, without payment of any service charge by the converting Holder but, if required by the Issuer or Trustee, with payment of a sum sufficient to cover any documentary, stamp or similar issue or transfer tax or similar governmental charge required by law or that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such conversion being different from the name of the Holder of the old Notes surrendered for such conversion.

 

(e)           If a Holder submits a Note for conversion, the Issuer shall pay any documentary, stamp or similar issue or transfer tax due on the issue of any shares of Common Stock upon conversion, unless the tax is due because the Holder requests such shares to be issued in a name other than the Holder’s name, in which case the Holder shall pay that tax.  The Conversion Agent may refuse to deliver the certificates representing the shares of Common Stock being 

 

32

 

issued in a name other than the Holder’s name until the Trustee receives a sum sufficient to pay any tax that is due by such Holder in accordance with the immediately preceding sentence.

 

(f)            Except as provided in Section 14.04, no adjustment shall be made for dividends on any shares of Common Stock issued upon the conversion of any Note as provided in this Article 14.

 

(g)           Upon the conversion of an interest in a Note evidenced by 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 Issuer shall notify the Trustee in writing of any conversion of Notes effected through any Conversion Agent other than the Trustee.

 

(h)           Upon conversion, a Holder shall not receive any separate cash payment for accrued and unpaid interest, if any, except as set forth below.  The Issuer’s settlement of the full Conversion Obligation shall be deemed to satisfy in full its obligation to pay the principal amount of the Note and accrued and unpaid interest, if any, to, but not including, the relevant Conversion Date. As a result, accrued and unpaid interest, if any, to, but not including, the relevant Conversion Date shall be deemed to be paid in full rather than cancelled, extinguished or forfeited.  Upon a conversion of Notes into a combination of cash and shares of Common Stock, accrued and unpaid interest will be deemed to be paid first out of the cash paid upon such conversion.  Notwithstanding the foregoing, if Notes are converted after the close of business on a Regular Record Date, Holders of such Notes as of the close of business on such Regular Record Date will receive the full amount of interest payable on such Notes on the corresponding Interest Payment Date notwithstanding the conversion.  Notes surrendered for conversion during the period from the close of business on any Regular Record Date to the open of business on the immediately following Interest Payment Date must be accompanied by funds equal to the amount of interest payable on the Notes so converted; provided that no such payment shall be required (1) for conversions following the Regular Record Date immediately preceding the Maturity Date; (2) if the Issuer has specified a Fundamental Change Repurchase Date that is after a Regular Record Date and on or prior to the Business Day immediately following the corresponding Interest Payment Date; or (3) to the extent of any Defaulted Amounts, if any Defaulted Amounts exists at the time of conversion with respect to such Note.  Therefore, for the avoidance of doubt, all Holders of record on the Regular Record Date immediately preceding the Maturity Date shall receive the full interest payment due on the Maturity Date regardless of whether their Notes have been converted following such Regular Record Date.

 

(i)            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 (if the Issuer elects (or is deemed to have elected) to satisfy the related Conversion Obligation by Physical Settlement) or the last Trading Day of the relevant Observation Period (if the Issuer elects (or is deemed to have elected) to satisfy the related Conversion Obligation by Combination Settlement), as the case may be.  Upon a conversion of Notes, such Person shall no longer be a Holder of such Notes surrendered for conversion.

 

33

 

(j)            The Issuer shall not issue any fractional share of Common Stock upon conversion of the Notes and shall instead pay cash in lieu of delivering any fractional share of Common Stock issuable upon conversion based on the Daily VWAP for the relevant Conversion Date (in the case of Physical Settlement) or based on the Daily VWAP for the last Trading Day of the relevant Observation Period (in the case of Combination Settlement).  For each Note surrendered for conversion, if the Issuer has elected (or is deemed to have elected) Combination Settlement, the full number of shares that shall be issued upon conversion thereof shall be computed on the basis of the aggregate Daily Settlement Amounts for the relevant Observation Period and any fractional shares remaining after such computation shall be paid in cash.

 

Section 14.03.  Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection with Make-Whole Fundamental Changes.  (a)  If a Make-Whole Fundamental Change occurs or becomes effective prior to the Maturity Date and a Holder elects to convert its Notes in connection with such Make-Whole Fundamental Change, the Issuer shall, solely under the circumstances described below, increase the Conversion Rate for the Notes so surrendered for conversion by a number of additional shares of Common Stock (the “Additional Shares”), as described below.  A conversion of Notes shall be deemed for these purposes to be “in connection with” such Make-Whole Fundamental Change if the relevant Notice of Conversion is received by the Conversion Agent from, and including, the Effective Date of the Make-Whole Fundamental Change up to, and including, the Business Day immediately prior to the related Fundamental Change Repurchase Date (or, in the case of a Make-Whole Fundamental Change that would have been a Fundamental Change but for the proviso in clause (b) of the definition thereof, the 35th Trading Day immediately following the Effective Date of such Make-Whole Fundamental Change).

 

(b)           Upon surrender of Notes for conversion in connection with a Make-Whole Fundamental Change pursuant to Section 14.01(b)(iii), the Issuer shall, at its option, satisfy the related Conversion Obligation by Physical Settlement, Cash Settlement or Combination Settlement in accordance with, and subject to, Section 14.02; provided, however, that if, at the effective time of a Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the Reference Property following such Make-Whole Fundamental Change is composed entirely of cash, for any conversion of Notes following the Effective Date of such Make-Whole Fundamental Change, the Conversion Obligation shall be calculated based solely on the Stock Price for the transaction and shall be deemed to be an amount of cash per $1,000 principal amount of converted Notes equal to the Conversion Rate (including any adjustment for Additional Shares), multiplied by such Stock Price.  In such event, the Conversion Obligation shall be paid to Holders in cash on the third Business Day following the Conversion Date.  The Issuer shall notify the Holders of Notes of the Effective Date of any Make-Whole Fundamental Change and issue a press release announcing such Effective Date no later than five Business Days after such Effective Date.

 

(c)           The number of Additional Shares, if any, by which the Conversion Rate shall be increased shall be determined by reference to the table below, based on the date on which the Make-Whole Fundamental Change occurs or becomes effective (the “Effective Date”) and the price (the “Stock Price”) paid (or deemed to be paid) per share of the Common Stock in the Make-Whole Fundamental Change.  If the holders of the Common Stock receive in exchange for their Common Stock only cash in a Make-Whole Fundamental Change described in clause (b) of

 

34

 

the definition of Fundamental Change, the Stock Price shall be the cash amount paid per share.  Otherwise, the Stock Price shall be the average of the Last Reported Sale Prices of the Common Stock over the five Trading Day period ending on, and including, the Trading Day immediately preceding the Effective Date of the Make-Whole Fundamental Change.  The Board of Directors shall make appropriate adjustments to the Stock Price, in its good faith determination, to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date of the event occurs, during such five consecutive Trading Day period.

 

(d)           The Stock Prices set forth in the column headings of the table below shall be adjusted as of any date on which the Conversion Rate of the Notes is otherwise adjusted.  The adjusted Stock Prices shall equal the Stock Prices applicable immediately prior to such adjustment, multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to such adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion Rate as so adjusted.  The number of Additional Shares set forth in the table below shall be adjusted in the same manner and at the same time as the Conversion Rate as set forth in Section 14.04.

 

(e)           The following table sets forth the number of Additional Shares by which the Conversion Rate shall be increased per $1,000 principal amount of Notes pursuant to this Section 14.03 for each Stock Price and Effective Date set forth below:

 

	
 
    	
 
    	
Stock Price
    	
 
    
	
Effective Date
    	
 
    	
$5.00
    	
 
    	
$5.50
    	
 
    	
$6.25
    	
 
    	
$6.75
    	
 
    	
$7.50
    	
 
    	
$10.00
    	
 
    	
$12.50
    	
 
    	
$15.00
    	
 
    	
$17.50
    	
 
    	
$20.00
    	
 
    	
$22.50
    	
 
    	
$25.00
    	
 
    
	
July 17, 2013
    	
 
    	
40.0000
    	
 
    	
34.4551
    	
 
    	
27.5747
    	
 
    	
24.0824
    	
 
    	
19.9587
    	
 
    	
11.6378
    	
 
    	
7.2779
    	
 
    	
4.6677
    	
 
    	
2.9915
    	
 
    	
1.8758
    	
 
    	
1.1015
    	
 
    	
0.5984
    	
 
    
	
July 15, 2014
    	
 
    	
40.0000
    	
 
    	
33.8735
    	
 
    	
26.7581
    	
 
    	
23.2095
    	
 
    	
19.0833
    	
 
    	
10.9868
    	
 
    	
6.8537
    	
 
    	
4.3975
    	
 
    	
2.8197
    	
 
    	
1.7666
    	
 
    	
1.0544
    	
 
    	
0.5760
    	
 
    
	
July 15, 2015
    	
 
    	
40.0000
    	
 
    	
33.0858
    	
 
    	
25.6486
    	
 
    	
22.0228
    	
 
    	
17.8924
    	
 
    	
10.1041
    	
 
    	
6.2817
    	
 
    	
4.0353
    	
 
    	
2.5905
    	
 
    	
1.6214
    	
 
    	
0.9629
    	
 
    	
0.5192
    	
 
    
	
July 15, 2016
    	
 
    	
40.0000
    	
 
    	
32.1509
    	
 
    	
24.2259
    	
 
    	
20.4738
    	
 
    	
16.3207
    	
 
    	
8.9376
    	
 
    	
5.5330
    	
 
    	
3.5662
    	
 
    	
2.2974
    	
 
    	
1.4391
    	
 
    	
0.8520
    	
 
    	
0.4532
    	
 
    
	
July 15, 2017
    	
 
    	
40.0000
    	
 
    	
30.7585
    	
 
    	
22.1770
    	
 
    	
18.2681
    	
 
    	
14.1129
    	
 
    	
7.3576
    	
 
    	
4.5384
    	
 
    	
2.9466
    	
 
    	
1.9101
    	
 
    	
1.1976
    	
 
    	
0.7043
    	
 
    	
0.3654
    	
 
    
	
July 15, 2018
    	
 
    	
40.0000
    	
 
    	
28.6175
    	
 
    	
19.1323
    	
 
    	
15.0483
    	
 
    	
10.9775
    	
 
    	
5.2828
    	
 
    	
3.2759
    	
 
    	
2.1635
    	
 
    	
1.4190
    	
 
    	
0.8918
    	
 
    	
0.5189
    	
 
    	
0.2570
    	
 
    
	
July 15, 2019
    	
 
    	
40.0000
    	
 
    	
25.2840
    	
 
    	
14.3154
    	
 
    	
10.0714
    	
 
    	
6.3924
    	
 
    	
2.7172
    	
 
    	
1.7589
    	
 
    	
1.1964
    	
 
    	
0.7992
    	
 
    	
0.5053
    	
 
    	
0.2892
    	
 
    	
0.1278
    	
 
    
	
July 15,   2020
    	
 
    	
40.0000
    	
 
    	
21.8181
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    

 

The exact Stock Prices and Effective Dates may not be set forth in the table above, in which case:

 

(i)            if the Stock Price is between two Stock Prices in the table above or the Effective Date is between two Effective Dates in the table, 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 Prices and the earlier and later Effective Dates, as applicable, based on a 365-day year;

 

(ii)           if the Stock Price is greater than $25.00 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table above pursuant to subsection (d) above), no Additional Shares shall be added to the Conversion Rate; and

 

(iii)          if the Stock Price is less than $5.00 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table above

 

35

 

pursuant to subsection (d) above), no Additional Shares shall be added to the Conversion Rate.

 

Notwithstanding the foregoing, in no event shall the Conversion Rate per $1,000 principal amount of Notes exceed 200.0000 shares of Common Stock, subject to adjustment in the same manner as the Conversion Rate pursuant to Section 14.04.

 

(f)                                   Despite the occurrence of a Make-Whole Fundamental Change, nothing in this Section 14.03 shall prevent an adjustment to the Conversion Rate pursuant to Section 14.04 to the extent applicable.

 

Section 14.04.  Adjustment of Conversion Rate.  The Conversion Rate shall be adjusted from time to time by the Issuer if any of the following events occurs, except that the Issuer shall not make any adjustments to the Conversion Rate if Holders of the Notes participate (other than in the case of (x) a share split or share combination or (y) a tender or exchange offer), at the same time and upon the same terms as holders of the Common Stock and solely as a result of holding the Notes, in any of the transactions described in this Section 14.04, without having to convert their Notes, as if they held a number of shares of Common Stock equal to the Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Holder.

 

(a)                                 If the Issuer exclusively issues shares of Common Stock as a dividend or distribution on shares of the Common Stock, or if the Issuer effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:

 

 

where,

 

CR0                              =                            the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date of such dividend or distribution, or immediately prior to the open of business on the Effective Date of such share split or share combination, as applicable;

 

CR'                                 =                            the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date or Effective Date;

 

OS0                                =                            the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date or Effective Date; and

 

OS'                                   =                            the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination.

 

Any adjustment made under this Section 14.04(a) shall become effective 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 for such share split or share combination, as applicable.  If any dividend or distribution of the type described in this Section 14.04(a) is 

 

36

 

declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

(b)                                 If the Issuer issues to all or substantially all holders of the Common Stock any rights, options or warrants entitling them, for a period of not more than 45 calendar days after the announcement date of such issuance, to subscribe for or purchase shares of the Common Stock at a price per share that is less than the average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such issuance, the Conversion Rate shall be increased based on the following formula:

 

 

where,

 

CR0                              =                            the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such issuance;

 

CR'                                 =                            the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date;

 

OS0                                =                            the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date;

 

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 Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants.

 

Any increase made under this Section 14.04(b) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the open of business on the Ex-Dividend Date for such issuance.  To the extent that such rights, options or warrants expire without delivery of some or all of the underlying shares of Common Stock, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the increase with respect to 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 Rate shall be decreased to the Conversion Rate that would then be in effect if such announcement with respect to the issuance of the rights, options or warrants had not occurred.

 

37

 

For purposes of this Section 14.04(b) and for the purpose of Section 14.01(b)(ii)(A), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of the Common Stock at less than such average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement for such issuance, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Issuer 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.

 

(c)                                  If the Issuer distributes shares of its Capital Stock, evidences of its indebtedness, other assets or property of the Issuer or rights, options or warrants to acquire its Capital Stock or other securities, to all or substantially all holders of the Common Stock, excluding (i) dividends, distributions or issuances as to which an adjustment was effected pursuant to Section 14.04(a) or Section 14.04(b), (ii) dividends or distributions paid exclusively in cash as to which an adjustment was effected pursuant to Section 14.04(d), and (iii) Spin-Offs as to which the specific provisions set forth below in this Section 14.04(c) shall apply (any of such shares of Capital Stock, evidences of indebtedness, other assets or property or rights, options or warrants to acquire Capital Stock or other securities, the “Distributed Property”), then the Conversion Rate shall be increased based on the following formula:

 

 

where,

 

CR0                              =                            the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;

 

CR'                                 =                            the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date;

 

SP0                                  =                            the average of the Last Reported Sale Prices of 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 distribution; and

 

FMV                         =                            the fair market value (as determined by the Board of Directors) of the Distributed Property with respect to each outstanding share of the Common Stock on the Ex-Dividend Date for such distribution.

 

Any increase made under the portion of this Section 14.04(c) above shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution.  If such distribution is not so paid or made, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such distribution had not been declared.  Notwithstanding the foregoing, if “FMV” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, in respect of each $1,000 principal amount thereof, at the same time and upon the same terms as holders of the Common 

 

38

 

Stock receive the Distributed Property, the amount and kind of Distributed Property such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate in effect on the Ex-Dividend Date for the distribution.  If the Board of Directors determines the “FMV” (as defined above) of any distribution for purposes of this Section 14.04(c) by reference to the actual or when-issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in computing the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution.

 

With respect to an adjustment pursuant to this Section 14.04(c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Issuer, that are, or, when issued, will be, listed or admitted for trading on a U.S. national securities exchange (a “Spin-Off”), the Conversion Rate shall instead be increased based on the following formula:

 

 

where,

 

CR0                              =                            the Conversion Rate in effect immediately prior to the end of the Valuation Period;

 

CR'                                 =                            the Conversion Rate in effect immediately after the end of the Valuation Period;

 

FMV0                    =                            the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Common Stock applicable to one share of the Common Stock (determined by reference to the definition of Last Reported Sale Price as set forth in Section 2.01 as if references therein to Common Stock were to such Capital Stock or similar equity interest) over the 10 consecutive Trading Day period beginning on, and including, the fifth Trading Day immediately following the Ex-Dividend Date of the Spin-Off (the “Valuation Period”); and

 

MP0                             =                            the average of the Last Reported Sale Prices of the Common Stock over the Valuation Period.

 

The adjustment to the Conversion Rate under the preceding paragraph shall occur on the last Trading Day of the Valuation Period; provided that in respect of any conversion of Notes during the Valuation Period, references in the portion of this Section 14.04(c) related to Spin-Offs with respect to 10 Trading Days shall be deemed to be replaced with such lesser number of Trading Days as have elapsed between the Ex-Dividend Date of such Spin-Off and the Conversion Date in determining the Conversion Rate.  If the Ex-Dividend Date of the Spin-Off is after the 10th Trading Day immediately preceding, and including, the end of any Observation Period in respect of a conversion of Notes, references in the preceding paragraph to 10 Trading Days will be deemed to be replaced, solely in respect of that conversion of Notes, with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date for the Spin-Off to, and including, the last Trading Day of such Observation Period.

 

39

 

For purposes of this Section 14.04(c) (and subject in all respect to Section 14.11), rights, options or warrants distributed by the Issuer to all holders of the Common Stock entitling them to subscribe for or purchase shares of the Issuer’s Capital Stock, including Common Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (“Trigger Event”): (i) are deemed to be transferred with such shares of the Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of the Common Stock, shall be deemed not to have been distributed for purposes of this Section 14.04(c) (and no adjustment to the Conversion Rate under this Section 14.04(c) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 14.04(c).  If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the date of this First Supplemental Indenture, are subject to events, upon the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and Ex-Dividend Date with respect to new rights, options or warrants with such rights (in which case the existing rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders thereof).  In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the immediately preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 14.04(c) was made, (1) in the case of any such rights, options or warrants that shall all have been redeemed or purchased without exercise by any holders thereof, upon such final redemption or purchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or purchase price received by a holder or holders of Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Common Stock as of the date of such redemption or purchase, and (2) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights, options and warrants had not been issued.

 

For purposes of Section 14.04(a), Section 14.04(b) and this Section 14.04(c), if any dividend or distribution to which this Section 14.04(c) is applicable also includes one or both of:

 

(A)                               a dividend or distribution of shares of Common Stock to which Section 14.04(a) is applicable (the “Clause A Distribution”); or

 

(B)                               a dividend or distribution of rights, options or warrants to which Section 14.04(b) is applicable (the “Clause B Distribution”),

 

then, in either case, (1) such dividend or distribution, other than the Clause A Distribution and the Clause B Distribution, shall be deemed to be a dividend or distribution to which this Section 14.04(c) is applicable (the “Clause C Distribution”) and any Conversion Rate adjustment required by this Section 14.04(c) with respect to such Clause C Distribution shall then be made,

 

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and (2) the Clause A Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C Distribution and any Conversion Rate adjustment required by Section 14.04(a) and Section 14.04(b) with respect thereto shall then be made, except that, if determined by the Issuer (I) the “Ex-Dividend Date” of the Clause A Distribution and the Clause B Distribution shall be deemed to be the Ex-Dividend Date of the Clause C Distribution and (II) any shares of Common Stock included in the Clause A Distribution or Clause B Distribution shall be deemed not to be “outstanding immediately prior to the open of business on such Ex-Dividend Date or Effective Date” within the meaning of Section 14.04(a) or “outstanding immediately prior to the open of business on such Ex-Dividend Date” within the meaning of Section 14.04(b).

 

(d)                                 If any cash dividend or distribution is made to all or substantially all holders of the Common Stock, the Conversion Rate shall be adjusted based on the following formula:

 

 

where,

 

CR0                              =                            the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution;

 

CR'                                 =                            the Conversion Rate in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution;

 

SP0                                  =                            the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and

 

C                                            =                            the amount in cash per share the Issuer distributes to all or substantially all holders of the Common Stock.

 

Any increase pursuant to this Section 14.04(d) shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution.  If such dividend or distribution is not so paid, the Conversion Rate shall be decreased, effective as of the date the Board of Directors determines not to make or pay such dividend or distribution, to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.  Notwithstanding the foregoing, if “C” (as defined above) is equal to or greater than “SP0” (as defined above), in lieu of the foregoing increase, each Holder of a Note shall receive, for each $1,000 principal amount of Notes, at the same time and upon the same terms as holders of shares of the Common Stock, the amount of cash that such Holder would have received if such Holder owned a number of shares of Common Stock equal to the Conversion Rate on the Ex-Dividend Date for such cash dividend or distribution.

 

(e)                    If the Issuer or any of its Subsidiaries make a payment in respect of a tender or exchange offer for the Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of the Common Stock exceeds the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period

 

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commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the Conversion Rate shall be increased based on the following formula:

 

 

where,

 

CR0                              =                            the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;

 

CR'                                 =                            the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires;

 

AC                                   =                            the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares of Common Stock purchased in such tender or exchange offer;

 

OS0                                =                            the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer);

 

OS'                                   =                            the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all shares of Common Stock accepted for purchase or exchange in such tender or exchange offer); and

 

SP'                                     =                            the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the date such tender or exchange offer expires.

 

The adjustment to the Conversion Rate under this Section 14.04(e) shall occur at the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; provided that in respect of any conversion of Notes within the 10 Trading Days immediately following, and including, the expiration date of any tender or exchange offer, references in this Section 14.04(e) with respect to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed between the date that such tender or exchange offer expires and the Conversion Date in determining the Conversion Rate.  In addition, if the Trading Day next succeeding the date such tender or exchange offer expires is after the 10th Trading Day immediately preceding, and including, the end of any Observation Period in respect of a conversion of Notes, references in the preceding paragraph to 10 Trading Days shall be deemed to be replaced, solely in respect of that conversion of Notes, with such lesser number of Trading Days as have elapsed from, and

 

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including, the Trading Day next succeeding the date such tender or exchange offer expires to, and including, the last Trading Day of such Observation Period.

 

(f)                                   Notwithstanding this Section 14.04 or any other provision of the Indenture or the Notes, if a Conversion Rate adjustment becomes effective on any Ex-Dividend Date, and a Holder that has converted its Notes on or after such Ex-Dividend Date and on or prior to the related Record Date would be treated as the record holder of the shares of Common Stock as of the related Conversion Date as described under Section 14.02(i) based on an adjusted Conversion Rate for such Ex-Dividend Date, then, notwithstanding the Conversion Rate adjustment provisions in this Section 14.04, the Conversion Rate adjustment relating to such Ex-Dividend Date shall not be made for such converting Holder. Instead, such Holder shall be treated as if such Holder were the record owner of the shares of Common Stock on an unadjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.

 

(g)                                  Except as stated herein, the Issuer shall not adjust the Conversion Rate for the issuance of shares of the Common Stock or any securities convertible into or exchangeable for shares of the Common Stock or the right to purchase shares of the Common Stock or such convertible or exchangeable securities.

 

(h)                                 In addition to those adjustments required by clauses (a), (b), (c), (d) and (e) of this Section 14.04, and to the extent permitted by applicable law and subject to the applicable rules of any exchange on which any of the Issuer’s securities are then listed, the Issuer from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business Days if the Board of Directors determines that such increase would be in the Issuer’s best interest.  In addition, to the extent permitted by applicable law and subject to the applicable rules of any exchange on which any of the Issuer’s securities are then listed, the Issuer may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock in connection with a dividend or distribution of shares of Common Stock (or rights to acquire shares of Common Stock) or similar event.  Whenever the Conversion Rate is increased pursuant to either of the preceding two sentences, the Issuer shall mail to the Holder of each Note at its last address appearing on the Security register a notice of the increase at least 15 days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.

 

(i)                                     Notwithstanding anything to the contrary in this Article 14, the Conversion Rate shall not be adjusted:

 

(i)                                     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 the Issuer’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;

 

(ii)                                  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 the Issuer or any of the Issuer’s Subsidiaries;

 

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(iii)                               upon the issuance of any shares of the Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) of this subsection and outstanding as of the date the Notes were first issued;

 

(iv)                              solely for a change in the par value of the Common Stock; or

 

(v)                                 for accrued and unpaid interest, if any.

 

(j)                          All calculations and other determinations under this Article 14 shall be made by the Issuer and shall be made to the nearest one-ten thousandth (1/10,000th) of a share.  Notwithstanding anything in this Section 14.04 to the contrary, the Issuer shall not be required to adjust the Conversion Rate unless the adjustment would result in a change of at least 1% of such Conversion Rate.  However, the Issuer shall carry forward any adjustments that are less than 1% of such Conversion Rate and take them into account when determining subsequent adjustments.  In addition, the Issuer shall make any carried-forward adjustments not otherwise effected (i) on each anniversary of the first issue date of the Notes, (ii) upon any conversion of the Notes, (iii) on the Effective Date of any Fundamental Change or Make-Whole Fundamental Change, (iv) on each Trading Day during any Observation Period and (v) on the Maturity Date.

 

(k)                       Whenever the Conversion Rate is adjusted as herein provided, the Issuer shall promptly file with the Trustee (and the Conversion Agent if not the Trustee) an Officer’s Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment.  Unless and until a Responsible Officer of the Trustee shall have received such Officer’s Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without inquiry that the last Conversion Rate of which it has knowledge is still in effect.  Promptly after delivery of such certificate, the Issuer shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Rate to each Holder at its last address appearing on the Security register.  Failure to deliver such notice shall not affect the legality or validity of any such adjustment.

 

(l)                           For purposes of this Section 14.04, the number of shares of Common Stock at any time outstanding shall not include shares of Common Stock held in the treasury of the Issuer so long as the Issuer does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Issuer, but shall include shares of Common Stock issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

 

Section 14.05.  Adjustments of Prices.  Whenever any provision of this First Supplemental Indenture requires the Issuer to calculate the Last Reported Sale Prices, the Daily VWAPs, the Daily Conversion Values or the Daily Settlement Amounts over a span of multiple days (including an Observation Period and the period for determining the Stock Price for purposes of a Make-Whole Fundamental Change), the Board of Directors shall make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date of the event occurs, at any time during the period when the Last Reported Sale Prices, the Daily VWAPs, the Daily Conversion Values or the Daily Settlement Amounts are to be calculated.

 

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Section 14.06.                   Shares to Be Fully Paid.  The Issuer shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to provide for conversion of the Notes from time to time as such Notes are presented for conversion (assuming that at the time of computation of such number of shares, all such Notes would be converted by a single Holder and that Physical Settlement is applicable).

 

Section 14.07.                   Effect of Recapitalizations, Reclassifications and Changes of the Common Stock.

 

(a)                       In the case of:

 

(i)                                     any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination),

 

(ii)                                  any consolidation, merger or combination involving the Issuer,

 

(iii)                               any sale, lease or other transfer to a third party of the consolidated assets of the Issuer and the Issuer’s Subsidiaries substantially as an entirety or

 

(iv)                              any statutory share exchange,

 

in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “Merger Event”), then, at and after the effective time of such Merger Event, the right to convert each $1,000 principal amount of Notes shall be changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such Merger Event would have owned or been entitled to receive (the “Reference Property,” with each “unit of Reference Property” meaning the kind and amount of Reference Property that a holder of one share of Common Stock is entitled to receive) upon such Merger Event and, prior to or at the effective time of such Merger Event, the Issuer or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture permitted under Section 10.02(b) providing for such change in the right to convert each $1,000 principal amount of Notes; provided, however, that at and after the effective time of the Merger Event (A) the Issuer shall continue to have the right to determine the form of consideration to be paid or delivered, as the case may be, upon conversion of Notes in accordance with, and subject to, Section 14.02 and (B) (I) any amount payable in cash upon conversion of the Notes in accordance with Section 14.02 shall continue to be payable in cash, (II) any shares of Common Stock that the Issuer would have been required to deliver upon conversion of the Notes in accordance with Section 14.02 shall instead be deliverable in the amount and type of Reference Property that a holder of that number of shares of Common Stock would have been entitled to receive in such Merger Event and (III) the Daily VWAP shall be calculated based on the value of a unit of Reference Property.

 

If the Merger Event causes the Common Stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), then (i) the Reference Property into which the Notes will be convertible

 

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shall be deemed to be (x) the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election or (y) if no holders of Common Stock affirmatively make such an election, the types and amounts of consideration actually received by the holders of Common Stock, and (ii) the unit of Reference Property for purposes of the immediately preceding paragraph shall refer to the consideration referred to in clause (i) attributable to one share of Common Stock.  If the holders of the Common Stock receive only cash in such Merger Event, then for all conversions for which the relevant Conversion Date occurs after the effective date of such Merger Event (A) the consideration due upon conversion of each $1,000 principal amount of Notes shall be solely cash in an amount equal to the Conversion Rate in effect on the Conversion Date (as may be increased by any Additional Shares pursuant to Section 14.03), multiplied by the price paid per share of Common Stock in such Merger Event and (B) the Issuer shall satisfy the Conversion Obligation by paying cash to converting Holders on the third Business Day immediately following the relevant Conversion Date.  The Issuer shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) of such weighted average as soon as practicable after such determination is made.

 

Such supplemental indenture described in the second immediately preceding paragraph shall provide for adjustments that shall be as nearly equivalent as is possible to the adjustments provided for in this Article 14.  If, in the case of any Merger Event, the Reference Property includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the successor or purchasing corporation, as the case may be, in such Merger Event, 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 Notes as the Board of Directors shall reasonably consider necessary by reason of the foregoing.

 

(b)                       When the Issuer executes a supplemental indenture pursuant to subsection (a) of this Section 14.07, the Issuer shall promptly file with the Trustee an Officer’s Certificate briefly stating the reasons therefor, the kind or amount of cash, securities or property or asset that will comprise a unit of Reference Property after any such Merger Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with, and shall promptly mail notice thereof to all Holders.  The Issuer shall cause notice of the execution of such supplemental indenture to be mailed to each Holder, at its address appearing on the Security register provided for in the Indenture, within 20 days after execution thereof.  Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.

 

(c)                        The Issuer shall not become a party to any Merger Event unless its terms are consistent with this Section 14.07.  None of the foregoing provisions shall affect the right of a holder of Notes to convert its Notes into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, as set forth in Section 14.01 and Section 14.02 prior to the effective date of such Merger Event.

 

(d)                       The above provisions of this Section 14.07 shall similarly apply to successive Merger Events.

 

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Section 14.08.                   Certain Covenants.  (a) The Issuer covenants that all shares of Common Stock issued upon conversion of Notes will be fully paid and non-assessable by the Issuer and free from all taxes, liens and charges with respect to the issue thereof.

 

(b)                       The Issuer covenants that, if any shares of Common Stock to be provided for the purpose of conversion of Notes hereunder require registration with or approval of any governmental authority under any federal or state law before such shares of Common Stock may be validly issued upon conversion, the Issuer will, to the extent then permitted by the rules and interpretations of the Commission, secure such registration or approval, as the case may be.

 

(c)                        The Issuer further covenants that if at any time the Common Stock shall be listed on any national securities exchange or automated quotation system the Issuer will list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, any Common Stock issuable upon conversion of the Notes.

 

Section 14.09.                   Responsibility of Trustee.  The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine the Conversion Rate (or any adjustment thereto) or whether any facts exist that may require any adjustment (including any increase) of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same.  The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities, property or cash that may at any time be issued or delivered upon the conversion of any Note; and the Trustee and any other Conversion Agent make no representations with respect thereto.  Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Issuer to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Note for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Issuer contained in this Article 14.  Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 14.07 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders upon the conversion of their Notes after any event referred to in such Section 14.07 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 6.02 of the Base Indenture, may accept (without any independent investigation) as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officer’s Certificate (which the Issuer shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.  Neither the Trustee nor the Conversion Agent shall be responsible for determining whether any event contemplated by Section 14.01(b) has occurred that makes the Notes eligible for conversion or no longer eligible therefor until the Issuer has delivered to the Trustee and the Conversion Agent the notices referred to in Section 14.01(b) with respect to the commencement or termination of such conversion rights, on which notices the Trustee and the Conversion Agent may conclusively rely, and the Issuer agrees to deliver such notices to the Trustee and the Conversion Agent immediately after the occurrence of any such event or at such other times as shall be provided for in Section 14.01(b).

 

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Section 14.10.                   Notice to Holders Prior to Certain Actions.  In case of any:

 

(a)                       Merger Event; or

 

(b)                       voluntary or involuntary dissolution, liquidation or winding-up of the Issuer or any of its Subsidiaries;

 

then, in each case (unless notice of such event is otherwise required pursuant to another provision of the Indenture), the Issuer shall cause to be filed with the Trustee and the Conversion Agent (if other than the Trustee) and to be mailed to each Holder at its address appearing on the Security register, as promptly as possible but in any event at least 20 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such action by the Issuer or one of its Subsidiaries or, if a record is not to be taken, the date as of which the holders of Common Stock of record are to be determined for the purposes of such action by the Issuer or one of its Subsidiaries, or (ii) the date on which such Merger Event, dissolution, liquidation or winding-up is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding-up.  Failure to give such notice, or any defect therein, shall not affect the legality or validity of such action by the Issuer or one of its Subsidiaries, Merger Event, dissolution, liquidation or winding-up.

 

Section 14.11.                   Stockholder Rights Plans.  If the Issuer has a stockholder rights plan in effect upon conversion of the Notes, each share of Common Stock, if any, issued upon such conversion shall be entitled to receive the appropriate number of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan, as the same may be amended from time to time. However, if, prior to any conversion of Notes, the rights have separated from the shares of Common Stock in accordance with the provisions of the applicable stockholder rights plan so that the Holders would not be entitled to receive any rights in respect of Common Stock, if any, issuable upon conversion of the Notes, the Conversion Rate shall be adjusted at the time of separation as if the Issuer distributed to all or substantially all holders of the Common Stock Distributed Property as provided in Section 14.04(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.

 

ARTICLE 15
  REPURCHASE OF NOTES AT OPTION OF HOLDERS

 

Section 15.01.                   Repurchase at Option of Holders Upon a Fundamental Change.  (a)  If a Fundamental Change occurs at any time, each Holder shall have the right, at such Holder’s option, to require the Issuer to repurchase for cash all of such Holder’s Notes, or any portion thereof that is equal to $1,000 or an integral multiple of $1,000, on the date (the “Fundamental Change Repurchase Date”) specified by the Issuer that is not less than 20 calendar days or more than 35 calendar days following the date of the Fundamental Change Issuer Notice at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental 

 

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Change Repurchase Price”), unless the Fundamental Change Repurchase Date falls after a  Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Issuer shall instead pay the full amount of accrued and unpaid interest to Holders of record as of such Regular Record Date, and the Fundamental Change Repurchase Price shall be equal to 100% of the principal amount of Notes to be repurchased pursuant to this Article 15.

 

(b)                       Repurchases of Notes under this Section 15.01 shall be made, at the option of the Holder thereof, upon:

 

(i)                                     delivery to the paying agent by a Holder of a duly completed notice (the “Fundamental Change Repurchase Notice”) in the form set forth in Attachment 2 to the Form of Note attached hereto as Exhibit A, if the Notes are evidenced by definitive Securities, or in compliance with the Depositary’s procedures for surrendering interests in Notes evidenced by Global Securities, if the Notes are evidenced Global Securities, in each case on or before the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date; and

 

(ii)                                  delivery of the Notes, if the Notes are evidenced by definitive Securities, to the paying agent concurrently with or at any time after delivery of the Fundamental Change Repurchase Notice (together with all necessary endorsements for transfer) at the Corporate Trust Office of the paying agent, or book-entry transfer of the Notes, if the Notes are evidenced by Global Securities, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Fundamental Change Repurchase Price therefor.

 

The Fundamental Change Repurchase Notice in respect of any Notes to be repurchased shall state:

 

(i)                                     in the case of Notes evidenced by definitive Securities, the certificate numbers of the Notes to be delivered for repurchase;

 

(ii)                                  the portion of the principal amount of Notes to be repurchased, which must be $1,000 or an integral multiple thereof; and

 

(iii)                               that the Notes are to be repurchased by the Issuer pursuant to the applicable provisions of the Notes and the Indenture;

 

provided, however, that if the Notes are evidenced by Global Securities, the Fundamental Change Repurchase Notice must comply with appropriate Depositary procedures.

 

Notwithstanding anything herein to the contrary, any Holder delivering to the paying agent the Fundamental Change Repurchase Notice contemplated by this Section 15.01 shall have the right to withdraw, in whole or in part, such Fundamental Change Repurchase Notice at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date by delivery of a written notice of withdrawal to the paying agent in accordance with Section 15.02.

 

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The paying agent shall promptly notify the Issuer of the receipt by it of any Fundamental Change Repurchase Notice or written notice of withdrawal thereof.

 

(c)                        On or before the 20th calendar day after the occurrence of the effective date of a Fundamental Change, the Issuer shall provide to all Holders of Notes and the Trustee and the paying agent (in the case of a paying agent other than the Trustee) a written notice (the “Fundamental Change Issuer Notice”) of the occurrence of the effective date of the Fundamental Change and of the repurchase right at the option of the Holders arising as a result thereof.  In the case of Notes evidenced by definitive Securities, such notice shall be by first class mail or, in the case of Notes evidenced by Global Securities, such notice shall be delivered in accordance with the applicable procedures of the Depositary.  Simultaneously with providing such notice, the Issuer shall publish a notice containing the information set forth in the Fundamental Change Issuer Notice in a newspaper of general circulation in The City of New York or publish such information on the Issuer’s website or through such other public medium as the Issuer may use at that time.  Each Fundamental Change Issuer Notice shall specify:

 

(i)                                     the events causing the Fundamental Change;

 

(ii)                                  the date of the Fundamental Change;

 

(iii)                               the last date on which a Holder may exercise the repurchase right pursuant to this Article 15;

 

(iv)                              the Fundamental Change Repurchase Price;

 

(v)                                 the Fundamental Change Repurchase Date;

 

(vi)                              the name and address of the paying agent and the Conversion Agent, if applicable;

 

(vii)                           if applicable, the Conversion Rate and any adjustments to the Conversion Rate;

 

(viii)                        if applicable, that the Notes with respect to which a Fundamental Change Repurchase Notice has been delivered by a Holder may be converted only if the Holder withdraws the Fundamental Change Repurchase Notice in accordance with the terms of the Indenture; and

 

(ix)                              the procedures that Holders must follow to require the Issuer to repurchase their Notes.

 

No failure of the Issuer to give the foregoing notices and no defect therein shall limit the Holders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 15.01.

 

At the Issuer’s request, the Trustee shall give such notice in the Issuer’s name and at the Issuer’s expense; provided, however, that, in all cases, the text of such Fundamental Change Issuer Notice shall be prepared by the Issuer.

 

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(d)                       Notwithstanding the foregoing, no Notes may be repurchased by the Issuer on any date at the option of the Holders upon a Fundamental Change if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such date (except in the case of an acceleration resulting from a Default by the Issuer in the payment of the Fundamental Change Repurchase Price with respect to such Notes). The paying agent will promptly return to the respective Holders thereof any Notes evidenced by definitive Securities held by it during the acceleration of the Notes (except in the case of an acceleration resulting from a Default by the Issuer in the payment of the Fundamental Change Repurchase Price with respect to such Notes), or any instructions for book-entry transfer of the Notes in compliance with the procedures of the Depositary shall be deemed to have been cancelled, and, upon such return or cancellation, as the case may be, the Fundamental Change Repurchase Notice with respect thereto shall be deemed to have been withdrawn.

 

Section 15.02.                   Withdrawal of Fundamental Change Repurchase Notice.  (a)  A Fundamental Change Repurchase Notice may be withdrawn (in whole or in part) by means of a written notice of withdrawal delivered to the Corporate Trust Office of the paying agent in accordance with this Section 15.02 at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date, specifying:

 

(i)                                     the principal amount of the Notes with respect to which such notice of withdrawal is being submitted,

 

(ii)                                  if definitive Securities have been issued, the certificate number of the Note in respect of which such notice of withdrawal is being submitted, and

 

(iii)                               the principal amount, if any, of such Note that remains subject to the original Fundamental Change Repurchase Notice, which portion must be in principal amounts of $1,000 or an integral multiple of $1,000;

 

provided, however, that if the Notes are evidenced by Global Securities, the notice must comply with appropriate procedures of the Depositary.

 

Section 15.03.                   Deposit of Fundamental Change Repurchase Price.  (a)  The Issuer will deposit with the Trustee (or other paying agent appointed by the Issuer, or if the Issuer is acting as its own paying agent, set aside, segregate and hold in trust as provided in Section 5.04) on or prior to 11:00 a.m., New York City time, on the Fundamental Change Repurchase Date an amount of money sufficient to repurchase all of the Notes to be repurchased at the appropriate Fundamental Change Repurchase Price.  Subject to receipt of funds and/or Notes by the Trustee (or other paying agent appointed by the Issuer), payment for Notes surrendered for repurchase (and not withdrawn prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date) will be made on the later of (i) the Fundamental Change Repurchase Date (provided the Holder has satisfied the conditions in Section 15.01) and (ii) the time of book-entry transfer or the delivery of such Note to the Trustee (or other paying agent appointed by the Issuer) by the Holder thereof in the manner required by Section 15.01 by mailing checks for the amount payable to the Holders of such Notes entitled thereto as they shall appear in the Security register; provided, however, that payments to the Depositary shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee.

 

51

 

The Trustee shall, promptly after such payment and upon written demand by the Issuer, return to the Issuer any funds in excess of the Fundamental Change Repurchase Price.

 

(b)                       If by 11:00 a.m. New York City time, on the Fundamental Change Repurchase Date, the Trustee (or other paying agent appointed by the Issuer) holds money sufficient to make payment on all the Notes or portions thereof that are to be repurchased on such Fundamental Change Repurchase Date, then, with respect to the Notes that have been properly surrendered for repurchase and have not been validly withdrawn, (i) such Notes will cease to be outstanding, (ii) interest will cease to accrue on such Notes (whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the Trustee or paying agent) and (iii) all other rights of the Holders of such Notes will terminate (other than the right to receive the Fundamental Change Repurchase Price).

 

(c)                        Upon surrender of a Note that is to be repurchased in part pursuant to Section 15.01, the Issuer shall execute and the Trustee shall authenticate and deliver to the Holder a new Note in an authorized denomination equal in principal amount to the unrepurchased portion of the Note surrendered.

 

Section 15.04.                   Covenant to Comply with Applicable Laws Upon Repurchase of Notes.  In connection with any repurchase offer, the Issuer will, if required:

 

(a)                       comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act;

 

(b)                       file a Schedule TO or any other required schedule under the Exchange Act; and

 

(c)                        otherwise comply with all federal and state securities laws in connection with any offer by the Issuer to repurchase the Notes;

 

in each case, so as to permit the rights and obligations under this Article 15 to be exercised in the time and in the manner specified in this Article 15.

 

ARTICLE 16
  NO OPTIONAL REDEMPTION

 

Section 16.01.                   No Redemption; Applicability of Article 12 of the Base Indenture.  Article 12 of the Base Indenture shall not apply to the Notes.  The Notes shall not be redeemable by the Issuer prior to the Maturity Date, and no sinking fund is provided for the Notes.

 

ARTICLE 17
  MISCELLANEOUS PROVISIONS

 

Section 17.01.                   Jurisdiction.

 

52

 

The Issuer irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Trustee, that any legal action, suit or proceeding against it with respect to obligations, liabilities or any other matter arising out of or in connection with the Indenture or  the Notes may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of the Notes have been paid, hereby irrevocably consents and submits to the non-exclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for itself in respect of its properties, assets and revenues.

 

The Issuer irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with the Indenture brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

 

Section 17.02.                   No Security Interest Created.  Nothing in the Indenture or in the Notes, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction.

 

Section 17.03.                   Table of Contents, Headings, Etc.  The table of contents and the titles and headings of the articles and sections of this First Supplemental 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.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this First Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Issuer.

 

Section 17.04.                   Authenticating Agent.  The Trustee may appoint an authenticating agent that shall be authorized to act on its behalf and subject to its direction in the authentication and delivery of Notes in connection with the original issuance thereof and transfers and exchanges of Notes hereunder, including under Section 2.04, Section 2.08, Section 2.09, Section 2.11 and Section 8.05 of the Base Indenture and Section 15.03 as fully to all intents and purposes as though the authenticating agent had been expressly authorized by the Indenture and those Sections to authenticate and deliver Notes.  For all purposes of the Indenture, the authentication and delivery of Notes by the authenticating agent shall be deemed to be authentication and delivery of such Notes “by the Trustee” and a certificate of authentication executed on behalf of the Trustee by an authenticating agent shall be deemed to satisfy any requirement hereunder or in the Notes for the Trustee’s certificate of authentication.  Such authenticating agent shall at all times be a Person eligible to serve as trustee hereunder pursuant to Section 6.09 of the Base Indenture.

 

Any corporation or other entity into which any authenticating agent may be merged or converted or with which it may be consolidated, or any corporation or other entity resulting from

 

53

 

any merger, consolidation or conversion to which any authenticating agent shall be a party, or any corporation or other entity succeeding to the corporate trust business of any authenticating agent, shall be the successor of the authenticating agent hereunder, if such successor corporation  or other entity is otherwise eligible under this Section 17.04, without the execution or filing of any paper or any further act on the part of the parties hereto or the authenticating agent or such successor corporation or other entity.

 

Any authenticating agent may at any time resign by giving written notice of resignation to the Trustee and to the Issuer.  The Trustee may at any time terminate the agency of any authenticating agent by giving written notice of termination to such authenticating agent and to the Issuer.  Upon receiving such a notice of resignation or upon such a termination, or in case at any time any authenticating agent shall cease to be eligible under this Section, the Trustee may appoint a successor authenticating agent (which may be the Trustee), shall give written notice of such appointment to the Issuer and shall mail notice of such appointment to all Holders as the names and addresses of such Holders appear on the Security register.

 

The Issuer agrees to pay to the authenticating agent from time to time reasonable compensation for its services although the Issuer may terminate the authenticating agent, if it determines such agent’s fees to be unreasonable.

 

The provisions of Section 6.03, Section 6.04, Section 6.07, and Section 7.03 (as amended by Section 8.01 of this First Supplemental Indenture) of the Base Indenture and this Section 17.04 shall be applicable to any authenticating agent.

 

If an authenticating agent is appointed pursuant to this Section 17.04, the Notes may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:

 

	
                                                     ,
    	
 
    
	
as Authenticating   Agent
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Authorized Officer
    	
 
    
			

 

Section 17.05.                   Execution in Counterparts.  In addition to the provisions set forth in Section 11.09 of the Base Indenture, the exchange of copies of the Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of the Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 17.06.                   Waiver of Jury Trial.  EACH OF THE ISSUER 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 THE INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

54

 

Section 17.07.                   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 that are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

Section 17.08.                   Calculations.  Except as otherwise provided herein, the Issuer shall be responsible for making all calculations called for under the Notes.  These calculations include, but are not limited to, determinations of the Last Reported Sale Prices of the Common Stock, the Daily VWAPs, the Daily Conversion Values, the Daily Settlement Amounts, accrued interest payable on the Notes and the Conversion Rate of the Notes.  The Issuer shall make all these calculations in good faith and, absent manifest error, the Issuer’s calculations shall be final and binding on Holders of Notes.  The Issuer shall provide a schedule of its calculations to each of the Trustee and the Conversion Agent, and each of the Trustee and Conversion Agent is entitled to rely conclusively upon the accuracy of the Issuer’s calculations without independent verification.  The Trustee will forward the Issuer’s calculations to any Holder of Notes upon the request of that Holder at the sole cost and expense of the Issuer.

 

Section 17.09.                   USA PATRIOT Act.  The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee.  The parties to the Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the USA PATRIOT Act.

 

[Remainder of page intentionally left blank]

 

55

 

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first written above.

 

	
 
    	
MERRIMACK   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert J.   Mulroy
    
	
 
    	
 
    	
Name:
    	
Robert J. Mulroy
    
	
 
    	
 
    	
Title:
    	
President and   Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Yana Kislenko
    
	
 
    	
 
    	
Name:
    	
Yana Kislenko
    
	
 
    	
 
    	
Title:
    	
Vice President
    

 

 

EXHIBIT A

 

[FORM OF FACE OF NOTE]

 

[INCLUDE FOLLOWING LEGEND IF A GLOBAL SECURITY]

 

[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO THE NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]

 

A-1

 

Merrimack Pharmaceuticals, Inc.

 

4.50% Convertible Senior Note due 2020

 

	
No. [          ]
    	
[Initially](1) $[                  ]
    

 

 

CUSIP No. 590328AA8

 

Merrimack Pharmaceuticals, Inc., a corporation duly organized and validly existing under the laws of the State of Delaware (the “Issuer,” which term includes any successor corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to [CEDE & CO.](2) [              ](3), or registered assigns, the principal sum [as set forth in the “Schedule of Exchanges of Notes” attached hereto](4) [of $[              ]](5), which amount, taken together with the principal amounts of all other outstanding Notes, shall not, unless permitted by the Indenture, exceed $125,000,000 in aggregate at any time (or $143,750,000 if the Underwriters exercise their over-allotment option in full as set forth in the Underwriting Agreement), in accordance with the rules and procedures of the Depositary, on July 15, 2020, and interest thereon as set forth below.

 

This Note shall bear interest on the outstanding principal balance hereof at the rate of 4.50% per year from July 17, 2013, or from the most recent date to which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date until July 15, 2020.  Interest is payable semi-annually in arrears on each January 15 and July 15, commencing on January 15, 2014, to Holders of record at the close of business on the preceding January 1 and July 1 (whether or not such day is a Business Day), respectively.

 

Any Defaulted Amounts shall accrue interest per annum on the outstanding principal balance hereof at the rate borne by the Notes plus one percent (1%), subject to the enforceability thereof under applicable law, from, and including, the relevant payment date to, but excluding, the date on which such Defaulted Amounts shall have been paid by the Issuer, at its election, in accordance with Section 3.03(c) of the Indenture.

 

The Issuer shall pay the principal of and interest on this Note, if and so long as such Note is evidenced by a Global Security, in immediately available funds to the Depositary or its nominee, as the case may be, as the registered Holder of such Note.  As provided in and subject to the provisions of the Indenture, the Issuer shall pay the principal of any Notes (other than Notes that are evidenced by Global Securities) at the office or agency designated by the Issuer for that purpose.  The Issuer has initially designated the Trustee as its paying agent and Security Registrar in respect of the Notes and its agency in the Borough of Manhattan, The City of New York, as a place where Notes may be presented for payment or for registration of transfer and exchange.

 

(1)  Include if a Global Security.

(2)  Include if a Global Security.

(3)  Include if a definitive Security.

(4)  Include if a Global Security.

(5)  Include if a definitive Security.

 

A-2

 

Reference is made to the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right to convert this Note into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, on the terms and subject to the limitations set forth in the Indenture.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

 

This Note will be governed by, and construed in accordance with, the internal laws of the State of New York (without regard to the conflicts of laws provisions thereof).

 

In the case of any conflict between this Note and the Indenture, the provisions of the Indenture shall control and govern.

 

This Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been signed manually by the Trustee or a duly authorized authenticating agent under the Indenture.

 

[Remainder of page intentionally left blank]

 

A-3

 

IN WITNESS WHEREOF, the Issuer has caused this Note to be duly executed.

 

	
 
    	
MERRIMACK   PHARMACEUTICALS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

 

	
Dated:
    	
 
    
	
 
    	
 
    
	
TRUSTEE’S   CERTIFICATE OF AUTHENTICATION
    	
 
    
	
 
    	
 
    
	
WELLS FARGO BANK,   NATIONAL ASSOCIATION
    	
 
    
	
as Trustee
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized Officer
    	
 
    

 

A-4

 

[FORM OF REVERSE OF NOTE]

 

Merrimack Pharmaceuticals, Inc.
 4.50% Convertible Senior Note due 2020

 

This Note is one of a duly authorized issue of Notes of the Issuer, designated as its 4.50% Convertible Senior Notes due 2020 (the “Notes”), limited to the aggregate principal amount of $125,000,000 (as increased by an amount equal to the aggregate principal amount of any additional Notes purchased by the Underwriters pursuant to the exercise of their option to purchase additional Notes as set forth in the Underwriting Agreement) all issued or to be issued under and pursuant to the First Supplemental Indenture dated as of July 17, 2013 (the “First Supplemental Indenture”), between the Issuer and Wells Fargo Bank, National Association (the “Trustee”), which amends and supplements the Indenture dated as of July 17, 2013 between the Issuer and the Trustee (the “Base Indenture” and, as amended and supplemented by the First Supplemental Indenture and from time to time with respect to the Notes, the “Indenture”) to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the Holders of the Notes.  Additional Notes may be issued in an unlimited aggregate principal amount, subject to certain conditions specified in the Indenture.  Capitalized terms used in this Note and not defined in this Note shall have the respective meanings set forth in the Indenture.

 

In case certain Events of Default shall have occurred and be continuing, the principal of, and interest on, all Notes may be declared, by either the Trustee or Holders of at least 25% in aggregate principal amount of Notes then outstanding, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions and certain exceptions set forth in the Indenture.

 

Subject to the terms and conditions of the Indenture, the Issuer will make all payments and deliveries in respect of the Fundamental Change Repurchase Price on the Fundamental Change Repurchase Date and the principal amount on the Maturity Date, as the case may be, to the Holder who surrenders a Note to a paying agent to collect such payments in respect of the Note.  The Issuer will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.

 

The Indenture contains provisions permitting the Issuer and the Trustee in certain circumstances, without the consent of the Holders of the Notes, and in certain other circumstances, with the consent of the Holders of not less than a majority in aggregate principal amount of the Notes at the time outstanding, evidenced as in the Indenture provided, to execute supplemental indentures modifying the terms of the Indenture and the Notes as described therein.  It is also provided in the Indenture that, subject to certain exceptions, the Holders of a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the Holders of all of the Notes waive any past Default or Event of Default under the Indenture and its consequences.

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay or

 

A-5

 

deliver, as the case may be, the principal (including the Fundamental Change Repurchase Price, if applicable) of, accrued and unpaid interest on, and the consideration due upon conversion of, this Note at the place, at the respective times, at the rate and in the lawful money herein prescribed.

 

The Notes are issuable in registered form without coupons in denominations of $1,000 principal amount and integral multiples thereof.  At the office or agency of the Issuer referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, Notes may be exchanged for a like aggregate principal amount of Notes of other authorized denominations, without payment of any service charge but, if required by the Issuer or Trustee, with payment of a sum sufficient to cover any transfer or similar tax that may be imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such exchange of Notes being different from the name of the Holder of the old Notes surrendered for such exchange.

 

The Notes are not subject to redemption through the operation of any sinking fund or otherwise.

 

Upon the occurrence of a Fundamental Change, the Holder has the right, at such Holder’s option, to require the Issuer to repurchase for cash all of such Holder’s Notes or any portion thereof (in principal amounts of $1,000 or integral multiples thereof) on the Fundamental Change Repurchase Date at a price equal to the Fundamental Change Repurchase Price.

 

Subject to the provisions of the Indenture, the Holder hereof has the right, at its option, during certain periods and upon the occurrence of certain conditions specified in the Indenture, prior to the close of business on the Business Day immediately preceding the Maturity Date, to convert any Notes or portion thereof that is $1,000 or an integral multiple thereof, into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, at the Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture.

 

A-6

 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM = as tenants in common

 

UNIF GIFT MIN ACT = Uniform Gifts to Minors Act

 

CUST = Custodian

 

TEN ENT = as tenants by the entireties

 

JT TEN  = joint tenants with right of survivorship and not as tenants in common

 

Additional abbreviations may also be used though not in the above list.

 

A-7

 

SCHEDULE A(6)

 

SCHEDULE OF EXCHANGES OF NOTES

 

Merrimack Pharmaceuticals, Inc.
 4.50% Convertible Senior Notes due 2020

 

The initial principal amount of this Global Security is              DOLLARS ($[            ]).  The following increases or decreases in this Global Security have been made:

 

	
Date of exchange
    	
 
    	
Amount of
   decrease in
   principal amount
   of this Global
   Security
    	
 
    	
Amount of
   increase in
   principal amount
   of this Global
   Security
    	
 
    	
Principal amount
   of this Global
   Security following
   such decrease or
   increase
    	
 
    	
Signature of
   authorized
   signatory of
   Trustee or
   Custodian
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(6)  Include if a Global Security.

 

A-8

 

ATTACHMENT 1

 

[FORM OF NOTICE OF CONVERSION]

 

To:  Merrimack Pharmaceuticals, Inc.

 

The undersigned registered owner of this Note hereby exercises the option to convert this Note, or the portion hereof (that is $1,000 principal amount or an integral multiple thereof) below designated, into cash, shares of Common Stock or a combination of cash and shares of Common Stock, as applicable, at the election of the Issuer, in accordance with the terms, and subject to certain limitations, of the Indenture referred to in this Note, and directs that any cash payable and any shares of Common Stock issuable and deliverable upon such conversion, together with any cash for any fractional share, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below.  If any shares of Common Stock or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all documentary, stamp or similar issue or transfer taxes, if any in accordance with Section 14.02(d) and Section 14.02(e) of the Indenture.  Any amount required to be paid to the undersigned on account of interest accompanies this Note.  Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature(s)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature   Guarantee
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature(s) must   be guaranteed by an eligible Guarantor Institution (banks, stock brokers,   savings and loan associations and credit unions) with membership in an   approved signature guarantee medallion program pursuant to Securities and   Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be   issued, or Notes are to be delivered, other than to and in the name of the   registered holder.
    	
 
    	
 
    

 

1

 

	
Fill in for   registration of shares if to be issued, and Notes if to be delivered, other   than to and in the name of the registered holder:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Name)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Street Address)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(City, State and   Zip Code)
    	
 
    	
 
    
	
Please print name   and address
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Principal amount   to be converted (if less than all):   $            ,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
NOTICE: The above   signature(s) of the Holder(s) hereof must correspond with the name   as written upon the face of the Note in every particular without alteration   or enlargement or any change whatever.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Social Security or   Other Taxpayer
    
	
 
    	
 
    	
Identification   Number
    

 

2

 

ATTACHMENT 2

 

[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]

 

To: Merrimack Pharmaceuticals, Inc.

 

The undersigned registered owner of this Note hereby acknowledges receipt of a notice from Merrimack Pharmaceuticals, Inc. (the “Issuer”) as to the occurrence of a Fundamental Change with respect to the Issuer and specifying the Fundamental Change Repurchase Date and requests and instructs the Issuer to pay to the registered holder hereof in accordance with Section 15.01 of the Indenture referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not fall during the period after a Regular Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest, if any, thereon to, but excluding, such Fundamental Change Repurchase Date.  Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture.

 

In the case of Notes evidenced by definitive Securities, the certificate numbers of the Notes to be repurchased are as set forth below:

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature(s)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Social Security or   Other Taxpayer
    
	
 
    	
 
    	
Identification   Number
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Principal amount   to be repaid (if less than all): $            ,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
NOTICE: The above   signature(s) of the Holder(s) hereof must correspond with the name   as written upon the face of the Note in every particular without alteration   or enlargement or any change whatever.
    

 

1Exhibit 10.1

 

ExecutionCopy

 

CREDIT FACILITIES AGREEMENT

 

datedJuly 12, 2013

 

between

 

Hardinge Holdings GmbH
  c/o L. Kellenberger & Co. AG, Heiligkreuzstrasse 28, 9009 St. Gallen, Switzerland;

 

and

 

L. Kellenberger & Co AG
 Heiligkreuzstrasse 28, 9009 St. Gallen, Switzerland

 

(collectively“the Borrowers”, each a “Borrower”)

 

and

 

Credit Suisse AG
 Paradeplatz 8, 8001 Zürich, Switzerland

 

(the“Lender”)

 

regarding

 

a CHF 2,550,000Amortizing Mortgage Loan Facility (the “Facility A”)and

 

aCHF 18,000,000 Revolving Working Capital Facility (the “Facility B”)

 

 

TABLE OF CONTENTS

 

	
1.
    	
DEFINITIONS
    	
4
    
	
 
    	
 
    	
 
    
	
2.
    	
THE FACILITIES
    	
12
    
	
 
    	
 
    	
 
    
	
3.
    	
AVAILABILITY
    	
12
    
	
 
    	
 
    	
 
    
	
3.1
    	
Facility A
    	
12
    
	
 
    	
 
    	
 
    
	
3.2
    	
Facility B
    	
12
    
	
 
    	
 
    	
 
    
	
4.
    	
USE OF PROCEEDS
    	
14
    
	
 
    	
 
    	
 
    
	
5.
    	
UTILIZATION AND ROLLOVER
    	
14
    
	
 
    	
 
    	
 
    
	
6.
    	
CONDITIONS PRECEDENT
    	
15
    
	
 
    	
 
    	
 
    
	
6.1
    	
Initial Conditions Precedent
    	
15
    
	
 
    	
 
    	
 
    
	
6.2
    	
Further Conditions Precedent
    	
15
    
	
 
    	
 
    	
 
    
	
7.
    	
INTEREST PAYMENTS AND ACCRUAL   OF INTEREST
    	
15
    
	
 
    	
 
    	
 
    
	
7.1
    	
Interest Rate
    	
15
    
	
 
    	
 
    	
 
    
	
7.2
    	
Interest Payments
    	
16
    
	
 
    	
 
    	
 
    
	
7.3
    	
Default Interest Rate
    	
16
    
	
 
    	
 
    	
 
    
	
7.4
    	
Minimum Interest
    	
17
    
	
 
    	
 
    	
 
    
	
7.5
    	
Market   Disruption
    	
17
    
	
 
    	
 
    	
 
    
	
8.
    	
FINAL MATURITY, REPAYMENT,   CANCELLATION AND ILLEGALITY
    	
17
    
	
 
    	
 
    	
 
    
	
8.1
    	
Final Maturity Date
    	
17
    
	
 
    	
 
    	
 
    
	
8.2
    	
Ordinary Repayments
    	
17
    
	
 
    	
 
    	
 
    
	
8.3
    	
Payments for Credit Instruments and   Derivative Transactions under Facility B
    	
18
    
	
 
    	
 
    	
 
    
	
8.4
    	
Prepayments
    	
18
    
	
 
    	
 
    	
 
    
	
8.5
    	
General Provisions
    	
18
    
	
 
    	
 
    	
 
    
	
8.6
    	
Voluntary Cancellation
    	
19
    
	
 
    	
 
    	
 
    
	
8.7
    	
Illegality
    	
19
    
	
 
    	
 
    	
 
    
	
8.8
    	
Breakage Costs
    	
19
    
	
 
    	
 
    	
 
    
	
9.
    	
REPRESENTATIONS AND WARRANTIES
    	
20
    
	
 
    	
 
    	
 
    
	
10.
    	
COVENANTS
    	
22
    
	
 
    	
 
    	
 
    
	
10.1
    	
Negative Covenants
    	
22
    
	
 
    	
 
    	
 
    
	
10.2
    	
Positive Covenants
    	
24
    
	
 
    	
 
    	
 
    
	
10.3
    	
Financial Covenants
    	
24
    
	
 
    	
 
    	
 
    
	
11.
    	
INFORMATION UNDERTAKINGS
    	
25
    
	
 
    	
 
    	
 
    
	
11.1
    	
Financial Information
    	
25
    
	
 
    	
 
    	
 
    
	
11.2
    	
Further Information
    	
26
    
	
 
    	
 
    	
 
    
	
12.
    	
EVENTS OF DEFAULT AND RESULTING   CONSEQUENCES
    	
26
    
	
 
    	
 
    	
 
    
	
12.1
    	
Events of Default
    	
26
    
	
 
    	
 
    	
 
    
	
12.2
    	
Consequences
    	
28
    
	
 
    	
 
    	
 
    
	
13.
    	
CASH COLLATERAL
    	
28
    
	
 
    	
 
    	
 
    
	
14.
    	
SECURITIES AND GUARANTEE
    	
28
    
	
 
    	
 
    	
 
    
	
15.
    	
LIMITATION
    	
29
    
	
 
    	
 
    	
 
    
	
16.
    	
COMMISSIONS, FEES AND EXPENSES
    	
30
    
	
 
    	
 
    	
 
    
	
16.1
    	
Commissions for Credit Instruments
    	
30
    

 

2

 

	
16.2
    	
Commitment Fee for Facility B
    	
30
    
	
 
    	
 
    	
 
    
	
16.3
    	
Arrangement Fee
    	
30
    
	
 
    	
 
    	
 
    
	
16.4
    	
Transaction and Amendment Expenses
    	
30
    
	
 
    	
 
    	
 
    
	
16.5
    	
Enforcement Expenses
    	
30
    
	
 
    	
 
    	
 
    
	
17.
    	
INCREASED COSTS
    	
30
    
	
 
    	
 
    	
 
    
	
18.
    	
TAX GROSS-UP AND TAX INDEMNITY
    	
31
    
	
 
    	
 
    	
 
    
	
19.
    	
SET-OFF
    	
31
    
	
 
    	
 
    	
 
    
	
19.1
    	
By the Borrower
    	
31
    
	
 
    	
 
    	
 
    
	
19.2
    	
By the Lender
    	
31
    
	
 
    	
 
    	
 
    
	
20.
    	
THIRD PARTY TRANSFERS
    	
31
    
	
 
    	
 
    	
 
    
	
21.
    	
ADDITIONAL BORROWERS
    	
32
    
	
 
    	
 
    	
 
    
	
22.
    	
GENERAL PROVISIONS
    	
32
    
	
 
    	
 
    	
 
    
	
22.1
    	
Notices
    	
32
    
	
 
    	
 
    	
 
    
	
22.2
    	
Electronic Communication
    	
33
    
	
 
    	
 
    	
 
    
	
22.3
    	
Entire Agreement
    	
33
    
	
 
    	
 
    	
 
    
	
22.4
    	
General Terms and Conditions
    	
34
    
	
 
    	
 
    	
 
    
	
22.5
    	
Amendments
    	
34
    
	
 
    	
 
    	
 
    
	
22.6
    	
No Waiver and No Remedies Exclusive
    	
34
    
	
 
    	
 
    	
 
    
	
22.7
    	
Severability
    	
34
    
	
 
    	
 
    	
 
    
	
22.8
    	
Waiver of Banking Secrecy and Data   Protection
    	
34
    
	
 
    	
 
    	
 
    
	
22.9
    	
Credit Risk Hedging
    	
34
    
	
 
    	
 
    	
 
    
	
22.10
    	
Equivalent Currency
    	
35
    
	
 
    	
 
    	
 
    
	
23.
    	
GOVERNING LAW AND JURISDICTION
    	
35
    
	
 
    	
 
    	
 
    
	
23.1
    	
Governing Law
    	
35
    
	
 
    	
 
    	
 
    
	
23.2
    	
Jurisdiction
    	
35
    

 

3

 

LIST OFSCHEDULES

 

SCHEDULEA                                                      Limit Delegation

 

SCHEDULE B                                                   Form of Utilization/Rollover Request

 

SCHEDULE C                                                   Initial Conditions Precedent

 

SCHEDULE D                                                   Form of Guarantee

 

SCHEDULEE                                                      Applicable Margins (Pricing Grid)

 

SCHEDULEF                                                       Form of Covenant Compliance Certificate

 

SCHEDULE G                                                Accession Letter

 

SCHEDULE H                                                Addresses

 

1.                                               DEFINITIONS

 

Unless otherwise defined in this Agreement, capitalized terms shall have the following meaning:

 

	
Accession Letter:
    	
 
    	
means a document   substantially in the form set out in Schedule G.
    
	
 
    	
 
    	
 
    
	
Additional Borrower:
    	
 
    	
means a company which   becomes an Additional Borrower in accordance with Clause 21.
    
	
 
    	
 
    	
 
    
	
Agreement:
    	
 
    	
means this Credit Facilities Agreement.
    
	
 
    	
 
    	
 
    
	
Amortization Date:
    	
 
    	
has the meaning assigned to it in Clause 8.2.1.
    
	
 
    	
 
    	
 
    
	
Application for a   Guarantee:
    	
 
    	
means the standard   application form of the Lender (or any other form agreed between the Lender   and the relevant Borrower) for the issuance of a Credit Instrument.
    
	
 
    	
 
    	
 
    
	
Borrowers:
    	
 
    	
meansHardinge   Holdings, Kellenberger and the Additional Borrowers, each a “Borrower”.
    
	
 
    	
 
    	
 
    
	
Breakage Costs:
    	
 
    	
has the meaning assigned to it in Clause 8.8.
    
	
 
    	
 
    	
 
    
	
Business Day:
    	
 
    	
means a day (other than a Saturday or Sunday) on   which banks are open for general banking business in Zurich, Switzerland and:

 

(i)                       (in relation to the quotation day for the determination of LIBOR) the   principal financial center of the country of that currency; or

 

(ii)                    (in relation to the quotation day for the determination 
    

 

4

 

	
 
    	
 
    	
of EURIBOR) any TARGET Day.
    
	
 
    	
 
    	
 
    
	
Change of Control:
    	
 
    	
occurs(i) if Hardinge Inc. directly or   indirectly holds less than 100% of the voting rights or of the quota capital   (Stammkapital)ofHardinge Holdings or   (ii) if Hardinge Holdings directly or indirectly holds less than 100% of   the voting rights or of the share capital of Kellenberger.
    
	
 
    	
 
    	
 
    
	
Clause:
    	
 
    	
means a clause in this Agreement.
    
	
 
    	
 
    	
 
    
	
Covenant Compliance Certificate:
    	
 
    	
has the meaning assigned to it in Clause 11.1(d).
    
	
 
    	
 
    	
 
    
	
Credit Instrument:
    	
 
    	
has the meaning assigned to it in Clause 3.2(c).
    
	
 
    	
 
    	
 
    
	
Default Interest:
    	
 
    	
has the meaning assigned to it in Clause 7.3.
    
	
 
    	
 
    	
 
    
	
Derivative Transaction:
    	
 
    	
has the meaning assigned to it in Clause 3.2(d).
    
	
 
    	
 
    	
 
    
	
Derivative Amount:
    	
 
    	
has the meaning assigned to it in Clause 3.2(d).
    
	
 
    	
 
    	
 
    
	
EBITDA:
    	
 
    	
means earnings from operations before interest,   taxes, depreciation and amortization, adjusted (where appropriate) on a pro   forma basis for acquisitions and disposals.
    
	
 
    	
 
    	
 
    
	
Economic Equity:
    	
 
    	
means, at any time, the aggregate amount of all   amounts paid in or credited as paid up on the issued capital stock, plus the amount standing to the credit of the capital   reserves and the revenue reserves, plus   subordinated shareholder loans(subordinated in form and substance   satisfactory to the Lender) (if any),minus own   shares, minus loans granted to Hardinge Inc.   and minus receivables due from Hardinge   Inc.
    
	
 
    	
 
    	
 
    
	
EURIBOR:
    	
 
    	
means, in relation to   any fixed term advance in EUR:  

 

(i)                       the applicable Screen Rate; or  

 

(ii)                    if the Screen Rate for the interest period of the fixed term advances is   not available but Screen Rates for shorter or longer interest periods are   available, the rate as determined by the Lender for the relevant interest   period by way of interpolation between the rates of the next shorter and next   longer interest period for which a Screen Rate is available; or  

 

(iii)                 if   EURIBOR cannot be determined in accordance with (i) or (ii) above,   the arithmetic mean (rounded upwards to 4 decimal places) of the rates as   supplied to the Lender at its request quoted by the Reference 
    

 

5

 

	
 
    	
 
    	
Banks,  

 

as of 11:00 a.m.   (Brussels time) on the quotation day (being in each case 2Business Days prior   to the utilization date or the rollover date) for EUR and for a period   comparable to the interest period of that fixed term advance and, if the rate   is less than zero, EURIBOR shall be deemed to be zero.
    
	
 
    	
 
    	
 
    
	
Event of Default:
    	
 
    	
has the meaning assigned to it in Clause 12.1.
    
	
 
    	
 
    	
 
    
	
External Basket:
    	
 
    	
means any Financial Indebtedness arising under the   following existing credit lines:  

 

(i)                       CHF 7,000,000 working capital line for Kellenberger with UBS AG;  

 

(ii)                    USD 12,000,000working capital line for Hardinge Precision Machinery   (Jiaxing) Company Ltd., People’s Republic of China (PRC);  

 

(iii)                 RMB 34,200,000 working capital line for Hardinge Precision Machinery   (Jiaxing) Company Ltd., People’s Republic of China (PRC);

 

(iv)                RMB 15,000,000construction loan for Hardinge Precision Machinery   (Jiaxing) Company Ltd., Taiwan;  

 

(v)                   TWD 58,500,000mortgage loans for Hardinge Taiwan Precision Machinery   Limited, Taiwan,

 

as well as Financial   Indebtedness in connection with:  

 

(vi)                letters of credit and guarantees for Hardinge China Limitedof up to RMB   20,000,000;  

 

(vii)             credit facilities granted to Hardinge Holdings for the financing of   acquisitionsin the amount of up to USD 12,500,000; and  

 

(viii)          subordinated shareholder loans granted by Hardinge Inc. to Hardinge   Holdings (subordinated in form and substance satisfactory to the Lender).
    
	
 
    	
 
    	
 
    
	
Facility:
    	
 
    	
meansFacility Aor Facility B, each as defined in   Clause 3 (collectively, the “Facilities”).
    
	
 
    	
 
    	
 
    
	
Facility A Loan:
    	
 
    	
means the loan outstanding under Facility A.
    
	
 
    	
 
    	
 
    
	
Final Maturity Date:
    	
 
    	
has the meaning assigned to it in Clause 8.1.
    
	
 
    	
 
    	
 
    
	
Final Maturity Date A:
    	
 
    	
has the meaning assigned to it in Clause 8.1.
    

 

6

 

	
Final Maturity Date B:
    	
 
    	
has the meaning assigned to it in Clause 8.1.
    
	
 
    	
 
    	
 
    
	
Financial Covenants:
    	
 
    	
has the meaning assigned to it in Clause 10.3.
    
	
 
    	
 
    	
 
    
	
Finance Documents:
    	
 
    	
means this Agreement, the Security Agreements, the   Guarantee, any utilization request or rollover request and any Application   for a Guarantee, any amendment, restatement or waiver relating to any of   these documents and any other document designated as such by the Lender and   Hardinge Holdings.
    
	
 
    	
 
    	
 
    
	
Financial Indebtedness:
    	
 
    	
means any indebtedness of a company of the Hardinge   HoldingsGroup in respect of  

 

(i)                       monies borrowed and debit balances at banks;  

 

(ii)                    any amount raised pursuant to the issue of debentures, bonds, notes,   loans or other securities;  

 

(iii)                 receivables sold or discounted (otherwise than on a non-recourse basis);  

 

(iv)                leases classified as finance leases;  

 

(v)                   any counterindemnity obligation in respect of a guarantee, bond, a   standby or documentary letter of credit (including contingent liabilities);  

 

(vi)                any amount raised under any other transaction having the commercial   effect of a borrowing or other form of debt financing; and  

 

(vii)             any amount of any liability in respect of any guarantee or other   indemnity or any similar obligation for any of the items referred to in   (i) to (vi) above,  

 

with the exclusion of financial indebtedness in   connection with loans granted by a company of the Hardinge Holdings Group to   another company of the Hardinge Holdings Group.
    
	
 
    	
 
    	
 
    
	
Guarantee:
    	
 
    	
has the meaning assigned to it in Clause 14.
    
	
 
    	
 
    	
 
    
	
Hardinge Group:
    	
 
    	
means Hardinge Inc. and all its direct and indirect   Subsidiaries.
    
	
 
    	
 
    	
 
    
	
Hardinge Holdings:
    	
 
    	
means Hardinge Holdings GmbH.
    
	
 
    	
 
    	
 
    
	
Hardinge Holdings Group:
    	
 
    	
means Hardinge Holdings and all its direct and   indirect Subsidiaries.
    
	
 
    	
 
    	
 
    
	
Individual Utilization Limit:
    	
 
    	
means the amounts stated in the column “Individual   
    

 

7

 

	
 
    	
 
    	
Utilization Limit (in   CHF)”of Section 1 of the Limit Delegation setting   forth the amounts allocated to each Borrower under Facility B as well as the   maximum amounts for certainutilizationsfor each Borrower under Facility B.
    
	
 
    	
 
    	
 
    
	
lnterest Payment Date:
    	
 
    	
has the meaning assigned to it in Clause 7.2.
    
	
 
    	
 
    	
 
    
	
Kellenberger:
    	
 
    	
means L. Kellenberger & Co AG.
    
	
 
    	
 
    	
 
    
	
Latest Financial Statements:
    	
 
    	
has the meaning assigned to it in Clause 9(l).
    
	
 
    	
 
    	
 
    
	
LIBOR:
    	
 
    	
means, in relation to   any fixed term advance in any currency other than EUR:  

 

(i)                       the applicable Screen Rate; or  

 

(ii)                    if the Screen Rate for the interest period of the fixed term advance is   not available but Screen Rates for shorter or longer interest periods are   available, the rate as determined by the Lender for the relevant interest   period by way of interpolation between the rates of the next shorter and next   longer interest period for which a Screen Rate is available;  

 

(iii)                 if   LIBOR cannot be determined in accordance with (i) or (ii) above,   the arithmetic mean (rounded upwardsto four decimal places) of the rates as   supplied to the Lender at its request quoted by the Reference Banks,  

 

as of 11:00 a.m.   (London time) on the quotation day (being in each case 2Business Days prior   to the utilization date or the rollover date)for the currency of that fixed   term advance and for a period comparable to the interest period of that fixed   term advance and, if the rate is less than zero, LIBOR shall be deemed to be   zero.
    
	
 
    	
 
    	
 
    
	
Limit Delegation:
    	
 
    	
means the   determination of the Individual Utilization Limits by Hardinge Holdings and   the Lender set forth in Schedule A as well as any new Limit Delegation which   is agreed by Hardinge Holdings and the Lender from time to time in accordance   with Clause 3.2 which shall replace the Limit Delegation in place at such   point in time.
    
	
 
    	
 
    	
 
    
	
Market Disruption Event:
    	
 
    	
meanseither (i) at or about noon (London time   for LIBOR and Brussels time for EURIBOR) on the quotation day for the   relevant interest period and currency the Screen Rate is not available,   LIBOR/EURIBOR may not be determined in accordance with subparagraph   (ii) of the 
    

 

8

 

	
 
    	
 
    	
LIBOR/EURIBOR   definition and none or only one of the Reference Banks supplies a rate to the   Lender to determine LIBOR/EURIBOR for the relevant currency and interest   period or (ii) before close of business in Zurich on the quotation day   for the relevant interest period, the Lender notifies the Borrower that the   cost to it of obtaining matching deposits in the relevant interbank market   would be in excess of LIBOR/EURIBOR.
    
	
 
    	
 
    	
 
    
	
Material Adverse Change:
    	
 
    	
means any event or series of events or any   circumstance that has a material adverse effect on the ability of a Borrower   to comply with any of its obligations under the Finance Documents.
    
	
 
    	
 
    	
 
    
	
Maximum Amount:
    	
 
    	
has the meaning assigned to it in Clause 15.
    
	
 
    	
 
    	
 
    
	
Mortgage Loan Documentation:
    	
 
    	
means the CHF 3,000,000“framework   agreement for mortgage loan” between   Kellenberger and the Lender dated December 21, 2011 and any document   referred to in such framework agreement.
    
	
 
    	
 
    	
 
    
	
Net Senior Debt:
    	
 
    	
means, at any time,   the aggregate amount of all short-term and long-term Financial Indebtedness   in accordance with applicable accounting standards net of the aggregate   amount of all cash and cash equivalents.
    
	
 
    	
 
    	
 
    
	
Optional Currencies:
    	
 
    	
meansEUR, GBP and USD.
    
	
 
    	
 
    	
 
    
	
Potential Event of Default:
    	
 
    	
meansany event or circumstance which would (with the   expiry of a grace period (if granted), the giving of notice, the making of   any determination under the Finance Documents or any combination of the   foregoing) constitute an Event of Default.
    
	
 
    	
 
    	
 
    
	
Prepayment:
    	
 
    	
has the meaning assigned to it in Clause 8.8.
    
	
 
    	
 
    	
 
    
	
Qualifying Bank:
    	
 
    	
means a person or   entity that conducts effectively banking activities, with its own   infrastructure and staff, as its principal business purpose and that has a   banking license in full force and effect issued in accordance with the   banking laws of its jurisdiction of organization or, if acting through a   branch, issued in accordance with the banking laws in the jurisdiction of   such branch.
    
	
 
    	
 
    	
 
    
	
Reference Banks:
    	
 
    	
meansCredit Suisse AG, UBS AG and   ZürcherKantonalbankor such other Qualifying Banks as may be appointed by the   Lender in consultation with Hardinge Holdings.
    

 

9

 

	
Restricted Activity:
    	
 
    	
means a business activity involving a Restricted   Person or relating to a Restricted Country.
    
	
 
    	
 
    	
 
    
	
Restricted Country:
    	
 
    	
means Cuba, Iran, Myanmar, North Korea, Sudan   and Syria and/or any other applicable country as notified by the Lender.
    
	
 
    	
 
    	
 
    
	
Restricted Person:
    	
 
    	
means a person and/or a legal entity either   (i) located, domiciled, resident, organized under the laws of or   incorporated in a Restricted Country, (ii) being the government or owned   or controlled by the government of a Restricted Country or by a party   located, domiciled, resident, organized under the laws of or incorporated in   a Restricted Country or (iii) subject to any sanctions imposed by the   United Nations (UN), the European Union (EU), the State Secretariat for   Economic Affairs (SECO) of Switzerland, the Directorate for Public   International Law of Switzerland (DIPL), the United States Treasury   Department’s Office of Foreign Assets Control (OFAC), HM Treasury and the   Foreign and Commonwealth Office of the United Kingdom, the Monetary Authority   of Singapore (MAS) and the Hong Kong Monetary Authority (HKMA).
    
	
 
    	
 
    	
 
    
	
RMB:
    	
 
    	
meansRenmimbi.
    
	
 
    	
 
    	
 
    
	
Screen Rate:
    	
 
    	
means,in relation to LIBOR, the British Bankers   Association Interest Settlement Rate for the relevant currency and period   and, in relation to EURIBOR, the percentage rate p.a. determined by the   Banking Federation of the European Union for the relevant period, in each   case as displayed   on the appropriate page of the Reuters screen.If the agreed page is   replaced or service ceases to be available, the Lender may specify another   page or service displaying the appropriate rate after consultation with   Hardinge Holdings.
    
	
 
    	
 
    	
 
    
	
Secured Obligations:
    	
 
    	
means all present and future obligations and   liabilities (whether actual or contingent, whether owed jointly, severally or   in any other capacity whatsoever) of the Borrowers(including for the   avoidance of doubt the Additional Borrowers) under and/or in connection with   this Agreement and/or any other Finance Document.
    
	
 
    	
 
    	
 
    
	
Securities:
    	
 
    	
has the meaning assigned to it in Clause 14.
    
	
 
    	
 
    	
 
    
	
Security Agreement:
    	
 
    	
has the meaning assigned to it in Clause 14.
    

 

10

 

	
Subsidiary:
    	
 
    	
means an entity of which a person has direct or   indirect control or holds directly or indirectly 50% or more of the voting   rights or of the capital stock of such entity.
    
	
 
    	
 
    	
 
    
	
Swiss Guidelines:
    	
 
    	
means, collectively, guideline S-02.122.1 in relation   to bonds of April 1999 (Merkblatt “Obligationen” vom April 1999),   guideline S-02.130.1 in relation to money market instruments and accounts   receivable of April 1999 (Merkblattvom April 1999   betreffendGeldmarktpapiere und BuchforderungeninländischerSchuldner),   guideline S-02.123 in relation to interbank loans of September22, 1986   (Merkblatt “Verrechnungssteuer auf Zinsen von Bankguthaben,   derenGläubigerBankensind (Interbankguthaben)” vom 22. September 1986),   guideline S-02.128 in relationtosyndicatedcreditfacilitiesofJanuary 2000   (Merkblatt “Steuerliche Behandlung von Konsortialdarlehen,   Schuldscheindarlehen, Wechseln und Unterbeteiligungen” vom Januar 2000),   circularletterno. 34 in relationtocustomercreditbalancesofJuly 26, 2011   (Kreisschreiben Nr. 34 vom 26. Juli 2011 betreffend “Kundenguthaben”)   andthecircularletterNo. 15 ofFebruary 7, 2007 (1-015-DVS-2007) in   relationtobondsand derivative financialinstrumentsassubject matter   oftaxationof Swiss federalincometax, Swiss withholdingtaxand Swiss stamptaxes   (Kreisschreiben Nr. 15 “Obligationen und derivative Finanzinstrumente als   Gegenstand der direkten Bundessteuer, der Verrechnungssteuer und der   Stempelabgaben” vom 7. Februar 2007), in each case as issued, amended or   replaced from time to time, by the Swiss Federal Tax Administration or as   substituted or superseded and overruled by any law, statute, ordinance, court   decision, regulation or the like as in force from time to time.
    
	
 
    	
 
    	
 
    
	
Swiss Twenty Non-Bank   Rule:
    	
 
    	
means the   rule that the aggregate number of creditors (other than Qualifying   Banks) of a Swiss Borrower under all outstanding borrowings (including under   the Agreement) made or deemed to be made by such Swiss Borrower must not at   any time exceed 20, all in accordance with the Swiss Guidelines.
    
	
 
    	
 
    	
 
    
	
TARGET Day:
    	
 
    	
means any day on   which the Trans-European Automated Real-time Gross Settlement Express   Transfer payment system is open for the settlement of payments in EUR.
    

 

11

 

	
Total Assets:
    	
 
    	
means, at any time,   the aggregate amount of all fixed and current assets.
    
	
 
    	
 
    	
 
    
	
TWD:
    	
 
    	
meansNew Taiwan   Dollar.
    

 

2.                                               THE FACILITIES

 

Subject to the terms of this Agreement, the Lender makes available to the BorrowersFacility A andFacility B.

 

As of the first utilization date under this Agreement, all other existing framework agreements for credit lines and all other credit lines of any of the Borrowers with the Lender shall be cancelled and any amounts outstanding thereunder shall immediately become due for repayment.

 

3.                                               AVAILABILITY

 

3.1                                        Facility A

 

Facility A is a refinancing facilityto be used by Kellenberger to refinance the amounts outstanding under the Mortgage Loan Documentation.

 

Upon fulfilment of the initial conditions precedent according to Clause 6.1, the amounts outstanding under the utilizationsof the Mortgage Loan Documentation (i.e., CHF 2,550,000) shall be converted into a Facility A Loan with an initial outstanding amount of CHF 2,550,000 and shall be subject to the terms of this Agreement and of Facility A. Accumulated interest which is outstanding under the Mortgage Loan Documentation atsuch point in time shall be payable as of the next Interest Payment Date.

 

After the Final Maturity DateA, Kellenberger and the Lender may mutually agree (but with no obligation of the Lender) on one or more new credit products within the then available amount of Facility A,subject to the conditions set forth in the Mortgage Loan Documentation and subject to an extension of the Final Maturity Date A.

 

3.2                                        Facility B

 

Facility B is a revolving working capital facility of up to CHF 18,000,000to be used by the Borrowers in accordance with Clause 4 hereafter. Within the amount of CHF 18,000,000, the Lender makes available the Facility B to the Borrowers in accordance with the Individual Utilization Limit as stated in the Limit Delegation attached hereto as Schedule A, provided that the aggregate amount of all Individual Utilization Limits shall not exceed an aggregate principal amount equal to CHF 18,000,000 (to the extent not reduced or cancelled). The Lender and Hardinge Holdings may at any time agree on a new Limit Delegation substantially in the form as attached hereto as Schedule A, setting forth new Individual Utilization Limits, which shall replace the Limit Delegation being in place at such point in time. In case of discrepancies between the Limit Delegation and this Agreement, this Agreement shall prevail.

 

12

 

Subject to the terms of this Agreement, the Lender will make Facility B available to theBorrowers:

 

(a)                       in the form offixed term advances subject to rollover, each in the amount of no less thanCHF 200,000 or, if more, integral multiples of CHF 100,000, with interest periods of 1, 2, 3 or 6, full months or anyother interest period agreed with the Lender, provided that no interest period shall extend beyond the Final Maturity Date B. Whenever operationally possible, such fixed term advances shallonly be used by the Borrowers other than Hardinge Holdings;

 

(b)                       in the form ofcurrent account overdrafts, provided that any such current account overdraft shall be fully repaid by the relevant Borrower as per the Final Maturity DateB;

 

(c)                        in the form of(standby) letters of credit and (standby) letters of guarantee(including payment guarantees (other than payment guarantees to secure Financial Indebtedness), advance payment guarantees, bid bonds, performance bonds or guarantees for warranty) (each such instrument a “Credit Instrument”) to be issued by and in a form acceptable to the Lender, provided that each Credit Instrument shall have a maturity of a maximum of 24 months from the date of issue.As of the Final Maturity Date B, any outstanding Credit Instrument that cannot be cancelled with immediate effect must be secured by the relevant Borrower by cash collateral in accordance with Clause 13; or

 

(d)                       to cover the margin requirements for over-the-counter (OTC) derivative transactions (each a”Derivative Transaction”) entered intobetweena Borrower and the Lender. The amount of the utilization in the case of Derivative Transactions corresponds tothe margin requirements of the Derivative Transactions, as determined by the Lender(or, if any actual amount is due by a Borrower as a result of the termination or close out of Derivative Transactions, that amount) (the “Derivative Amount”).As of the Final Maturity Date B, theoutstanding Derivative Transaction that cannot be cancelled with immediate effect must be secured by the relevant Borrower by cash collateral in accordance with Clause 13.

 

The aggregate available amount outstanding under all utilizations under (a) as fixed term advances and under (b) as account overdrafts shallbe CHF 8,000,000 or the equivalent in the respective Optional Currency.

 

Facility B can be utilised by the Borrowers in CHF as well as in the Optional Currencies.

 

The Lender reserves the right to refuse individual transactions relating to Credit Instruments if it is of the reasonable opinion that it is not in a position to issue the requested Instrument (a) due to applicable law or regulation, court or administrative order or due to the applicable law subject to which the Credit Instrument would be issued; (b) because the Credit Instrument would be issued in favor of Restricted Persons or beneficiaries and/or recipients located, domiciled and/or resident in a Restricted Country or (c) for reputational or business policy reasons, with no obligation of the Lender to specify such reputational or business policy reasons.

 

13

 

The Borrowers are obligedat all times to immediately repay any amounts outstanding (subject to Breakage Costs) under Facility B that exceed any available amount under Facility B, including the Individual Utilization Limits. However, if such amounts are exceeded due to currency fluctuations or due to an increase of the Derivative Amounts, the Borrowers are only obliged to repay any amounts outstanding (subject to Breakage Costs) under Facility B that exceed any available amount under Facility B(including the Individual Utilization Limits)by more than 5%.In any case, if there are Credit Instruments and Derivative Transactions outstanding under Facility B, the Borrowers shall first repay the amounts drawn under (a) as fixed term advances and/or under (b) as account overdrafts and then secure the remaining amount to be repaid, if any,by cash collateral in accordance with Clause 13.

 

4.                                               USE OF PROCEEDS

 

Facility A will be used to refinance any amount outstanding under the Mortgage Loan Documentation.

 

Facility B may only be drawn and exclusively be used for general corporate and working capital purposes of the companies of the Hardinge Holdings Group (with the exclusion of acquisitions).

 

Credit Instruments under Facility B may not be in favor of Restricted Persons orbeneficiaries and/or recipients located, domiciled and/or resident in a Restricted Country.

 

The Lender has no responsibility to monitor or verify the application of any amount drawn under the Facilities.

 

5.                                               UTILIZATION AND ROLLOVER

 

Subject to the terms of this Agreement, fixed term advances under Facility B may be utilised, as applicable, by delivering to the Lender no later than 10:00 a.m. (Zurich time) 3 Business Daysprior to the respective utilization date an irrevocable and duly completed utilization request in the form as attached hereto as Schedule B, duly signed by the relevant Borrower and in accordance with the respective availability criteria and terms set forth in this Agreement.

 

Instead of a repayment of any fixed term advances under Facility B on the last day of the relevant interest period for fixed term advances under Facility B (see Clause 8.2 below), fixed term advances under Facility B may be rolled-over into a new fixed term advance by delivery of a rollover request in the form as attached hereto as Schedule B, duly signed by the relevant Borrower and in accordance with the respective availability criteria and terms set forth in this Agreement.

 

In case of a utilization of Facility Bby way of Credit Instruments, the relevant Borrower shall deliver to the Lender no later than 10:00 a.m. (Zurich time) 2Business Daysprior to the respective date of issue of the Credit Instrument, an irrevocable and duly completed Application for a Guarantee,duly signed by the relevant Borrower and in accordance with the respective availability criteria and terms set forth in this Agreement, including an unconditional undertaking to repay to the Lender 

 

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any amount that the Lender has paid under the relevant Credit Instrument (Revers).

 

6.                                               CONDITIONS PRECEDENT

 

6.1                                        Initial Conditions Precedent

 

A request for any utilization under this Agreement may only be delivered if the initial conditions precedent set forth in Part I ofSchedule C are fulfilled in form and in substance satisfactory to the Lender.

 

6.2                                        Further Conditions Precedent

 

Subject to Clause 6.1, the Lender is only obliged to comply with anutilization or rollover request or with an Application for a Guarantee, if on the date of the utilization or rollover request or on the Date of the Application for a Guarantee and on the date of the proposed utilization:

 

(a)                       neither an Event of Default nor a Potential Event of Default have occurred; and

 

(b)                       all representations and warranties in Clause 9 are true and correct; and

 

(c)                        on the date of the proposed utilization no available amounts under any Facility would be exceeded due to such proposed utilization.

 

7.                                              INTEREST PAYMENTS AND ACCRUAL OF INTEREST

 

7.1                                        Interest Rate

 

7.1.1                              Facility A

 

The interest rate for the Facility A Loan is 2.50% p.a.

 

7.1.2                              Fixed Term Advances

 

The interest rate for each interest period for afixed term advance under Facility Bis the percentage rate p.a., which is the aggregate of

 

(a)                       the applicable LIBOR or, with respect to fixed term advances in EUR, the applicable EURIBOR;

 

plus

 

(b)                       the applicable margin.

 

The applicable margin will be calculated by the Lender on a semi-annual basis for the past 12 months based on the unaudited consolidated annual statements (as of December 31) to be provided to the Lender in accordance with Clause 11.1(a) and the unaudited consolidated semi-annualfinancial statements (as of June 30) to be provided to the Lender in accordance with Clause 11.1(c), as applicable, of the Hardinge Holdings Group as well as on the Covenant Compliance Certificate. The applicable margin will be modified by the Lender accordingly effective 5 Business Daysafter receipt of the Covenant Compliance Certificate and the relevant financial statements applicablebased on the margin grid set forth in Schedule E and will be applied to any new fixed term advances (including for the avoidance of doubt, any 

 

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fixed term advance which is rolled-over into a new fixed term advance) and in respect to any outstanding fixed term advance,as of the period starting on the next Interest Payment Date.

 

The applicable margin shall initially be 2.25% p.a., until Hardinge Holdings delivers to the Lender the unaudited consolidated financial statements of Hardinge Holdings Group as of December 31, 2013, as well as the relevant Covenant Compliance Certificate. Thereafter, the applicable margin shall be determined based on the margin grid set forth in Schedule E and in accordance with this Clause.

 

7.1.3                              Current Account Overdrafts

 

The interest rates on current account overdrafts under Facility Bare determined by the Lender. The interest ratesare based, among other things, on the prevailing money and capital market conditions. The CHF interest rate is currently 4.50% p.a.The Lender may at any time and with immediate effect adjust the interest rates without any separate notice to reflect changes in the money and capital market conditions and/or changes in the Lender’s risk assessment. The applicable interest rates are printed on the account statements.

 

7.2                                        Interest Payments

 

Interest on fixed term advances under the Facilities is due and payable by the relevant Borrower on the last day of the interest period of that fixed term advance, except that for interest periods in excess of 6 months, interest will be payable at the end of each quarter and at the end of such interest period, and for the Facility A Loan interest will be payable quarterly in arrears (each such day being an “lnterest Payment Date”).

 

For current account overdrafts under Facility B, interest will be charged to the respective account on a quarterly basis.

 

lf an Interest Payment Date or any other date on which a payment under this Agreement is due and payable would otherwise fall on a date which is not a Business Day, that lnterest Payment Date will be the next following Business Dayin that calendar month (if there is one) or the preceding Business Day (if there is not).

 

Interest accrues on any fixed term advance from and including the respective utilization date or rollover date, as the case may be, to but excluding the last day of the respective interest period. lnterest is calculated on the basis of the actual number of days elapsed in the relevant period, divided by 360 (actual/360) or in case of any fixed term advance in GBP, divided by 365 (actual/365).

 

7.3                                        Default Interest Rate

 

Upon the occurrence of an Event of Default, the interest on the Facility A Loan, on the then outstanding amount of all fixed term advances under Facility B and on all current account overdrafts until the date on which the Event of Default no longer exists or on which the Facility A Loan, all outstanding fixed term advancesunder Facility B and all current account overdrafts have been fully repaid, shall be increased by 2 percentage points p.a. (the “Default lnterest”).

 

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7.4                                        Minimum Interest

 

If a tax deduction is required by law to be made by a Borrower in respect of interest payable under this Agreement and should it be unlawful for such Borrower to comply with Clause 18 for any reason and if the gross-up is effectively not paid, (a) the applicable interest rate in relation to that interest payment shall be (i) the interest rate which would have been applied to that interest payment (ii) divided by 1 minus the minimal permissible rate at which the relevant tax deduction is required to be made in view of domestic tax law and/or applicable tax treaties and (b) (i) the relevant Borrower shall be obligated to pay the relevant interest at the adjusted rate in accordance with this Clause, (ii) the relevant Borrower shall make the tax deduction on the interest so recalculated and (iii) all references to a rate of interest under such utilization shall be construed accordingly.

 

7.5                                        Market Disruption

 

If a Market Disruption Event occurs in relation to a fixed term advance for any interest period, then the rate of interest for that fixed term advance for the relevant interest period shall be the percentage rate p.a. which is the sum of (a) the applicable margin set forth under Clause 7.1 and (b) the rate notified by the Lender as soon as practicable and in any event within 5 Business Days after the Lender’s notification of the Market Disruption Event and before interest is due to be paid in respect of that interest period, to be that which expresses as a percentage rate p.a. the cost of the Lender of funding the fixed term advance from whatever source it may reasonably select.

 

8.                                               FINAL MATURITY, REPAYMENT, CANCELLATION AND ILLEGALITY

 

8.1                                        Final Maturity Date

 

The final maturity dates of the Facilities shall be as follows:

 

“Final Maturity Date A”: December 23, 2016 (Kellenberger may at any time request an extension of the Final Maturity Date A; the Lender has, however, no obligation to accept such extension); and

 

“Final Maturity Date B”: July 31, 2018 (together the “Final Maturity Dates”).

 

The Facilities shall cease to be available on the relevant Final Maturity Date or on such earlier date on which they are cancelled in accordance with the terms of this Agreement.

 

8.2                                        Ordinary Repayments

 

8.2.1                              Ordinary Repayments under Facility A

 

The Borrower shall make repayments of the Facility A Loan in the amount of CHF 150,000 on June 30 and December 31 (each an “Amortization Date”) of every year (as set forth in the Mortgage Loan Documentation), the next time on December31, 2013. Any amounts repaid under Facility A may not be redrawn.

 

Notwithstanding any repayments, outstanding amounts under Facility A are due in full as of the Final Maturity Date A.

 

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8.2.2                              Ordinary Repayments under Facility B

 

The Borrowers shall repay in full any outstanding fixed termadvance under Facility B on the last day of its respective interest period (subject to the Borrowers’ ability to request the rollover of such fixed term advance in accordance with the relevant provisions of this Agreement).

 

In any case, outstanding amounts under Facility B are due in full as of the Final Maturity Date B.

 

8.3                                        Payments for Credit Instruments and Derivative Transactions under Facility B

 

If the Lender has made any payment under aCredit Instrument, the Borrower that requested the issuance of the Credit Instrument shall immediately pay to the Lender that relevant amount.

 

If any actual amount is due and payableby a Borroweras a result of the termination or close out of a Derivative Transaction, the Borrower that entered into the Derivative Transaction shall immediately pay to the Lender that relevant amount.

 

8.4                                        Prepayments

 

8.4.1                              Mandatory Prepayments

 

In the circumstances described below, the Borrowersare obligated to prepay all amounts outstanding under the Facilities, all amounts outstanding under account overdrafts shall become immediately due for repayment and Credit Instruments and Derivative Transactions that cannot be cancelled with immediate effectmust be secured by the relevant Borrowers by cash collateral in accordance with Clause 13:

 

(a)                       upon full or partial refinancing of the Facilities; or

 

(b)                       upon the occurrence of a Change of Control.

 

No amount may be redrawn and the Facilities will be fully cancelled.

 

8.4.2                              Voluntary Prepayments

 

Each Borrower has the right to voluntarily prepayall or part of the Facility A Loan as well as all or part of the fixed term advances under Facility Bin minimum amounts of CHF 500,000 or, if more, integral multiples of CHF 500,000 or, if less, the whole amount of the outstanding fixed term advance under Facility B, by giving at least 5Business Days’ written notice to the Lender. Any such notice shall be irrevocable.

 

8.5                                        General Provisions

 

(a)                       Any amount prepaid under Facility A by means of a voluntary prepayment may not be redrawn and the commitment of the Lender under the relevant Facility will be cancelled in the same amount.Any amount voluntarily prepaid under Facility B may be redrawn.

 

(b)                       Breakage Costs in accordance with Clause 8.8 hereafter will be payable by the relevant Borrower if a prepayment of a fixed term advance occurs prior to the last day of an interest period or in case of Facility A, prior to the Final Maturity Date A(or the next following Amortization Date with regard to the amount to be repaid as of such Amortization Date).

 

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(c)                        Any interest accrued on the amount of the prepayment as per the date of the prepayment shall become due on the date of the prepayment.

 

(d)                       Prepayments under Facility Awill reduce the next ordinary repaymentinstallment pursuant to Clause 8.2 above.

 

8.6                                       Voluntary Cancellation

 

Hardinge Holdings may cancel all or part ofthe unutilised amount of Facility B, determining at the same time which Individual Utilization Limits shall be reduced by the same amount, in minimum amounts of CHF 1,000,000or, if more, integral multiples of CHF 500,000, by giving at least 5Business Days’ written notice to the Lender. Any notice of cancellation by Hardinge Holdingswill be irrevocable and shall reduce the total commitment of the Lenderunder Facility B.

 

8.7                                        Illegality

 

lf it is or becomes unlawful in any applicable jurisdiction for the Lender to perform any of its obligations as contemplated by this Agreement, the Lender (i) shall promptly notify Hardinge Holdings upon becoming aware of such circumstance and (ii)is entitled,by notice to Hardinge Holdings,to cancel its commitment under the Facilities and to request from the Borrowers the prepayment of any fixed term advance, the Facility A Loan and all current account overdrafts (including accrued interest thereon) on the date specified by the Lender in the notice delivered to Hardinge Holdings and to request from the Borrowersthat any Credit Instruments and Derivative Transactionsare secured by cash collateral in accordance with Clause 13 on the date specified by the Lender in the notice delivered to Hardinge Holdings.

 

8.8                                        Breakage Costs

 

In case of a voluntary prepayment, a mandatory prepayment or a prepayment due to an Event of Default (each a “Prepayment”) being made on a date prior to the last date of the interest period of the respective fixed term advance, or in case of the Facility A Loan, on a date prior to the Final Maturity Date A (or prior to the next following Amortization Date with regard to the amounts to be repaid as of such Amortization Date), the Borrowers shall pay to the Lender an amount equal to the Breakage Costs.

 

(a)        “Breakage Costs” shall consist of:

 

(i)                          in the case of the Facility A Loan: the amount (if any) by which (x) the additional interest, which would have been payable on the amount of such Prepayment had it been paid on the Final Maturity Date A (or on the Amortization Dates with regard to the amounts to be repaid on the Amortization Dates), exceeds (y) the amount of interest, which as notified by the Lender, would have been payable to the Lender on the Final Maturity Date A (or on the Amortization Dates with regard to the amounts to be repaid on the Amortization Dates) in respect of a deposit in the applicable currency of the amount of such Prepayment placed by it with a prime bank in the relevant interbank market for a period starting on the date of receipt of such Prepayment and ending on the Final 

 

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Maturity Date A (or on the Amortization Dates with regard to the amounts to be repaid on the Amortization Dates); and

 

(ii)                       in the case of fixed term advances: the amount (if any) by which (x) the additional interest, which would have been payable on the amount of such Prepayment (based on LIBOR or in case of any fixed term advance in EUR based on EURIBOR as the casemay be, including the applicable margin determined pursuant to Clause7.1) had it been paid on the last day of such interest period, exceeds (y) the amount of interest, which as notified by the Lender, would have been payable to the Lender on the last day of such interest period in respect of a deposit in the applicable currency of the amount of such Prepayment placed by it with a prime bank in the relevant interbank market for a period starting on the date of receipt of such Prepayment and ending on the last day of the relevant interest period,

 

as well as in case of (i) and (ii), all further costs reasonably incurred by the Lender in connection with suchPrepayment.

 

(b)                       Breakage Costs shall be calculated and notified by the Lender to the relevant Borrower and become due for payment on the same date as the Prepayment.

 

(c)                        ln order to mitigate Breakage Costs, a mandatory prepayment in accordance with Clause 8.4.1 may be deferred to the last date of the interest period of the respective fixed term advance, provided that the amount of such deferred payment is deposited, until the payment to the Lender is effected, in a bank account with the Lender, and shall at all times be subject to the Lender’s respective rights of lien and of set-off.

 

9.                                               REPRESENTATIONS AND WARRANTIES

 

Each Borrower represents and warrants - with regard to the Borrower itself and, as applicable, the other companies of the Hardinge Holdings Group or of the Hardinge Group that:

 

(a)                      it is duly incorporated and validly existing under the laws of its place of incorporation and it is entitled to hold its assets and conduct its business as it is presently being conducted;

 

(b)                      no resolutions, procedures or applications or other actions exist, have been taken or started to be taken or are threatened against any company of the Hardinge Groupregarding thewinding-up, liquidation, dissolution, bankruptcy, administration or reorganization or change of the legal form (or in each case equivalent proceedingsunder applicable foreign law);

 

(c)                       it has obtained or effected all approvals and authority(including the approvals of the relevant corporate bodies) required to validly enter into the Finance Documents and to perform its rights, and comply with and fulfill its obligations thereunder;

 

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(d)                       it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or anyotherauthority, nor is there any stamp, registration or similar tax payable on or in relation to the Finance Documents;

 

(e)                        the entering into, the signing and the performance of this Agreement and all other Finance Documents do not result in a conflict with, or a violation of, (i) any law or regulation applicable to it, (ii) any provision of its articles of incorporation or other corporate documents or (iii) any agreement, arrangement, instrument or other contractual obligation binding upon it;

 

(f)                         all its obligations under the Finance Documents are legal, valid and binding obligations and are enforceable against it in accordance with their terms;

 

(g)                        it has complied and complies with the Finance Documents, including the FinancialCovenants;

 

(h)                       it is in possession of all material authorizations, approvals, licenses, consents and registrations required for the proper conduct of its business as it is currently being conducted;

 

(i)                           it is and was in compliance in all material respects with all applicable laws and regulations (including but not limited to environmental laws and regulations), approvals and consents applicable to it;

 

(j)                          it is not required to make any deduction or withholding for or on account of anytax from any payment it may make under the Finance Documents to the Lender;

 

(k)                       all information provided to the Lender in connection with this Agreement regarding the Borrowers, the Hardinge Group and the Hardinge Holdings Group were true, correct and complete at the date when so provided in all material respects and all projections and other forecasts have been made with due care and are based on reasonable assumptions;

 

(l)                          the most recent audited consolidated financial statements of the Hardinge Group, the most recent unaudited financial statements of the Hardinge Holdings Group, the most recent of the audited financial statements of each Borrower and the most recent of the auditedfinancial statements the other companies of the Hardinge Holdings Group (to the extent existing, otherwise reference is made to the unaudited financial statements) (the “Latest Financial Statements”)give a true and fair view under applicable local accounting standards of the financial position and results of the relevant company of the Hardinge Group,of the Hardinge Group and of the Hardinge Holdings Groupand have been prepared in accordance with the applicable accounting standards being correctly applied on a consistent basis.No liabilities (including contingent liabilities) and no unrealized or expected losses existed up to the date of the Latest Financial Statements that are not reflected in the respective Latest Financial Statements, and adequate reserves for potential liabilities have been created in conformity with the applicable accounting standards, and, in particular, all of the obligations, undertakings and liabilities, actual or contingent, are adequately reflected in the books of the members of the

 

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Hardinge Group and adequate reserves have been provided for in the respective Latest Financial Statements;

 

(m)                   there are no litigation, arbitration oradministrative proceedings against a company of the Hardinge Group which are current orpendingorwhich have been threatened, it being agreed that in case of any civil actions, only civil actions regarding an amount of more than USD 1,000,000shall be relevant;

 

(n)                       the Securities are free of any lien, charge or encumbrance or any other third party right;

 

(o)                       adequate insurance coverage for the companies of the Hardinge Group is maintained;

 

(p)                       it has not directly or indirectly, transferred, made use of, or provided the benefits of, any money, proceeds or services provided or received under or in connection with this Agreement or of any Credit Instrument provided and/or issued under Facility B to, or in favor of, any Restricted Person, a Restricted Country or a Restricted Activity;

 

(q)                       no company of the Hardinge Holdings Group is subject to any statutory or contractual limitations on direct or indirect distributions (including dividends and intra-group loans) to any othercompany of the Hardinge Holdings Group;

 

(r)                          it is compliant with the Swiss Twenty Non-Bank Rule;

 

(s)                         its payment obligations under the Finance Documents rank at least paripassu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally;

 

(t)                          subject to applicable treaties, the choice of Swiss law as the governing law of the Finance Documents and the choice of Zurich as the place of jurisdiction will be recognised and enforced in its jurisdiction of incorporation. Subject to applicable treaties, any judgment obtained in Zurich in relation to a Finance Document will be recognised and enforced in its jurisdiction of incorporation;

 

(u)                       no Material Adverse Change has occurred; and

 

(v)                       neither an Event of Default nor a Potential Event of Default have occurred.

 

The representations and warranties setout in this Clause 9 are deemed to be made (i) on the date hereof, (ii) on any date of a utilization request and of a rollover request and on the respective utilization date and rollover date and (iii) on any date a Borrower requests the issuance or extension of a Credit Instrument under Facility B by way of an Application of a Guarantee and on the date on which the Credit Instrument is issued, always by reference to the facts and circumstances then existing.

 

10.                                        COVENANTS

 

10.1                                 Negative Covenants

 

(a)                      Until full repayment of the Facilities, the Borrowers shall notundertake any of the following actions:

 

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(i)                          directly or indirectly, transfer, make use of, or provide the benefits of, any money, proceeds or services provided or received under or in connection with this Agreement or of any Credit Instrument provided and/or issued under Facility B to, or in favor of, any Restricted Person, a Restricted Country or a Restricted Activity.

 

(ii)                       sell, pledge or transfer any real estate assets serving as Security; and

 

(iii)                    change the accounting principles and/or the articles of association, unless required by law (including any changesto the year-end closing dates);

 

(b)                      Until full repayment of the Facilities, the Borrowers shall not, andshall procure that each company of the Hardinge Holdings Group will not, undertake any of the following actions:

 

(i)                          enter into any foreign exchange or financial derivatives transactions except than in the ordinary course of business (e.g. for hedging purposes). In any case, companies of the Hardinge Holdings Group shall refrain from foreign exchange or financial derivatives transactions for speculative purposes;

 

(ii)                       incur or permit to be outstanding any Financial lndebtedness (other than corporate guarantees)in respect of any other person other than the External Basket; and

 

(iii)                    grant,incur or permit to be outstanding any security interests (including pledges, transfers by way of security or issuances of corporate guarantees) in favor of third parties other than (α) securities established by operation of law and/or security interest which is customary in the market and which is established in the ordinary course of business, (β) Securities pursuant to this Agreement, (γ) security interestin the amount of up to CHF 4,000,000to secure the Financial Indebtedness defined in subparagraph (i) of the definition of the External Basket, (δ) security interest in the amount of up to TWD 58,500,000 to secure the Financial Indebtedness defined in subparagraph (v) of the definition of the External Basket, (ε) the security interest in the amount of up to RMB 21,000,000 tosecure the Financial Indebtedness defined in subparagraph (iv) of the definition of the External Basketand/or(ζ) the existing pledge of 65% of the quotas (Stammanteile) of Hardinge Holdings in favor of Manufacturers and Traders Trust Company.

 

(c)                        Until full repayment of the Facilities, the Borrowers shall not, andshall procure that each company of the Hardinge Group will not, undertake any of the following actions:

 

(i)                          executeor participate in acquisitions, mergers or joint ventureswhich exceed USD 5,000,000per year or per transaction in enterprise value of the acquired, merged or established entity;

 

(ii)                       repay quota capital in Hardinge Holdings, repay subordinated loans granted to Hardinge Holdings or acquire or repurchase any quotas or 

 

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                                     part of the quota capital in Hardinge Holdings other than a decrease of the quota capital (Kapitalreduktion) to pay “quasi dividends” (i.e. the maximum amount of such quota capital reduction being such amount which could also be distributed as dividend in a relevant year); and

 

(iii)                    change the legal structure of the Hardinge Group (except for internal restructurings which are to be pre-discussed with the Lender).

 

10.2                                 Positive Covenants

 

Until full repayment of the Facilities, the Borrowers shall, and shall procure that each other company of the Hardinge Group will:

 

(a)                       maintain the nature of the business as currently conducted and the assets of the Hardinge Group;

 

(b)                       maintain and obtain all required regulatory consents and approvals required to operate its business;

 

(c)                        ensure that all transactions areentered into at arm’s length commercial terms;

 

(d)                       ensure that all reasonably necessary measures are taken to protect the Hardinge Group’s intellectual property rights, including also know-how, as necessary for the conduct of business and business activity of the companies of the Hardinge Group;

 

(e)                        maintain adequate insurance coverage for each company of the Hardinge Group;

 

(f)                         pay all due taxes for the Hardinge Group (unless such taxes are contested in good faith);

 

(g)                        comply in all material respects with all applicable laws and regulations; and

 

(h)                       ensure that all obligations and liabilities of the Borrowers under this Agreement rank at least paripassu in right of payment with all claims of all of its unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applicable to companies in general.

 

10.3                                 Financial Covenants

 

The following financial covenants (the “Financial Covenants”) are to be complied with during the term of this Agreement and shall be confirmed in writing by Hardinge Holdings(delivering a Covenant Compliance Certificate in accordance with Clause 11.1(d)):

 

(a)                       on a quarterly basis:Economic Equity Ratio (on a consolidated basis) of the Hardinge Holdings Group):

 

The Economic Equity divided by the Total Assets shall amount to a minimum of:

 

Ratio: 35%

 

(to be confirmed based on the unauditedconsolidated annual financial statements and the unaudited consolidated quarterly financial statements of the Hardinge Holdings Group).

 

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(b)                       on a yearly basis: Economic Equity Ratio of Kellenberger (standalone):

 

The Economic Equity divided by the Total Assets shall amount to a minimum of:

 

Ratio: 35%.

 

(to be confirmed based on the audited annual financial statements of Kellenberger for the precedent financial year).

 

The Financial Covenant under (a) will be tested for the first time as of September 30, 2013.The Financial Covenant under (b) will be tested for the first time as of December 31. 2013.

 

11.                                        INFORMATION UNDERTAKINGS

 

11.1                                 Financial Information

 

Until full repayment of the Facilities, Hardinge Holdingsshall provide, and will cause the other companies of the Hardinge Holdings Group to provide, the Lender with the following financial documents:

 

(a)                       within 120 days after December 31 of each year, annual financial statements (profit and loss statements, balance sheet, cash flow statements including a comparison with the budgeted results, and a brief explanation of deviations from budget as well as a comparison with the previous year results for the same period) (i) of the Hardinge Group (audited), on a consolidated basis including the report by the independent auditor and(ii) of the Hardinge Holdings Group on a consolidated basis (internal-unaudited);

 

(b)                       within 150 days after December 31 of each year, annual financial statements (profit and loss statements, balance sheet, cash flow statements including a comparison with the budgeted results, and a brief explanation of deviations from budget as well as a comparison with the previous year results for the same period)of the Borrowers (audited) on a stand-alone basis including the report by the independent auditor;

 

(c)                       within 45 days after the end of each financial quarter of each year (but not after December 31), (i)financial statements (profit and loss statements, balance sheet and cash flow statements for the quarter) for the Hardinge Holdings Group (on a consolidated basis) and for Kellenberger (on a stand-alone basis), including a comparison with the budgeted results, and a brief explanation of deviations from budget as well as a comparison with the previous year results for the same period and (ii) financial statements (balance sheet, income statement, bookings and actual backlog), the first time as of June 30, 2013;

 

(d)                      within 45 days after the end of each financial quarter of each year (but not after December 31) and within 120 days after December 31 of each year, a covenant compliance certificate showing the detailed calculation of the Financial Covenant set forth in Clause 10.3(a), validly signed by members of senior management Hardinge Holdings (in accordance with the signatory power registered in the commercial register) and by the Corporate Controller of the 

 

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Hardinge Group, confirming that the Financial Covenant set forth in Clause 10.3(a)has been complied with(“Covenant Compliance Certificate”).

 

The Covenant Compliance Certificate to be provided within 120 days after December 31 shall also show the detailed calculation of the Financial Covenant set forth in Clause 10.3(b) and include the confirmation that the Financial Covenant set forth in Clause 10.3(b) has been complied with. The Covenant Compliance Certificates to be provided within 45 days after June 30 and within 120 days after December 31 shall additionally show the detailed calculation of “Net Senior Debt divided by the EBITDA” (as required for the determination of the applicable margin in accordance with Clause 7.1.12) and include a confirmation that the calculation of “Net Senior Debt divided by the EBITDA” has been made correctly and in accordance with the terms set forth in this Agreement.

 

(e)                        no later than on December 31 of each year, the annual budget of the Hardinge Holdings Group and of the Hardinge Group for the following year, including information on business strategy, first as per December 31, 2013;

 

(f)                         within 45 days after the end of the financial quarter of each year (but not after December 31) or within 120 days after the end of each financial year, an update on (i) all loans granted by companies of the Hardinge Holdings Group to other companies of the Hardinge Group and (ii) the external bank debt situation of Hardinge Holdings Group, showing the lenders, the borrowers, the limits made available to such borrowers and the amounts which were utilised and unutilised, as well as any security granted and maturity profile (first as of June 30 2013).

 

11.2                                 Further Information

 

The Borrowers shall immediately notify the Lender of the occurrence of:

 

(a)                       extraordinary business developments regarding the Hardinge Group or any company of the Hardinge Group (especially if they might have a material impact on the companies of Hardinge Group or cause an Event of Default);

 

(b)                       any Event of Default and/or of any Potential Event of Default;

 

(c)                        any other circumstances or events which constitute or may reasonably be expected to constitute a Material Adverse Change;

 

(d)                       any amendments and changes in any finance documentation regarding financing agreements with Manufacturers and Traders Trust Company; and

 

(e)                        additional information related to the business activities of the Hardinge Group upon reasonable request of the Lender.

 

12.                                        EVENTS OF DEFAULT AND RESULTING CONSEQUENCES

 

12.1                                 Events of Default

 

Each of the following events or circumstances constitutes an “Event of Default”:

 

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(a)                       a Borrower does not pay on the due date any amount payable in accordance with a Finance Document at the place at, and in the currency in, which it is expressed to be payable, unless such delay in payment is due to a technical error and is remedied within 3 Business Days;

 

(b)                       any representation, warranty or statement made or deemed to be made or repeated by the Borrowersin any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made or repeated,unless such breach of representation or warranty is, in the reasonable opinion of the Lender, capable of remedy and is remedied within 10 Business Days;

 

(c)                        the Financial Covenants or any of the other obligations and undertakings set out in this Agreement or any other Finance Document are not complied with,unless such non-compliance is, in the reasonable opinion of the Lender, capable of remedy and is remedied within 10 Business Days;

 

(d)                       any Financial Indebtedness of any company of the Hardinge Holdings Group is not paid when due or any Financial Indebtedness of any company of the Hardinge Holdings Group is declared to be or otherwise becomes due and payable prior to its specified maturity due to a default (however described). No Event of Default will occur if the aggregate amount of the relevant Financial Indebtedness is less than 1,000,000;

 

(e)                        (i) a company of the Hardinge Group admits inability to pay its debts as they fall due or suspends making payments or by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its Financial Indebtedness (including for the purpose of this Clause any financial indebtedness as described in subparagraph (i) to (vii) of the definition of Financial Indebtedness incurred by each company of the Hardinge Group) or (ii) the value of the assets of a company of the Hardinge Group is less than its liabilities;

 

(f)                         any corporate action, legal proceedings or other procedure or step is taken with regard to a company of the Hardinge Group in relation to (i) the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise), (ii) a composition, compromise, assignment or arrangement with any creditor, (iii) the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager or other similar officer, (iv) the enforcement of any security interest granted by such company of the Hardinge Group or (v) or any analogous procedure or step is taken in any jurisdiction; except in each case for solvent intra-group restructurings which shall be pre-discussed with Lender;

 

(g)                        a company of the Hardinge Group ceases or suspends, or threatens or announces that it will cease or suspend,any or all or a substantial part of its business;except in each case for solvent intra-group restructurings which shall be pre-discussed with Lender;

 

(h)                       in the reasonable opinion of the Lender, a Material Adverse Change has occurred;

 

27

 

(i)                           the independent auditors of any of the companies of the Hardinge Group make any material reservations and/or qualifications to the audited financial statements of the Hardinge Group or in respect of any stand-alone financial statements of any company of the Hardinge Group; and/or

 

(j)                          a portion of this Agreement or any other Finance Document becomes void, invalid or unenforceable or a company of the Hardinge Group repudiates or rescinds a Finance Document or evidences an intention to repudiate or rescind a Finance Document.

 

12.2                                 Consequences

 

Upon the occurrence of an Event of Default or of an event which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of the foregoing) constitute an Event of Default or if an Event of Default is imminent, the Lender shall become immediately entitled (but not obliged) by giving notice to Hardinge Holdings to:

 

(a)                       cancel the Facilities (in whole or in part) with immediate effect;

 

(b)                      declare that all amounts outstanding under the Facilities (including interest and commissions) are immediately due and payable;

 

(c)                       require that all outstanding Credit Instruments and outstanding Derivative Transactions have to be secured by cash collateral in accordance with Clause 13; and/or

 

(d)                       enforce its rights in respect of the Securities and the Guarantee.

 

13.                                        CASH COLLATERAL

 

If a Borrower has to provide cash collateral in accordance with the terms of this Agreement as security for outstanding Credit Instruments and/or outstanding Derivative Transactions, the relevant Borrower is obliged to pay the total countervalue of the outstanding Credit Instruments and/or the Derivative Amount of the outstanding Derivative Transactions in the relevant currency and amount into bank accounts designated by the Lender (including bank accounts newly opened for this purpose). Upon payment into these accounts, the corresponding account credit shall be deemed to have been pledged to the Lender by the relevant Borrower as collateral against any claim of the Lender based on the outstanding Credit Instruments or any claim of the Lender based on the outstanding Derivative Transactions.

 

14.                                        SECURITIES AND GUARANTEE

 

In order to secure the Secured Obligations,Kellenberger shall provide the following securities pursuant to the terms of one or more separate collateral agreement(s) (the “Security Agreement”):

 

(a)                       security transfer of mortgage notes in the total amount of CHF 6,175,000 (sum of 6 mortgage notes ranked from no 1 to 3, on the building at Heiligkreuzstrasse 28, 9008 St. Gallen, land register St. Fiden (SG), land register No. 342); and

 

28

 

(b)                       security transfer of mortgage notes in the total amount of CHF 3,000,000 (CHF 3’000’00.00 bearer mortgage note (Inhaberschuldbrief), first ranking bearer mortgage note, no prior ranking, on the building at Gärtliszälg, 8590 Romanshorn, land register Romanshorn, land register No. 1668)

 

(the “Securities”).

 

The Security Agreement(s) shall be executed concurrently with this Agreement.

 

In addition to the Securities, Hardinge Holdings shall provide a guarantee satisfactory to the Lender (the “Guarantee”), substantially in the form as set forth in ScheduleD, to secure any and all obligations of the Borrowers under Facility B, including interest payments, commissions and other payment obligations incurring in connection with Facility B.

 

15.                                        LIMITATION

 

If and to the extent the Securities are enforced and if and to the extent the using of the proceeds from the enforcement of the Securities would constitute a repayment of capital (Einlagerückgewähr/Kapitalrückzahlung), a violation of the legally protected reserves (gesetzlichgeschützteReserven) or the payment of a (constructive) dividend (Gewinnausschüttung) under Swiss corporate law, the proceeds from the enforcement of the Securities shall be limited to the maximum amount of Kellenberger’s freely disposable shareholder equity at the time of such enforcement (the “Maximum Amount”), provided that such limitation is required under the applicable law at that time and provided further that such limitation shall not releaseKellenberger from its obligations in excess of the Maximum Amount, but merely postpone the performance date of those obligations until such time or times as performance is again permitted under then applicable law. This Maximum Amount of freely disposable shareholder equity shall be determined in accordance with Swiss law and applicable Swiss accounting principles, and, if and to the extent required by applicable Swiss law, shall be confirmed by the auditors of Kellenbergeron the basis of an interim audited balance sheet as of that time.

 

In case of the enforcement of the Securities granted by Kellenberger under this Agreement, Kellenberger shall:

 

(a)                       procure that such enforcement proceeds can be used to discharge Secured Obligations without deduction of Swiss withholding tax; and

 

(b)                       in the case of a deduction of Swiss withholding tax, use its best efforts to ensure that any person, which is entitled to a full or partial refund of the Swiss withholding tax deducted from such enforcement proceeds, will, as soon as possible after such deduction,

 

(i)                           request a refund of the Swiss withholding tax under applicable law (including any tax treaties); and

 

(ii)                        pay to the Lender upon receipt any amount so refunded.

 

Kellenberger shall take and cause to be taken any action, including the passing of any shareholders’ resolutions to approve the use of the enforcement proceeds, 

 

29

 

which may be required as a matter of Swiss mandatory law in force at the time of the enforcement of the Securities in order to allow a prompt use of the enforcement proceeds.

 

16.                                        COMMISSIONS, FEESAND EXPENSES

 

16.1                                 Commissions for Credit Instruments

 

The relevant Borrower shall pay to the Lender customary bank commissions for Credit Instruments issued under Facility B as determined by the Lender reflecting the duration, type and amount of the Credit Instrument. Such commission shall be payable in advance at least for one quarter and shall amount to a minimum of CHF 300 per Credit Instrument and calendar quarter.

 

16.2                                 Commitment Fee for Facility B

 

Hardinge Holdings shall pay to the Lender a commitment fee in the amount of 30% of the applicable margin for Facility B on the average unutilised amount of Facility B (whereas any amount utilized to cover the margin requirements for Derivative Transactions shall not be taken into account for the calculation of the commitment fee). Such commitment fee shall be payable quarterly in arrears.

 

16.3                                 Arrangement Fee

 

Hardinge Holdingsshall pay to the Lender a non-recurring arrangement fee of 1.25% of the total amount of Facility B. The arrangement fee will become payable upon signing of this Agreement.

 

16.4                                 Transaction and Amendment Expenses

 

Hardinge Holdingsshall promptly on demand pay to the Lender the amount of all reasonable professional fees (including accountants, outside legal counsel and any notary fees) and out of pocket expenses reasonably incurred by the Lender in connection with the Facilities, the Finance Documents or with the amendments of the Finance Documents.

 

16.5                                 Enforcement Expenses

 

Hardinge Holdingsshall, within 3 Business Daysfrom the respective demand, pay to the Lender the amount of all costs and expenses (including legal fees) reasonably incurred by the Lender in connection with the enforcement of or the preservation of any rights under any Finance Document.

 

17.                                        INCREASED COSTS

 

lf, by reason of (i) any change in law or in its interpretation or administration and/or (ii) compliance with any new or adjusted capital adequacy requirement or any other new or adjusted request from, or new or adjusted requirement of, any central bank or other financial, monetary or other authority:

 

(a)                       the Lender is unable to obtain the rate of return on its capital which it would have been able to obtain but for its entering into or assuming or maintaining a commitment or performing its obligations under this Agreement;

 

30

 

(b)                       the Lender or any of its affiliates incurs a cost as a result of its entering into or assuming or maintaining a commitment or performing its obligations under this Agreement; or

 

(c)                        there is any increase in the cost to the Lender or any of its affiliates of funding or maintaining the Facilities;

 

then the Borrowers shall, from time to time on demand of the Lender, promptly pay to the Lender amounts sufficient to indemnify the Lender, or to enable the Lender to indemnify its affiliate, against, as the case may be, (i) such reduction in the rate of return of capital, (ii) such cost or (iii) such increased cost.

 

18.                                        TAX GROSS-UP AND TAX INDEMNITY

 

Each Borrower shall make all payments to be made by it under the Finance Documents (including, for the avoidance of doubt, all interest payments as well as all fee payments and the amounts to be paid under the Guarantee or the Security) without any tax deduction, unless a tax deduction is required by law. The Borrowersshall promptly upon becoming aware that it must make a tax deduction (or that there is any change in the rate or the basis of a tax deduction) notify the Lender accordingly. lf a tax deduction is required by law to be made by a Borrower, the amount of the payment due from such Borrower shall be increased to an amount which (after making any tax deduction) results in a payment to the Lender of an amount equal to the payment which would have been due had no tax deduction been required.

 

The Borrowers shall, within 3 Business Daysfrom the respective demand, indemnify the Lender against the loss, liability or cost that the Lender will suffer or has suffered, directly or indirectly, in the amount of any taxes so deducted, withheld or accounted for and paid by the Lender, irrespective of whether such taxes were correctly assessed or demanded.

 

19.                                        SET-OFF

 

19.1                                 By the Borrower

 

The Borrowershave no right to set-off any of their obligations under the Finance Documents against any obligations of the Lender towards any of the Borrowers and all payments to be made by the Borrowers shall be made without set-off.

 

19.2                                 By the Lender

 

The Lender may setoff any claims it has against the Borrowers under the Finance Documents against any claim any of the Borrowersmay have against the Lender, irrespective of the due date of such claims. If the claims are in different currencies, the Lender may convert either claim at a market rate of exchange in its usual course of business for the purpose of the set-off.

 

20.                                        THIRD PARTY TRANSFERS

 

The Borrowers shall not be entitled to assign or transfer all or any of its rights, benefits and obligations under this Agreement or any other Finance Document.

 

31

 

21.                                        ADDITIONAL BORROWERS

 

Subject to compliance with the KYC-requirements of the Lender, Jones & Shipman Hardinge Ltd and/or Forkardt Deutschland GmbH may become Additional Borrowers under this Agreement within 30 days after this Agreement is executed.

 

Jones & Shipman Hardinge Ltd and/or Forkardt Deutschland GmbH shall become Additional Borrowers if:

 

(a)                       Hardinge Holdings and the Lender have agreed on a new Limit Delegation substantially in the form as attached hereto as Schedule A, setting forth new Individual Utilization Limits, which shall replace the Limit Delegation being in place at such point in time;

 

(b)                       at such point in time, Hardinge Holdings holds directly or indirectly all of the capital stock and of the voting rights in such Additional Borrower;

 

(c)                        Hardinge Holdings delivers to the Lender a duly completed and executed Accession Letter;

 

(d)                       Hardinge Holdings confirms that neither an Event of Default nor a Potential Event of Default have occurred or would occur as a result of such companies becoming Additional Borrowers; and

 

(e)                        the Lender has received all of the documents and other evidence listed in Part II of Schedule C in relation to such companies, each in form and substance satisfactory to the Lender.

 

22.                                        GENERAL PROVISIONS

 

22.1                                Notices

 

(a)                       All notices or other communications to be given under or in connection with this Agreement shall be made in writing and in English, and shall be delivered by hand, by registered mail (return receipt requested), by an internationally recognised courier or by telefax or e-mail to the following addresses:

 

if to the Borrowers:                                         to the addresses set forth in Schedule H; and

 

if to the Lender:                                                           Credit Suisse AG

                                                                                                                                                  SGLS 14

                                                                                                                                                  Giesshübelstrasse 30

                                                                                                                                                  8070 Zurich

                                                                                                                                                  Telefax: +41 44 333 40 41

                                                                                                                                                  E-mail:deborah.vogt@credit-suisse.com

 

32

 

or any substitute address or fax number as a party may notify to the other parties in accordance with the above by not less than 5 Business Days’ notice.

 

(b)                       All notices, communications, documents or other information shall be effective only if received by the party to whom it is addressed.

 

22.2                                 Electronic Communication

 

(a)                       The Borrowersagree that the Lender is authorised to send information to any e-mail address that the Borrowershave previously given to the Lender in writing or ofwhich the Lender is aware from e-mail communication with the Borrowers, its employees and/or advisers.

 

(b)                       The Borrowersauthorise the Lender to communicate by e-mail with third parties, which are involved in the credit relations under this Agreement (including any prospective transferees of the Lender). The Lender is entitled to assume that all the orders and instructions e-mailed by the Borrowers, or any such third parties, are from an authorised individual, irrespective of the existing signatory rights in accordance with the commercial register or the specimen signature.

 

(c)                        The parties are aware of the following risks of exchanging information electronically:

 

(i)                 unencrypted information is transported over an open, publicly accessiblenetwork and can, in principle, be viewed by others, thereby allowing conclusions to be drawn, amongst other things, about an existing banking relationship;

 

(ii)              information can potentially be changed by a third party;

 

(iii)           the identity of the sender (e-mail address) can be forged or otherwise manipulated; and

 

(iv)          the exchange of information can be delayed or interrupted due to transmission errors, technical faults, interruptions, malfunctions, illegal interventions, network overload, the malicious blocking of electronic access by third parties,or other shortcomings on the part of the network provider. Time-critical orders and instructions may not be processed in due time. Therefore, the Borrowersare advised to use another suitable means of communication for these types of orders and instructions.

 

22.3                                 Entire Agreement

 

This Agreement, including the Schedules and any other agreements and documents referred to herein, constitutes the entire agreement and understanding among the parties with respect to the subject matter hereof, and shall supersede all prior oral and written agreements or understandings of the parties relating hereto. All references to this Agreementshall be deemed to include the Schedules hereto.

 

33

 

22.4                                 General Terms and Conditions

 

The General Terms and Conditions of the Lender as amended and replaced from time to time shall apply to the Finance Documents, provided that in case of any conflict, the terms of the Finance Documents shall prevail.

 

22.5                                 Amendments

 

This Agreement may only be amended by a written instrument signed by all parties.

 

22.6                                 No Waiver and No Remedies Exclusive

 

No failure to exercise, or any delay in exercising, any right or remedy under this Agreementshall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

 

22.7                                 Severability

 

Should any part or provision of this Agreement be held to be invalid or unenforceable by any competent arbitral tribunal, court, governmental or administrative authority having jurisdiction, the other provisions of this Agreement shall nonetheless remain valid. In this case, the parties shall negotiate in good faith a substitute provision that best reflects the economic intentions of the parties without being unenforceable, and shall execute all agreements and documents required in this connection.

 

22.8                                 Waiver of Banking Secrecy and Data Protection

 

The Borrowers herewith release the Lender from any confidentiality obligations and anyfurther restrictions based on the Swiss banking secrecy or any data protection legislationand any other confidentiality obligations with regard to any data and/or information directly or indirectly relating to the credit relations described in this Agreement, to the extent asrequired or useful for the execution, performance, funding administration and enforcement of the Finance Documents, the Facilities granted hereunder and the Securities and/or for due exercise of the respectiverights or fulfillment of the respective obligations by the Lender and expressly approve any transfer of such data and/or information abroad.

 

22.9                                 Credit Risk Hedging

 

In order for the Lender to directly or indirectly insure or hedge credit risk arising from this Agreement, the Lender may, at any time, disclose data and information associated with this Agreement and the credit risk evaluation required for buying credit protection or credit insurance from a third party. Such hedging and insurance transactions do not entail a transfer of all or any part of this Agreement or its servicing to a third party.

 

Data and information may be disclosed to third parties in Switzerland or abroad, namely to hedging or insurance providers, such as banks, financial institutions, credit insurers, hedge funds or to other entities offering credit protection. In the context of such hedging transactions data and information may also be disclosed to

 

34

 

other parties involved within the scope of such hedging or insurance transactions, such as rating agencies.

 

These third parties shall be obliged to keep such transferred data and information confidential and to handle it securely which is subject to the local legal and regulatory provisions governing secrecy and data protection obligations.

 

22.10                          Equivalent Currency

 

Any amount in CHF for which the equivalent in other currencies is mentioned in thisAgreement and the Schedules hereto (except where specifically provided otherwise therein) shall be determined, if required, by applying the Lender’s exchange rate of the relevantdate of the determination of such amount.

 

23.                                        GOVERNING LAW AND JURISDICTION

 

23.1                                 Governing Law

 

This Agreement and the rights, benefits and obligations of the parties hereunder shall be governed by and construed in accordance with the substantive laws of Switzerland andwith the exception of conflict of law rules.

 

23.2                                 Jurisdiction

 

Exclusive place of jurisdiction for the settlement of any dispute in connection with this Agreement shall be Zurich, venue being Zurich 1.

 

The Lender, however, shall be entitled to initiate legal proceedings before any other competent court.

 

The Borrowers:

 

	
Hardinge Holdings GmbH  
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Peter Hürsch
    	
 
    	
 
    
	
Peter Hürsch
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
L. Kellenberger & Co AG
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Peter Hürsch
    	
 
    	
/s/ Bruno Schmucki
    
	
Peter Hürsch
    	
 
    	
Bruno Schmucki
    

 

35

 

	
The Lender
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Credit Suisse AG
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Reto Brägger  
    	
 
    	
/s/ Christian Kunz  
    
	
Reto Brägger
    	
 
    	
Christian Kunz
    

 

36

 

SCHEDULE A: Limit Delegation

 

Reference is made to the Credit Facilities Agreement between Credit Suisse AG as Lender and Hardinge Holdings GmbH and L. Kellenberger & Co AG as Borrowers dated July 12, 2013(the “Credit Facilities Agreement”). Terms defined in the Credit Facilities Agreement have the same meaning in this Limit Delegation unless given a different meaning in this Limit Delegation.

 

1.                            Hardinge Holdings GmbH and Credit Suisse AG herewith agree to make the following Individual Utilization Limits available to the following Borrowers:

 

	
 
    	
 
    	
Maximum Utilization Limits (in CHF)
    	
 
    	
Individual Utilization Limit (in CHF)
    	
 
    
	
Facility Borrower
    	
 
    	
Total Amount
    	
 
    	
Sublimit Cash
    	
 
    	
Total Amount
    	
 
    	
Sublimit Cash
   (fixed term 
   advances and
   current account
   overdrafts)
    	
 
    
	
Hardings Holdings GmbH  
    	
 
    	
18’000’000
    	
 
    	
8’000’000
    	
 
    	
0
    	
 
    	
0
    	
 
    
	
L. Kellenberger &   Co AG
    	
 
    	
18’000’000
    	
 
    	
8’000’000
    	
 
    	
18’000’000
    	
 
    	
8’000’000
    	
 
    
	
Aggregate   of Allocated Limits
    	
 
    	
n.   a.
    	
 
    	
n.   a.
    	
 
    	
18’000’000
    	
 
    	
8’000’000
    	
 
    

 

[2.                  The effective date is: [   ]](1)

 

3.                      Clause 23 (Governing Law and Jurisdiction) of the Credit Facilities Agreement shall apply to this Limit Delegation mutatis mutandis.

 

[4.                  This Limit Delegation replaces [the previous one dated of XX.XX.XXXX].](2)

 

 

	
Yours   faithfully,
    	
 
    
	
 
    	
 
    
	
Credit   Suisse AG
    	
Hardinge   Holdings GmbH
    

 

(1) Only for future Limit Delegations.

(2) Only for future Limit Delegations.

 

37

 

SCHEDULE B: Form of Utilization/Rollover Request

 

To:                                      Credit Suisse AG
                                                           SGLS 14
                                                           Giesshübelstrasse 30
                                                           CH-8070 Zurich
                                                           E-Mail:deborah.vogt@credit-suisse.com

 

From:                        [Borrower]

 

[Place, Date]

 

Credit Facilities Agreement dated July 12, 2013 - [Utilization / Rollover] Request

 

Ladies and Gentlemen,

 

We refer to the Credit Facilities Agreement between Credit Suisse AG as Lender and Hardinge Holdings GmbH and L. Kellenberger & Co AG as Borrowers dated July 12, 2013(the “Credit Facilities Agreement”). Terms defined in the Credit Facilities Agreement have the same meaning in this [utilization/rollover] request unless given a different meaning in this [utilization/rollover] request. This is an irrevocable [utilization/rollover] request in accordance with Clause 5 of the Credit Facilities Agreement.

 

We wish to [utilise a fixed term advance / roll over a maturing fixedterm advance] under the Facilities on the following terms:

 

1.                            FacilityB

 

2.                            Amount: [·]

 

3.                            Facility Currency: [·]

 

4.                            [Utilization / Rollover] Date: [·]

 

5.                            Interest Period: [·]

 

6.                            Payment should be made to: [·]

 

We confirm that:

 

(a)                       the representations and warranties made in Clause 9 of the Credit Facilities Agreement stipulated as being made or repeated on the date of this [utilization/rollover] request and on the [utilization/rollover] date are true and correct with respect to the facts and circumstances existing on any such date; and

 

(b)                       neitheran Event of Defaultnor a Potential Event of Defaulthave occurred.

 

Yours faithfully,

 

[   ]

 

	
 
    	
 
    
	
[Authorised Signatory]
    	
 
    

 

38

 

SCHEDULEC:Initial Conditions Precedent

 

Part I

 

(a)                       Receipt of the Agreement (duly executed) and all pertaining documents relating to the Facilities and the Securities, including all necessary corporate authorizations for the entry into said documents.

 

(b)                       Valid and binding completion of all Securities in favor of the Lender, including all necessary authorizations and resolutions of the respective corporate bodies.

 

(c)                       Receipt of the duly executed Guarantee.

 

(d)                       Receipt of a copy of the constitutional documents of each Borrower.

 

(e)                        Receipt of a confirmation of Hardinge Inc. (duly signed) that neither an Event of Default nor a Potential Event of Default haveoccurred.

 

(f)                         Receipt of a list of any material pending or immediately threatened litigation or other proceedings against a company of Hardinge Group (in case of civil actions only amounts exceeding USD 1.0 million per dispute shall be considered).

 

(g)                        Receipt of a current structure chart of the Hardinge Group.

 

(h)                       Receipt of an up-to-date overview of all Financial Indebtedness (including for the purpose of this Clause any financial indebtedness as described in subparagraph (i) to (vii) of the definition of Financial Indebtedness incurred by each company of the Hardinge Group) of all the companies of the Hardinge Group(including borrower, lender, limit, utilization, security interest granted, maturity, financial covenants (if any)).

 

(i)                           Receipt of a copy of the quota pledge agreement of Hardinge Holdings with Manufacturers and Traders Trust Company.

 

(j)                          Receipt of all KYC-documents for each Borrower in a form satisfactory to the Lender.

 

(k)                       Any other document, authorization, or opinion the Lender may (reasonably) request.

 

Part II

 

(a)                       An Accession Letter duly executed by the Additional Borrower and Hardinge Holdings.

 

(b)                       Receipt of legalized copies of the constitutional documents of each Additional Borrower (extract from the Commercial Register and the current articles of association or equivalent documents in the respective jurisdictions), as well as all necessary corporate authorizations for the entry into said documents (including, to the extent necessary or if required by the Lender, an authorization authorizing a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices to be signed and/or dispatched by it under or in connection with the Finance Documents).

 

(c)                        Receipt of all KYC-documents for the Additional Borrower in a form satisfactory to the Lender.

 

(d)                       Any other document, authorization, or opinion (including any legal opinions) the Lender may request.

 

39

 

SCHEDULE D: Form of Guarantee

 

Hardinge Holdings GmbH
 Heiligkreuzstrasse 28
 9009 St. Gallen
 Switzerland

 

Credit Suisse AG
 Paradeplatz 8
 8001 Zürich
 Switzerland

 

First Demand Guarantee (hereinafter “Guarantee”)

 

Dear Sirs

 

In consideration of Facility B (the “Facility”) in the amount of CHF 18,000,000granted to the borrowers under the Credit Facilities Agreement between Credit Suisse AG as lender and Hardinge Holdings GmbH and L. Kellenberger & Co AG as borrowers (the “Borrowers”) dated July 12, 2013(the “Credit FacilitiesAgreement”) this Guarantee is being issued by the undersigned, Hardinge HoldingsGmbH (the “Guarantor”), in favor of Credit Suisse AG. Terms defined in the Credit Facilities Agreement have the same meaning in this Guarantee unless given a different meaning in this Guarantee.

 

This Guarantee shall guarantee any and all obligations of the Borrowersand the Additional Borrowers (as defined in the Credit Facilities Agreement) under or in connection with the Facility (including but not limited to principal, interest, Breakage Costs and commissions and costs), including, if applicable, any obligation to provide cash cover in connection with outstanding Credit Instruments (as defined in the Credit Facilities Agreement) and outstanding Derivative Transactions (as defined in the Facility Agreement).

 

The Guarantor hereby unconditionally and irrevocably undertakes in the sense of article 111 of the Swiss Code of Obligations to pay to Credit Suisse AG upon first demand any amount requested by Credit Suisse AG

 

up to a maximum amount of CHF 20,000,000

 

waiving all rights of objection and defence, irrespective of the validity and effects of the Credit Facilities Agreement (including interest, fees, commissions and expenses) upon receipt by the Guarantor of the written demand from Credit Suisse AG containing its confirmation that the requested payment is due and has remained unpaid by any Borrower or Additional Borrower.

 

Such demand shall be sent by mail or transmitted by fax.

 

The Guarantor shall pay all taxes (including stamp taxes and registration fees) imposed with respect to this Guarantee, and the obligation of the Guarantor to pay any such amounts shall survive the discharge of the other obligations of the Guarantor hereunder.

 

This Guarantee constitutes a continuing obligation and shall expire upon full payment by the Borrowers of all amounts payable under or in connection with the Facility.

 

40

 

This Guarantee shall be governed by and construed in accordance with substantive Swiss law (i.e. excluding conflict of laws rules and regulations). Exclusive place of jurisdiction for the settlement of any dispute in connection with this Guarantee shall be Zurich, venue being Zurich 1.

 

Credit Suisse AG, however, shall be entitled to initiate legal proceedings before any other competent court.

 

 

	
/s/ Peter Hürsch
    	
 
    	
/s/ Bruno Schmucki
    
	
Peter Hürsch
    	
 
    	
Bruno Schmucki
    

 

41

 

SCHEDULE E: Applicable Margins (Pricing Grid)

 

	
Net Senior Debt / EBITDA
    	
 
    	
Applicable Margin
   Facility B
    	
 
    
	
>                           2.50 x < 3.00 x
    	
 
    	
3.00% p.a.
    	
 
    
	
>                           2.00 x < 2.50 x
    	
 
    	
2.25% p.a.
    	
 
    
	
>                           1.50 x < 2.00 x
    	
 
    	
1.75% p.a.
    	
 
    
	
>                           1.00 x < 1.50 x
    	
 
    	
1.25% p.a.
    	
 
    
	
<                           1.00 x
    	
 
    	
1.00% p.a.
    	
 
    

 

42

 

SCHEDULE F: Form of Covenant Compliance Certificate

 

Credit Suisse AG
 SGLS 14
 Giesshübelstrasse 30
 CH-8070 Zurich
 E-Mail: deborah.vogt@credit-suisse.com

 

From:                        Hardinge Holdings GmbH

 

[Place, Date]

 

Credit Facilities Agreement dated July 12, 2013 - Covenant Compliance Certificate

 

Ladies and Gentlemen,

 

We refer to the Credit Facilities Agreement between Credit Suisse AG asLender and Hardinge Holdings GmbH and L. Kellenberger & Co AG as Borrowers dated July 12, 2013(the “Credit Facilities Agreement”). Terms defined in the Credit Facilities Agreement have the same meaning in this Covenant Compliance Certificate unless given a different meaning in this Covenant Compliance Certificate.

 

With reference to Clause 11.1(d) of the Credit Facilities Agreement the undersigned herewith confirm:

 

1.                                               the following Financial Covenants:

(a)                      Economic Equity Ratio (calculated on a consolidated basis of Hardinge Holdings Group):

[·]

(b)                      [Economic Equity Ratio on Kellenberger (calculated on a standalone basis):

[·]](3)

2.                                               [Net Senior Debt/EBITDA (calculated on a consolidated basis of Hardinge Holdings Group):

[·]](4)

3.                                               the Borrower is in compliance with the Financial Covenants given under the FinanceDocuments;

4.                                               neither an Event of Defaultnor a Potential Event of Defaulthave occurred; and

5.                                               the truth and correctness of the information and the correctness of the calculation of the financial key figures contained in the attachment hereto.

 

For Hardinge Holdings GmbH

 

(3) Only to be provided annually

(4) Only to be provided semi-annually.

 

43

 

SCHEDULE G: Form of Accession Letter

 

To:                                      Credit Suisse AG

 

From:                        [Subsidiary] and Hardinge Holdings GmbH

 

Dated:                    [date]

 

Dear Sirs

 

We refer to the Credit Facilities Agreement between Credit Suisse AG as Lender and Hardinge Holdings GmbH and L. Kellenberger & Co AG as Borrowers dated July 12, 2013(the “Agreement”).

 

1.                                This is an Accession Letter. Terms defined in the Agreement have the same meaning in this Accession Letter unless given a different meaning in this Accession Letter.

 

2.                                [Subsidiary] agrees to become an Additional Borrower and to be bound by the terms of the Agreement as an Additional Borrower pursuant to Clause 21 of the Agreement.  [Subsidiary] is a company duly incorporated under the laws of [name of relevant jurisdiction].

 

3.                                Hardinge Holdings confirms that neither anEvent of Default nor a Potential Event of Default have occurred or would occur as a result of [Subsidiary] becoming an Additional Borrower and that the Additional Borrower is a wholly owned Subsidiary of Hardinge Holdings.

 

4.                                This Accession Letter shall be governed by and construed in accordance with substantive Swiss law (i.e. excluding conflict of laws rules and regulations). Exclusive place of jurisdiction for the settlement of any dispute in connection with this Accession Letter shall be Zurich, venue being Zurich 1.

 

Credit Suisse AG, however, shall be entitled to initiate legal proceedings before any other competent court.

 

	
Hardinge Holdings   GmbH
    	
[Subsidiary]
    

 

44

 

SCHEDULE H: ADDRESSES

 

Borrowers:

 

Hardinge Holdings GmbH
 c/o L. Kellenberger & Co. AG
 Attn: Peter Hürsch
 Heiligkreuzstrasse 28
 9009 St. Gallen
 Switzerland
 Telefax: +41 71 242 92 22  
 E-Mail: Peter.Huersch@kellenberger.net

 

L. Kellenberger & Co AG 
 Attn: Peter Hürsch
 Heiligkreuzstrasse 28
 9009 St. Gallen
 Switzerland
 Telefax: +41 71 242 92 22
 E-Mail: Peter.Huersch@kellenberger.net

 

Upon Accession to the Credit Facilities Agreement as Additional Borrowers:

 

Jones & Shipman Hardinge Ltd
 Attn: Adam Maher
 Murrayfield Road
 Leicester LE3 1UW 
 England
 Telefax: +44 (0)116 2013002
 E-Mail: AMaher@hardinge.co.uk

 

Forkardt Deutschland GmbH
 to the address provided to the Lender upon accession.

 

In each case with a copy to (for convenience purposes):

 

Hardinge Inc.
 Attn: Douglas J. Malone
 One Hardinge Drive
 Elmira, New York 14902
 United States
 E-Mail: doug.malone@hardinge.com

 

45

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