Document:

ex10-40.htm

EXHIBIT 10.40

 

CADIZ INC.,

 

 

as Issuer

 

 

and

 

 

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

 

 

as Trustee

 

 

Indenture

 

 

Dated as of March 5, 2013

 

 

7.00% Convertible Senior Notes due 2018

  

  

  

 

TABLE OF CONTENTS

 

Page

 

ARTICLE 1

 

 

 

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

	
  

	
Section 1.01

	
Definitions 

	
1

	
  

	
Section 1.02

	
Other Definitions 

	
9

	
  

	
Section 1.03

	
Rules of Construction 

	
10

	
  

	
Section 1.04

	
Acts of Holders 

	
11

 

ARTICLE 2

 

THE NOTES

 

	
  

	
Section 2.01

	
Form, Dating and Denominations; Legends 

	
11

	
  

	
Section 2.02

	
Execution and Authentication 

	
12

	
  

	
Section 2.03

	
Registrar, Paying Agent and Conversion Agent 

	
13

	
  

	
Section 2.04

	
Paying Agent to Hold Money in Trust 

	
14

	
  

	
Section 2.05

	
Noteholder Lists 

	
14

	
  

	
Section 2.06

	
Transfer and Exchange 

	
14

	
  

	
Section 2.07

	
Replacement Notes 

	
15

	
  

	
Section 2.08

	
Outstanding Notes 

	
16

	
  

	
Section 2.09

	
Treasury Notes 

	
16

	
  

	
Section 2.10

	
Temporary Notes 

	
16

	
  

	
Section 2.11

	
Cancellation 

	
16

	
  

	
Section 2.12

	
CUSIP Numbers 7

	
17

	
  

	
Section 2.13

	
Additional Transfer and Exchange Requirements 

	
17

	
  

	
Section 2.14

	
Additional Notes 

	
20

	
  

	
Section 2.15

	
Accretion 

	
21

	
  

	
Section 2.16

	
Calculation of Original Issue Discount 

	
21

 

ARTICLE 3

 

 

REPURCHASES

 

	
  

	
Section 3.01

	
Repurchase or Conversion Upon a Change in Control 

	
22

	
  

	
Section 3.02

	
Effect of Repurchase Notice 

	
25

	
  

	
Section 3.03

	
Deposit of Fundamental Change Repurchase Price 

	
25

	
  

	
Section 3.04

	
Notes Repurchased in Part 

	
26

	
  

	
Section 3.05

	
Covenant to Comply with Securities Laws upon Repurchase of Notes 

	
26

 

ARTICLE 4

 

COVENANTS

 

	
  

	
Section 4.01

	
Payment of Notes 

	
26

	
  

	
Section 4.02

	
Maintenance of Office or Agency 

	
26

	
  

	
Section 4.03

	
Existence 

	
27

	
  

	
Section 4.04

	
Annual Reports 

	
27

	
  

	
Section 4.05

	
Reports to Trustee 

	
27

	
  

	
Section 4.06

	
Rule 144A Information Requirements 

	
28

	
  

	
Section 4.07

	
Reservation of Common Stock 

	
28

	
  

	
Section 4.08

	
Issuance of Shares 

	
28

	
  

	
Section 4.09

	
Incurrence of Debt 

	
28

	
  

	
Section 4.10

	
Asset Sales 

	
29

 

ARTICLE 5

 

CONSOLIDATION, MERGER, SALE OR LEASE OF ASSETS

 

	
  

	
Section 5.01

	
Consolidation, Merger, Sale or Lease of Assets by the Company 

	
32

 

ARTICLE 6

 

DEFAULT AND REMEDIES

 

	
  

	
Section 6.01

	
Events of Default 

	
32

	
  

	
Section 6.02

	
Acceleration 

	
34

	
  

	
Section 6.03

	
Other Remedies 

	
34

	
  

	
Section 6.04

	
Waiver of Past Defaults 

	
34

	
  

	
Section 6.05

	
Control by Majority 

	
35

	
  

	
Section 6.06

	
Limitation on Suits 

	
35

	
  

	
Section 6.07

	
Rights of Holders to Receive Payment 

	
35

	
  

	
Section 6.08

	
Collection Suit by Trustee 

	
35

	
  

	
Section 6.09

	
Trustee May File Proofs of Claim 6

	
36

	
  

	
Section 6.10

	
Priorities 

	
36

	
  

	
Section 6.11

	
Restoration of Rights and Remedies 

	
36

	
  

	
Section 6.12

	
Undertaking for Costs 

	
36

	
  

	
Section 6.13

	
Rights and Remedies Cumulative 

	
37

	
  

	
Section 6.14

	
Delay or Omission Not Waiver 

	
37

 

ARTICLE 7

 

THE TRUSTEE

 

	
  

	
Section 7.01

	
General 

	
37

	
  

	
Section 7.02

	
Certain Rights of Trustee 

	
38

	
  

	
Section 7.03

	
Individual Rights of Trustee 

	
40

	
  

	
Section 7.04

	
Trustee’s Disclaimer 

	
40

	
  

	
Section 7.05

	
Notice of Default 

	
40

	
  

	
Section 7.06

	
Reports by Trustee to Holders 

	
40

	
  

	
Section 7.07

	
Compensation and Indemnity 

	
40

	
  

	
Section 7.08

	
Replacement of Trustee 

	
41

	
  

	
Section 7.09

	
Successor Trustee by Merger 

	
42

	
  

	
Section 7.10

	
Eligibility 

	
42

	
  

	
Section 7.11

	
Money Held in Trust 

	
42

 

ARTICLE 8

 

DISCHARGE

 

	
  

	
Section 8.01

	
Satisfaction and Discharge of this Indenture 

	
43

	
  

	
Section 8.02

	
Application of Trust Money 

	
43

	
  

	
Section 8.03

	
Repayment to Company 

	
43

	
  

	
Section 8.04

	
Reinstatement 

	
44

 

ARTICLE 9

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

	
  

	
Section 9.01

	
Amendments Without Consent of Holders 

	
44

	
  

	
Section 9.02

	
Amendments With Consent of Holders 

	
45

	
  

	
Section 9.03

	
Effect of Consent 

	
46

	
  

	
Section 9.04

	
Trustee’s Rights and Obligations 

	
46

 

ARTICLE 10

 

CONVERSION

 

	
  

	
Section 10.01

	
Conversion Privilege 

	
47

	
  

	
Section 10.02

	
Conversion Procedures; Conversion Settlement 

	
47

	
  

	
Section 10.03

	
Fractional Shares 

	
49

	
  

	
Section 10.04

	
Taxes on Conversion 

	
49

	
  

	
Section 10.05

	
Company to Provide Common Stock 

	
49

	
  

	
Section 10.06

	
Adjustment for Change in Capital Stock 

	
50

	
  

	
Section 10.07

	
Adjustment for Rights, Options or Warrants Issue 

	
50

	
  

	
Section 10.08

	
Adjustment for Other Distributions 

	
52

	
  

	
Section 10.09

	
Adjustment for Cash Dividends 

	
53

	
  

	
Section 10.10

	
Adjustment for Tender Offer 

	
55

	
  

	
Section 10.11

	
Provisions Governing Adjustment to Conversion Rate 

	
56

	
  

	
Section 10.12

	
Disposition Events 

	
57

	
  

	
Section 10.13

	
Rights Issued in Respect of Common Stock Issued Upon Conversion 

	
58

	
  

	
Section 10.14

	
When Adjustment May Be Deferred 

	
58

	
  

	
Section 10.15

	
When No Adjustment Required 

	
59

	
  

	
Section 10.16

	
Notice of Adjustment 

	
59

	
  

	
Section 10.17

	
Notice of Certain Transactions 

	
59

	
  

	
Section 10.18

	
Company Determination Final 

	
60

	
  

	
Section 10.19

	
Trustee’s Adjustment Disclaimer 

	
60

	
  

	
Section 10.20

	
Simultaneous Adjustments 

	
60

	
  

	
Section 10.21

	
Successive Adjustments 

	
60

	
  

	
Section 10.22

	
Withholding Taxes 

	
60

	
  

	
Section 10.23

	
Restricted Shares 

	
60

	
  

	
Section 10.24

	
Limitation on Issuance of Common Stock 

	
61

 

ARTICLE 11

 

REDEMPTION

 

	
  

	
Section 11.01

	
No Right to Redeem 

	
61

 

ARTICLE 12

 

 

MISCELLANEOUS

 

	
  

	
Section 12.01

	
Trust Indenture Act of 1939 

	
61

	
  

	
Section 12.02

	
Noteholder Communications; Noteholder Actions 

	
61

	
  

	
Section 12.03

	
Notices 

	
62

	
  

	
Section 12.04

	
Communication by Holders with Other Holders 

	
63

	
  

	
Section 12.05

	
Certificate and Opinion as to Conditions Precedent 

	
63

	
  

	
Section 12.06

	
Statements Required in Certificate or Opinion 

	
63

	
  

	
Section 12.07

	
Legal Holiday 

	
64

	
  

	
Section 12.08

	
Rules by Trustee, Paying Agent, Conversion Agent and Registrar 

	
64

	
  

	
Section 12.09

	
Governing Law; Waiver of Jury Trial 

	
64

	
  

	
Section 12.10

	
No Adverse Interpretation of Other Agreements 

	
64

	
  

	
Section 12.11

	
Successors 

	
64

	
  

	
Section 12.12

	
Counterparts 

	
64

	
  

	
Section 12.13

	
Severability 

	
64

	
  

	
Section 12.14

	
Table of Contents and Headings 

	
65

	
  

	
Section 12.15

	
No Liability of Directors, Officers, Employees, Incorporators, Members and Stockholders 

	
65

	
  

	
Section 12.16

	
U.S.A. Patriot Act 

	
65

	
  

	
Section 12.17

	
Force Majeure 

	
65

 

SCHEDULES

 

SCHEDULE I                                           Accretion Schedule

 

EXHIBITS

 

EXHIBIT A                                Form of Note

 

EXHIBIT B                                DTC Legend

 

EXHIBIT C                                OID Legend

 

EXHIBIT D                                Transfer Restriction Legend

 

EXHIBIT E                                Certificate for Exchange or Transfer of Transfer Restricted Notes

 

EXHIBIT F                                Option of Holder to Elect Purchase

  

  

  

 

INDENTURE dated as of March 5, 2013 between Cadiz Inc., a Delaware corporation (the “Company”) and The Bank of New York Mellon Trust Company, N.A., as Trustee.

 

RECITALS

 

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of the Company’s 7.00% Convertible Senior Notes due 2018 (the “Notes”). All things necessary to make this Indenture a legal, valid and binding agreement of the Company, in accordance with its terms, have been done, and the Company has done all things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee and duly issued by the Company, the valid obligations of the Company as hereinafter provided.

 

THIS INDENTURE WITNESSETH

 

For and in consideration of the premises and the purchase of the Notes by the Holders thereof, the parties hereto covenant and agree, for the equal and proportionate benefit of all Holders, as follows:

 

ARTICLE 1

 

DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01. Definitions.

 

“Accretion Date” means, as applicable, each March 5, June 5, September 5 and December 5 of each year, commencing June 5, 2013.

 

“Accreted Principal Amount” means the Original Principal Amount as adjusted upward for accretion pursuant to Section 2.15.

 

“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Securities, by contract or otherwise.

 

“Agent” means any Registrar, Paying Agent or Conversion Agent.

 

“Agent Member” means a member of, or a participant in, the Depositary.

 

“Applicable Conversion Rate” means the Conversion Rate on any day.

 

“Applicable Procedures” means, with respect to any transfer, exchange or conversion of beneficial ownership interests in a Global Note, the rules and procedures of the Depositary, in each case to the extent applicable to such transfer, exchange or conversion.

 

“Asset Sale” means “Asset Sale” as defined in the Credit Agreement.

 

“Bankruptcy Law” means Title 11 of the United States Code (or any successor thereto) or any similar federal or state law for the relief of debtors.

 

“Board of Directors” means the board of directors or comparable governing body of the Company, or any committee thereof duly authorized to act on its behalf.

 

“Business Day” means any weekday that is not a day on which banking institutions in The City of New York or the place of payment of the Notes are authorized or obligated to close.

 

“Capital Lease Obligations” means, with respect to any Person, the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Indenture, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP.

 

“Capital Stock” means, with respect to any Person, any and all shares of stock of a corporation, partnership interests or other equivalent interests (however designated, whether voting or non-voting) in such Person’s equity, entitling the holder to receive a share of the profits and losses, and a distribution of assets, after liabilities, of such Person.

 

“Cash” means such coin or currency of the United States as at any time of payment is legal tender for the payment of public and private debts.

 

“Certificated Note” means a Note in registered individual form without interest coupons.

 

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

 

“Closing Date” means March 5, 2013.

 

“Closing Price” of Common Stock or any other security on any date means the closing sale price per share (or, if no closing sale price is reported, the average of the last bid and last 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. securities exchange on which Common Stock or such other security is traded.  If Common Stock or such other security is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the Closing Price will be the last quoted bid price for Common Stock or such other security in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If Common Stock or such other security is not so quoted, the Closing Price will be the average of the mid-point of the last bid and ask prices for Common Stock or such other security on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Company for this purpose.  The Closing Price will be determined without reference to extended or after hours trading.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Commission” means the Securities and Exchange Commission.

 

“Commodity Price Protection Agreement” means, with respect to any Person, any forward contract, futures contract, commodity swap, commodity option or other similar agreement or arrangement (including derivative agreements or arrangements) as to which such Person is a party or a beneficiary relating to, or the value of which is dependent upon or which is designed to protect such Person against, fluctuations in commodity prices.

 

“Common Stock” means common stock of the Company, $0.01 par value, as it exists on the date of this Indenture and any shares of any class or classes of Capital Stock of the Company resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion of Notes shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications.

 

“Company” means the party named as such in the first paragraph of this Indenture or any successor obligor under this Indenture and the Notes pursuant to Section 5.01.

 

“Corporate Trust Office” means an office of the Trustee at which the corporate trust business of the Trustee is principally administered, which at the date of this Indenture is 400 South Hope Street, Suite 400, Los Angeles, CA 90071.

 

“Credit Agreement” means the Amended and Restated Credit Agreement, dated as of the date hereof, among the Company, Cadiz Real Estate LLC, LC Capital Master Fund, Ltd., as administrative agent, and the lenders party thereto, as amended, extended, renewed, restated, supplemented or otherwise modified from time to time, and one or more agreements, including an indenture, governing Refinancing Indebtedness Incurred to Refinance, in whole or in part, the Debt then outstanding under the Credit Agreement or one or more successor Credit Agreements; provided, however, that the principal amount (or accreted value, in the case of Debt issued at a discount) of the Refinancing Indebtedness does not exceed the principal amount (or accreted value, as the case may be) of the Debt Refinanced plus the amount of accrued and unpaid interest on the Debt Refinanced, any premium paid to holders of the Debt Refinanced and reasonable expenses (including underwriting discounts) incurred in connection with the Incurrence of the Refinancing Indebtedness.

 

“Currency Agreement” means, with respect to any Person, any foreign exchange contract, currency swap agreement or other similar agreement or arrangement (including derivative agreements or arrangements) as to which such Person is a party or a beneficiary designed to hedge foreign currency risk of such Person.

 

“Debt” means, with respect to any Person at any date, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services (other than current trade payables incurred in the ordinary course of such Person’s business), (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (v) all Capital Lease Obligations of such Person, (vi) all obligations of such Person, contingent or otherwise, as an account party or applicant under or in respect of acceptances, letters of credit, surety bonds or similar arrangements, (vii) the liquidation value of all redeemable preferred Capital Stock of such Person, (viii) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in clauses (i) through (vii) above, (ix) all obligations of the kind referred to in clauses (i) through (viii) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation, and (x) all obligations under Hedging Obligations of such Person.  The Debt of any Person shall include the Debt of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Debt expressly provide that such Person is not liable therefor.

 

“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.

 

“Depositary” means DTC or the nominee thereof, or any successor thereto.

 

“DTC” means The Depository Trust Company, a New York corporation, and its successors.

 

“DTC Legend” means the legend set forth in Exhibit B.

 

“Exchange Act” means the Securities Exchange Act of 1934, and the rules and regulations of the Commission thereunder, in each case as amended.

 

“Exchange Agreement” means the Exchange Agreement, dated as of March 4, 2013, by and among the Company, LC Capital Master Fund, Ltd., Milfam II LP and Water Asset Management Managed Account #1, L.L.C.

 

“Exchange Transaction” refers to the transactions consummated pursuant to the Exchange Agreement.

 

“Ex-Date” means, with respect to any issuance, dividend or distribution on Common Stock, the first date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive such issuance, dividend or distribution.

 

“GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time.

 

“Global Note” means a Note in registered global form without interest coupons.

 

“Guarantee Obligation” means, with respect to any Person (the “Guaranteeing Person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the Guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Debt, leases, dividends or other obligations (the “Primary Obligations”) of any other third Person (the “Primary Obligor”) in any manner, whether directly or indirectly, including any obligation of the Guaranteeing Person, whether or not contingent, (i) to purchase any such Primary Obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such Primary Obligation or (2) to maintain working capital or equity capital of the Primary Obligor or otherwise to maintain the net worth or solvency of the Primary Obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such Primary Obligation of the ability of the Primary Obligor to make payment of such Primary Obligation or (iv) otherwise to assure or hold harmless the owner of any such Primary Obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business.  The amount of any Guarantee Obligation of any Guaranteeing Person shall be deemed to be the maximum amount for which such Guaranteeing Person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such Primary Obligation and the maximum amount for which such Guaranteeing Person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such Guaranteeing Person’s maximum reasonably anticipated liability in respect thereof as determined by the Guaranteeing Person in good faith.

 

“Hedging Obligations” mean, with respect to any Person, the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Price Protection Agreement.

 

“Holder” or “Noteholder” means the registered holder of any Note.

 

“Incur” means, with respect to any Debt or other obligation of any Person, to create, issue, incur (including by conversion, exchange or otherwise), assume, guarantee or otherwise become liable in respect of such Debt or other obligation on the balance sheet of such Person (and “Incurrence,” “Incurred” and “Incurring” will have meanings correlative to the foregoing); provided that a change in GAAP that results in an obligation of such Person that exists at such time becoming Debt will not be deemed an Incurrence of such Debt.  Accrual of interest, the accretion of accreted value, the payment of interest in the form of additional Debt and increases in Debt outstanding solely as a result of fluctuations in the exchange rate of currencies will not be deemed to be an Incurrence of Debt.  Any Debt issued at a discount (including Debt on which interest is payable through the issuance of additional Debt) will be deemed Incurred at the time of original issuance of the Debt at the accreted amount thereof.

 

“Indenture” means this indenture, as amended or supplemented from time to time.

 

“Indirect Participant” means an entity that, with respect to any Depositary, clears through or maintains a direct or indirect, custodial relationship with a Participant.

 

“Initial Notes” means the Notes issued on the Closing Date and any Notes issued in replacement thereof, which Initial Notes shall be Transfer Restricted Notes as of the Closing Date.

 

“Interest Rate Agreement” means, with respect to any Person, any interest rate protection agreement, interest rate swaps, caps, floors or collars, option, future or derivative agreements or arrangements and similar agreements or arrangements and/or other types of hedging agreements as of which such Person is a party or beneficiary designed to hedge interest rate risk of such Person.

 

“Lien” means any security interest, pledge, lien or other encumbrance.

 

“Market Disruption Event” means, with respect to Common Stock or any other security, the occurrence or existence for more than one-half hour period in the aggregate on any Scheduled Trading Day for Common Stock or such other security of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in Common Stock or such other security or in any options, contracts or future contracts relating to Common Stock or such other security, and such suspension or limitation occurs or exists at any time before 1:00 p.m. (New York City time) on such day.

 

“Maturity Date” means March 5, 2018.

 

“NASDAQ” means the NASDAQ Stock Market or any successor thereto.

 

“Net Cash Proceeds” means “Net Cash Proceeds” as defined in the Credit Agreement.

 

“Notes” has the meaning assigned to such term in the Recitals.

 

“Officer” means the chairman of the Board of Directors, the president, the chief executive officer, any vice president, the chief financial officer, the treasurer, any assistant treasurer, the secretary or any assistant secretary, in each case of the Company.

 

“Officers’ Certificate” means a certificate of the Company signed in the name of the Company, (a) by the chairman of the Board of Directors, the president or chief executive officer or a vice president and (b) by the chief financial officer, the treasurer, any assistant treasurer, the secretary or any assistant secretary, for which such officer shall have no personal or individual liability.

 

“Opinion of Counsel” means a written opinion signed by legal counsel, who may be an employee of or counsel to the Company, reasonably satisfactory to the Trustee.

 

“Original Issue Discount” means the amount of ordinary interest income on a Note that must be accrued as original issue discount for U.S. federal income tax purposes.

 

“Original Principal Amount” means (a) with respect to Notes issued on the Closing Date $53,458,000 and (b) with respect to Additional Notes issued pursuant to Section 2.14, the principal amount of such Additional Notes on their date of issuance.

 

“Participant” means a Person who has an account with the Depositary.

 

“Paying Agent” refers to a Person engaged to perform the obligations of the Trustee in respect of payments made or funds held hereunder in respect of the Notes.

 

“Person” means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity, including a government or political subdivision or an agency or instrumentality thereof.

 

“principal” of any Debt (including the Notes) means the principal amount of such Debt (or if such Debt was issued with original issue discount, the face amount of such Debt less the remaining unamortized portion of the original issue discount of such Debt), together with, unless the context otherwise indicates, any premium then payable on such Debt.

 

“Qualified Water Project” means a water conservation project, consistent with the water conservation project contemplated by the Final Environmental Impact Report for the Cadiz Valley Water Conservation, Recovery & Storage Project SCH# 2011031002 and certified by the Santa Margarita Water District on July 31, 2012, but that would transfer an average of not less than 20,000 acre-feet of water per annum to and/or from the groundwater basin underlying the Cadiz Valley portion of the Mortgaged Properties (as defined in the Credit Agreement) located in the eastern Mojave Desert portion of San Bernardino County, California and that requires the conversion of existing facilities and the construction of certain necessary facilities including an expansion of an existing wellfield on the property, a manifold system (including connecting piping and natural gas power supply), monitoring wells, pumping facilities, power facilities, pipelines and/or related buildings and appurtenances.

 

“Refinance” means, in respect of any Debt, to refinance, extend (including pursuant to any defeasance or discharge mechanism), renew, refund, repay, prepay, redeem, defease or retire, or to issue Debt in exchange or replacement for, such Debt in whole or in part. “Refinanced” and “Refinancing” will have correlative meanings.

 

“Refinancing Indebtedness” means any Debt of the Company or any of its Subsidiaries to the extent Incurred to substantially concurrently Refinance any other Debt of the Company or any of its Subsidiaries.

 

“Responsible Officer” means, when used with respect to the Trustee, any officer of the trustee within the Corporate Trust Office of the Trustee who has direct responsibility for the administration of this Indenture and shall also mean any other officer of the Trustee to whom any corporate trust matter is referred because of such person’s knowledge and familiarity with the particular subject matter.

 

“Rule 144” means Rule 144 promulgated under the Securities Act or any successor to such Rule.

 

“Rule 144A” means Rule 144A promulgated under the Securities Act or any successor to such Rule.

 

“Scheduled Trading Day” means a day that is scheduled to be a Trading Day.

 

“Securities Act” means the Securities Act of 1933, and the rules and regulations of the Commission thereunder, in each case as amended.

 

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

 

“Subsidiary” means with respect to any Person, any corporation, association or other business entity of which more than 50% of the outstanding Voting Securities is owned, directly or indirectly, by, or, in the case of a partnership, the sole general partner or the managing partner or the only general partners of which are, such Person and one or more Subsidiaries of such Person (or a combination thereof).

 

“Trading Day” means, with respect to Common Stock or any other security, a day during which (a) trading in Common Stock or such other security generally occurs on NASDAQ or, if the Common Stock is not then listed on NASDAQ, on the principal other U.S. national or regional securities exchange, if any, 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, if any, on which the Common Stock is then admitted for trading, (b) there is no Market Disruption Event and (c) a Closing Price for Common Stock or such other security (other than a Closing Price referred to in the next to last sentence of such definition) is available for such securities exchange or market; provided that if Common Stock or such other security is not admitted for trading or quotation on or by any exchange, bureau or other organization, Trading Day will mean any Business Day.

 

“Transfer Restricted Global Note” means a Global Note that is a Transfer Restricted Note.

 

“Transfer Restricted Note” means a Note that is subject to resale restrictions pursuant to the Securities Act of 1933, and the rules and regulations thereunder, in each case as amended.

 

“Treasury regulations” means the U.S. federal income tax regulations, including temporary regulations, promulgated under the Code, as those regulations may be amended from time to time.  Any reference herein to a specific Section of the Treasury regulations shall include any corresponding provisions of succeeding, similar, substitute, proposed or final Treasury regulations.

 

“Trustee” means the party named as such in the first paragraph of this Indenture or any successor trustee under this Indenture pursuant to Article 7.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

 

“Unrestricted Global Note” means a Global Note that is not a Transfer Restricted Note.

 

“Unrestricted Note” means a Note that is not a Transfer Restricted Note.

 

“Volume Weighted Average Price” per share of Common Stock on any Trading Day means such price as displayed on Bloomberg (or any successor service) page CDZI <equity> VWAP (or, in connection with any Reference Property, the applicable price of such Reference Property as displayed on Bloomberg, as determined by the Company) in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such Trading Day. If such price is not available, the Volume Weighted Average Price means the market value per share of Common Stock on such day as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company.

 

“Voting Securities” means, with respect to any Person, securities of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person.

 

Section 1.02. Other Definitions.

	

 

Term

	 	

Defined in Section

	 
	
“Accretion Schedule”

	 	 	2.15	 
	
“Act”

	 	 	1.04	 
	
“Additional Notes”

	 	 	2.14	 
	
“Asset Sale Offer”

	 	 	4.10	(a)
	
“Averaging Period”

	 	 	10.10	 
	
“Bankruptcy Default”

	 	 	6.01	(h)
	
“Change in Control”

	 	 	3.01	(a)
	
“Company Order”

	 	 	2.02	 
	
“Conversion Agent”

	 	 	2.03	 
	
“Conversion Date”

	 	 	10.02	(a)
	
“Conversion Obligation”

	 	 	10.01	(a)
	
“Conversion Rate”

	 	 	10.01	 
	
“Conversion Shares”

	 	 	10.24	 
	
“Custodian”

	 	 	2.03	 
	
“Disposition Event”

	 	 	10.12	 
	
“EDGAR”

	 	 	4.04	 
	
“Event of Default”

	 	 	6.01	 
	
“Exchange Notes”

	 	 	2.01	(a)
	
“Expiration Date”

	 	 	10.10	 
	
“Fundamental Change Election Date”

	 	 	3.01	(a)
	
“Fundamental Change Repurchase Date”

	 	 	3.01	(a)
	
“Fundamental Change Repurchase Price”

	 	 	3.01	(a)
	
“Legal Holiday”

	 	 	12.07	 
	
“Offer Amount”

	 	 	4.10	(c)
	
“Offer Period”

	 	 	4.10	(c)
	
“Paying Agent”

	 	 	2.03	 
	
“Primary Registrar”

	 	 	2.03	 
	
“Purchase Agreement Notes”

	 	 	2.01	(a)
	
“Purchase Date”

	 	 	4.10	(c)
	
“Reference Property”

	 	 	10.12	 
	
“reference dividend”

	 	 	10.09	 
	
“Register”

	 	 	2.03	 
	
“Registrar”

	 	 	2.03	 
	
“Regulatory Cap”

	 	 	10.24	 
	
“Repurchase Notice”

	 	 	3.01	(b)
	
“Restricted Shares”

	 	 	10.23	 
	
“Rights”

	 	 	10.13	 
	
“Settlement Amount”

	 	 	10.02	(b)
	
“Shareholder Approval”

	 	 	10.24	 
	
“Shareholder Rights Plan”

	 	 	10.13	 
	
“Spin-Off”

	 	 	10.08	(b)
	
“Transfer Restriction Legend”

	 	 	2.14	 
	
“Trigger Event”

	 	 	10.11	 
	
“Valuation Period”

	 	 	10.08	(b)
	
“Weighted Average Consideration”

	 	 	10.12	 

 

Section 1.03. Rules of Construction.

 

 Unless the context otherwise requires or except as otherwise expressly provided,

 

(a) a term has the meaning assigned to it;

 

(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

 

(c) “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not to any particular Section, Article or other subdivision;

 

(d) all references to Sections or Articles or Exhibits refer to Sections or Articles or Exhibits of or to this Indenture unless otherwise indicated;

 

(e) references to agreements or instruments, or to statutes or regulations, are to such agreements or instruments, or statutes or regulations, as amended from time to time (or to successor statutes and regulations);

 

(f) in the event that a transaction meets the criteria of more than one category of permitted transactions or listed exceptions the Company may classify such transaction as it, in its sole discretion, determines;

 

(g) “or” is not exclusive;

 

(h) “including” means including, without limitation; and

 

(i) words in the singular include the plural, and words in the plural include the singular.

 

Section 1.04. Acts of Holders.

 

  Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments (which may take the form of an electronic writing or messaging or otherwise be in accordance with the Applicable Procedures or customary procedures of the Trustee) of substantially similar tenor signed by, or on behalf of, such Holders, including by an agent duly appointed in writing (which may be in electronic form); and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent (either of which may be in electronic form) shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.

 

ARTICLE 2

 

THE NOTES

 

Section 2.01. Form, Dating and Denominations; Legends.

 

  (a)  The Notes and the Trustee’s certificate of authentication will be substantially in the form attached as Exhibit A. The terms and provisions contained in the form of the Note annexed as Exhibit A constitute and are hereby expressly made a part of this Indenture. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Indenture and a Note, the terms of this Indenture will control. The Notes may have notations, legends or endorsements required by law, rules of or agreements with national securities exchanges to which the Company is subject, or usage. Each Note will be dated the date of its authentication. The Notes will be issuable only in minimum denominations of $1,000 in Original Principal Amount and any integral multiples of $1,000 in excess thereof.  The Initial Notes are being issued by the Company either (i) pursuant to the Exchange Transactions entered into on the Closing Date (the “Exchange Notes”) or (ii) to qualified purchasers for Cash, in each case in a transaction exempt from registration under the Securities Act pursuant to Section 4(2) of the Securities Act (the “Purchase Agreement Notes”). The Initial Notes shall be issued as Transfer Restricted Notes.

 

(b) Global Notes in General. Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that (i) it shall represent the aggregate Original Principal Amount of outstanding Notes from time to time endorsed thereon and that the aggregate Original Principal Amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions, repurchases and conversions and (ii) principal shall accrete on the principal amount of such Global Note pursuant to Section 2.15. Any adjustment of the aggregate principal amount of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.06 and shall be made on the records of the Trustee and the Depositary.

 

The Global Notes representing the Initial Notes shall initially be Transfer Restricted Notes.

 

Agent Members shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or under the Global Note, and the Depositary (including, for this purpose, its nominee) may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and Holder of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall (i) prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or (ii) impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Note.

 

(c) Authentication and Delivery. The Company shall execute and the Trustee shall, in accordance with Section 2.02, authenticate and deliver initially one or more Notes that (i) shall be registered in the name of each applicable Holder, (ii) may be held by the Trustee as Custodian and (iii) shall bear a legend substantially to the effect set forth in Exhibit B.

 

(d) Transfer Restriction Legend. All Transfer Restricted Notes shall bear the Transfer Restriction Legend.

 

Section 2.02. Execution and Authentication.

 

  An Officer shall sign the Notes for the Company by manual signature. Typographic errors or defects in any such facsimile signature shall not affect the validity or enforceability of any Note which has been authenticated and delivered by the Trustee.

 

If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

 

A Note shall not be valid until an authorized signatory of the Trustee signs manually the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

 

On the Closing Date, the Company shall issue, and the Trustee shall authenticate and make available for delivery, the Initial Notes for original issue in the aggregate Original Principal Amount of up to $53,458,000 upon the Company Order delivered with respect to the Closing Date. After the Closing Date, the Company may issue, and the Trustee shall authenticate and make available for delivery, Additional Notes issued pursuant to Section 2.14. The Trustee shall so authenticate and make available for delivery Notes upon receipt of a written order or orders of the Company signed by an Officer of the Company (a “Company Order”). The Company Order shall specify the Original Principal Amount of Notes to be authenticated, shall specify whether such Notes will be represented by a Transfer Restricted Note or an Unrestricted Note and shall specify the date on which each original issue of Notes is to be authenticated; provided that any Initial Notes shall be issued in the form of Transfer Restricted Notes that are Certificated Notes.

 

The Company at any time or from time to time may, without the consent of any Holder, issue Additional Notes pursuant to Section 2.14, which Additional Notes shall be entitled to all of the benefits of this Indenture. Such Additional Notes will be deemed Notes for all purposes hereunder, including without limitation in determining the necessary Holders who may take the actions or consent to the taking of actions as specified in this Indenture.

 

The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as an Agent to deal with the Company or an Affiliate of the Company.

 

The Notes shall be issuable only in registered form without coupons and only in minimum denominations of $1,000 Original Principal Amount and any integral multiples of $1,000 in excess thereof.

 

Section 2.03. Registrar, Paying Agent and Conversion Agent.

 

 The Company shall maintain one or more offices or agencies where Notes may be presented for registration of transfer or for exchange (each, a “Registrar”), one or more offices or agencies where Notes may be presented for payment (each, a “Paying Agent”), one or more offices or agencies where Notes may be presented for conversion (each, a “Conversion Agent”) and one or more offices or agencies where notices and demands to or upon the Company in respect of the Notes and this Indenture may be delivered. The Company will at all times maintain a Paying Agent, Conversion Agent, Registrar and an office or agency where notices and demands to or upon the Company in respect of the Notes and this Indenture may be delivered in the United States. One of the Registrars (the “Primary Registrar”) shall keep a register of the Notes and of their transfer and exchange (the “Register”).

 

The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company fails to maintain a Registrar, Paying Agent, or location for delivery of notices and demands in any place required by this Indenture, or fails to give the foregoing notice, the Trustee shall act as such. The Company or any Affiliate of the Company may act as Paying Agent (except for the purposes of Article 8); provided that if the Company or any Affiliate of the Company is acting as Paying Agent, and an Event of Default occurs under either of Section 6.01(f) or 6.01(g), thereafter the Trustee shall serve as the Paying Agent.

 

The Company hereby initially designates the Trustee as Paying Agent and Registrar, and each of the Corporate Trust Office of the Trustee and the office or agency of the Trustee in the United States (located at 400 South Hope Street, Suite 400, Los Angeles, CA 90071) for each of the aforesaid purposes. Each Noteholder may elect to have the Trustee act as custodian (the “Custodian”) on behalf of such Noteholder, and the electing Noteholders are deemed to have consented to the appointment of the trustee as Custodian.  The Trustee as Custodian shall have the same rights, benefits, and protections as the Trustee.

 

Section 2.04. Paying Agent to Hold Money in Trust.

 

 Prior to 12:00 p.m., New York City time, on each date on which the Accreted Principal Amount of any Notes is due and payable, the Company shall deposit with a Paying Agent a sum sufficient to pay such Accreted Principal Amount so becoming due. A Paying Agent shall hold in trust for the benefit of Noteholders or the Trustee all money held by the Paying Agent for the payment of the Accreted Principal Amount of the Notes, and shall notify the Trustee of any default by the Company (or any other obligor on the Notes) in making any such payment. If the Company or an Affiliate of the Company acts as Paying Agent, it shall, before 12:00 p.m., New York City time, on each date on which a payment of the Accreted Principal Amount of Notes is due and payable, segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee, and the Trustee may at any time during the continuance of any Default, upon written request to a Paying Agent, require such Paying Agent to pay forthwith to the Trustee all sums so held in trust by such Paying Agent. Upon doing so, the Paying Agent (other than the Company) shall have no further liability for the money.

 

Section 2.05. Noteholder Lists.

 

  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders. If the Trustee is not the Primary Registrar, the Company shall furnish to the Trustee at such times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders.

 

Section 2.06. Transfer and Exchange.

 

  Subject to compliance with any applicable additional requirements contained in Section 2.13, when a Note is presented to a Registrar with a request to register a transfer thereof or to exchange such Note for an equal principal amount of Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met; provided that every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by an assignment form in the form included in Exhibit A, duly executed by the Holder thereof or its attorney duly authorized in writing. To permit registration of transfers and exchanges, upon surrender of any Note for registration of transfer or exchange at an office or agency maintained pursuant to Section 2.03, the Company shall execute and the Trustee shall authenticate Notes of a like aggregate principal amount at the Company’s request. Any exchange or transfer shall be without service charge, except that the Company or the Registrar may require payment of a sum sufficient to cover any tax, assessment or other governmental charge that may be imposed in relation thereto; provided that this sentence shall not apply to any exchange pursuant to Section 2.10, Section 3.04, Section 9.03(b) or Section 10.02(f) not involving any transfer.

 

All Notes issued upon any transfer or exchange of Notes shall be valid obligations of the Company, evidencing the same debt and entitled to the same benefits under this Indenture, as the Notes surrendered upon such transfer or exchange.

 

Any Registrar appointed pursuant to Section 2.03 shall provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Notes upon transfer or exchange of Notes.

 

The Trustee and Registrar shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Agent Members or other beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

Section 2.07. Replacement Notes.

 

  If any mutilated Note is surrendered to the Company, a Registrar or the Trustee, or the Company, a Registrar and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Note, and there is delivered to the Company, the applicable Registrar and the Trustee such security or indemnity as will be required by them to save each of them harmless, then, in the absence of notice to the Company, such Registrar or the Trustee that such Note has been acquired by a protected purchaser, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like tenor and principal amount, bearing a number not contemporaneously outstanding.

 

In case any such mutilated, destroyed, lost or stolen Note has become or is about to become due and payable, or is about to be purchased by the Company pursuant to Article 3 or Section 4.10, the Company in its discretion may, instead of issuing a new Note, pay or purchase such Note, as the case may be.

 

Upon the issuance of any new Notes under this Section 2.07, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Trustee or the Registrar) in connection therewith.

 

Every new Note issued pursuant to this Section 2.07 in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

 

The provisions of this Section 2.07 are (to the extent lawful) exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

 

Section 2.08. Outstanding Notes.

 

  Notes outstanding at any time are all Notes authenticated by the Trustee, except for those canceled by it, those paid pursuant to Section 2.07, those converted pursuant to Article 10, those delivered to it for cancellation or surrendered for transfer or exchange and those described in this Section 2.08 as not outstanding.

 

If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Company and the Trustee receive proof satisfactory to them that the replaced Note is held by a protected purchaser.

 

If a Paying Agent holds at 12:00 p.m., New York City time, on the Maturity Date Cash sufficient to pay the Accreted Principal Amount of the Notes payable on that date, then on and after the Maturity Date, such Notes shall cease to be outstanding and the Accreted Principal Amount shall cease to accrete.

 

Subject to the restrictions contained in Section 2.09, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.

 

Section 2.09. Treasury Notes.

 

  In determining whether the Holders have concurred in any notice, direction, waiver or consent, Notes owned by the Company or any other obligor on the Notes or by any Subsidiary of the Company or of such other obligor shall be disregarded, except that, for purposes of determining whether the Trustee shall be protected in relying on any such notice, direction, waiver or consent, only Notes which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to the Notes and that the pledgee is not the Company or any other obligor on the Notes or any Subsidiary of the Company or of such other obligor.

 

Section 2.10. Temporary Notes.

 

  Until definitive Notes are ready for delivery, the Company may prepare and execute, and, upon receipt of a Company Order, the Trustee shall authenticate and deliver, temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Company with the consent of the Trustee considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate and deliver definitive Notes in exchange for temporary Notes.

 

Section 2.11. Cancellation.

 

  To the extent permitted by law, the Company or any of its Subsidiaries may from time to time repurchase any Notes in the open market or by tender offer at any price or by private agreement without giving prior notice to Holders.  The Company shall cause any Notes so repurchased to be surrendered to the Trustee for cancellation.   The Registrar, the Paying Agent and the Conversion Agent shall forward to the Trustee or its agent any Notes surrendered to them for transfer, exchange, payment or conversion. The Trustee and no one else shall cancel, in accordance with its standard procedures, all Notes surrendered for transfer, exchange, payment, conversion or cancellation and upon written request of the Company shall deliver evidence of the canceled Notes to the Company.

 

Section 2.12. CUSIP Numbers.

 

  The Company in issuing the Notes may use one or more “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a purchase and that reliance may be placed only on the other identification numbers printed on the Notes, and any such purchase shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the “CUSIP” numbers.

 

Section 2.13. Additional Transfer and Exchange Requirements.

 

  (a)  If Notes are issued upon the transfer, exchange or replacement of Notes subject to restrictions on transfer and bearing the Transfer Restriction Legend, or if a request is made to remove the Transfer Restriction Legend on a Note, the Notes so issued shall bear the Transfer Restriction Legend, or the Transfer Restriction Legend shall not be removed, as the case may be, unless such Note has been sold pursuant to an effective registration statement under the Securities Act and the Holder selling such Notes has delivered to the Company and the Registrar a certification of the same or there is delivered to the Company and the Registrar such reasonably satisfactory evidence, which shall include an Opinion of Counsel, as may be reasonably required by the Company and the Registrar, that neither the Transfer Restriction Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144 or that such Notes are not “restricted” within the meaning of Rule 144 or may otherwise be transferred without registration under the Securities Act. Upon provision of such evidence to the Company or the Registrar if requested by the Company or the Registrar, the Trustee, at the written direction of the Company, shall authenticate and deliver a Note that does not bear the Transfer Restriction Legend. If the Transfer Restriction Legend is removed from the face of a Note, the Transfer Restriction Legend shall be reinstated at any time the Company reasonably determinates that, to comply with applicable law (including, without limitation, the Securities Act), such Note must bear the Transfer Restriction Legend.

 

(b) No transfer of a Note to any Person shall be effective under this Indenture or the Notes unless and until such Note has been registered in the name of such Person. Notwithstanding any other provisions of this Indenture or the Notes, transfers of a Global Note, in whole or in part, shall be made only in accordance with this Section 2.13.

 

(c) The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures.

 

(i) Beneficial interests in any Transfer Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Transfer Restricted Global Note in accordance with the transfer restrictions set forth in the Transfer Restriction Legend. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same or any other Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.13(c)(i).

 

(ii) In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.13(c)(i), the transferor of such beneficial interest must deliver to the Registrar an order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase.

 

(iii) A beneficial interest in any Transfer Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Transfer Restricted Global Note if the transfer complies with the requirements of Section 2.13(c)(ii) and the Registrar receives a duly executed certificate substantially in the form of Exhibit E hereto.

 

(iv) A beneficial interest in any Transfer Restricted Global Note may be exchanged for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if (1) the exchange or transfer complies with the requirements of Section 2.13(c)(ii) and (2) if the Registrar or the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar and the Company stating that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Transfer Restriction Legend are no longer required in order to maintain compliance with the Securities Act.

 

(d) The restrictions imposed by the Transfer Restriction Legend upon the transferability of any Note shall cease and terminate upon the earlier of (i) the sale of such Note pursuant to an effective registration statement under the Securities Act or the transfer of such Note in compliance with Rule 144 (or any successor provision thereto), or (ii) upon the expiration of the holding period applicable to sales thereof under Rule 144(d) under the Securities Act (or any successor provision). Any Note as to which such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon a surrender of such Note for exchange to the Registrar in accordance with the provisions of this Section 2.13, be exchanged for a new Note, of like tenor and aggregate principal amount, in accordance with Section 2.13(a).

 

(e) As used in Section 2.13(c) and (d), the term “transfer” encompasses any sale, pledge, transfer, hypothecation or other disposition of any Note.

 

(f) This Section 2.13(f) shall apply only to Global Notes:

 

(i) Notwithstanding any other provisions of this Indenture or the Notes, a Global Note shall not be exchanged in whole or in part for a Note registered in the name of any Person other than the Depositary or one or more nominees thereof; provided that a Global Note may be exchanged for Notes registered in the names of any person designated by the Depositary in the event that (A) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Note or such Depositary has ceased to be a “clearing agency” registered under the Exchange Act, and a successor Depositary is not appointed by the Company within 90 days, (B) the Company has provided the Depositary with written notice that it has decided to discontinue use of the system of book-entry transfer through the Depositary or any successor Depositary or (C) an Event of Default has occurred and is continuing and the Trustee or the Holders of a majority of the Accreted Principal Amount of the outstanding Notes have requested such exchange. Any Global Note exchanged pursuant to clauses (A) or (B) above shall be so exchanged in whole and not in part, and any Global Note exchanged pursuant to clause (C) above may be exchanged in whole or from time to time in part as directed by the Depositary. Any Note issued in exchange for a Global Note or any portion thereof shall be a Global Note; provided that any such Note so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Note.

 

(ii) Notes issued in exchange for a Global Note or any portion thereof shall be issued in definitive, fully-registered book-entry form, without interest coupons, shall have an Accreted Principal Amount equal to that of such Global Note or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the legends provided for herein applicable thereto. Any Global Note to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Registrar. With regard to any Global Note to be exchanged in part, either such Global Note shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Note, the principal amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Note issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof.

 

(iii) Subject to the provisions of clause (v) below, the registered Holder may grant proxies and otherwise authorize any Person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

 

(iv) In the event of the occurrence of any of the events specified in clause (i) above, the Company will promptly make available to the Trustee a reasonable supply of Certificated Notes in definitive, fully registered form, without interest coupons.

 

(v) Neither Agent Members nor any other Persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Note registered in the name of the Depositary or any nominee thereof, or under any such Global Note, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and holder of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a holder of any Note. Neither the Trustee nor any Agent Member shall have any responsibility or liability for any actions taken or not taken by the Depositary.

 

Section 2.14. Additional Notes.

 

  If authorized by a resolution of the Board of Directors, the Company shall be entitled to issue additional Notes under this Indenture (“Additional Notes”) which shall have substantially identical terms as the Notes, other than with respect to (i) the date of issuance, (ii) the issue price, (iii) the accretion rate on the Notes (to the extent such Additional Notes are issued with a different “CUSIP”, “ISIN” or “Common Code” number than the Notes), and (iv) if such Additional Notes shall be issued in the form of Unrestricted Notes or Transfer Restricted Notes (in which case the Transfer Restricted Notes will bear the legends set forth in Exhibit D (collectively, the “Transfer Restriction Legend”)), the transfer restrictions in respect of Notes that are, respectively, Transfer Restricted Notes or Unrestricted Notes; provided that such issuance shall be made in compliance with this Indenture; provided, further, that no Additional Notes may be issued with the same “CUSIP”, “ISIN” or “Common Code” number as other Notes unless it is so permitted in accordance with applicable law and such Additional Notes are fungible with the Notes for U.S. federal tax purposes. The Notes issued on the Closing Date and any Additional Notes shall be treated as a single class for all purposes under this Indenture.

 

With respect to any Additional Notes, the Company shall set forth in an Officers’ Certificate, a copy of which shall be delivered to the Trustee, or in a supplemental indenture, the following information:

 

(1) the aggregate Accreted Principal Amount of Notes outstanding immediately prior to the issuance of such Additional Notes;

 

(2) the aggregate Original Principal Amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

 

(3) the issue price, if any, the issue date of such Additional Notes and the accretion amount as of the first Accretion Date following the issuance of such Additional Notes;

 

(4) the “CUSIP”, “ISIN” or “Common Code” number, as applicable, of such Additional Notes; and

 

(5) whether such Additional Notes shall be Transfer Restricted Notes or Unrestricted Notes.

 

In authenticating such Additional Notes, and accepting the additional responsibilities under this Indenture in relation to such Additional Notes, the Trustee shall receive, and, subject to Section 7.01, shall be fully protected in relying upon:

 

(a)           A copy of the resolution or resolutions of the Board of Directors in or pursuant to which the terms and form of the Additional Notes were established, certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect as of the date of such certificate, and if the terms and form of such Additional Notes are established by an Officers' Certificate pursuant to general authorization of the Board of Directors, such Officers' Certificate;

 

(b)           an executed supplemental indenture, if any;

 

(c)           an Officers’ Certificate delivered in accordance with Section 12.05; and

 

(d)           an Opinion of Counsel which shall state: (i) that the form of such Additional Notes has been established by a supplemental indenture or by or pursuant to a resolution of the Board of Directors in accordance and in conformity with the provisions of this Indenture; (ii) that the terms of such Additional Notes have been established in accordance with and in conformity with the other provisions of this Indenture; (iii) that such Additional Notes, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting the enforcement of creditors' rights and to general equity principles; and (iv) that all conditions precedent to the authentication of the Additional Notes have been met.

 

The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith shall determine that such action would expose the Trustee to personal liability to existing Holders.

 

Section 2.15. Accretion.  Commencing on the Closing Date, the principal amount of the Notes shall accrete at a rate equal to 7.00% per annum (compounded quarterly).  Schedule I hereto sets forth the Accreted Principal Amounts per $1,000 Original Principal Amount of Notes as of specified dates during the period from the Closing Date through the Maturity Date (the “Accretion Schedule”).

 

Section 2.16. Calculation of Original Issue Discount.  The Company shall file with the Trustee within 30 days after the end of each calendar year (i) a written notice specifying the amount of Original Issue Discount (including daily rates and accrual periods) accrued on outstanding Notes as of the end of such year and (ii) such other specific information relating to such Original Issue Discount as may then be required under the Code or the Treasury regulations promulgated thereunder.

 

ARTICLE 3

 

REPURCHASES

 

Section 3.01. Repurchase or Conversion Upon a Change in Control.

 

(a) Upon the occurrence of a Change in Control, each Holder shall elect, at such Holder’s option, subject to the terms and conditions of Article 3 of this Indenture, either (i) to require the Company to repurchase for Cash all, but not less than all, of such Holder’s Notes in integral multiples of $1,000 principal amount at a price (the “Fundamental Change Repurchase Price”) equal to the Accreted Principal Amount as of such Change in Control or (ii) to convert all, but not less than all, of such Holder’s Notes on the Conversion Date pursuant to Section 10.02. Upon a valid exercise of the option to require repurchase, the Company will be required to repurchase the Notes on a date selected by the Company (the “Fundamental Change Repurchase Date”), which shall be no earlier than 15 days or later than 35 days after the date on which the Company mails the notice contemplated by this Section 3.01, subject to satisfaction by or on behalf of the Holder of the requirements set forth in Section 3.01(b).  A failure by a Holder to (x) make such election or (y) surrender any Notes to be converted to the Conversion Agent pursuant to Section 10.02, in each case, on or before the third (3rd) Business Day before the Fundamental Change Repurchase Date (the “Fundamental Change Election Date”) shall be deemed to constitute an election to require the Company to repurchase such Holder’s Notes for the Fundamental Change Repurchase Price.

 

 A “Change in Control” will be deemed to have occurred when any of the following has occurred:

 

(a) the consummation of any transaction (including, without limitation, any merger or consolidation other than those excluded under clause (d) below) the result of which is that any “person” or “group” becomes the “beneficial owner” (as these terms are defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Capital Stock of the Company that is at that time entitled to vote by the holder thereof in the election of the Board of Directors (or comparable body);

 

(b) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company;

 

(c) the sale, lease, transfer, conveyance or other disposition, in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any “person” or “group” (as these terms are used in Section 13(d)(3) of the Exchange Act); or

 

(d) any transaction or series of related transactions in connection with which (whether by means of exchange, liquidation, consolidation, merger, combination, reclassification, recapitalization, acquisition or otherwise) all of the Common Stock is exchanged for, converted into, acquired for, or constitutes solely the right to receive, other securities, other property, assets or cash, other than (i) any transaction pursuant to which the holders of 50% or more of the total voting power of all shares of Capital Stock of the Company entitled to vote generally in elections of directors immediately prior to such transaction have the right to exercise, directly or indirectly, 50% or more of the total voting power of all shares of Capital Stock of the continuing or surviving Person entitled to vote generally in elections of directors immediately after giving effect to such transaction (ii) any changes resulting solely from a subdivision or combination or change solely in par value, or (iii) any merger solely for the purpose of changing the jurisdiction of incorporation of the Company and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the surviving entity.

 

On or before the fifth (5) day after the occurrence of a Change in Control (or in the case of a Change in Control under clause (c) or (d) of the definition thereof on the same day as the public announcement of such transaction by the Company), the Company will mail a written notice of Change in Control by first-class mail to the Trustee and to each Holder at their addresses shown in the register of the Registrar (and to beneficial owners as required by applicable law). The notice shall include a form of Repurchase Notice to be completed by the Noteholder and shall state:

 

(1) the events causing a Change in Control;

 

(2) the date of such Change in Control;

 

(3) the Fundamental Change Election Date;

 

(4) the Fundamental Change Repurchase Price;

 

(5) the Fundamental Change Repurchase Date;

 

(6) the name and address of the Paying Agent and the Conversion Agent;

 

(7) the then current Applicable Conversion Rate and any adjustments thereto;

 

(8) that Notes with respect to which a Repurchase Notice is given by the Holder may be converted pursuant to Article 10 hereof only if the Repurchase Notice has been withdrawn in accordance with the terms of this Indenture;

 

(9) the procedures a Holder must follow to exercise rights under this Section 3.01(a); and

 

(10) the CUSIP and ISIN number(s) of the Notes, if applicable.

 

(b) A Holder shall make its election under this Section 3.01 by (x) delivery of a written notice (a “Repurchase Notice”) to the Paying Agent or (y) delivery of a Conversion Notice to the Conversion Agent in accordance with Section 10.02, at any time prior to the Close of Business on the Fundamental Change Election Date.  The Repurchase Notice shall state:

 

(i) if Certificated Notes have been issued, the certificate number of the Notes (or if the Holder’s Notes are Global Notes, that such Holder’s notice must comply with the Applicable Procedures);

 

(ii) the portion of the Original Principal Amount of Notes to be repurchased, which portion must be $1,000 or an integral multiple of $1,000; and

 

(iii) that such Notes shall be repurchased by the Company pursuant to the terms and conditions specified in this Article 3.

 

The delivery of such Note to the Paying Agent prior to, on or after the Fundamental Change Repurchase Date (together with all necessary endorsements and compliance by the Holder with the Applicable Procedures) at the offices of the Paying Agent shall be a condition to the receipt by the Holder of the Fundamental Change Repurchase Price therefor; provided, however, that such Fundamental Change Repurchase Price shall be so paid pursuant to this Section 3.01 only if the Note so delivered to the Paying Agent shall conform in all respects to the description thereof set forth in the related Repurchase Notice.

 

The Company shall repurchase from the Holder thereof, pursuant to this Section 3.01, a portion of a Note if the Original Principal Amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the repurchase of all of a Note also apply to the repurchase of such portion of such Note.

 

Any repurchase by the Company contemplated pursuant to the provisions of this Section 3.01 shall be consummated by the delivery of the consideration to be received by the Holder on or prior to the later of the Fundamental Change Repurchase Date and the time of delivery of the Note to the Paying Agent in accordance with this Section 3.01.

 

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Repurchase Notice contemplated by this Section 3.01(b) shall have the right to withdraw such Repurchase Notice at any time prior to the Close of Business on the Fundamental Change Election Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.02 and contemporaneous delivery of a Conversion Notice to the Conversion Agent in accordance with Section 10.02.

 

The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase Notice or written withdrawal thereof.

 

No Notes may be repurchased by the Company at the option of Holders upon a Change in Control if the principal amount of the Notes has been accelerated (other than as a result of a default in the payment of the Fundamental Change Repurchase Price with respect to the Notes), and such acceleration has not been rescinded, on or prior to the date on which such repurchase is to be consummated. The Paying Agent will promptly return to the respective Holders thereof any Notes (x) with respect to which a Repurchase Notice has been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of acceleration described in the immediately preceding sentence in which case, upon such return, the Repurchase Notice with respect thereto shall be deemed to have been withdrawn.

 

Section 3.02. Effect of Repurchase Notice.

 

  (a)  Upon receipt by the Paying Agent of the Repurchase Notice specified in Section 3.01(b), the Holder of the Note in respect of which such Repurchase Notice was given shall (unless such Repurchase Notice is withdrawn as specified in this Section 3.02) thereafter be entitled to receive solely the Fundamental Change Repurchase Price with respect to such Note. Such Fundamental Change Repurchase Price shall be paid to such Holder, subject to receipt of funds by the Paying Agent, on or prior to the later of (x) the Fundamental Change Repurchase Date, with respect to such Note (provided the conditions in Section 3.01(b) have been satisfied) and (y) the time of delivery of such Note to the Paying Agent by the Holder thereof in the manner required by Section 3.01(b). Notes in respect of which a Repurchase Notice has been given by the Holder thereof may not be converted pursuant to Article 10 hereof on or after the date of the delivery of such Repurchase Notice unless such Repurchase Notice has first been validly withdrawn as specified in this Section 3.02.

 

(b) A Repurchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent at any time prior to the Close of Business on the Fundamental Change Election Date. Such notice of withdrawal shall state:

 

(i) the principal amount being withdrawn;

 

(ii) if Certificated Notes are to be withdrawn, the certificate numbers of the Notes being withdrawn (or, if Global Notes or a portion thereof are to be withdrawn, that such Holder has complied with the Applicable Procedures in respect of the withdrawal of such Holder’s election to exercise its repurchase rights pursuant to Section 3.01 of this Indenture);

 

(iii) the principal amount, if any, of the Notes that remain subject to a Repurchase Notice; and

 

(iv) that such Holder has contemporaneously delivered a Conversion Notice to the Conversion Agent in accordance with Section 10.02 with respect to such withdrawn Notes.

 

Section 3.03. Deposit of Fundamental Change Repurchase Price.

 

 Prior to 12:00 p.m. (New York City time) on the Business Day prior to the Fundamental Change Repurchase Date, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary of the Company or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an amount of money (in immediately available funds if deposited on such Trading Day) sufficient to pay the aggregate Fundamental Change Repurchase Price of all the Notes or portions thereof which are to be repurchased as of the Fundamental Change Repurchase Date.

 

If the Paying Agent holds money sufficient to pay the Fundamental Change Repurchase Price with respect to the Notes to be repurchased on the Fundamental Change Repurchase Date in accordance with the terms of this Indenture, then, immediately on and after the Fundamental Change Repurchase Date, the Accreted Principal Amount on such Notes shall cease to accrete, whether or not the Notes are delivered to the Paying Agent, and all other rights of the Holders of such Notes shall terminate, other than the right to receive the Fundamental Change Repurchase Price upon delivery of such Notes.

 

Section 3.04. Notes Repurchased in Part.

 

 Any Note which is to be repurchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and, provided that the Holder has properly delivered a Conversion Notice to the Conversion Agent pursuant to Section 10.02 prior to the Fundamental Change Election Date with respect to such remaining portion, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Note so surrendered that is not repurchased; provided that such Notes so delivered shall be immediately surrendered to the Conversion Agent pursuant to Section 10.02 and the Holder thereof shall be entitled to receive solely the Settlement Amount as contemplated by Section 10.02(b).

 

Section 3.05. Covenant to Comply with Securities Laws upon Repurchase of Notes.

 

 In connection with any repurchase upon the occurrence of a Change in Control, to the extent required by applicable law, the Company shall:

 

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

 

(b) otherwise comply with all federal and state securities laws as necessary to effect a repurchase of Notes by the Company at the option of Holder.

 

ARTICLE 4

 

COVENANTS

 

Section 4.01. Payment of Notes.

 

  The Company shall make all payments in respect of the Notes on the dates and in the manner provided in the Notes or pursuant to this Indenture. Any amounts of shares of Common Stock to be given to the Conversion Agent shall be deposited with the Conversion Agent by 12:00 p.m., New York City time, by the Company. The Accreted Principal Amount of the Notes and the Fundamental Change Repurchase Price shall be considered paid on the applicable date due if on such date (which, in the case of a Fundamental Change Repurchase Price, shall be on the Business Day immediately following the Fundamental Change Repurchase Date) the Trustee, the Conversion Agent or the Paying Agent (other than the Company or any Subsidiary of the Company, as applicable) holds, in accordance with this Indenture, cash or securities, if permitted hereunder, sufficient to pay all such amounts then due.

 

Section 4.02. Maintenance of Office or Agency.

 

 The Company will maintain in the United States an office or agency where Notes may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be delivered. The Company hereby initially designates the Corporate Trust Office of the Trustee as such office of the Company. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or delivered to the Trustee.

 

The Company may also from time to time designate one or more other offices or agencies where the Notes may be surrendered or presented for any of such purposes and may from time to time rescind such designations. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

 

Section 4.03. Existence.

 

  The Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and the existence, rights and franchises of the Company; provided that the Company is not required to preserve any such right or franchise if the preservation thereof is no longer desirable in the conduct of the business of the Company as determined by the Board of Directors; provided further that this Section does not prohibit any transaction otherwise permitted by Section 5.01.

 

Section 4.04. Annual Reports.

 

  The Company shall deliver to the Trustee, within fifteen days after the Company is required to file the same with the Commission, copies of the Company’s annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) that the Company is required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; provided that any such information, documents or reports filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system, or any successor system established by the Commission, shall be deemed to be filed with the Trustee; provided, however, that the Trustee shall have no obligation whatsoever to determine whether or not such information, documents or reports have been filed pursuant to the EDGAR system.

 

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

 

Section 4.05. Reports to Trustee.

 

  The Company will deliver to the Trustee:

 

(a) within 120 days after the end of each fiscal year (commencing in 2014) a certificate from the principal executive, financial or accounting officer of the Company stating that the officer has conducted or supervised a review of the activities of the Company and its performance under this Indenture and that, based upon such review, no Default exists hereunder or, if there has been a Default, specifying the Default, its nature, status and what action the Company is taking or proposes to take with respect thereto; and

 

(b) promptly and in any event within 15 days after the Company becomes aware of the occurrence of a Default, an Officers’ Certificate setting forth the details of the Default, and the action which the Company is taking or proposes to take with respect thereto.

 

Section 4.06. Rule 144A Information Requirements. At any time the Company is not subject to Section 13 or 15(d) of the Exchange Act, so long as (i) any of the Notes or any shares of Common Stock issuable upon conversion thereof shall, at such time, constitute “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act and (ii) less than one year has passed since the acquisition of such Notes from the Company or an Affiliate of the Company, the Company shall (x) promptly provide to the Trustee and shall, upon written request, provide to any Holder, beneficial owner or prospective purchaser of such Notes or any shares of Common Stock issued upon conversion of such Notes, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act to facilitate the resale of such Notes or shares of Common Stock pursuant to Rule 144A under the Securities Act and (y) take such further action as any Holder or beneficial owner of such Notes or such Common Stock may reasonably request to the extent required from time to time to enable such Holder or beneficial owner to sell such Notes or shares of Common Stock in accordance with Rule 144A under the Securities Act.

 

Section 4.07. Reservation of Common Stock. The Company shall at all times reserve and keep available, out of its authorized but unissued shares of Common Stock, such shares of Common Stock as shall be sufficient to effect conversion of all outstanding Notes.  If at any time the number of authorized but unissued shares of Common Stock of the Company shall not be sufficient to effect the conversion of the Notes and otherwise to comply with the terms of this Indenture, the Company will forthwith take such corporate action as may be necessary to increase its authorized but unissued shares of such Common Stock to such number of shares as shall be sufficient for such purpose.  The Company will obtain any authorization, consent, approval or other action by or make any filing with any court or administrative body that may be required under applicable securities laws in connection with the issuance of shares of its Common Stock upon the conversion of the Notes.

 

Section 4.08. Issuance of Shares. The Common Stock, when issued, will be duly and validly issued, fully paid and nonassessable and will be free and clear of any Liens caused or created by the Company, and will have been issued in compliance with the Securities Act.  When issued, the Common Stock will be free from any restrictions, other than transfer restrictions pursuant to the securities laws.

 

Section 4.09. Incurrence of Debt. The Company shall not, and shall not cause or permit any of its Subsidiaries to, directly or indirectly, Incur any Debt, except that the Company and its Subsidiaries may Incur the following Debt:  (i) Debt of the Company in respect of the Notes (including Additional Notes in an aggregate Original Principal Amount not to exceed $5,000,000 at any one time outstanding), (ii) Debt of the Company and Cadiz Real Estate LLC Incurred pursuant to the Credit Agreement, (iii) Debt of the Company and its Subsidiaries Incurred solely for the purpose of financing (whether in whole or in part) the cost of construction or improvement of the Qualified Water Project, including out-of-pocket costs and expenses incurred by the Company and its Subsidiaries in connection with such construction or improvement, in an aggregate principal amount at any one time outstanding, including all Refinancing Debt Incurred to Refinance Debt Incurred pursuant to this clause (iii), not to exceed, together with the aggregate principal amount of all Debt then outstanding pursuant to clause (ii) of this Section 4.09, the lesser of (x) the aggregate cost of such construction or improvement, including out-of-pocket costs and expenses incurred by the Company and its Subsidiaries in connection with such construction or improvement, as determined by the Board of Directors in good faith and evidenced by a resolution of the Board of Directors, plus the amount necessary to Refinance the Debt outstanding pursuant to clause (ii) of this Section 4.09 and (y) $300,000,000, (iv) Hedging Obligations entered into by the Company and its Subsidiaries in the ordinary course of business and not for speculative purposes up to an aggregate principal amount of $5,000,000 at any one time outstanding, (v) Debt of a Subsidiary of the Company owed to and held by the Company, (vi) Debt of the Company or any of its Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided that such Debt is extinguished within five Business Days after Incurrence, (vii) Debt of the Company or any of its Subsidiaries with respect to letters of credit issued in the ordinary course of business in respect of health, disability or other employee benefits or property, casualty or liability insurance or self-insurance, or other Debt with respect to reimbursement-type obligations regarding workers’ compensation claims; provided that, upon the drawing of any such letter of credit, the reimbursement obligation with respect thereto is reimbursed within thirty (30) days following such drawing, (viii) Debt of the Company or any of its Subsidiaries arising from agreements for indemnification, adjustment of purchase price, earn-outs or similar obligations, in each case Incurred in connection with the disposition or acquisition of any business, asset or Subsidiary, other than Guarantee Obligations Incurred by any Person acquiring all or any portion of such business, assets or other Person for purposes of financing such acquisition; provided that (A) such Debt is not reflected on the balance sheet of the Company or any of its Subsidiaries (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (A) and (B) in the case of a disposition, the maximum aggregate liability in respect of all such Debt under this clause (viii) will at no time exceed the gross proceeds, including the fair market value of non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value), actually received by the Company and its Subsidiaries in connection with such disposition, (ix) Debt of the Company or any of its Subsidiaries consisting of take-or-pay obligations contained in supply agreements, in each case in the ordinary course of business, (x) Debt arising in connection with endorsement of instruments of deposit in the ordinary course of business, (xi) Capitalized Lease Obligations of the Company or any of its Subsidiaries in an aggregate principal amount at any one time outstanding, including all Refinancing Debt Incurred to Refinance Debt Incurred pursuant to this clause (xi), not to exceed $10,000,000, and (xii) unsecured Debt in an aggregate principal amount not to exceed $10,000,000 at any one time outstanding.  For purposes of determining any particular amount of Indebtedness under this Section 4.09, Guarantee Obligations, Liens or obligations with respect to letters of credit otherwise supporting Debt otherwise included in the determination of such particular amount will not be included.

 

Section 4.10. Asset Sales. (a) if, the Net Cash Proceeds from Asset Sales available to the Company after all outstanding obligations under the Credit Agreement have been repaid and the commitments thereunder permanently reduced to zero, exceeds $2,500,000, the Company shall deposit the Net Cash Proceeds of such Asset Sales into a cash collateral account and shall promptly provide notice thereof to the Trustee, which notice shall specify the amount of the Net Cash Proceeds so deposited.  The Trustee shall deliver any notice of deposit it receives from the Company under this Section 4.10 to the Noteholders within five (5) Business Days.  The Trustee shall, by notice to the Company delivered no more than thirty (30) days after the Trustee’s receipt of notice from the Company of such deposit, require the Company to apply the applicable Net Cash Proceeds towards prepayment of amounts owing under the Notes (“Asset Sale Offer”) in accordance with this Section 4.10.

 

(b) In the event that, pursuant to Section 4.10 hereof, the Company shall be required to commence an Asset Sale Offer, it shall follow the procedures specified below.

 

(c) The Asset Sale Offer shall remain open for a period of twenty (20) Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the “Offer Period”).  No later than five (5) Business Days after the termination of the Offer Period (the “Purchase Date”), the Company shall apply all Net Cash Proceeds (the “Offer Amount”) to the purchase of Notes, or, if less than the Offer Amount has been tendered, all Notes tendered in response to the Asset Sale Offer.  Payment for any Notes so purchased shall be made in the same manner as all other payments are made under the Indenture and Notes.

 

(d) Upon the commencement of an Asset Sale Offer, the Company shall send, by first-class mail, a notice to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer.  The Asset Sale Offer shall be made to all Holders.  The notice, which shall govern the terms of the Asset Sale Offer, shall state:

 

(i) that the Asset Sale Offer is being made pursuant to this Section 4.10 hereof and the length of time the Asset Sale Offer shall remain open;

 

(ii) the Offer Amount, the purchase price and the Purchase Date;

 

(iii) that the principal of any Note not tendered or accepted for payment shall continue to accrete;

 

(iv) that, unless the Company defaults in making such payment, the principal amount of any Note accepted for payment pursuant to the Asset Sale Offer shall cease to accrete after the Purchase Date;

 

(v) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in minimum amounts of $1,000 or an integral multiple of $1,000 in excess thereof;

 

(vi) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Note completed, or transfer by book-entry transfer, to the Company, the Depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three (3) days before the Purchase Date;

 

(vii) that Holders shall be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

 

(viii) that, if the aggregate principal amount of Notes surrendered by the holders thereof exceeds the Offer Amount, the Trustee, in accordance with the applicable Depositary procedures in the case of Global Notes, shall select the Notes to be purchased on a pro rata basis based on the Accreted Principal Amount of the Notes tendered (with such adjustments as may be deemed appropriate by the Trustee, in accordance with the applicable Depositary procedures in the case of Global Notes, so that only Notes in minimum denominations of $1,000, or an integral multiple of $1,000 in excess thereof, shall be purchased); and

 

(ix) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer) representing the same indebtedness to the extent not repurchased.

 

(e) On or before the Purchase Date, the Company shall, to the extent lawful, (1) accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof validly tendered pursuant to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all Notes tendered and (2) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof so tendered.

 

(f) The Company, the Depositary or the Paying Agent, as the case may be, shall promptly mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes properly tendered by such Holder and accepted by the Company for purchase, and the Company shall promptly issue a new Note, and the Trustee, upon receipt of an Authentication Order, shall authenticate and mail or deliver (or cause to be transferred by book-entry) such new Note to such Holder in a principal amount equal to any unpurchased portion of the Note surrendered representing the same indebtedness to the extent not repurchased; provided that each such new Note shall be in a principal amount of $1,000 or an integral multiple of $1,000 in excess thereof.  Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof.  The Company shall publicly announce the results of the Asset Sale Offer on or as soon as practicable after the Purchase Date.

 

(g) Any Net Cash Proceeds remaining after the Asset Sale Offer may be used by the Company for working capital.

 

ARTICLE 5

 

CONSOLIDATION, MERGER, SALE OR LEASE OF ASSETS

 

Section 5.01. Consolidation, Merger, Sale or Lease of Assets by the Company.

 

  (a)  The Company may not, directly or indirectly, consolidate with or merge into any Person or sell, convey, transfer or lease all or substantially all of its properties and assets to another Person, unless:

 

(i) the resulting, surviving or transferee Person (if other than the Company) is an entity organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia;

 

(ii) such entity (if other than the Company) expressly assumes all of the obligations of the Company under the Notes and this Indenture pursuant to a supplemental indenture;

 

(iii) immediately after giving effect to the transaction, no Event of Default or Default has occurred and is continuing; and

 

(iv) the Company delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and the supplemental indenture (if any) comply with this Indenture.

 

(b) Subject to Article 3, upon the consummation of any transaction effected in accordance with these provisions, if the Company is not the resulting, surviving or transferee Person, the resulting, surviving or transferee Person shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the Notes with the same effect as if such successor Person had been named as the Company in this Indenture. Upon such substitution, except in the case of a lease, the Company will be released from its obligations under the Notes and this Indenture.

 

ARTICLE 6

 

DEFAULT AND REMEDIES

 

Section 6.01. Events of Default.

 

 An “Event of Default” occurs with respect to the Notes if:

 

(a) the Company defaults in payment of the Fundamental Change Repurchase Price with respect to any Note, when such becomes due and payable;

 

(b) the Company defaults in the payment of the Accreted Principal Amount of any Note when due at maturity, redemption, upon repurchase or otherwise (including, without limitation, upon the exercise by a Holder of its right to require the Company to repurchase such Notes pursuant to and in accordance with Articles 3 or 4 hereof);

 

(c) the Company fails to issue any notice of a Change in Control as required under Section 3.01(a) of this Indenture, and such default continues for a period of three Business Days;

 

(d) the Company fails to comply with its obligation to convert the Notes into Common Stock or other property pursuant to and in accordance with Article 10 upon exercise of a Holder’s right to convert its Notes pursuant to Article 10;

 

(e) other than as set forth in paragraph (f), the Company fails to comply with any of its other covenants or agreements in the Notes or this Indenture and fails to cure (or obtain a waiver of) such default, within 45 days after the Company receives a notice of such default by the Trustee or by Holders of not less than 25% in Accreted Principal Amount of the Notes then outstanding;

 

(f) the Company fails to comply with its covenants or agreements in Article V of this Indenture and fails to cure such default within 3 Business Days;

 

(g) the Company or any Significant Subsidiary fails to pay principal when due (whether at stated maturity or otherwise) or an uncured default that results in the acceleration of maturity, of any indebtedness for borrowed money of the Company or any of its Significant Subsidiaries in an aggregate amount in excess of $10,000,000 (or its foreign currency equivalent), unless such indebtedness is discharged, or such acceleration is rescinded, stayed or annulled, within a period of 30 calendar days after written notice of such failure or uncured default is given to the Company by the Trustee or to the Company and the Trustee by the Holders of not less than 25% in Accreted Principal Amount of the Notes then outstanding; provided that if any such failure or acceleration referred to above shall cease or be cured, waived, rescinded or annulled, then the resulting Event of Default shall be deemed not to have occurred;

 

(h) the Company or any Significant Subsidiary, pursuant to or under or within the meaning of any Bankruptcy Law, (i) commences a voluntary case or proceeding; (ii) consents to the entry of an order for relief against it in an involuntary case or proceeding or the commencement of any case against it; (iii) consents to the appointment of any receiver, trustee, assignee, liquidator, custodian or similar official of it or for any substantial part of its property; (iv) makes a general assignment for the benefit of its creditors; (v) files a petition in bankruptcy or answer or consent seeking reorganization or relief; or (vi) consents to the filing of such petition or the appointment of or taking possession by any receiver, trustee, assignee, liquidator, custodian or similar official;

 

(i) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Company or any Significant Subsidiary in an involuntary case or proceeding, or adjudicates the Company or any Significant Subsidiary insolvent or bankrupt; (ii) appoints any receiver, trustee, assignee, liquidator, custodian or similar official of the Company or any Significant Subsidiary or for any substantial part of any such entity’s property; or (iii) orders the winding up or liquidation of the Company or any Significant Subsidiary, and the order or decree remains unstayed and in effect for 60 consecutive days (an Event of Default specified in clause (h) or (i) a “Bankruptcy Default”); or

 

(j) the Company or any of its Significant Subsidiaries fails to pay final non-appealable judgments entered by a court or courts of competent jurisdiction aggregating in excess of $10,000,000 (net of any amounts as to which a reputable and solvent third party insurer has accepted full coverage), which judgments are not paid, discharged, bonded or stayed for a period of 60 days.

 

Section 6.02. Acceleration.

 

 If an Event of Default, other than a Bankruptcy Default, occurs and is continuing under this Indenture, the Holders of at least 25% in aggregate of the Original Principal Amount of the Notes then outstanding, by written notice to the Company (and to the Trustee), may, and the Trustee at the written request of such Holders may, declare the then Accreted Principal Amount of the Notes to be immediately due and payable. Upon a declaration of acceleration, such Accreted Principal Amount will become immediately due and payable. If a Bankruptcy Default occurs, the Accreted Principal Amount of the Notes then outstanding will become immediately due and payable automatically without any declaration or other act on the part of the Trustee or any Holder.  If the Accreted Principal Amount of any Note is not paid when due (whether upon acceleration pursuant to this Section 6.02, upon the date set for payment of the Fundamental Change Repurchase Price pursuant to Article 3 hereof or upon the Maturity Date), then in each such case the overdue amount shall, to the extent permitted by law, bear cash interest at the rate of 2.00% per annum (“Default Interest”), compounded quarterly, which interest shall accrue from the date the Accreted Principal Amount was originally due to the payment date of such amount has been made or duly provided for.

 

Section 6.03. Other Remedies.

 

 If an Event of Default occurs and is continuing, the Trustee may pursue, in its own name or as trustee of an express trust, any available remedy by proceeding at law or in equity to collect the payment of Accreted Principal Amount of the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.

 

Section 6.04. Waiver of Past Defaults.

 

 Except as otherwise provided in Section 6.07 and Section 9.02(b), Holders of a majority in Original Principal Amount of the outstanding Notes by written notice to the Company and to the Trustee may waive any existing or future Default or Event of Default and its consequences and rescind and annul a declaration of acceleration with respect to such Event of Default and its consequences (other than an Event of Default (a) with respect to the failure to make payment of the Accreted Principal Amount or the Fundamental Change Repurchase Price, in each case with respect to any Note, (b) with respect to the failure to pay or deliver the consideration due upon conversion of the Notes or (c) with respect to any provision that under this Indenture cannot be modified or amended without the consent of the Holder of each outstanding Note affected) if:

 

(i) all existing Events of Default, other than the nonpayment of the Accreted Principal Amount, if any on the Notes that have become due solely by the declaration of acceleration, have been cured or waived, and

 

(ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction.

 

Upon such waiver, the Default will cease to exist, and any Event of Default arising therefrom will be deemed to have been cured, but no such waiver will extend to any subsequent or other Default or impair any right consequent thereon.

 

Section 6.05. Control by Majority.

 

 The Holders of a majority in Original Principal Amount of the outstanding Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that may involve the Trustee in personal liability, or that the Trustee determines may be unduly prejudicial to the rights of Holders of Notes not joining in the giving of such direction, and may take any other action it deems proper that is not inconsistent with any such direction received from Holders of Notes. Prior to taking any action hereunder, the Trustee shall receive indemnification satisfactory to it against all fees, losses and expenses (including attorney’s fees and expenses) incurred or to be incurred by taking such action.

 

Section 6.06. Limitation on Suits.

 

 A Holder may not institute any proceeding, judicial or otherwise, with respect to this Indenture or the Notes, or for the appointment of a receiver or trustee, or for any other remedy under this Indenture or the Notes, unless:

 

(i) the Holder has previously given to the Trustee written notice of a continuing Event of Default;

 

(ii) Holders of at least 25% in Original Principal Amount of outstanding Notes have made written request to the Trustee to institute proceedings in respect of the Event of Default in its own name as Trustee under this Indenture;

 

(iii) Holders have offered to the Trustee indemnity satisfactory to the Trustee against any costs, liabilities or expenses to be incurred in compliance with such request;

 

(iv) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

 

(v) during such 60-day period, the Holders of a majority in Original Principal Amount of the outstanding Notes have not given the Trustee a direction that is inconsistent with such written request.

 

Section 6.07. Rights of Holders to Receive Payment.

 

 Notwithstanding anything to the contrary, the right of a Holder of a Note to receive (x) the Accreted Principal Amount of a Note on the Maturity Date, (y) payment of the Fundamental Change Repurchase Price on the Fundamental Change Repurchase Date and (z) payment or delivery, as the case may be, of Common Stock, Cash and/or other property pursuant to and in accordance with Article 10 upon conversion of such Note on the date specified in Article 10, or to bring suit for the enforcement of any such payment or delivery, as the case may be, on or after such respective dates, may not be impaired or affected without the consent of that Holder.

 

Section 6.08. Collection Suit by Trustee.

 

 If an Event of Default specified in clause (a) or (b) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust for the whole amount owing with respect to the Notes, and such further amount as is sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee hereunder.

 

Section 6.09. Trustee May File Proofs of Claim.

 

 The Trustee may file proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee hereunder) and the Holders allowed in any judicial proceedings relating to the Company or its creditors or property, and is entitled and empowered to collect, receive and distribute any money, securities or other property payable or deliverable upon conversion or exchange of the Notes or upon any such claims. Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, if the Trustee consents to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agent and counsel, and any other amounts due the Trustee hereunder. Nothing in this Indenture will be deemed to empower the Trustee to authorize or consent to, or accept or adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

Section 6.10. Priorities.

 

 If the Trustee collects any money or property pursuant to this Article, it shall pay out the money or property in the following order:

 

First: to the Trustee for all amounts due under Section 7.07 hereof;

 

Second: to Holders for other amounts then due and unpaid in respect of the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable in respect of the Notes; and

 

Third: to the Company or as a court of competent jurisdiction may direct.

 

The Trustee, upon written notice to the Company, may fix a record date and payment date for any payment to Holders pursuant to this Section. At least 15 days before such record date, the Trustee shall mail to each Noteholder and the Company a notice that states the record date, the payment date and the amount to be paid.

 

Section 6.11. Restoration of Rights and Remedies.

 

  If the Trustee or any Holder has instituted a proceeding to enforce any right or remedy under this Indenture and the proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to the Holder, then, subject to any determination in the proceeding, the Company, the Trustee and the Holders will be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Company, the Trustee and the Holders will continue as though no such proceeding had been instituted.

 

Section 6.12. Undertaking for Costs.

 

 In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court may require any party litigant in such suit (other than the Trustee) to file an undertaking to pay the costs of the suit, and the court may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant (other than the Trustee) in the suit having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to (a) a suit by a Holder to enforce payment of (i) the Accreted Principal Amount on the Maturity Date or any Default Interest, (ii) payment of the Fundamental Change Repurchase Price on the Fundamental Change Repurchase Date, (iii) delivery of the Common Stock, Cash and/or other property pursuant to and in accordance with Article 10 upon conversion of such Note on the date specified in Article 10 or (iv) payment of the applicable portion of the Offer Amount with respect to any Notes properly tendered and accepted for payment in connection with an Asset Sale Offer, (b) a suit by Holders of more than 10% in Accreted Principal Amount of the outstanding Notes or (c) a suit by the Trustee.

 

Section 6.13. Rights and Remedies Cumulative.

 

 No right or remedy conferred or reserved to the Trustee or to the Holders under this Indenture is intended to be exclusive of any other right or remedy, and all such rights and remedies are, to the extent permitted by law, cumulative and in addition to every other right and remedy hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or exercise of any right or remedy hereunder, or otherwise, will not prevent the concurrent assertion or exercise of any other right or remedy.

 

Section 6.14. Delay or Omission Not Waiver.

 

 No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default will impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

ARTICLE 7

 

THE TRUSTEE

 

Section 7.01. General.

 

  (a)  The duties and responsibilities of the Trustee are as provided by the Trust Indenture Act and as set forth herein. Whether or not expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee is subject to this Article.

 

(b) Except during the continuance of an Event of Default, the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations will be read into this Indenture against the Trustee. In case an Event of Default has occurred and is continuing, the Trustee shall exercise those rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

 

(c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

 

(1)           this Subsection shall not be construed to limit the effect of Subsection (b) of this Section;

(2)           the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and

(3)           the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of the required percentage (as set forth in the relevant provisions of the Indenture) in principal amount of the Notes, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Notes.

 

(d)  Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

 

Section 7.02. Certain Rights of Trustee.

 

 Subject to Trust Indenture Act Sections 315(a) through (d) (to which this Indenture is hereby subject):

 

(a) The Trustee may conclusively rely, and will be protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document, but, in the case of any document which is specifically required to be furnished to the Trustee pursuant to any provision hereof, the Trustee shall examine the document to determine whether it conforms to the form requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

 

(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel, or both, each conforming to Section 12.06 and the Trustee will not be liable for any action it takes or omits to take in reliance on the certificate or opinion.

 

(c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care.

 

(d) The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders, unless such Holders have offered to the Trustee security or indemnity satisfactory to it against the fees, costs, expenses and liabilities that might be incurred by it in compliance with such request or direction.

 

(e) The Trustee will not be liable for any action it takes or omits to take that it believes to be authorized or within its rights or powers or for any action it takes or omits to take in accordance with the direction of the Holders in accordance with Section 6.05 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture.

 

(f) The Trustee may consult with counsel of its selection, and the advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(g) No provision of this Indenture will require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder, or in the exercise of its rights or powers, unless it receives indemnity satisfactory to it against any fee, loss, liability or expense.

 

(h) The Trustee shall have no duty to inquire as to performance of the Company with respect to the covenants contained in Article 4. In addition, the Trustee shall not be deemed to have knowledge of a Default or an Event of Default except (i) a Default or Event of Default occurring pursuant to Section 6.01(a) and 6.01(b) or (ii) any Default or Event of Default of which a Responsible Officer of the Trustee shall have received actual written notification from the Company or the Holders of at least 25% in Original Principal Amount of Notes then outstanding or obtained actual knowledge.

 

(i) The rights, privileges, protections, immunities and benefits given to the Trustee including, without limitation, its rights to be indemnified, are extended to and shall be enforced by the Trustee in its capacities hereunder and each agent, custodian and other person employed to act hereunder.

 

(j) The permissive rights of the Trustee to take certain actions under this Indenture shall not be construed as a duty unless so specified herein.

 

(k) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

 

(m) The Trustee may request that the Company deliver a certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture.

 

(n) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

 

Section 7.03. Individual Rights of Trustee.

 

  The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not the Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Trust Indenture Act Sections 310(b) and 311.

 

Section 7.04. Trustee’s Disclaimer.

 

  The Trustee (a) makes no representation as to the validity or adequacy of this Indenture or the Notes, (b) is not accountable for the Company’s use or application of the proceeds from the Notes and (c) is not responsible for any statement in the Notes other than its certificate of authentication.

 

Section 7.05. Notice of Default.

 

  If any Default or Event of Default occurs and is continuing and is known to the Trustee, the Trustee will send notice of the Default or Event of Default to each Holder within 90 days after it occurs, unless the Default or Event of Default has been cured; provided that, except in the case of a Default (w) in the payment of Accreted Principal Amount of any Note, (x) in the payment of the Fundamental Change Repurchase Price on the Fundamental Change Repurchase Date, (y) in the payment or delivery of Common Stock, Cash and/or property pursuant to and in accordance with Article 10 upon conversion of such Note on the date specified in Article 10 or (z) in the payment of the applicable portion of the Offer Amount with respect to any Notes properly tendered and accepted for payment in connection with an Asset Sale Offer, the Trustee may withhold the notice if and so long as a Responsible Officer or committee of Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of the Holders. Notice to Holders under this Section will be given in the manner and to the extent provided in Trust Indenture Act Section 313(c).

 

Section 7.06. Reports by Trustee to Holders.

 

 As promptly as practicable after each June 1, beginning with the June 1 following the date of this Indenture, the Trustee will mail to each Holder, as provided in Trust Indenture Act Section 313(c), a brief report dated as of such June 1, covering the matters described in Trust Indenture Act Section 313(a), and file such reports with each stock exchange upon which the Notes are listed and with the Commission. The Company will promptly notify the Trustee in writing if and when the Notes are listed on any stock exchange and of any delisting thereof.

 

Section 7.07. Compensation and Indemnity.

 

  (a) The Company will pay the Trustee compensation as agreed upon in writing for its services. The compensation of the Trustee is not limited by any law on compensation of a Trustee of an express trust. The Company will reimburse the Trustee upon request for all out-of-pocket expenses, disbursements and advances incurred or made by the Trustee, including the compensation and expenses of the Trustee’s agents and counsel.

 

(b) The Company will indemnify the Trustee and any predecessor Truestee and their agents (which for purpose of this Section 7.07 shall include its officers, directors, employees and agents)for, and hold it harmless against, any and all loss, damage, claim or liability or expense incurred by it without negligence or willful misconduct on its part arising out of or in connection with the acceptance or administration of this Indenture and its duties under this Indenture and the Notes, including the costs and expenses of defending itself against any claim (whether asserted by the Company, a Holder or any other Person) or liability and of complying with any process served upon it or any of its officers in connection with the exercise or performance of any of its powers or duties under this Indenture and the Notes or in connection with enforcing the provisions of this Section 7.07.

 

(c) To secure the Company’s payment obligations in this Section, the Trustee will have a lien prior to the Notes on all money or property held or collected by the Trustee, in its capacity as Trustee, except money or property held in trust to pay principal or accreted value of particular Notes.

 

When the Trustee incurs expenses or renders services in connection with a Bankruptcy Default, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive the termination of this Indenture, and any earlier resignation or removal of the Trustee in accordance with Section 7.08.

 

Section 7.08. Replacement of Trustee.

 

  (a)  (i) The Trustee may resign at any time by written notice to the Company.

 

(ii) The Holders of a majority in the Original Principal Amount of the outstanding Notes may remove the Trustee by written notice to the Trustee.

 

(iii) If the Trustee is no longer eligible under Section 7.10 or in the circumstances described in Trust Indenture Act Section 310(b), any Holder that satisfies the requirements of Trust Indenture Act Section 310(b) may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

(iv) The Company may remove the Trustee if (A) the Trustee is no longer eligible under Section 7.10; (B) the Trustee is adjudged a bankrupt or an insolvent; (C) a receiver or other public officer takes charge of the Trustee or its property; or (D) the Trustee becomes incapable of acting.

 

A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section.

 

(b) If the Trustee has been removed by the Holders, Holders of a majority of the Original Principal Amount of the Notes then outstanding may appoint a successor Trustee with the consent of the Company. Otherwise, if the Trustee resigns or is removed, or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee. If the successor Trustee does not deliver its written acceptance within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority of the Original Principal Amount of the outstanding Notes may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee.

 

(c) Upon delivery by the successor Trustee of a written acceptance of its appointment to the retiring Trustee and to the Company, (i) the retiring Trustee will transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07(c), (ii) the resignation or removal of the retiring Trustee will become effective, and (iii) the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. Upon request of any successor Trustee, the Company will execute any and all reasonable instruments for fully and vesting in and confirming to the successor Trustee all such rights, powers and trusts. The Company will give notice of any resignation and any removal of the Trustee and each appointment of a successor Trustee to all Holders, and include in the notice the name of the successor Trustee and the address of its Corporate Trust Office.

 

(d) Notwithstanding replacement of the Trustee pursuant to this Section, the Company’s obligations under Section 7.07 will continue for the benefit of the retiring Trustee.

 

(e) The Trustee agrees to give the notices provided for in, and otherwise comply with, Trust Indenture Act Section 310(b).

 

Section 7.09. Successor Trustee by Merger.

 

 If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the resulting, surviving or transferee corporation or national banking association without any further act will be the successor Trustee with the same effect as if the successor Trustee had been named as the Trustee in this Indenture.

 

Section 7.10. Eligibility.

 

 This Indenture must always have a Trustee that satisfies the requirements of Trust Indenture Act Section 310(a) and has a combined capital and surplus of at least $25,000,000 as set forth in its most recent published annual report of condition.

 

Section 7.11. Money Held in Trust.

 

 The Trustee will not be liable for interest on any money received by it except as it may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law and except for money held in trust under Article 8.

 

ARTICLE 8

 

DISCHARGE

 

Section 8.01. Satisfaction and Discharge of this Indenture.

 

  (a)  This Indenture shall cease to be of further effect if either: (i) all outstanding Notes (other than Notes replaced pursuant to Section 2.07) have been delivered to the Trustee for cancellation, (ii) all outstanding Notes have become due and payable on the Maturity Date or on the Fundamental Change Repurchase Date in connection with any repurchase of all outstanding Notes or (iii) all outstanding Notes have been delivered for conversion pursuant to Article 10, and the Company irrevocably deposits or delivers, as the case may be, prior to the applicable date on which such payment is due and payable, or such conversion is to be settled, with the Trustee, the Paying Agent (if the Paying Agent is not the Company or any of its Affiliates) or the Conversion Agent Cash in respect of such payment or Common Stock, Cash and/or other property pursuant to and in accordance with Article 10 in respect of any such conversion on the Maturity Date, the Fundamental Change Repurchase Date or the date such conversion is to be settled, as the case may be; provided that, in all cases, the Company shall pay to the Trustee all other sums payable hereunder by the Company.

 

(b) Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 7.07 shall survive. The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture, at the cost and expense of the Company, on demand, accompanied by an Officers’ Certificate and an Opinion of Counsel pursuant to Section 12.05.

 

Section 8.02. Application of Trust Money.

 

 Subject to the provisions of Section 8.03, the Trustee, the Conversion Agent or a Paying Agent (as applicable) shall hold in trust, for the benefit of the Holders, all money, Common Stock or other consideration paid or delivered to it, as the case may be, pursuant to Section 8.01 and shall apply such money, Common Stock or other consideration in accordance with this Indenture and the Notes to the payment of the principal amount of (including the relevant Fundamental Change Repurchase Price) the Notes or delivery of the Common Stock, Cash and/or other property pursuant to and in accordance with Article 10, if applicable, payable or issuable, as the case may be, upon conversion of the Notes.

 

Section 8.03. Repayment to Company.

 

 The Trustee, the Conversion Agent and each Paying Agent shall promptly pay or deliver, as the case may be, to the Company upon request any excess money, Common Stock or other consideration (x) paid or delivered to them pursuant to Section 8.01 and (y) held by them at any time.

 

Subject to applicable abandoned property law, the Trustee, the Conversion Agent and each Paying Agent (as applicable) shall also pay or deliver, as the case may be, to the Company upon request any money, Common Stock or other consideration held by them for the payment of the principal amount of (including the relevant Fundamental Change Repurchase Price) and interest on, or the amount due in connection with any conversion of, the Notes that remains unclaimed for two years after a right to such money, Common Stock or other consideration has matured (which maturity shall occur, for the avoidance of doubt, on the Maturity Date, the Fundamental Change Repurchase Date, the Purchase Date or the date specified in Section 10.02(a), as the case may be); provided that the Trustee or such Paying Agent, before being required to make any such payment or delivery, may at the expense of the Company cause to be mailed to each Holder entitled to such money, Common Stock or other consideration or publish in a newspaper of general circulation in the City of New York notice that such money, Common Stock or other consideration remains unclaimed and that after a date specified therein, which shall be at least 30 days from the date of such mailing or publication, any unclaimed balance or portion of such money, Common Stock or other consideration then remaining will be repaid or re-delivered to the Company. After payment or delivery, as the case may be, to the Company, Holders entitled to such money, Common Stock or other consideration must look to the Company for payment or delivery as general creditors unless an applicable abandoned property law designates another Person.

 

Section 8.04. Reinstatement.

 

  If the Trustee, the Conversion Agent or any Paying Agent (as applicable) is unable to apply any money, Common Stock or other consideration in accordance with Section 8.02 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no payment or delivery, as the case may be, had occurred pursuant to Section 8.01 until such time as the Trustee or such Paying Agent is permitted to apply all such money in accordance with Section 8.02; provided that if the Company has made any payment of the principal amount of (including the relevant Fundamental Change Repurchase Price or the Offer Amount pursuant to Section 4.10), or the amount due in connection with any conversion of, the Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive any such payment or delivery from the money, Common Stock or other consideration held by the Trustee or such Paying Agent.

 

ARTICLE 9

 

AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

Section 9.01. Amendments Without Consent of Holders.

 

 The Company and the Trustee may amend or supplement this Indenture or the Notes without notice to or the consent of any Noteholder:

 

(a) to cure any ambiguity, omission, defect or inconsistency in this Indenture or the Notes;

 

(b) to evidence a successor to the Company and the assumption by that successor of the obligations of the Company under this Indenture in accordance with Article 5 or Section 10.12 of this Indenture;

 

(c) to secure the obligations of the Company in respect of the Notes and this Indenture;

 

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

 

(e) to make any change to comply with the Trust Indenture Act, or any amendment thereto;

 

(f) to make any provision with respect to matters or questions arising under this Indenture that the Company may deem necessary or desirable and that shall not be inconsistent with provisions of this Indenture provided that such change or modification does not, in the good faith opinion of the Company’s Board of Directors, adversely affect the interests of the Holders of the Notes in any material respect;

 

(g) to provide for the addition or modification of any of the provisions of this Indenture as shall be necessary or desirable to provide for or facilitate the guarantee of the Notes by one or more guarantors;

 

(h) to increase the Conversion Rate; provided that the increase will not adversely affect the interest of the Holders of the Notes; and

 

(i) to make any change that does not adversely affect the rights of any Holder of the Notes.

 

Section 9.02. Amendments With Consent of Holders.

 

  (a)  Except as otherwise provided in Section 6.07 or paragraph (b) of this Section, the Company and the Trustee may amend this Indenture and the Notes with the written consent of the Holders of at least a majority in Original Principal Amount of the outstanding Notes, and the Holders of a majority of the Original Principal Amount of Notes then outstanding by written notice to the Trustee may, on behalf of the Holders of such Notes waive any existing or past Default under this Indenture and its consequences, except an uncured Default (i) in the payment of the Accreted Principal Amount of any Note or Default Interest, (ii) in the payment of the Fundamental Change Repurchase Price with respect to any Note, (iii) in the payment of the applicable portion of the Offer Amount with respect to any Notes properly tendered and accepted for payment in connection with an Asset Sale Offer (iv) in the payment or delivery of the consideration due upon conversion of the Notes or (v) in respect of any provision that under this Indenture cannot be modified or amended without the consent of the Holder of each outstanding Note affected.

 

(b) Notwithstanding the provisions of paragraph (a), without the consent of each Holder affected, an amendment or waiver may not:

 

(i) reduce the Original Principal Amount or the Accreted Principal Amount on any Note or reduce the Fundamental Change Repurchase Price on any Note;

 

(ii) make any Note payable in any currency or securities other than that stated in the Note;

 

(iii) change the Maturity Date of any Note;

 

(iv) reduce the rate of accretion or Default Interest or the time for accretion or payment of interest of any Note;

 

(v) after a Change in Control, make any change that adversely affects the right of a Holder to require the Company to repurchase a Note upon the occurrence of a Change in Control;

 

(vi) impair the right to institute suit for the enforcement of any payment with respect to, or conversion of, the Notes;

 

(vii) make any change that adversely affects the right of a Holder to convert any Note; or

 

(viii) change this Section 9.02(b).

 

(c) It is not necessary for Noteholders to approve the particular form of any proposed amendment, supplement or waiver, but is sufficient if their consent approves the substance thereof.

 

(d) An amendment, supplement or waiver under this Section will become effective on receipt by the Trustee of written consents (including consents delivered in accordance with the Applicable Procedures with respect to Global Notes) from the Holders of the requisite percentage in Original Principal Amount of the outstanding Notes. After an amendment, supplement or waiver under this Section becomes effective, the Company will send to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. The Company will send photocopies of the applicable supplemental indentures to Holders upon request. Any failure of the Company to send such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.

 

Section 9.03. Effect of Consent.

 

  (a)  After an amendment, supplement or waiver becomes effective, it will bind every Holder unless it is of the type requiring the consent of each Holder affected. If the amendment, supplement or waiver is of the type requiring the consent of each Holder affected, the amendment, supplement or waiver shall bind each Holder that has consented to it and every subsequent Holder of a Note that evidences the same debt as the Note of the consenting Holder.

 

(b) If an amendment, supplement or waiver changes the terms of a Note, the Company or the Trustee may require the Holder to deliver it to the Trustee so that the Trustee may place an appropriate notation of the changed terms on the Note and return it to the Holder, or exchange it for a new Note that reflects the changed terms. The Trustee may also place an appropriate notation on any Note thereafter authenticated. However, the effectiveness of the amendment, supplement or waiver is not affected by any failure to annotate or exchange Notes in this fashion.

 

Section 9.04. Trustee’s Rights and Obligations.

 

  The Trustee shall receive, and will be fully protected in conclusively relying upon, an Opinion of Counsel stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article is authorized or permitted by this Indenture and is the valid and binding obligation of the Company, enforceable in accordance with its terms, which Opinion of Counsel may contain customary limitations and qualifications. The Trustee shall additionally receive an Officers’ Certificate stating that the exception of any amendment, supplement or waiver is authorized or permitted by this Indenture.  If the Trustee has received such an Opinion of Counsel and Officers’ Certificate, it shall sign the amendment, supplement or waiver so long as the same does not adversely affect the rights of the Trustee. The Trustee may, but is not obligated to, execute any amendment, supplement or waiver that affects the Trustee’s own rights, duties, liabilities or immunities under this Indenture. For the avoidance of doubt, the Trustee is also entitled to receive an Officers’ Certificate and Opinion of Counsel pursuant to Section 12.05 in connection with any amendment, supplement or waiver of any provision of the Indenture.

 

ARTICLE 10

 

CONVERSION

 

Section 10.01. Conversion Privilege.

 

  Subject to and upon compliance with the provisions of this Article 10, any applicable limitations on exercise by any Noteholder contained in the Exchange Agreement or the purchase agreement with the Company pursuant to which the Initial Notes were issued and to the limitations on issuance of Common Stock set forth in Section 10.24, a Noteholder shall have the right, at such Noteholder’s option, to convert all or any portion (if the portion to be converted is a minimum of $1,000 of then Accreted Principal Amount or an integral multiple of $1,000 in excess thereof) of such Noteholder’s Notes at any time and from time to time following the Closing Date at a conversion rate (the “Conversion Rate”) equivalent to 124.223 shares of Common Stock per $1,000 of then Accreted Principal Amount of Notes, subject to adjustment as set forth in this Article 10. Subject to any applicable limitations on exercise by any Noteholder contained in the Exchange Agreement or the purchase agreement with the Company pursuant to which the Initial Notes were issued and to the limitations on issuance of Common Stock set forth in Section 10.24, upon conversion of any Notes, the Company shall pay or deliver to the converting Noteholder shares of Common Stock, Cash in lieu of fractional shares of Common Stock as described in Section 10.02 and Section 10.03 and/or any other property pursuant to and in accordance with this Article 10 (the Company’s obligation to pay or deliver such consideration being herein called the “Conversion Obligation”).

 

Section 10.02. Conversion Procedures; Conversion Settlement.

 

  (a)  To convert a Note that is represented by a Certificated Note, a Noteholder must (1) complete and manually sign a Conversion Notice, a form of which is on the back of the Note, and deliver such Conversion Notice to the Conversion Agent, (2) surrender the Note to the Conversion Agent, (3) if required, furnish appropriate endorsement and transfer documents and (4) if required, pay all transfer or similar taxes. If a Noteholder holds a beneficial interest in a Global Note, to convert such beneficial interest, such Noteholder must comply with requirements (1) and (4) as set forth in the immediately preceding sentence and comply with the Applicable Procedures. The first date on which all of the requirements set forth in the first sentence of this Section 10.02(a) (in the case of a Certificated Note) or the second sentence of this Section 10.02(a) (in the case of a Global Note or a beneficial interest therein) have been satisfied is referred to in this Indenture as the “Conversion Date.” The Conversion Agent shall, within one (1) Business Day of any Conversion Date, provide notice to the Company, as set forth in Section 12.03, of the occurrence of such Conversion Date. The Accreted Principal Amount shall have the accreted value as of the date of delivery of the notice described in clause (1) of the first sentence of this Section 10.02(a).

 

(b) Subject to any applicable limitations on exercise by any Noteholder contained in the Exchange Agreement or the purchase agreement with the Company pursuant to which the Initial Notes were issued and to the limitations on issuance of Common Stock set forth in Section 10.24, upon any conversion of any Note, the Company will deliver to converting Holders, in respect of each $1,000 of then Accreted Principal Amount of Notes being converted determined as of the date of delivery of the Conversion Notice, a “Settlement Amount” equal to the number of shares of Common Stock equal to the Applicable Conversion Rate (or, if applicable, the equivalent amount of Reference Property as determined in accordance with Section 10.12), Cash in lieu of fractional shares of Common Stock as provided in Section 10.03 and Cash in lieu of shares of Common Stock that cannot be issued pursuant to Section 10.24. The Settlement Amount will be delivered by the Company on the third Business Day immediately following the applicable Conversion Date. A Holder shall not be entitled to any payment (or shares) in connection with accretion occurring after the date specified in the last sentence of Section 10.02(a).

 

(c) A Holder receiving any Common Stock upon conversion shall not be entitled to any rights as a holder of Common Stock with respect to shares issuable upon conversion, including, among other things, the right to vote and receive dividends and notices of stockholder meetings, until the Conversion Date.

 

(d) No payment or adjustment will be made for dividends on, other distributions with respect to, or other transactions with respect to, any Common Stock except as specifically provided in this Article 10. Upon conversion of a Note, any Accreted Principal Amount will be deemed paid by the shares of Common Stock received by the Noteholder upon conversion. Delivery to the Noteholder of such shares of Common Stock shall thus be deemed to satisfy the Company’s obligation to pay the Accreted Principal Amount of such Note, such that such Note is deemed paid in full rather than cancelled, extinguished or forfeited.

 

(e) If a Noteholder converts more than one Note at the same time, the number of shares of Common Stock and any Cash in lieu of fractional shares of Common Stock due upon conversion or any other Reference Property shall be determined based on the total principal amount of the Notes converted.

 

(f) Upon surrender of a Note that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Note in an authorized denomination equal in principal amount to the unconverted portion of the Note surrendered.

 

(g) Notwithstanding the foregoing, with respect to any shares of Common Stock to be issued to a Holder in connection with any conversion hereunder, if the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Program and either (i) a registration statement covering the resale of such shares of Common Stock is effective under the Securities Act, (ii) such Holder has sold such shares of Common Stock pursuant to and in compliance with Rule 144 (assuming neither the transferor nor the transferee is an affiliate of the Company), (iii) such shares of Common Stock are eligible to be sold, assigned or transferred under Rule 144 (provided that such Holder provides the Company with reasonable assurances that such shares of Common Stock are eligible for sale, assignment or transfer under Rule 144 which shall include an opinion of Holder’s counsel as may be reasonably required by the Company or the transfer agent), or (iv) a restrictive legend is not required to be included on the certificate with respect to such shares of Common Stock under applicable requirements of the Securities Act (including, without limitation, controlling judicial interpretations and pronouncements issued by the Commission), then, at such Holder’s request, the Company shall deliver such shares of Common Stock, within three (3) Business Days following the Conversion Date, to such Holder by crediting (or causing the Company’s transfer agent to credit) such aggregate number of shares of Common Stock to which such Holder shall be entitled to such Holder's or its designee's balance account with DTC through its Deposit/Withdrawal At Custodian system.

 

Section 10.03. Fractional Shares.

 

  The Company will not issue a fractional share of Common Stock upon conversion of a Note. Instead, the Company shall pay Cash in lieu of fractional shares of Common Stock equal to the number of such fractional shares multiplied by the Closing Price on the relevant Conversion Date.

 

Section 10.04. Taxes on Conversion.

 

  If a Holder converts a Note, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of any shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder’s name. The Conversion Agent may refuse to deliver the certificates representing Common Stock being issued in a name other than the Holder’s name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because Common Stock is to be delivered in a name other than the Holder’s name.

 

Section 10.05. Company to Provide Common Stock.

 

  The Company will use all reasonable efforts to comply with all federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Notes and shall use all reasonable efforts to list or cause to have quoted such shares of Common Stock on each national securities exchange or in the over-the-counter market or such other market on which Common Stock is then listed or quoted.

 

In addition, if any shares of Common Stock that would be issuable upon conversion of Notes hereunder require registration with or approval of any governmental authority before such shares of Common Stock may be issued upon such conversion, the Company will use all reasonable efforts to cause such shares of Common Stock to be duly registered or approved, as the case may be.

 

Following conversion pursuant to this Article 10, the Company may place a legend on the shares of Common Stock that such stock is subject to certain resale restrictions, pursuant to the Securities Act of 1933, and the rules and regulations thereunder, in each case, as amended.

 

Section 10.06. Adjustment for Change in Capital Stock.

 

  If the Company issues shares of Common Stock as a dividend or distribution on shares of Common Stock, or if the Company effects a share split or share combination of the Common Stock, then the Conversion Rate will be adjusted based on the following formula:

 

	  	  
	
CR1 = CR0  ́

	
OS1

	
OS0

 

where,

 

	
  

	
CR1 =

	
the new Conversion Rate in effect immediately after the opening of business on the Ex-Date for such dividend or distribution or immediately after the opening of business on the effective date of such share split or combination, as the case may be;

 

	
  

	
CR0 =

	
the Conversion Rate in effect immediately prior to the opening of business on the Ex-Date for such dividend or distribution or the effective date of such share split or share combination, as applicable;

 

	
  

	
OS0 =

	
the number of shares of Common Stock outstanding immediately prior to such dividend or distribution, or the effective date of such share split or share combination, as applicable; and

 

	
  

	
OS1 =

	
the number of shares of Common Stock outstanding immediately after such dividend or distribution, or the effective date of such share split or share combination.

 

Any adjustment made under this Section 10.06 shall become effective immediately after the opening of business on the Ex-Date for such dividend or distribution, or immediately after the opening of business on the effective date of such share split or share combination, as applicable. If any dividend or distribution described in this Section 10.06 is declared but not so paid or made, or if the outstanding shares of Common Stock are not split or combined, as the case may be, effective as of the date the Board of Directors or a committee thereof determines not to pay such dividend or distribution or to effect such split or combination, the new Conversion Rate shall again be adjusted to the Conversion Rate that would then be in effect if such dividend or distribution or share split or share combination had not been declared.

 

Section 10.07. Adjustment for Rights, Options or Warrants Issue.

 

  If the Company distributes to all or substantially all holders of Common Stock any rights, warrants or options (other than pursuant to a stockholder rights plan, provided that such rights plan provides for the issuance of such rights with respect to the Common Stock issued upon conversion of the Notes) entitling them to subscribe for or purchase, for a period of not more than 60 days following the issuance of such rights, warrants or options, shares of Common Stock at a price per share less than the average of the Closing Prices of Common Stock for the ten consecutive Trading Days ending on, and including, the Trading Day immediately preceding the announcement of the issuance of such rights, warrants or options, then the Conversion Rate will be increased based on the following formula;

 

	  	  
	
CR1 = CR0  ́

	
OS0 + X

	
OS0 + Y

 

where,

 

	
  

	
CR1 =

	
the new Conversion Rate in effect immediately after the opening of business on the Ex-Date for such distribution;

 

	
  

	
CR0 =

	
the Conversion Rate in effect immediately prior to the opening of business on the Ex-Date for such distribution;

 

	
  

	
OS0 =

	
the number of shares of Common Stock outstanding immediately prior to the Ex-Date for such distribution;

 

	
  

	
X =

	
the aggregate number of shares of Common Stock issuable pursuant to such rights, warrants or options; and

 

	
  

	
Y =

	
the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, warrants or options divided by the average of the Closing Prices over the ten consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the announcement of the issuance of such rights, warrants or options.

 

Any increase made under this Section 10.07 shall be made successively whenever any such rights, warrants or options are issued and shall become effective immediately after the opening of business on the Ex-Date for such distribution. However, to the extent that shares of Common Stock are not delivered pursuant to such rights or upon the expiration or termination of such rights, warrants or options, the Conversion Rate shall be readjusted to the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights, warrants or options been made on the basis of the delivery of only the number of shares of Common Stock actually delivered.

 

For the purposes of this Section 10.07, in determining whether any rights, warrants or options entitle the holders thereof to subscribe for or purchase shares of Common Stock at less than the average of the Closing Prices for the ten consecutive Trading Days ending on, and including, the Trading Day immediately preceding the announcement of the issuance of such rights, warrants or option, and in determining the aggregate price payable to exercise such rights, warrants or options, there shall be taken into account any consideration received by the Company for such rights, warrants or options and any amount payable upon exercise or conversion thereof, with the value of such consideration, if other than cash, as shall be determined in good faith by the Board of Directors. If any right, warrant or option described in this Section 10.07 is not exercised or converted prior to the expiration of the exercisability or convertibility thereof, the new Conversion Rate shall again be adjusted to the Conversion Rate that would then be in effect if such right, warrant or option had not been so issued. Except in connection with any readjustment expressly provided for in this clause, in no event shall the Conversion Rate be decreased pursuant to this Section 10.07.

 

If the Company elects to make a distribution described in this Section 10.07 that has a per share of Common Stock value equal to more than 15% of the Closing Price of Common Stock on the day preceding the date of announcement for such distribution, the Company will be required to give notice to Holders at least 35 Business Days prior to the Ex-Date for such distribution.

 

Section 10.08. Adjustment for Other Distributions.

 

   (a)  If the Company distributes shares of the Company’s Capital Stock, evidences of the Company’s indebtedness or other assets or property of the Company to all or substantially all holders of Common Stock (excluding (i) dividends or distributions as to which adjustment is required to be effected pursuant to Section 10.06, (ii) rights, warrants or options as to which adjustment is required to be effected pursuant to Section 10.07, (iii) the initial distribution of rights issued pursuant to a stockholder rights plan, provided that such rights plan provides for the issuance of such rights with respect to Common Stock issued upon conversion of the Notes, (iv) dividends or distributions paid exclusively in cash and (v) spin-offs described below in Section 10.08(b)), then the Conversion Rate will be adjusted based on the following formula:

 

	  	  
	
CR1 = CR0  ́

	
SP0

	
SP0 – FMV

 

where,

 

	
  

	
CR1 =

	
the new Conversion Rate in effect immediately after the opening of business on the Ex-Date for such distribution;

 

	
  

	
CR0 =

	
the Conversion Rate in effect immediately prior to the opening of business on the Ex-Date for such distribution;

 

	
  

	
SP0 =

	
the average of the Closing Prices over the ten consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Date for such distribution; and

 

	
  

	
FMV =

	
the fair market value (as determined in good faith by the Board of Directors) of the shares of Capital Stock, evidences of indebtedness, assets or property distributed with respect to each outstanding share of Common Stock on the earlier of the record date or the Ex-Date for such distribution.

 

Any adjustment made under this Section 10.08 shall become effective immediately after the opening of business on the Ex-Date for such distribution. If the Board of Directors determines the FMV by reference to the actual or when-issued trading market for any securities, then, in doing so, it must consider the prices in such market over the same period used in computing SP0. Notwithstanding the foregoing, if FMV is equal to or greater than SP0, then, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall receive, on the date on which such Capital Stock, evidences of indebtedness, or other assets or property are distributed to holders of Common Stock, for each $1,000 principal amount of Notes, the amount of such Capital Stock, evidences of indebtedness, or other assets or property that a person who was a holder of record, on the record date for such distribution, of a number of shares of Common Stock equal to the Conversion Rate in effect immediately prior to the Ex-Date would have been entitled to receive pursuant to such distribution.

 

(b) Notwithstanding anything to the contrary in this Section 10.08, if there has been a payment of a dividend or other distribution on Common Stock in shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary, or other business unit, of the Company, which shares or equity interest are listed on a national securities exchange (a “Spin-Off”), the Conversion Rate will be increased based on the following formula:

 

	  	  
	
CR1 = CR0  ́

	
FMV0 + MP0

	  	
MP0

 

where,

 

	
  

	
CR1 =

	
the new Conversion Rate in effect immediately after the opening of business on the Ex-Date for such Spin-Off;

 

	
  

	
CR0 =

	
the Conversion Rate in effect immediately prior to the opening of business on the Ex-Date for such Spin-Off;

 

	
  

	
FMV0 =

	
the average of the Closing Prices of the Capital Stock or similar equity interest distributed to holders of Common Stock applicable to one (1) share of Common Stock over the first ten consecutive Trading Day period immediately following the Ex-Date for such Spin-Off (such period, the “Valuation Period”); and

 

	
  

	
MP0 =

	
the average of the Closing Prices per share of Common Stock over the Valuation Period.

 

The adjustment to the Conversion Rate pursuant to the immediately preceding formula will be made immediately after the open of business on the day after the last day of the applicable Valuation Period, but will be given effect immediately on and after the Ex-Date for the applicable Spin-Off. In no event shall the Conversion Rate be decreased pursuant to this Section 10.08.

 

(c) If the Company elects to make a distribution described in Section 10.08(a) or Section 10.08(b) that has a per share of Common Stock value equal to more than 15% of the Closing Price of Common Stock on the day preceding the declaration date for such distribution, the Company will be required to give notice to Holders at least 35 Business Days prior to the Ex-Date for such distribution.

 

If any such dividend or distribution described in Section 10.08(a) or (b) is declared but not paid or made, the new Conversion Rate shall again be adjusted to the Conversion Rate that would then be in effect if such dividend or right had not been declared.

 

Section 10.09. Adjustment for Cash Dividends.

 

  If the Company pays any cash dividends or distributions paid exclusively in cash to all or substantially all holders of Common Stock (other than (i) distributions described in Section 10.10 below, (ii) dividends or distributions made in connection with the Company’s liquidation, dissolution or winding-up or (iii) upon a Disposition Event) during any of its quarterly fiscal periods in an aggregate amount that, together with other cash dividends and distributions made during such quarterly fiscal period, exceeds the product of $0.00 (the “reference dividend”), multiplied by the number of shares of Common Stock outstanding on the record date of such distribution, then the Conversion Rate will be increased based on the following formula:

 

	  	  
	
CR1 = CR0  ́

	
SP0

	
SP0 – C

 

where,

 

	
  

	
CR1 =

	
the new Conversion Rate in effect immediately after the opening of business on the Ex-Date for such dividend or distribution;

 

	
  

	
CR0 =

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

 

	
  

	
SP0 =

	
the average of the Closing Prices over the ten consecutive Trading Day period ending on the Trading Day immediately preceding the earlier of the record date or the day prior to the Ex-Date for such dividend or distribution; and

 

	
  

	
C =

	
the amount in cash per share the Company distributes to holders of Common Stock that exceeds the reference dividend;

 

provided, however, that if C is equal to or greater than SP0, then, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive, on the date on which such cash dividend or distribution is distributed to holders of Common Stock and upon the same terms as such holders, for each $1,000 principal amount of Notes, the amount of cash to be paid as a dividend or distribution by the Company in respect of a number of shares of Common Stock equal to the Conversion Rate in effect on such Ex-Date. Any adjustment made under this Section 10.09 shall become effective immediately after the opening of business on the Ex-Date for such cash dividend or distribution.

 

If the Company elects to make a distribution described in this Section 10.09 that has a per share of Common Stock value equal to more than 15% of the Closing Price of Common Stock on the day preceding the declaration date for such distribution, the Company will be required to give notice to Holders at least 35 Business Days prior to the Ex-Date for such distribution.

 

If any such dividend or distribution described in this Section 10.09 is declared but not paid or made, the new Conversion Rate shall again be adjusted to the Conversion Rate that would then be in effect if such dividend or right had not been declared. Except in connection with any readjustment expressly provided for in the immediately preceding sentence, in no event shall the Conversion Rate be decreased pursuant to this Section 10.09.

 

The amount of the reference dividend is subject to adjustment in a manner inversely proportional to adjustments to the Conversion Rate; provided that no adjustment shall be made to the amount of the reference dividend for any adjustment made to the Conversion Rate under this Section 10.09.

 

Notwithstanding the foregoing, if an adjustment is required to be made under this Section 10.09 as a result of a distribution that is not a quarterly dividend, the reference dividend amount shall be deemed to be zero.

 

Section 10.10. Adjustment for Tender Offer.

 

 If the Company or any of its Subsidiaries makes a payment in respect of a tender offer or exchange offer for Common Stock, where the cash and value (as determined by the Board of Directors) of any other consideration included in the payment per share of Common Stock pursuant to such tender offer or exchange offer exceeds the Closing Price on the Trading Day next succeeding the last date (such last date, the “Expiration Date”) on which tenders or exchanges may be made pursuant to such tender offer or exchange offer, then the Conversion Rate will be increased based on the following formula:

 

	  	  
	
CR1 = CR0  ́

	
AC + (SP1  ́ OS1)

	  	
OS0  ́ SP1

 

where,

 

	
  

	
CR1 =

	
the new Conversion Rate in effect on the second day immediately following the Expiration Date;

 

	
  

	
CR0 =

	
the conversion rate in effect on the day immediately following the Expiration Date;

 

	
  

	
AC =

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

 

	
  

	
SP1 =

	
the average of the Closing Prices over the ten consecutive Trading Day period (the “Averaging Period”) commencing on, and including, the Trading Day next succeeding the Expiration Date;

 

	
  

	
OS1 =

	
the number of shares of Common Stock outstanding immediately after the Expiration Date (after giving effect to the purchase or exchange of shares pursuant to such tender offer or exchange offer); and

 

	
  

	
OS0 =

	
the number of shares of Common Stock outstanding immediately prior to the Expiration Date (prior to giving effect to such tender offer or exchange offer).

 

The adjustment to the Conversion Rate pursuant to the immediately preceding formula will be made immediately prior to the open of business on the day after the last day of the applicable Averaging Period, but will be given effect on the second day immediately following the Expiration Date. Notwithstanding anything to the contrary in this Indenture or the Notes, if the Company, or any of its Subsidiaries, is obligated to purchase Common Stock pursuant to any such tender offer or exchange offer but is permanently prevented by applicable law from effecting any such purchase or all such purchases are rescinded, then the Conversion Rate shall be readjusted to be the Conversion Rate that would be in effect if such tender offer or exchange offer had not been made. Except as provided in the immediately preceding sentence, if the application of this Section 10.10 to any tender offer or exchange offer would result in a decrease in the Conversion Rate, no adjustment shall be made for such tender offer or exchange offer under this Section 10.10.

 

Section 10.11. Provisions Governing Adjustment to Conversion Rate.

 

 Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company’s Capital Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (“Trigger Event”): (i) are deemed to be transferred with such shares of Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of Section 10.06, Section 10.07, Section 10.08, Section 10.09 or Section 10.10 (and no adjustment to the Conversion Rate under Section 10.06, Section 10.07, Section 10.08, Section 10.09 or Section 10.10 will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under Section 10.08, and, if applicable, Section 10.13. If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the date of this 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-Date with respect to new rights, options or warrants with such rights (and a termination or expiration of the existing rights, options or warrants without exercise by any of the holders thereof), except as set forth in Section 10.13. In addition, except as set forth in Section 10.13, 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 preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under Section 10.08 was made (including any adjustment contemplated in Section 10.13), (1) in the case of any such rights, options or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Rate shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a Cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights, 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 repurchase, 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.

 

Section 10.12. Disposition Events.

 

 If any of the following events (a “Disposition Event”) occurs:

 

(a) any reclassification of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination);

 

(b) a consolidation, merger, or other combination involving the Company; or

 

(c) a sale or conveyance to another Person of all or substantially all of the assets of the Company;

 

in each case, in which holders of outstanding Common Stock would be entitled to receive Cash, securities or other property for their shares of Common Stock, then, subject to the provisions of Section 3.01, (i) the right to convert each $1,000 Accreted Principal Amount of Notes into shares of Common Stock will be changed to a right to convert each $1,000 Accreted Principal Amount of Notes into the kind and amount of Cash, securities or other property that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such transaction would have owned or been entitled to receive (the “Reference Property”) (but such Accreted Principal Amount is to be determined based upon the accreted value as of the date of consummation of the Disposition Event and not any accretion after such date), and (ii) upon conversion the Notes shall be settled as set forth in this Section 10.12.

 

With respect to each $1,000 of Accreted Principal Amount of Notes surrendered for conversion after the effective date of any Disposition Event, upon conversion the Notes shall be settled in units of Reference Property, as follows: the Company shall deliver to the converting Noteholder a number of units of Reference Property (each such unit comprised of the kind and amount of Cash, securities or other property or assets that a holder of one share of Common Stock immediately prior to such Disposition Event would have owned or been entitled to receive based on the Weighted Average Consideration) equal to (1) the Accreted Principal Amount of Notes to be converted (but such Accreted Principal Amount is to be determined based upon the accreted value as of the date of consummation of the Disposition Event and not any accretion after such date), divided by $1,000, multiplied by (2) the then-applicable Conversion Rate.

 

The Company will deliver the Cash in lieu of fractional units of Reference Property as set forth pursuant to Section 10.03; provided that the amount of such Cash shall be determined as if references in such Section to “Closing Price of Common Stock” were instead a reference to the Closing Price of a unit of Reference Property composed of the kind and amount of Cash, securities or other property that a holder of one share of Common Stock immediately prior to such Disposition Event would have owned or been entitled to receive based on the Weighted Average Consideration.

 

“Weighted Average Consideration” shall mean the weighted average of the types and amounts of consideration received by the holders of the Common Stock entitled to receive Cash, securities or other property with respect to or in exchange for such Common Stock in any Disposition Event who affirmatively make such an election. The Company shall notify the Holders of the Weighted Average Consideration as soon as practicable after the Weighted Average Consideration is determined.

 

Upon the occurrence of a Disposition Event, to the extent the Notes are not otherwise required to be repurchased or converted in accordance with Article 3, the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture permitted under Section 9.02(b) providing for the conversion and settlement of the Notes as set forth in this Indenture. Such supplemental indenture shall amend the Conversion Obligation to provide for the delivery of Reference Property upon conversion as nearly equivalent in value to the Conversion Obligation as determined by the Company and shall provide for conversion settlement mechanics and adjustments that shall be as nearly equivalent as may be practicable to the conversion settlement mechanics and adjustments provided for in this Article 10. If, in the case of any Disposition Event, the Reference Property includes shares of stock or other securities and assets of a Person other than the successor or purchasing Person, as the case may be, in such reclassification, consolidation, merger, combination, sale or conveyance, then such supplemental indenture shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including to the extent required by the Board of Directors and practicable the provisions providing for the repurchase rights set forth in Article 3 herein.

 

In the event the Company shall execute a supplemental indenture pursuant to this Section 10.12, the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the reasons therefore, the kind or amount of cash, securities or property or asset that will comprise the Reference Property after any such Disposition Event, any adjustment to be made with respect thereto and that all conditions precedent have been complied with, and shall promptly mail notice thereof to all Noteholders. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Noteholder, at its address appearing on the Register provided for in this Indenture, within twenty days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture.

 

Section 10.13. Rights Issued in Respect of Common Stock Issued Upon Conversion.

 

   Each share of Common Stock issued upon conversion of Notes pursuant to this Article 10 shall be entitled to receive the appropriate number of rights (“Rights”), if any, and the certificates representing Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any rights plan (i.e., a poison pill) adopted by the Company, as the same may be amended from time to time, is in effect, (in each case, a “Shareholders Rights Plan”). Upon conversion of the Notes a Holder will receive, in addition to any Common Stock received in connection with such conversion, the Rights under the Shareholders Rights Plan, unless prior to any conversion, the Rights have separated from Common Stock, in which case no such Rights shall be delivered upon conversion. Any distribution of Rights pursuant to the Shareholders Rights Plan that would allow a Holder to receive upon conversion, in addition to shares of Common Stock, the Rights described therein (unless such Rights have separated from Common Stock) shall not constitute a distribution that would entitle the Holder to an adjustment to the Conversion Rate pursuant to Section 10.06.

 

Section 10.14. When Adjustment May Be Deferred.

 

 No adjustment in the Conversion Rate need be made unless the adjustment would require an increase or decrease of at least 1% of the Conversion Rate. Any adjustments that are less than 1% of the Conversion Rate will be carried forward and taken into account in determining any subsequent adjustment. In addition, the Company shall make any carry forward adjustments not otherwise effected on each anniversary of the date hereof, upon conversion of any Note, upon required repurchases of the Notes pursuant to Section 3.01, and on each day from and after the 24th Scheduled Trading Day prior to the Maturity Date. The Company may retain a firm of independent certified public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required pursuant to the terms hereof, and a certificate signed by such firm shall be conclusive evidence of the correctness of such adjustment absent manifest error or negligence.

 

Section 10.15. When No Adjustment Required.

 

 (a) No adjustment need be made for a transaction referred to in Section 10.06, 10.07, 10.08, 10.09 or 10.10 if Noteholders participate, without conversion, in the transaction or event that would otherwise give rise to an adjustment pursuant to such Section at the same time as holders of Common Stock participate with respect to such transaction or event and on the same terms as holders of Common Stock participate with respect to such transaction or event as if Noteholders, at such time, held a number of shares of Common Stock equal to the Applicable Conversion Rate, multiplied by the Accreted Principal Amount (expressed in thousands) of Notes held by such Noteholder, without having to convert their Notes.

 

(b) No adjustment need be made for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase Common Stock or any such security with respect to which adjustment has already been made.

 

(c) No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest.

 

(d) No adjustment need be made for a change in the par value or no par value of Common Stock.

 

(e) To the extent the Notes become convertible pursuant to this Article 10 into Cash, no adjustment need be made thereafter as to the Cash. Interest will not accrue on the Cash.

 

Section 10.16. Notice of Adjustment.

 

  Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Noteholders a notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent such notice and a certificate from the Company’s independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any Holder desiring inspection thereof.

 

Section 10.17. Notice of Certain Transactions.

 

  If (a) the Company takes any action that would require an adjustment in the Conversion Rate pursuant to Section 10.06, 10.07, 10.08, 10.09 or 10.10 (unless no adjustment is to occur pursuant to Section 10.14 or Section 10.15), (b) the Company takes any action that would require a supplemental indenture pursuant to Section 10.12, or (c) there is a liquidation or dissolution of the Company, then the Company shall mail to Noteholders and file with the Trustee and the Conversion Agent a notice stating the proposed Ex-Date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, combination, sale or conveyance. The Company shall file and mail the notice at least 15 days before such date.  Failure to file or mail the notice or any defect in it shall not affect the validity of the transaction.

 

Section 10.18. Company Determination Final.

 

  The Company shall be responsible for making all calculations called for hereunder and under the Notes. These calculations include, but are not limited to, the Weighted Average Price, the then Accreted Principal Amount of the notes being converted, the Closing Price, the Applicable Conversion Rate and the number of shares of Common Stock to be issued upon conversion of the Notes. The Company shall make all these calculations using commercially reasonable means and, absent manifest error, the Company’s calculations will be final and binding on Noteholders. The Company shall provide a schedule of the Company’s calculations to the Trustee, and the Trustee is entitled to rely upon the accuracy of the Company’s calculations without independent verification.

 

Section 10.19. Trustee’s Adjustment Disclaimer.

 

  The Trustee has no duty to determine when an adjustment under this Article 10 should be made, how it should be made or what it should be. The Trustee has no duty to determine whether a supplemental indenture under Section 10.12 need be entered into or whether any provisions of any supplemental indenture are correct. The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or assets issued upon conversion of Notes. The Trustee shall not be responsible for the Company’s failure to comply with this Article 10. Each Conversion Agent shall have the same protection under this Section 10.19 as the Trustee.

 

Section 10.20. Simultaneous Adjustments. For purposes of Section 10.08, Section 10.06 and Section 10.07, any dividend or distribution to which Section 10.08 is applicable that also includes shares of Common Stock, or rights, options or warrants to subscribe for or purchase shares of Common Stock (or both), shall be deemed instead to be (1) a dividend or distribution of the debt securities, assets or shares of Capital Stock other than such shares of Common Stock or rights (and any Conversion Rate adjustment required by Section 10.08 with respect to such dividend or distribution shall then be made) immediately followed by (2) a dividend or distribution of such shares of Common Stock or such rights (and any further Conversion Rate adjustment required by Section 10.06 and Section 10.07 with respect to such dividend or distribution shall then be made), except any shares of Common Stock included in such dividend or distribution shall not be deemed “outstanding immediately prior to such dividend or distribution” within the meaning of Section 10.06.

 

Section 10.21. Successive Adjustments.  After an adjustment to the Conversion Rate under this Article 10, any subsequent event requiring an adjustment under this Article 10 shall cause an adjustment to the Conversion Rate as so adjusted.

 

Section 10.22. Withholding Taxes.

 

  The Company may, at its option, set-off withholding taxes due with respect to Notes against payments of Common Stock, Cash in lieu of fractional shares of Common Stock on the Notes, if any and Cash in lieu of shares of Common Stock or Reference Property that cannot be issued pursuant to Section 10.24, if any. In the case of any such set-off against Common Stock delivered upon conversion of the Notes, such Common Stock shall be valued based on the average of the Closing Prices for the last ten Trading Days immediately preceding the date of payment of Common Stock and Cash in lieu of fractional shares of Common Stock, if any, and Cash in lieu of shares of Common Stock that cannot be issued pursuant to Section 10.24, if any.

 

Section 10.23. Restricted Shares.

 

  Any shares of Common Stock issued upon conversion of Transfer Restricted Notes that are “restricted securities” under Rule 144 are “Restricted Shares”. Any Restricted Shares shall bear appropriate legends regarding restrictions of the transfer of such Restricted Shares comparable to those set forth on Exhibit D.

 

Section 10.24. Limitation on Issuance of Common Stock.

 

 Notwithstanding any other provision of this Indenture, no Notes of any Holder shall be convertible into Common Stock under this Indenture to the extent that after such conversion such Holder would own more than 19.99% of the currently outstanding Common Stock of the Company (the “Regulatory Cap”) unless the Company shall have obtained the prior approval of its stockholders to the issuance of Common Stock upon conversion of the Notes (“Conversion Shares”) to any Holder, which, after such conversion would beneficially own shares of Common Stock in excess of the Regulatory Cap (“Shareholder Approval”); provided, however, that no Conversion Shares issued to such Holder (or, if necessary under applicable law or listing requirements, Conversion Shares issued to any other Holder) prior to any such stockholder approval shall be entitled to vote on any proposal submitted to Company stockholders to approve the issuance of Conversion Shares in excess of the Regulatory Cap.  The Company hereby agrees that (i) it shall seek stockholder approval to the issuance of the Conversion Shares in accordance with the terms of this Indenture, (ii) will use its reasonable efforts to obtain such approval and (iii) management of the Company shall recommend that the stockholders give such approval.

 

ARTICLE 11

 

REDEMPTION

 

Section 11.01. No Right to Redeem.

 

   Other than in connection with a repurchase on a Change in Control on the terms and under the circumstances set forth in Article 3, the Notes shall not be redeemable before the Maturity Date at the option of the Company.

 

ARTICLE 12

 

MISCELLANEOUS

 

Section 12.01. Trust Indenture Act of 1939.

 

 The mandatory provisions of Trust Indenture Act (as they apply to trust indentures) are intended to be applicable to, and shall govern, this Indenture and the Notes.  If any express provision of this Indenture limits, qualifies, or conflicts with another provision which is required or deemed to be included in this Indenture by the Trust Indenture Act, such required or deemed provision shall control to the extent of such conflict.

 

Section 12.02. Noteholder Communications; Noteholder Actions.

 

  (a) The rights of Holders to communicate with other Holders with respect to this Indenture or the Notes are as provided by the Trust Indenture Act, and the Company and the Trustee shall comply with the requirements of Trust Indenture Act Sections 312(a) and 312(b). Neither the Company nor the Trustee will be held accountable by reason of any disclosure of information as to names and addresses of Holders made pursuant to this Indenture.

 

(b) Subject to Section 1.04, the Trustee may make reasonable rules for action by or at a meeting of Holders, which will be binding on all the Holders.

 

(c) Any act by the Holder of any Note binds that Holder and every subsequent Holder of a Note that evidences the same debt as the Note of the acting Holder, even if no notation thereof appears on the Note.

 

(d) The Company may, but is not obligated to, fix a record date (which need not be within the time limits otherwise prescribed by Trust Indenture Act Section 316(c)) for the purpose of determining the Holders entitled to act with respect to any amendment or waiver or in any other regard, except that during the continuance of an Event of Default, only the Trustee may set a record date as to notices of Default, any declaration or acceleration or any other remedies or other consequences of the Event of Default. If a record date is fixed, those Persons that were Holders at such record date and only those Persons will be entitled to act, or to revoke any previous act, whether or not those Persons continue to be Holders after the record date. No act will be valid or effective for more than 90 days after the record date.

 

Section 12.03. Notices.

 

 (a)  Any notice or communication to the Company will be deemed given if in writing (i) when delivered in person or (ii) five days after mailing when mailed by first class mail, or (iii) when sent by facsimile transmission, with transmission confirmed, or electronic mail in PDF format. Any notice to the Trustee will be effective only upon receipt. In each case the notice or communication should be addressed as follows:

 

	
  

	
if to the Company:

 

	
  

	
Cadiz Inc.

 

	
  

	
550 South Hope Street, Suite 2850

 

	
  

	
Los Angeles, CA 90017

 

	
  

	
Attention:  Chief Financial Officer

 

	
  

	
Fax:  213-271-1614

 

	
  

	
if to the Trustee:

	
  

	
The Bank of New York Mellon Trust Company, N.A.

 

	
  

	
400 South Hope Street, Suite 400

 

	
  

	
Los Angeles, CA 90071

 

	
  

	
Attention:  Corporate Unit

 

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

 

(b) In addition to the foregoing, the Trustee agrees to accept and act upon notice, instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods. If the Company elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Company agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk or interception and misuse by third parties. Except as otherwise expressly provided with respect to published notices, any notice or communication to a Holder will be deemed given when mailed to the Holder at its address as it appears on the Register by first class mail or, as to any Global Note registered in the name of the Depository or its nominee, in accordance with the Applicable Procedures. Copies of any notice or communication to a Holder, if given by the Company, will be mailed to the Trustee at the same time. Any defect in mailing a notice or communication to any particular Holder will not affect its sufficiency with respect to other Holders.

 

(c) Where this Indenture provides for notice, the notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and the waiver will be the equivalent of the notice. Waivers of notice by Holders must be filed with the Trustee, but such filing is not a condition precedent to the validity of any action taken in reliance upon such waivers.

 

Section 12.04. Communication by Holders with Other Holders.

 

 Noteholders may communicate pursuant to Section 312(b) of the Trust Indenture Act with other Noteholders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have the protection of Section 312(c) of the Trust Indenture Act.

 

Section 12.05. Certificate and Opinion as to Conditions Precedent.

 

 Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate and Opinion of Counsel stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with.

 

Section 12.06. Statements Required in Certificate or Opinion.

 

 Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture may include:

 

(1) a statement that each person signing the certificate or opinion has read the covenant or condition and the related definitions;

 

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statement or opinion contained in the certificate or opinion is based;

 

(3) a statement that, in the opinion of each such person, that person has made such examination or investigation as is necessary to enable the person to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(4) a statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with, provided that an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials.

 

Section 12.07. Legal Holiday.

 

 A “Legal Holiday” is any day other than a Business Day. If any specified date (including a date for giving notice) is a Legal Holiday, the action shall be taken on the next succeeding day that is not a Legal Holiday, and, if the action to be taken on such date is a payment in respect of the Notes, no interest shall accrue for the intervening period.

 

Section 12.08. Rules by Trustee, Paying Agent, Conversion Agent and Registrar.

 

 The Registrar, Conversion Agent and the Paying Agent may make reasonable rules for their functions.

 

Section 12.09. Governing Law; Waiver of Jury Trial.

 

 THIS INDENTURE AND EACH NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF).

 

EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 12.10. No Adverse Interpretation of Other Agreements.

 

 This Indenture may not be used to interpret another indenture or loan or debt agreement of the Company or any Subsidiary of the Company, and no such indenture or loan or debt agreement may be used to interpret this Indenture.

 

Section 12.11. Successors.

 

 All agreements of the Company in this Indenture and the Notes will bind its successors. All agreements of the Trustee in this Indenture will bind its successor.

 

Section 12.12. Counterparts.

 

 The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this 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 12.13. Severability.

 

 In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

 

Section 12.14. Table of Contents and Headings.

 

 The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and in no way modify or restrict any of the terms and provisions of this Indenture.

 

Section 12.15. No Liability of Directors, Officers, Employees, Incorporators, Members and Stockholders.

 

 No director, officer, employee, incorporator, member or stockholder of the Company, as such, will have any liability for any obligations of the Company under the Notes or this Indenture, including by way of an Officers’ Certificate, or for any claim based on, in respect of, or by reason of, such obligations. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

 

Section 12.16. U.S.A. Patriot Act.

 

 The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. 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 this 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 U.S.A. Patriot Act.

 

Section 12.17. Force Majeure.

 

 In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

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

 

	
  

	
CADIZ INC.,

 

	
  

	
as Issuer

 

	 	/s/ Timothy J. Shaheen
	 	Name:  Timothy J. Shaheen 
	 	Title:  Chief Financial Officer and Secretary 

 

 

 

	
  

	
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

 

	
  

	
as Trustee

 

	 	/s/ R. Tarnas
	 	Name:  R. Tarna
	 	Title:  Vice President

 

  

  

  

SCHEDULE I

 

The following table sets forth the Accreted Principal Amount per $1,000 Original Principal Amount of Notes as of the specified dates during the period from the Closing Date through the Maturity Date.

 

	  	
Accreted Principal Amount

	
Date

	
3/05/2013

	
1,000

	
6/05/2013

	
1,017

	
9/05/2013

	
1,036

	
12/05/2013

	
1,054

	
3/05/2014

	
1,073

	
6/05/2014

	
1,091

	
9/05/2014

	
1,111

	
12/05/2014

	
1,131

	
3/05/2015

	
1,151

	
6/05/2015

	
1,171

	
9/05/2015

	
1,192

	
12/05/2015

	
1,213

	
3/05/2016

	
1,235

	
6/05/2016

	
1,257

	
9/05/2016

	
1,279

	
12/05/2016

	
1,302

	
3/05/2017

	
1,325

	
6/05/2017

	
1,348

	
9/05/2017

	
1,372

	
12/05/2017

	
1,397

	
3/05/2018

	
1,422

 

The Accreted Principal Amount for a Note between the dates listed above will include an amount reflecting the additional principal accretion that has accrued as of such date since the immediately preceding date in the table at an accretion rate of 7.00% per annum.

  

  

  

EXHIBIT A

 

 

[FACE OF NOTE]

 

THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT. THE HOLDER OF THIS NOTE MAY REQUEST THE FOLLOWING INFORMATION WITH RESPECT TO THIS NOTE: ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY. SUCH INFORMATION WILL PROMPTLY BE MADE AVAILABLE UPON REQUEST AND WILL BE PROVIDED BY THE CHIEF FINANCIAL OFFICER OF CADIZ INC. AT 550 SOUTH HOPE STREET, SUITE 2850 LOS ANGELES, CA 90017 FAX:  213-271-1614.

 

 

CADIZ INC.

 

 

7.00% Convertible Senior Note due 2018

No.                                                                                                                                          CUSIP No. [n]

                                                                                                                                          ISIN No. [n]

 

CADIZ Inc., a Delaware corporation (the “Company,” which term includes any successor under the Indenture hereinafter referred to), for value received, promises to pay to Cede & Co. or its registered assigns, the principal sum of [n] [set forth on Schedule I hereto]1 on March 5, 2018.

 

Initial Accretion Rate: The Notes shall accrete at a rate equal to 7.00% per annum (compounded quarterly).

 

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which will for all purposes have the same effect as if set forth at this place.

  

 

1      This schedule should be included only if the Note is a Global Note.

Exh. A-

  

  

  

 

IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officer.

 

 

 

	
  

	
CADIZ INC.

 

By:

 

Name:

 

Title:

 

(Form of Trustee’s Certificate of Authentication)

 

This is one of the 7.00% Convertible Senior Notes due 2018 described in the Indenture referred to in this Note.

 

Date:

 

 

	
  

	
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,

As Trustee

 

By:

 

Authorized Signatory

  

  

  

 

[REVERSE SIDE OF NOTE]

 

 

CADIZ INC.

 

7.00% Convertible Senior Note due 2018

 

Principal and Accretion.

 

The Company promises to pay the principal of this Note on March 5, 2018.

 

Pursuant to Section 2.15 of the Indenture, principal shall accrete on the principal amount of this Note (including the Original Principal Amount) at a rate equal to 7.00% per annum (compounded quarterly). The Accreted Principal Amount per $1,000 Original Principal Amount is set forth on Annex I attached hereto.

 

If the Accreted Principal Amount of any Note is not paid when due (whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the date set for payment of the Fundamental Change Repurchase Price pursuant to Article 3 of the Indenture, upon the Purchase Date for payment of the Offer Amount in connection with an Asset Sale Offer pursuant to Section 4.10 of the Indenture or upon the Maturity Date), then in each such case the overdue amount shall, to the extent permitted by law, bear cash interest at the rate of 2.00% per annum, compounded quarterly, which interest shall accrue from the date such Accreted Principal Amount was originally due to the payment date such amount has been made or duly provided for.

 

Paying Agent, Conversion Agent and Registrar.

 

Initially, the Trustee will act as Paying Agent and Registrar. The Company may appoint and change any Paying Agent, Conversion Agent, Registrar or co-registrar without notice, other than notice to the Trustee. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar. The Company may maintain deposit accounts and conduct other banking transactions with the Trustee in the normal course of business.

 

Indenture.

 

This is one of the Notes issued under an Indenture dated as of March 5, 2013 (as amended from time to time, the “Indenture”), between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee. Capitalized terms used herein are used as defined in the Indenture unless otherwise indicated. The terms of the Notes include those stated in the Indenture and those expressly made part of the Indenture by reference to the Trust Indenture Act. The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of all such terms. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Indenture will control. The Notes are general unsecured obligations of the Company.

 

Repurchase or Conversion at the Option of the Holders.

 

Upon the occurrence of a Change in Control, a Holder has the right, at such Holder’s option, to require the Company to repurchase all of such Holder’s Notes or any portion thereof (in minimum principal amounts of $1,000 or integral multiples of $1,000) on the Fundamental Change Repurchase Date at a price equal to the Fundamental Change Repurchase Price or to convert such Holder’s Notes. Any Notes not elected to be converted will be repurchased.

 

Redemption at the Option of the Company.

 

No sinking fund is provided for the Notes. Other than in connection with a repurchase on a Change in Control on the terms and under the circumstances set forth in Article 3 of the Indenture, the Notes shall not be redeemable before the Maturity Date at the option of the Company.

 

Conversion.

 

Subject to the provisions of the Indenture, the Holder hereof has the right, at its option, 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 (on the basis of the then Accreted Principal Amount) this Note or portion thereof that is at least $1,000 or an integral multiple of $1,000, into shares of Common Stock at a Conversion Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture. The Company shall pay Cash in lieu of fractional shares of Common Stock and as otherwise provided in the Indenture, and shall pay Cash in lieu of shares of Common Stock that cannot be issued pursuant to the terms of the Indenture, subject to notice and as otherwise provided for in the Indenture.

 

Defaults and Remedies.

 

Subject to certain exceptions, if an Event of Default, other than a Bankruptcy Default, occurs and is continuing under the Indenture, the Trustee or the Holders of at least 25% in Accreted Principal Amount of the Notes then outstanding, by written notice to the Company (and to the Trustee if the notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare the Accreted Principal Amount of the Notes to be immediately due and payable. Upon a declaration of acceleration, such principal and accreted value will become immediately due and payable. If a Bankruptcy Default occurs, the Accreted Principal Amount of the Notes then outstanding will become immediately due and payable automatically without any declaration or other act on the part of the Trustee or any Holder.

 

Amendment and Waiver.

 

Subject to certain exceptions set forth in the Indenture, the Indenture and the Notes may be amended, or default may be waived, with the consent of the Holders of a majority in Original Principal Amount of the outstanding Notes. Without notice to or the consent of any Holder, the Company and the Trustee may amend or supplement the Indenture or this Note to, among other things, cure any ambiguity, omission, defect or inconsistency in the Indenture or this Note that does not adversely affect the rights of any Holder of the Notes.

 

Registered Form; Denominations; Transfer; Exchange.

 

The Notes are in registered form without coupons in minimum denominations of $1,000 principal amount and integral multiples of $1,000. A Holder may register the transfer or exchange of Notes in accordance with the Indenture. The Trustee may require a Holder to furnish appropriate endorsements and transfer documents and to pay any taxes and fees as set forth in the Indenture. Pursuant to the Indenture, there are certain periods during which the Trustee will not be required to issue, register the transfer of or exchange any Note or certain portions of a Note.

 

Persons Deemed Owners.

 

The registered Holder of this Note may be treated as the owner of this Note for all purposes.

 

Unclaimed Money or Notes.

 

Subject to applicable abandoned property law, the Trustee and each Paying Agent shall pay or deliver, as the case may be, to the Company upon request any money, Common Stock or other consideration held by them for the payment of the Accreted Principal Amount of, or the amount due in connection with any conversion of, this Note that remains unclaimed for two years after a right to such money, Common Stock or other consideration has matured.

 

Trustee Dealings with the Company.

 

The Trustee, in its individual or any other capacity, may become the owner or pledgee of this Note and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not the Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Trust Indenture Act Sections 310(b) and 311.

 

No Recourse Against Others.

 

No director, officer, employee, incorporator, member or stockholder of the Company, as such, will have any liability for any obligations of the Company under this Note or the Indenture or for any claim based on, in respect of, or by reason of, such obligations. Each Holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of this Note.

 

Authentication.

 

This Note shall not be valid until an authorized officer of the Trustee signs manually the Trustee’s Certificate of Authentication on the other side of this Note.

 

Governing Law.

 

THE INDENTURE AND THE NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF).

 

Abbreviations.

 

Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts to Minors Act).

 

The Company will furnish a copy of the Indenture to any Holder upon written request and without charge.

  

  

  

[FORM OF TRANSFER NOTICE]

 

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto

 

Insert Taxpayer Identification No.                                                                                                                                          

 

 

Please print or typewrite name and address including zip code of assignee

 

the within Note and all rights thereunder, hereby irrevocably constituting and appointing

 

 

 

attorney to transfer said Note on the books of the Company with full power of substitution in the premises.

 

Your Signature:

 

 

 

 

(Sign exactly as your name appears on the other side of this Note)

 

Date:

 

Signature guaranteed by:2

 

 

 

By:                                                                      

  

 

2      The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

  

  

  

Cadiz Inc.

550 South Hope Street, Suite 2850

Los Angeles, CA 90017

Attention:  Chief Financial Officer

Fax:  213-271-1614

The Bank of New York Mellon Trust Company, N.A.

400 South Hope Street, Suite 400

Los Angeles, CA 90071

Attention:  Corporate Unit

 

CONVERSION NOTICE

 

To convert only part of this Note, state the Accreted Principal Amount to be converted (must be a minimum of $1,000 principal amount or an integral multiple of $1,000 principal amount): $________.

 

If only a portion of the Notes is to be converted, please indicate:

 

	
1.  

	
Accreted Principal Amount to be converted: U.S. $_________

 

	
2.  

	
Accreted Principal Amount and denomination of Notes representing unconverted Accreted Principal Amount to be issued: _________

 

Amount: U.S. $_________  Denominations: U.S. $_________

 

If you want the stock certificate made out in another person’s name or Cash in lieu of fractional shares of Common Stock paid to another person, fill in the form below:

 

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

 

(Print or type assignee’s name, address and zip code)

 

and irrevocably appoint

 

 

 

agent to transfer this Note on the books of the Company. The agent may substitute another to act for him or her.

	
Account Number:

	  
	
(if electronic book entry transfer)

	  
	
Transaction Code Number:

	  
	
(if electronic book entry transfer)

 

	  

 

 

Your Signature:

 

 

 

 

(Sign exactly as your name appears on the other side of this Note)

 

Date:

 

Signature guaranteed by:3

 

 

 

By:                                                                      

  

 

3      The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee.

  

  

  

 

Annex I

 

The following table sets forth the Accreted Principal Amount per $1,000 Original Principal Amount of Notes as of the specified dates during the period from the Closing Date through the Maturity Date.

 

	  	
Accreted Principal Amount

	
Date

	
3/05/2013

	
1,000

	
6/05/2013

	
1,017

	
9/05/2013

	
1,036

	
12/05/2013

	
1,054

	
3/05/2014

	
1,073

	
6/05/2014

	
1,091

	
9/05/2014

	
1,111

	
12/05/2014

	
1,131

	
3/05/2015

	
1,151

	
6/05/2015

	
1,171

	
9/05/2015

	
1,192

	
12/05/2015

	
1,213

	
3/05/2016

	
1,235

	
6/05/2016

	
1,257

	
9/05/2016

	
1,279

	
12/05/2016

	
1,302

	
3/05/2017

	
1,325

	
6/05/2017

	
1,348

	
9/05/2017

	
1,372

	
12/05/2017

	
1,397

	
3/05/2018

	
1,422

 

The Accreted Principal Amount for a Note between the dates listed above will include an amount reflecting the additional principal accretion that has accrued as of such date since the immediately preceding date in the table at an accretion rate of 7.00% per annum.

  

  

  

 

Schedule I4

 

No. ___

 

The initial principal amount of this Global Note is $________.

	

 

Date

	

 

Principal Amount of this Global Note

	

 

Notation Explaining Change in Principal Amount

	

 

Authorized Signature of Trustee

	  	  	  	  
	  	  	  	  

  

 

4      This schedule should be included only if the Note is a Global Note.

  

  

  

 

EXHIBIT B

 

 

DTC LEGEND

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN.

 

TRANSFERS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE TRANSFER PROVISIONS OF THE INDENTURE.

  

  

  

 

EXHIBIT C

 

 

OID LEGEND

 

THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT. THE HOLDER OF THIS NOTE MAY REQUEST THE FOLLOWING INFORMATION WITH RESPECT TO THIS NOTE: ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE DISCOUNT, ISSUE DATE AND YIELD TO MATURITY. SUCH INFORMATION WILL PROMPTLY BE MADE AVAILABLE UPON REQUEST AND WILL BE PROVIDED BY THE CHIEF FINANCIAL OFFICER OF CADIZ INC. AT 550 SOUTH HOPE STREET, SUITE 2850 LOS ANGELES, CA 90017 FAX:  213-271-1614.

  

  

  

 

EXHIBIT D

 

 

TRANSFER RESTRICTION LEGEND

 

THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR ANY APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

 

THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.

 

THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS NOTE AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.

  

  

  

 

EXHIBIT E

 

 

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION

 

OF TRANSFER OF TRANSFER RESTRICTED NOTES

 

	
Re:  

	
7.00% Convertible Senior Notes due 2018 (the “Notes”) of Cadiz Inc.                                                                                                                     

 

This certificate relates to $________ principal amount of Notes owned in (check applicable box)

 

 book-entry or  definitive form by _____________(the “Transferor”).

 

The Transferor has requested a Registrar or the Trustee to exchange or register the transfer of such Notes.

 

In connection with such request and in respect of each such Note, the Transferor does hereby certify that the Transferor is familiar with transfer restrictions relating to the Notes as provided in Section 2.13 of the Indenture dated as of March 5, 2013 between Cadiz Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Indenture”), and the transfer of such Note is being made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”) (check applicable box) or the transfer or exchange, as the case may be, of such Note does not require registration under the Securities Act because (check applicable box):

 

 Such Note is being transferred pursuant to an effective registration statement under the Securities Act.

 

 Such Note is being transferred outside the United States in an offshore transaction in accordance with Rule 904 under the Securities Act.

 

 Such Note is being acquired for the Transferor’s own account, without transfer.

 

 Such Note is being transferred to the Company or a Subsidiary (as defined in the Indenture) of the Company.

 

 Such Note is being transferred to a person the Transferor reasonably believes is a “qualified institutional buyer” (as defined in Rule 144A or any successor provision thereto (“Rule 144A”) under the Securities Act) that is purchasing for its own account or for the account of a “qualified institutional buyer”, in each case to whom notice has been given that the transfer is being made in reliance on such Rule 144A, and in each case in reliance on Rule 144A.

 

 Such Note is being transferred pursuant to and in compliance with an exemption from the registration requirements under the Securities Act in accordance with Rule 144 (or any successor thereto) (“Rule 144”) under the Securities Act.

 

 Such Note is being transferred pursuant to and in compliance with an exemption from the registration requirements of the Securities Act (other than an exemption referred to above) and as a result of which such Note will, upon such transfer, cease to be a “restricted security” within the meaning of Rule 144 under the Securities Act.

 

Date: __________

  

  

  

 

(Insert Name of Transferor)

 

OPTION OF HOLDER TO ELECT PURCHASE

 

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 of the Indenture, check the box below:

 

[           ] Section 4.10

 

Date:  _____________________

 

	
  

	
Your Signature:

	 

 

	
  

	
(Sign exactly as your name appears on the face of this Note)

 

Tax Identification No.:                                                                         

 

Signature Guarantee*:  __________________________________

 

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).ex10-41.htm

EXHIBIT 10.41

 

 

PRIVATE PLACEMENT PURCHASE AGREEMENT

 

This Private Placement Purchase Agreement (the “Agreement”) is made as of March 4, 2013 by and among the parties set forth on Exhibit A hereof (together, the “Purchasers”) and Cadiz, Inc. (the “Company”).

 

RECITALS

 

WHEREAS, in connection with the entry of that certain amended and restated credit agreement (the “Amended and Restated Credit Agreement”), to be entered into by and among the Company, Cadiz Real Estate LLC, LC Capital Master Fund, Ltd., as administrative agent, and the lenders party thereto (the “Current Lenders”), the Current Lenders and the Company are entering into an Exchange Agreement dated as of the date hereof (the “Exchange Agreement”) pursuant to which the Current Lenders are exchanging certain outstanding loans to the Company for $35,958,000 in original principal amount of the Company’s 7% Convertible Senior Notes due 2018 (the “Notes”) that will be issued pursuant to the provisions of an indenture (the “Indenture”) to be entered into between the Company and The Bank of New York Mellon Trust Company, N.A. (the “Trustee”) in the form attached hereto as Exhibit B.

 

WHEREAS, the Purchasers desire to purchase from the Company and the Company desires to sell to the Purchasers $17,500,000 in original principal amount of the Notes.

 

WHEREAS, the Conversion Shares (as defined below) will have the benefit of the Registration Rights Agreement, to be dated as of the Closing Date, by and among the Company and each of the parties that are signatories thereto (the “Registration Rights Agreement”), in the form attached hereto as Exhibit C.

 

WHEREAS, terms and expressions defined or construed in the Amended and Restated Credit Agreement shall have the same meanings or construction when used in this Agreement and the rules of usage set forth therein shall apply hereto, except (i) as amended below and (ii) where the context requires otherwise.

 

NOW THEREFORE, on and subject to the terms hereof, the parties hereto agree as follows:

 

ARTICLE I

 

PURCHASE OF NOTES

 

Subject to the terms set forth in this Agreement, at the Closing (as defined herein), the Company agrees to issue the Notes, and each Purchaser severally, and not jointly, agrees to purchase the principal amount of the Notes set out against its name as its purchase commitment in Exhibit A hereto at the purchase price of 100% of the principal amount of the Notes (the “Purchase Price”).

 

Subject to Section 5.1, the closing of the purchase and sale of the Notes (the “Closing”) shall occur on a date (the “Closing Date”) no later than three business days after the date of this Agreement.  At the Closing, (a) each Purchaser shall deliver or cause to be delivered to the Company its portion of the Purchase Price equivalent to its purchase commitment in Exhibit A hereto, and (b) the Company shall issue to each Purchaser the principal amount of Notes set out against such Purchaser’s name in Exhibit A hereto. Following the Closing Date, the Company shall use commercially reasonable efforts to issue global notes, in a form eligible for deposit with The Depository Trust Company.  Once the Notes become eligible to use the system of The Depositary Trust Company, each Purchaser shall promptly deliver their Notes back to the Trustee prior to the Company issuing the global notes.

 

ARTICLE II

 

REPRESENTATIONS AND

 

WARRANTIES OF THE PURCHASERS

 

Each Purchaser hereby makes the following representations and warranties (solely as to itself), each of which is and shall be true and correct on the date hereof and at the Closing, to the Company and all such representations and warranties shall survive the Closing:

 

Section 2.1 Power and Authorization.  In the case of any Purchaser that is an entity, the Purchaser is duly organized, validly existing and in good standing, and has the power, authority and capacity to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the Purchase contemplated hereby.

 

Section 2.2 Valid and Enforceable Agreement; No Violations.  This Agreement has been duly executed and delivered by the Purchaser and constitutes a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except that such enforcement may be subject to (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general principles of equity, whether such enforceability is considered in a proceeding at law or in equity (such qualifications in clauses (a) and (b) being the “Enforceability Exceptions”).  This Agreement and consummation of the Purchase will not violate, conflict with or result in a breach of or default under (i) the Purchaser’s organizational documents, (ii) any agreement or instrument to which the Purchaser is a party or by which the Purchaser or any of its assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to the Purchaser.

 

Section 2.3 Accredited Investor/Qualified Institutional Buyer.  The Purchaser is either (i) an “accredited investor” within the meaning of Rule 501(a) of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) (ii) has (and if applicable, its officers, employees, directors or equity owners have) either alone or with his, her or its purchaser representative or representatives, if any, such knowledge and experience in financial and business matters that he, she or it is capable of evaluating the merits and risks of an investment in the Securities or (iii) a “qualified institutional buyer” within the meaning of Rule 144A promulgated under the Securities Act (“Rule 144A”). The information the Purchaser has provided in writing to the Company as set forth on the Purchaser’s signature page hereto is true, correct and complete, as of the date hereof and as of the Closing Date in all material respects.

 

Section 2.4 No Related Party or 5% Stockholder Status.  The Purchaser and its affiliates (within the meaning of Rule 144 promulgated under the Securities Act) (a) collectively beneficially own and will beneficially own as of the Closing Date (after giving effect to the Purchase and prospective conversion of the Notes) (i) less than 5% of the Company’s outstanding common stock, par value $.01 per share (the “Common Stock”) and (ii) less than 5% of the aggregate number of votes that may be cast by holders of those outstanding securities of the Company that entitle the holders thereof to vote generally on all matters submitted to the Company’s stockholders for a vote (the “Voting Power”) or (b) if such Purchaser and its affiliates collectively beneficially owns and will beneficially own after the Closing Date (after giving effect to the Purchase and prospective conversion of the Notes) (i) 5% or more of the Common Stock and (ii) 5% or more of the Voting Power, it acknowledges and agrees that it will comply in all material respects with all applicable provisions of the Securities Exchange Act of 1934 as a result of such holdings.  The Purchaser, except as set forth in any Section 13 filings under the Exchange Act made by the Purchaser prior to the date hereof, is not a subsidiary, affiliate or, to its knowledge, otherwise closely-related to any director or officer of the Company or beneficial owner of 5% or more of the outstanding Common Stock or Voting Power.

 

Section 2.5 Restricted Notes and Stock.  The Purchaser (a) acknowledges (i) that the issuance of the Notes pursuant to this Agreement  and the issuance of any shares of Common Stock upon conversion of any of the Notes (the “Conversion Shares”) have not been registered, nor does the Company have a plan or intent to register such issuance of Notes or Conversion Shares, under the Securities Act or any state securities laws except with respect to the Conversion Shares as contemplated by the Registration Rights Agreement, (ii) the Notes and Conversion Shares are being offered and sold in reliance upon exemptions provided in the Securities Act and state securities laws for transactions not involving any public offering and, therefore, cannot be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of unless they are subsequently registered and qualified under the Securities Act and applicable state laws or unless an exemption from such registration and qualification is available (iii) the Notes and Conversion Shares are “restricted securities” as that term is defined in Rule 144 promulgated under the Securities Act and (iv) any and all certificates representing the Notes and Conversion Shares shall bear the Transfer Restriction Legend (in the case of the Notes and as defined in the Indenture) and the  legend set forth in the Notes (in the case of the Conversion Shares) and (b) is purchasing the Notes and Conversion Shares for investment purposes only for the account of the Purchaser and not with any view toward a distribution thereof or with any intention of selling, distributing or otherwise disposing of the Notes or Conversion Shares in a manner that would violate the registration requirements of the Securities Act. The Purchaser is able to bear the economic risk of holding the Notes and Conversion Shares for an indefinite period and has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risk of its investment in the Notes and Conversion Shares.

 

Section 2.6 No Illegal Transactions.  The Purchaser has not, directly or indirectly, and no person acting on behalf of or pursuant to any understanding with it has, engaged in any transactions in the securities of the Company (including, without limitation, any Short Sales (as defined below) involving any of the Company’s securities) since the time that the Purchaser was first contacted by the Company or any other person regarding the transactions contemplated by this Agreement or an investment in the Notes or the Company.   The Purchaser covenants that neither it nor any person acting on its behalf or pursuant to any understanding with it will engage, directly or indirectly, in any transactions in the securities of the Company (including Short Sales) prior to the time the transactions contemplated by this Agreement are publicly disclosed.  “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 of Regulation SHO promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers.  Solely for purposes of this Section 2.6, subject to the Purchaser’s compliance with its obligations under the U.S. federal securities laws and the Purchaser’s internal policies, “Purchaser” shall not be deemed to include any employees, subsidiaries or affiliates of the Purchaser that are effectively walled off by appropriate “Chinese Wall” information barriers approved by the Purchaser’s legal or compliance department (and thus have not been privy to any information concerning the transactions contemplated by this Agreement).

 

Section 2.7 Adequate Information; No Reliance.  The Purchaser acknowledges and agrees that (a) the Purchaser has been furnished with all materials it considers relevant to making an investment decision to enter into the purchase and sale of the Notes and has had the opportunity to review the Company’s filings and submissions with the Securities and Exchange Commission (the “SEC”), including, without limitation, all information filed or furnished pursuant to the Exchange Act and all information incorporated into such filings and submissions, (b) the Purchaser has sufficient knowledge and expertise to make an investment decision with respect to the transactions contemplated hereby, (c) the Purchaser has had a full opportunity to speak directly with directors, officers and “Affiliates” (as that term is defined in Rule 501(b) of Regulation D under the Securities Act) of the Company and to ask questions of the Company and such directors, officers and Affiliates of the Company concerning the Company, its business, operations, financial performance, financial condition and prospects, and the terms and conditions of the purchase and sale of the Notes, and to obtain such additional information as it deems necessary to verify the accuracy of the information furnished to it and has asked such questions, received such answers and obtained such information as it deems necessary, (d) the Purchaser has had the opportunity to consult with its accounting, tax, financial and legal advisors to be able to evaluate the risks involved in the purchase and sale of the Notes and to make an informed investment decision with respect to such purchase and sale and (e) the Purchaser is not relying, and has not relied, upon any statement, advice (whether accounting, tax, financial, legal or other), representation or warranty made by the Company or any of its affiliates or representatives, except for (A) the publicly available filings and submissions made by the Company with the SEC under the Exchange Act, and (B) the representations and warranties made by the Company in this Agreement.

 

Section 2.8 Guarantee. The Purchaser represents and warrants that it never has been represented, guaranteed, or warranted to the Purchaser by any officer or director of the Company, their agents or employees or any other person in connection with the Company, expressly or by implication, any of the following:

 

(a) the approximate or exact length of time that the Purchaser will be required to remain as the owner of the Notes;

 

(b) the exact amount of profit and/or amount or type of consideration, profits or losses (including tax benefits) to be realized, if any, by the Company; or

 

(c) that the past performance or experience of the officers and directors of the Company, or any other person connected with the Company, can predict the results of the ownership of the Notes or the overall success of the Company.

 

Section 2.9 Purchaser’s Reporting Requirement. The Company has made no representations to the Purchaser regarding the Purchaser’s reporting requirements with the SEC related to the Purchaser’s ownership in the Company, and the Purchaser acknowledges and agrees that it is the responsibility of the Purchaser to ensure that it complies with any disclosure and reporting requirements of the SEC.

 

Section 2.10 No Public Market.  The Purchaser understands that no public market exists for the Notes, and that there is no assurance that a public market will ever develop for the Notes.

 

Section 2.11 No General Solicitation or Advertising. The offer to enter into the purchase of the Notes was directly communicated to the Purchaser, and the Purchaser was able to ask questions of and receive answers concerning the terms of this transaction.  At no time was Purchaser presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or solicited or invited to attend a promotional meeting otherwise than in connection and concurrently with such communicated offer.

 

Section 2.12 Legal Opinions.  The Purchaser acknowledges and understands that a legal opinion is being delivered by counsel to the Company in reliance on, and assuming the accuracy of, the foregoing representations and warranties of the Purchaser.

 

ARTICLE III

 

REPRESENTATIONS AND

 

WARRANTIES OF THE COMPANY

 

The Company hereby makes the following representations and warranties, each of which is and shall be true and correct on the date hereof and at the Closing, to the Purchasers, and all such representations and warranties shall survive the Closing.

 

Section 3.1 Exchange Act Filings. The Company has filed or furnished, as applicable, on a timely basis all forms, statements, certifications, reports and documents required to be filed or furnished by it with the SEC pursuant to the Exchange Act or the Securities Act since December 31, 2011 (the “Company Reports”). The Company Reports, when they became effective or were filed with or furnished to the SEC, as the case may be, conformed in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations thereunder and none of such documents contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and any further documents so filed or furnished after the date hereof and on or prior to the Closing, when such documents become effective or are filed with the SEC, as the case may be, will conform in all material respects to the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the SEC thereunder and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. On or before the first business day following the date of this Agreement, the Company shall issue a publicly available press release or file with the SEC a Current Report on Form 8-K disclosing all material terms of the transactions contemplated hereby.

 

Section 3.2 Due Incorporation.  Each of the Company and each of its Subsidiaries has been duly organized and is validly existing as a corporation or other legal entity in good standing (or the foreign equivalent thereof) under the laws of its jurisdiction of incorporation or organization.  Each of the Company and its Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other legal entity in each jurisdiction in which its ownership or lease of its properties or the conduct of its business requires such qualification and has all power and authority (corporate or other) necessary to own or hold its properties and to conduct the businesses in which each is engaged, except where the failure to so qualify or have such power or authority (i) would not have and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the condition (financial or otherwise), results of operations, assets or business of the Company and its Subsidiaries, taken as a whole, or (ii) impair in any material respect the ability of the Company to perform its obligations under this Agreement or the Indenture or to consummate any transactions contemplated hereby or thereby (any such effect as described in clauses (i) or (ii), a “Material Adverse Effect”). As used in this Agreement, “Subsidiary” shall have the meaning set forth in Rule 1-02 of Regulation S-X of the SEC.

 

Section 3.3 Subsidiaries. The membership interests or capital stock, as applicable, of each Subsidiary have been duly authorized and validly issued, are fully paid and nonassessable and, except to the extent set forth in the Company Reports, are owned by the Company directly, free and clear of any claim, lien, encumbrance, security interest, restriction upon voting or transfer or any other claim of any third party.

 

Section 3.4 Due Authorization.  The Company has the full right, power and authority to enter into this Agreement, the Indenture and the Registration Rights Agreement and to perform and to discharge its obligations hereunder and thereunder; and this Agreement, the Indenture and the Registration Rights Agreement have been duly authorized, this Agreement has been, and at Closing the Indenture and Registration Rights Agreement will be, duly executed and delivered by the Company, and each such agreement constitutes or will constitute upon Closing a valid and binding obligation of the Company enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.

 

Section 3.5 The Notes and the Conversion Shares. The Notes have been duly authorized and, when issued and delivered upon sale, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture. The Conversion Shares have been duly authorized for issuance by the Company and, when issued in accordance with the terms of the Notes and the Indenture, will be validly issued, fully paid and nonassessable and free of any preemptive or similar rights.  The Notes and the Conversion Shares will be issued in compliance with all federal and state securities laws.

 

Section 3.6 Capitalization. The authorized capital stock of the Company consists of 70,000,000 shares of Common Stock, of which 15,452,756 shares of Common Stock were outstanding as of the close of business on March 1, 2013. All of the outstanding shares of Common Stock have been duly authorized and are validly issued, fully paid and nonassessable.  Other than 897,218 shares of Common Stock reserved for issuance under the Company’s employee benefit plans, stock option and employee stock purchase plans or other employee compensation plans as such plans are in existence on the date hereof and described in the Company Reports and 472,223 shares of Common Stock reserved for issuance upon exercise of warrants outstanding on the date hereof and previously described in the Company Reports, the Company has no shares of capital stock reserved for issuance.  Except as set forth above or pursuant to this Agreement or the Exchange Agreement, there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate the Company or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of the Company or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any person a right to subscribe for or acquire, any securities of the Company or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. None of the outstanding shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company.

 

Section 3.7 No Default, Termination or Lien. The execution, delivery and performance of this Agreement the Indenture and the Registration Rights Agreement by the Company, the issuance, sale and delivery of the Notes by the Company, the issuance and delivery of the Conversion Shares in accordance with the terms of the Notes and the Indenture, the consummation of the transactions contemplated hereby and thereby, and compliance by the Company with the terms of this Agreement, the Indenture and the Registration Rights Agreement will not (with or without notice or lapse of time or both) conflict with or result in a breach or violation of any of the terms or provisions of, constitute a default under, give rise to any right of termination or other right or the cancellation or acceleration of any right or obligation or loss of a benefit under, or give rise to the creation or imposition of any lien, encumbrance, security interest, claim or charge upon any property or assets of the Company or any Subsidiary (except as provided in the Amended and Restated Credit Agreement) pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or to which any of the property or assets of the Company or any of its Subsidiaries is subject, nor will such actions result in any violation of the provisions of the charter or by-laws (or analogous governing instruments, as applicable) of the Company or any of its Subsidiaries or any law, statute, rule, regulation, judgment, order or decree of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its Subsidiaries or any of their properties or assets.

 

Section 3.8 No Consents. No consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, the Indenture and the Registration Rights Agreement, except such as may be required by the securities or blue sky laws of the various states and the NASDAQ Global Market in connection with the offer and sale of the Notes.

 

Section 3.9 Independent Accountants. PricewaterhouseCoopers LLP (“PwC”), who have certified certain financial statements and related schedules included or incorporated by reference in the Company Reports, is an independent registered public accounting firm as required by the Securities Act and the rules and regulations thereunder and the Public Company Accounting Oversight Board (United States).  Except as pre-approved in accordance with the requirements set forth in Section 10A of the Exchange Act, PwC has not been engaged by the Company to perform any “prohibited activities” (as defined in Section 10A of the Exchange Act).

 

Section 3.10 Financial Statements. The financial statements, together with the related notes and schedules, included in the Company Reports fairly present the financial position and the results of operations and changes in financial position of the Company and its consolidated Subsidiaries and other consolidated entities at the respective dates or for the respective periods therein specified.  Such statements and related notes and schedules have been prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis throughout the periods involved except as may be set forth in the related notes.  Such financial statements, together with the related notes and schedules, comply in all material respects with the Securities Act, the Exchange Act, and the rules and regulations thereunder.  No other financial statements or supporting schedules or exhibits are required by the Exchange Act or the rules and regulations thereunder to be filed with the SEC.

 

Section 3.11 No Material Adverse Change. There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its Subsidiaries, taken as a whole, from that set forth or contemplated in the Company Reports filed prior to the date hereof.

 

Section 3.12 Legal Proceedings. There are no legal or governmental proceedings, actions, suits or claims pending or, to the Company’s knowledge, threatened to which the Company or any of its Subsidiaries is a party or to which any of the properties or assets of the Company or any of its Subsidiaries is subject (i) other than proceedings accurately described in all material respects in the Company Reports (including the section entitled “Risk Factors” beginning on page 10 of the Company’s Form 10-K for the year ended December 31, 2011, filed with the SEC on March 15, 2012), litigation in connection with a Qualified Water Project (as defined in the Indenture) and proceedings that would not have and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (ii) that are required to be described in the Company Reports and are not so described; and there are no statutes, regulations, contracts or other documents to which the Company or any of its Subsidiaries is subject or by which the Company or any of its Subsidiaries is bound that are required to be described in the Company Reports or to be filed as exhibits to the Company Reports that are not described or filed as required. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any legal or governmental proceedings, actions, suits or claims of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  For purposes of this Agreement, “Company’s Knowledge” means the actual knowledge of the executive officers (as defined in Exchange Act Rule 3b-7) of the Company or its Subsidiaries, after reasonable due inquiry.

 

Section 3.13 Regulatory Permits. Each of the Company and its Subsidiaries possesses or has applied for all certificates, authorizations, licenses, franchises, permits, orders and approvals issued or granted by the appropriate governmental or regulatory authorities, agencies, courts, commissions or other entities, whether federal, state, local or foreign, or applicable self-regulatory organizations necessary to conduct its business as currently conducted, except (i) where the failure to possess such certificates, authorizations, licenses, franchises, permits, orders and approval, individually or in the aggregate, has not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect (“Material Permits”) and (ii) as accurately described in all material respects in the Company Reports (including the section entitled “Risk Factors” beginning on page 10 of the Company’s Form 10-K for the year ended December 31, 2011, filed with the SEC on March 15, 2012), and neither the Company nor any of its Subsidiaries has received any written notice of proceedings relating to the revocation or material adverse modification of any such Material Permits (except as accurately described in all material respects in the Company Reports), and to the Company’s Knowledge, there are no facts or circumstances that would give rise to the revocation or material adverse modifications of any Material Permits.

 

Section 3.14 Material Contracts. Except for the Material Contracts, the Company and its Subsidiaries are not party to any agreements, contracts or commitments that are material to the business, financial condition, assets or operations of the Company and its Subsidiaries that would be required to be filed pursuant to Item 601(b)(10) of Regulation S-K under the Exchange Act.  Neither the Company nor any of its Subsidiaries is in material default under or in material violation of, nor to the Company’s Knowledge, has received written notice of termination or default under any Material Contract.  For purposes of this Agreement, “Material Contract” means any contract of the Company that was filed as an exhibit to the Company Reports pursuant to Item 601(b)(10) of Regulation S-K.

 

Section 3.15 Investment Company Act. Neither the Company nor any of its Subsidiaries is or, after giving effect to the Exchange and the purchase and sale of the Notes and the application of the proceeds thereof, will become an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the SEC thereunder.

 

Section 3.16 No Price Stabilization. Neither the Company, its Subsidiaries nor any of the Company’s or its Subsidiaries’ officers, directors or affiliates has taken or will take, directly or indirectly, any action designed or intended to stabilize or manipulate the price of any security of the Company, or which caused or resulted in, or which would in the future reasonably be expected to cause or result in, stabilization or manipulation of the price of any security of the Company.

 

Section 3.17 Title to Property. The Company and its Subsidiaries have good and marketable title to all real and personal property owned by them which is material to the business of the Company and its Subsidiaries, taken as a whole, in each case free and clear of all liens, encumbrances and defects of title except such as are described in the Company Reports or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its Subsidiaries; and any real property and buildings held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries, in each case except as described in the Company Reports.

 

Section 3.18 No Labor Disputes. No labor problem or dispute with the employees of the Company exists, or, to the Company’s Knowledge, is threatened or imminent, which would or would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.  The Company is not aware that any key employee or significant group of employees of the Company plans to terminate employment with the Company.  To the Company’s Knowledge, no executive officer (as defined in Rule 501(f) of the Securities Act) of the Company or any of its Subsidiaries is in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement.  Except for matters which would not and would not reasonably be expected to, individually or in the aggregate, result in a Material Adverse Effect, (i) the Company has not engaged in any unfair labor practice; (ii) there is (A) no unfair labor practice complaint pending or, to the Company’s Knowledge, threatened against the Company before the National Labor Relations Board, and no grievance or arbitration proceeding arising out of or under collective bargaining agreements is pending or to the Company’s Knowledge, threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to the Company’s knowledge, threatened against the Company and (C) no union representation dispute currently existing concerning the employees of the Company and (ii) to the Company’s knowledge, (A) no union organizing activities are currently taking place concerning the employees of the Company and (B) there has been no violation of any federal, state, local or foreign law relating to discrimination in the hiring, promotion or pay of employees, any applicable wage or hour laws or any provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) or the rules and regulations promulgated thereunder concerning the employees of the Company.

 

Section 3.19 Taxes. The Company (i) has timely filed all necessary federal, state, local and foreign income and franchise tax returns (or timely filed applicable extensions therefore) that have been required to be filed and (ii)  is not in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto, other than any which the Company is contesting in good faith and for which adequate reserves have been provided and reflected in the financial statements included in the Company Reports. The Company does not have any tax deficiency that has been or, to the Company’s Knowledge, is reasonably likely to be asserted or threatened against it that would result or would reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect.

 

Section 3.20 ERISA. The Company is in compliance in all material respects with all presently applicable provisions of ERISA; no “reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as defined in ERISA) for which the Company would have any liability; the Company has not incurred and does not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the “Code”); and each “pension plan” for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification.

 

Section 3.21 Compliance with Environmental Laws. Except as disclosed in the Company Reports, neither the Company nor any of its Subsidiaries is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), or to the Company’s Knowledge, operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim would or would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim.

 

Section 3.22 Intellectual Property Rights. The Company and its Subsidiaries own or possess, or have the right to use, adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, “Intellectual Property Rights”) necessary to conduct the business now operated by them, or presently employed by them, and have not received any notice of infringement of or conflict with asserted rights of others with respect to any Intellectual Property Rights, except such as would not and would not reasonably be expected to,  individually or in the aggregate, have a Material Adverse Effect.

 

Section 3.23 Foreign Corrupt Practices Act. Neither the Company nor any of its Subsidiaries, nor to its knowledge, any director, officer, employee or other person associated with or acting on behalf of the Company or any of its Subsidiaries has:  (i) used any Company funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from Company funds; (iii) caused the Company or any of its Subsidiaries to be in violation of any provision of the United States Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment from Company funds.

 

Section 3.24 OFAC and Similar Laws. None of the Company, any of its Subsidiaries or, to the Company’s Knowledge, any director, officer, agent, employee, affiliate or representative of the Company or any of its subsidiaries is an individual or entity (“Person”) currently the subject or target of any  sanctions administered or enforced by the United States Government, including, without limitation, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations Security Council, the European Union, Her Majesty’s Treasury, or other relevant sanctions authority (collectively, “Sanctions”), nor is the Company or any of its Subsidiaries located, organized or resident in a country or territory that is the subject of Sanctions; and the Company will not directly or indirectly use the proceeds of the sale of the Notes, or lend, contribute or otherwise make available such proceeds to any subsidiaries, joint venture partners or other Person, to knowingly fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the subject of  Sanctions or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions.

 

Section 3.25 Disclosure Controls and Procedures. The Company has established and maintains disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are effective in all material respects to ensure that material information relating to the Company, including any consolidated Subsidiaries, is made known to its chief executive officer and chief financial officer by others within those entities.  The Company’s certifying officers have evaluated the effectiveness of the Company’s controls and procedures as of the end of the period covered by the most recently filed annual periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed annual periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no material changes in the Company’s internal controls (as such term is defined in the rules of the SEC under the Exchange Act) or, to the Company’s Knowledge, in other factors that could affect the Company’s internal controls.

 

Section 3.26 Accounting Controls. The Company and its Subsidiaries maintain a system of internal accounting and other controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Except as described in the Company Reports, since the end of the Company’s most recent audited fiscal year, there has been (A) no material weakness in the Company’s internal control over financial reporting (whether or not remediated) and (B) no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

Section 3.27 Absence of Material Changes. Subsequent to the respective dates as of which information is given in the Company Reports, and except as may be otherwise disclosed in such Company Reports, there has not been (i) any Material Adverse Effect, (ii) any transaction which is material to the Company, (iii) any obligation, direct or contingent (including any off-balance sheet obligations), incurred by the Company, which is material to the Company, (iv)  any dividend or distribution of any kind declared, paid or made on the capital stock of the Company, (v) any change in the capital stock (other than a change in the number of outstanding shares of Common Stock due to grants of stock under the Company’s stock incentive plans existing on the date hereof or the issuance of shares upon the exercise of outstanding options or warrants)or any issuance of options, warrants, convertible securities or other rights to purchase the capital stock (other than grants of stock options under the Company’s stock option plans existing on the date hereof) of the Company.

 

Section 3.28 Brokers Fees. Neither the Company nor any of its Subsidiaries is a party to any contract, agreement or understanding with any person (other than the Private Placement Agency Agreement (the “Placement Agreement”), dated March 4, 2013, among the Company and the placement agent identified therein (the “Placement Agent”) and any letter of understanding between the Company and the Placement Agent) that would give rise to a valid claim against the Company or the Placement Agent for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Notes or any transaction contemplated by this Agreement.

 

Section 3.29 Listing and Maintenance Requirements. The Company is subject to and in compliance in all material respects with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, as applicable.  The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the NASDAQ Global Market, and the Company has taken no action designed to, or reasonably likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the NASDAQ Global Market, nor has the Company received any notification that the SEC or NASDAQ is contemplating terminating such registration or listing.  The Conversion Shares will be duly authorized for listing on the NASDAQ Global Market immediately upon conversion of the Notes in accordance with the terms of the Notes and the Indenture.

 

Section 3.30 Sarbanes-Oxley Act. The Company is in compliance in all material respects with all applicable provisions of the Sarbanes-Oxley Act of 2002 and all applicable rules and regulations promulgated thereunder or implementing the provisions thereof that are then in effect.

 

Section 3.31 NASDAQ Shareholder Approval Rules. No approval of the stockholders of the Company under the rules and regulations of NASDAQ (including Rule 5635 of the NASDAQ Marketplace Rules) is required for the Company to issue and deliver the Notes to the Purchasers or the Conversion Shares upon conversion of the Notes.

 

Section 3.32 No General Solicitation. Neither the Company nor any person acting on its or their behalf has offered or sold the Notes or will offer or sell the Notes by means of any general solicitation or general advertising including but not limited to the methods described in Rule 502(c) under the Securities Act.

 

Section 3.33 Integration. No offers and sales of securities of the same or similar class as the Notes have been made by the Company or on its behalf during the six-month period ending with the date of this Agreement and no such offers or sales are currently being made or contemplated (in each case, whether pursuant to outstanding warrants, options, convertible or exchangeable securities, acquisition agreements or otherwise).  Neither the Company nor any other person acting on its behalf will, directly or indirectly, offer or sell any securities of the same or similar class as the Notes, or take any other action, so as to cause the offer and sale of the Notes to fail to be entitled to the exemption afforded by Regulation D under the Securities Act.

 

ARTICLE IV

 

OTHER AGREEMENTS

 

Section 4.1 Participation Rights.  Subject to applicable securities law, for so long as any portion of the Notes remain outstanding, in the event the Company issues any shares, interests, participations or other equivalents (however designated) of capital stock or any equivalent ownership interests (“Capital Stock”) the Company will offer to sell (subject to consummation of such issuance) to each Purchaser holding Notes with an Original Principal Amount (as that term is defined in the Indenture) of $1,000,000 or more, such Purchaser’s pro rata share of such Capital Stock at the same price and on the same terms (the “Participation Right”).  Each Purchaser’s “pro rata” share is equal to the ratio of (a) the number of Conversion Shares such Purchaser has the right to acquire upon conversion of the Notes (without giving effect to the limitations in Section 4.2 of this Agreement or Section 10.24 of the Indenture) held thereby to (b) the sum of (i) all Common Stock outstanding as of the time of such determination, (ii) all Common Stock issuable upon the exchange, exercise or conversion of all warrants, options, convertible securities or other such instruments then outstanding (whether or not such instruments are then exercisable) including, but not limited to, any equity securities reserved for issuance under any management or employee benefit plan, and (iii) all other Common Stock then issuable as a result of any anti-dilution adjustments and pre-emptive or similar rights granted to any other holder of the Company’s Common Stock.  The Participation Right shall not apply to authorized issuances by the Company in connection with: (i) strategic new business transactions, joint ventures or acquisitions, (ii) firm underwritten commitments for public offerings of common stock with expected gross proceeds in excess of Thirty-Five Million Dollars ($35,000,000), (iii) employee/ consultant stock incentive plans so long as such issuances have been approved by a majority of the independent directors on the Company’s board of directors, (iv) the conversion of any convertible securities of the Company outstanding as of the Closing, (v) the conversion of convertible securities which are offered in a transaction in which the Purchasers are given a right of participation pursuant to this Section 4.1, and (vi) the conversion of the Notes and the corresponding issuance of the Conversion Shares pursuant to the Indenture.  Such first offer shall be made in writing by the Company to the Purchaser and shall remain open for at least ten (10) business days (the “Participation Period”).  The written notice shall provide (i) reasonable information about the terms and conditions of such sale of Capital Stock; and (ii) the expiration date of the Participation Period.  Notice of the intention of any Purchaser to exercise its Participation Right shall be evidenced by an irrevocable writing signed by such Purchaser and delivered to the Company prior to the expiration date of the Participation Period, setting forth (i) such Purchaser’s election and (ii) that the representations and warranties of the Purchaser included in this Agreement are true and correct as of the date of such notice.

 

Section 4.2 Beneficial Ownership Limitation.

 

(a) No Purchaser listed on Schedule 4.2 hereto shall request that any of the Notes be converted, and the Company shall not effect the conversion of any of the Notes to the extent that, after giving effect to such issuance after conversion, such Purchaser (together with such Purchaser’s affiliates, and any other person or entity acting as a group together with such Purchaser or any of such Purchaser’s affiliates (collectively, the “Concert Parties”)), would beneficially own Common Stock in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Purchaser and its Concert Parties shall include the number of Conversion Shares issuable upon conversion of the portion of the Notes with respect to which such determination is being made, but shall exclude the number of Conversion Shares which would be issuable upon (A) conversion of the remaining portion of the Notes beneficially owned by such Purchaser or any of its Concert Parties and (B) conversion or exercise of the unexercised or unconverted portion of any loan to or securities of the Company (or any successor thereto) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by such Purchaser or any of its Concert Parties.  Except as set forth in the preceding sentence, for purposes of this Section 4.2, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, and the rules and regulations promulgated thereunder, it being acknowledged by each Purchaser that the Company is not representing to the Purchaser that such calculation is in compliance with Section 13(d) of the Exchange Act and the Purchaser is solely responsible for any schedules required to be filed in accordance therewith.  To the extent that the limitation contained in this Section 4.2 applies, the determination of whether and the extent to which any of the Notes may be converted (in relation to other loans or securities owned by the Purchaser together with any affiliates) shall be made in good faith by the Purchaser in consultation with its own counsel, and a request that all or a portion of the Notes beneficially owned by such Purchaser be converted shall be deemed to be the Purchaser’s determination that such conversion (in relation to other securities owned by the Purchaser together with any Concert Parties) shall be in compliance with this Section 4.2, and the Company shall not have any obligation to verify or confirm the accuracy of such determination.  In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 4.2, in determining the number of outstanding shares of Common Stock, a Purchaser may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s (or its successor’s) most recent periodic or annual report, as the case may be, filed with the SEC (y) a more recent public announcement by the Company (or its successor) or (z) any other notice by the Company or the Company’s transfer agent (or its successor or successor’s transfer agent) setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of any Purchaser listed on Schedule 4.2 hereto, the Company shall within two business days confirm orally and in writing to the Purchaser the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of loans or securities of the Company, including the Notes, by such Purchaser or its Concert Parties since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of the Conversion Shares issuable upon conversion of any of the Notes.  Any Purchaser listed on Schedule 4.2 hereto, upon not less than 61 days’ prior notice to the Company, may increase or decrease (including, for the avoidance of doubt, to 0%) the percentage constituting the Beneficial Ownership Limitation, and the provisions of this Section shall continue to apply to such increased or decreased Beneficial Ownership Limitation.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this Section 4.2 shall be construed and implemented in a manner otherwise than in strict conformity with the terms hereof in order to correct such terms (or any portion thereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this Section 4.2 shall apply to any successor to any Purchaser listed on Schedule 4.2 hereto.

 

(b) Notwithstanding the foregoing, the limitations contained in this Section 4.2 shall not restrict or limit (i) any exercise by a Purchaser of a Participation Right as described in Section 4.1 above or (ii) any conversion or prepayment of the Notes in connection with a Change in Control as contemplated by Article 3 of the Indenture.

 

ARTICLE V

 

CONDITIONS TO CLOSING

 

Section 5.1 Purchaser’s Conditions Precedent. The obligations of each Purchaser to complete the purchase of the Notes contemplated by this Agreement are, in each case, subject to the satisfaction of each of the following conditions precedent:

 

(a) each of the representations and warranties of the Company contained in this Agreement shall be true and correct as of the Closing Date, with the same effect as though those representations and warranties had been made on and as of the Closing Date, except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty need only be true and correct as of such date;

 

(b) the Notification Form: Listing of Additional Shares, to be filed with the NASDAQ prior to issuing any common stock, or any security convertible into common stock or in a transaction that may result in the potential issuance of common stock, greater than 10% of either the total shares outstanding or the voting power outstanding on a pre-transaction basis, shall have been filed;

 

(c) such Purchaser shall have received the Amended and Restated Registration Rights Agreement, executed and delivered by the Company and each of the other parties thereto (other than such Purchaser), substantially in the form of Exhibit C attached hereto;

 

(d) no court or other governmental or regulatory authorities, agencies,  commissions or other entities, whether federal, state, local or foreign, shall have enacted, issued, promulgated, enforced or entered any law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the transactions contemplated by this Agreement, and there shall not be pending by or before any such entity any suit, action or proceeding in respect thereof;

 

(e) the Indenture shall have been entered into as of the Closing Date by and between the Company and the Trustee;

 

(f) the Closing (as defined in the Amended and Restated Credit Agreement) of the Amended and Restated Credit Agreement shall have occurred;

 

(g) the Company and the Current Lenders shall have executed the Exchange Agreement and the exchanges contemplated thereby shall have occurred or shall occur simultaneously with the Closing;

 

(h) Cadwalader, Wickersham & Taft LLP, counsel for the Company, shall have furnished to the Purchasers an opinion, in the form attached hereto as Exhibit D, dated the Closing Date and addressed to the Purchasers;

 

(i) Theodora Oringher PC, counsel for the Company, shall have furnished to the Purchasers an opinion, in the form attached hereto as Exhibit E, dated the Closing Date and addressed to the Purchasers; and

 

(j) the Chief Executive Officer and Chief Financial Officer of the Company shall have delivered to such Purchaser a certificate, dated as of the Closing Date, certifying to their knowledge, after reasonable inquiry as to the matters set forth in paragraphs (a), (b), (e) and (f).

 

Section 5.2 Company Conditions Precedent, The obligations of the Company to complete the sale of the Notes to any Purchaser contemplated by this Agreement are subject to the satisfaction of each of the following conditions precedent:

 

(a) Each of the representations and warranties of such Purchaser contained in this Agreement shall be true and correct as of the Closing Date, with the same effect as though those representations and warranties had been made on and as of the Closing Date, except to the extent that any such representation or warranty is made as of a specified date, in which case such representation or warranty need only be true and correct as of such date;

 

(b) such Purchaser shall have duly performed and complied in all material respects with all covenants and agreements contained in this Agreement that are required to be performed or complied with by it at or before the Closing;

 

(c) no court or other governmental or regulatory authorities, agencies,  commissions or other entities, whether federal, state, local or foreign, shall have enacted, issued, promulgated, enforced or entered any law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins or otherwise prohibits consummation of the transactions contemplated by this Agreement, and there shall not be pending by or before any such entity any suit, action or proceeding in respect thereof;

 

(d) the Trustee shall have received from such Purchaser such documents reasonably requested by the Trustee with respect to the issuance of the Notes contemplated hereby; and

 

(e) such Purchaser shall have delivered to the Company an executed counterpart to the Registration Rights Agreement.

 

ARTICLE VI

 

CERTAIN COVENANTS

 

Section 6.1 Certain Actions.  Each of the Company and each Purchaser shall reasonably cooperate with each other and use (and shall cause their respective affiliates to use) reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable law and stock exchange listing standards to consummate the transactions contemplated by this Agreement as soon as practicable.  Without limiting the generality of the foregoing, on or before the Closing the Company shall deliver to each Purchaser the Registration Rights Agreement duly executed by the Company and a copy of the Indenture duly executed by each of the Company and the Trustee, and each Purchaser shall deliver to the Company the Registration Rights Agreement duly executed by such Purchaser.

 

Section 6.2 Legends. To the extent reasonably necessary under applicable law, any share certificate representing Conversion Shares which are issued upon conversion of the Notes shall have endorsed, to the extent appropriate, upon its face the following words:

	
  

	
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY JURISDICTION.  SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAW, OR (II) ANY EXEMPTION FROM REGISTRATION UNDER SUCH ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO THE DISPOSITION OF SECURITIES, INCLUDING RULE 144.

 

Section 6.3 Legend Removal. Upon the request of any Purchaser or any transferee or proposed transferee thereof, the Company shall remove the legend contemplated by Section 6.2 of this Agreement and the Company shall issue a stock certificate without such legend to such Purchaser or transferee (and shall revoke any related stop transfer or similar instructions to its registrar and transfer agent), or shall cause such shares upon initial issuance not to be so legended (and shall not issue any such stop transfer or similar legends to its registrar and transfer agent) if the Conversion Shares are covered by an effective registration statement under the Securities Act or if such person provides reasonable evidence and an opinion of counsel to the effect that a sale, transfer or assignment of such Conversion Shares may be made without registration under the Securities Act or that such Conversion Shares are eligible for resale pursuant to Rule 144 under the Securities Act. 

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1 Entire Agreement.  This Agreement and any documents and agreements executed in connection with the Purchase embody the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous oral or written agreements, representations, warranties, contracts, correspondence, conversations, memoranda and understandings between or among the parties or any of their agents, representatives or affiliates relative to such subject matter, including, without limitation, any term sheets, emails or draft documents.

 

Section 7.2 Construction.  References in the singular shall include the plural, and vice versa, unless the context otherwise requires.  References in the masculine shall include the feminine and neuter, and vice versa, unless the context otherwise requires.  Headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meanings of the provisions hereof.  Neither party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions of this Agreement, and all language in all parts of this Agreement shall be construed in accordance with its fair meaning, and not strictly for or against either party.

 

Section 7.3 Governing Law.  This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of New York, without reference to its choice of law rules.

 

Section 7.4 Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.  Any counterpart or other signature hereon delivered by facsimile shall be deemed for all purposes as constituting good and valid execution and delivery of this Agreement by such party.

 

Section 7.5 Specific Performance. Each party acknowledges and agrees that, in addition to other remedies, the parties shall be entitled to enforce the terms of this Agreement by decree of specific performance without the necessity of proving the inadequacy of monetary damages as a remedy and to obtain injunctive relief against any breach or threatened breach of this Agreement.

 

Section 7.6 Certain Definitional Provisions.  Unless the express context otherwise requires: the words “hereof”, “herein”, and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement; any references herein to a specific Section, Schedule or Annex shall refer, respectively, to Sections, Schedules or Annexes of this Agreement; wherever the word “include”, “includes”, or “including” is used in this Agreement, it shall be deemed to be followed by the words “without limitation”; and references herein to any gender includes each other gender.

 

[Signature Page Follows]

 

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first above written.

 

The Company

 

CADIZ INC.

 

 

By:  /s/ Timothy J. Shaheen

Name:  Timothy J. Shaheen

Title: Chief Financial Officer and Secretary

 

[Signature page to Purchase Agreement]

  

  

  

 

The Purchasers

 

ALTIMA GLOBAL SPECIAL

 

SITUATIONS MASTER FUND LTD

 

 

By:  /s/ Malcolm Goddard

Name:  Malcolm Goddard

Title:  Authorized Signatory

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

NOKOMIS CAPITAL MASTER FUND, LP

 

 

By:  /s/ Brett Hendrickson

Name: Brett Hendrickson

Title: Portfolio Manager

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

MOUSSESCAPADE, L.P.

 

 

By:  /s/ Jean Hoysradt

Name: Jean Hoysradt

Title:  Vice President & Secretary of

Moussescribe, General Partner of

Moussescapade, L.P.

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

SPHINX TRADING, LP

 

 

By:  /s/ Fred Goldman

Name:  Fred Goldman

Title:  CFO

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

BRYANT AND CARLEEN RILEY JTWROS

 

 

By:  /s/ Bryant Riley

Name:  Bryant Riley

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

B. RILEY & CO., LLC 401(K) PROFIT SHARING PLAN

 

 

By:  /s/ Bryant Riley

Name:  Bryant Riley

Title:  Trustee

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

B RILEY & CO., LLC

 

 

By:  /s/ Bryant Riley

Name:  Bryant Riley

Title:  Chairman

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

RILEY FAMILY TRUST DTD 6/20/89, MODIFIED 01/25/07

 

 

By:  /s/ Richard Riley

Name:  Richard Riley

Title:  Trustee

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

ROBERT ANTIN CHILDREN IRREVOCABLE TRUST DTD 01/01/01

 

 

By:  /s/ Bryant Riley

Name:  Bryant Riley

Title:  Trustee

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

WOLVERINE FLAGSHIP FUND TRADING LIMITED

 

 

By:  /s/ Kenneth Nadel

Name:  Kenneth Nadel

Title:  Chief Operating Officer

[Signature page to Private Placement Purchase Agreement]

  

  

  

 

EXHIBIT A

 

Purchasing Beneficial Owners

	
Bryant and Carleen Riley JTWROS

	 	$	275,000	 
	
B. Riley & Co., LLC 401(k) Profit Sharing Plan

	 	$	225,000	 
	
B Riley & Co., LLC

	 	$	1,000,000	 
	
Riley Family Trust DTd 6/20/89, Modified 01/25/07

	 	$	250,000	 
	
Robert Antin Children Irrevocable Trust Dtd 01/01/01

	 	$	250,000	 
	
Wolverine Flagship Fund Trading Limited

	 	$	2,000,000	 
	
Nokomis Capital Master Fund, LP

	 	$	9,415,000	 
	
Moussescapade, L.P.

	 	$	585,000	 
	
Sphinx Trading, LP

	 	$	2,500,000	 
	
Altima Global Special Situations Master Fund Ltd.

	 	$	1,000,000	 

  

  

  

 

EXHIBIT B

 

Form of Indenture

  

  

  

 

EXHIBIT C

 

 

Form of Registration Rights Agreement

REGISTRATION RIGHTS AGREEMENT

by and among

CADIZ INC.

and

 EACH HOLDER OF REGISTRABLE SECURITIES

REFLECTED ON THE SIGNATURE PAGE HEREOF

Amended and Restated as of March 5, 2013

 

SECTION 1.     CERTAIN DEFINITIONS..........1

 

 

SECTION 2.     DEMAND REGISTRATION RIGHTS..........4

 

 

SECTION 3.     PIGGY-BACK REGISTRATION RIGHTS..........7

 

 

SECTION 4.     SELECTION OF UNDERWRITERS..........8

 

 

SECTION 5.     BLACKOUT PERIODS..........8

 

 

SECTION 6.     HOLDBACK..........8

 

 

SECTION 7.     INELIGIBILITY TO EFFECT A DEMAND REGISTRATION..........9

 

 

SECTION 8.     LIQUIDATED DAMAGES..........9

 

 

SECTION 9.     REGISTRATION PROCEDURES..........10

 

 

SECTION 10.     REGISTRATION EXPENSES..........13

 

 

SECTION 11.     RULE 144..........14

 

 

SECTION 12.     COVENANTS OF HOLDERS..........14

 

 

SECTION 13.     INDEMNIFICATION; CONTRIBUTION..........14

 

 

SECTION 14.     INJUNCTIONS..........16

 

 

SECTION 15.     AMENDMENTS AND WAIVERS..........16

 

 

SECTION 16.     NOTICES..........16

 

 

SECTION 17.     SUCCESSORS AND ASSIGNS..........17

 

 

SECTION 18.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........17

 

 

SECTION 19.     COUNTERPARTS..........18

 

 

SECTION 20.     DESCRIPTIVE HEADINGS..........18

 

 

SECTION 21.     CHOICE OF LAW..........18

 

 

SECTION 22.     SEVERABILITY..........18

 

 

SECTION 23.     ENTIRE AGREEMENT..........18

 

 

SECTION 24.     FURTHER ACTIONS; REASONABLE BEST EFFORTS..........18

 

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of this 5th day of March, 2013 by and among Cadiz Inc., a Delaware corporation (the “Company”), and each holder of Registrable Securities (as defined herein) reflected on the signature page hereto (“Holders”).

 

RECITALS:

 

WHEREAS, the Company has entered into an Indenture as of March 5, 2013 (the “Indenture”) with The Bank of New York Mellon, N.A., as trustee, which provides for the issuance of the Company’s 7.00% Convertible Senior Notes due 2018 (the “Convertible Notes”) which Convertible Notes are convertible into shares of the Company’s common stock, par value $.01 per share (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in the Indenture;

 

WHEREAS, the Company issued, on October 30, 2012, warrants to purchase 250,000 shares of Common Stock (the “Sixth Amendment Warrants”); and

 

WHEREAS, the Company has agreed to amend and restate the registration rights agreement pursuant to which the Company has granted to the Holders registration rights with respect to the Registrable Securities.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

Section 1.            Certain Definitions.  For purposes of this Agreement, the following terms have the following meanings:

 

(a) “Affected Registrable Securities” means such portion of the Registrable Securities required by the terms hereof to be subject to an effective Registration Statement that are, at the time of determination, not subject to an effective Registration Statement as a result of a Registration Default.”

 

(b) “Affiliate” has the meaning ascribed to such term in Rule 12b-2 of the Exchange Act.

 

(c) “Agreement” has the meaning specified in the Preamble hereof.

 

(d) “Beneficially Own” has the meaning ascribed to such term in Rule 13d-3 of the Exchange Act.

 

(e) “Blackout Period” has the meaning specified in Section 5 hereof.

 

(f) “Board” has the meaning specified in Section 5 hereof.

 

(g) “Business Day” means a day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of the State of New York and the United States of America.

 

(h) “Common Stock” has the meaning specified in the Recitals hereof.

 

(i) “Company” has the meaning specified in the Preamble hereof.

 

(j) “Convertible Notes” has the meaning specified in the Recitals hereof.

 

(k) “Demand” has the meaning specified in Section 2(a) hereof.

 

(l) “Demand Registration” has the meaning specified in Section 2(a) hereof.

 

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is made thereto.

 

(n) “Fair Market Value” means, with respect to the securities of the Company that trade in a liquid market such as NASDAQ or the NYSE, the average of the closing price as best established for the 30-day period prior to the date on which the Fair Market Value is determined, and with respect to the securities of the Company that do not trade in a liquid market such as NASDAQ or the NYSE, the fair market value of such securities as determined by the Board in good faith.

 

(o) “FINRA” means the Financial Industry Regulatory Authority.

 

(p) “Holdback Period” has the meaning specified in Section 6(a) hereof.

 

(q) “Holder” has the meaning specified in the Preamble hereof, and shall include any person to whom the rights of a Holder under this Agreement have been transferred in accordance with the provisions of this Agreement.

 

(r) “Indenture” has the meaning specified in the Recitals hereof.

 

(s) “Ineligibility Accommodation Period” has the meaning specified in Section 7 hereof.

 

(t) “Inspectors” has the meaning specified in Section 9(k) hereof.

 

(u) “Liquidated Damages” has the meaning specified in Section 8(a) hereof.

 

(v) “NASDAQ” means the Nasdaq Stock Market, Inc.

 

(w) “NYSE” means the New York Stock Exchange.

 

(x) “Other Rights Holders” has the meaning specified in Section 2(f) hereof.

 

(y) “Person” means any individual, firm, partnership, corporation (including, without limitation, a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, and shall include any successor (by merger or otherwise) of any such entity.

 

(z) “Piggy-Back Request” has the meaning specified in Section 3(b) hereof.

 

(aa) “Piggy-Back Rights” has the meaning specified in Section 3(a) hereof.

 

(bb) “Prospectus” means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by any Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus.

 

(cc) “Records” has the meaning specified in Section 9(k) hereof.

 

(dd) “Registrable Securities” means any and all of (i) the shares of Common Stock of the Company received by Holders upon conversion of the Convertible Notes, (i) the shares of Common Stock of the Company underlying the Sixth Amendment Warrants, and (iii) any securities issuable or issued or distributed in respect of any of the securities identified in clauses (i) and (ii) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reorganization, merger, consolidation or otherwise.  Registrable Securities shall cease to be Registrable Securities when and to the extent that they shall have (i) been Transferred by Holders pursuant to an effective Registration Statement; or (ii) ceased to be outstanding.  Notwithstanding anything herein to the contrary, the Company shall not be required to have any of the Registrable Securities registered (or maintain the effectiveness of any prior registration of Registrable Securities) if, in the opinion of either counsel for the Company, knowledgeable and experienced in federal securities matters (said counsel to be acceptable to the Holder making a Demand in the reasonable judgment of such Holder), or counsel for such Holder, knowledgeable and experienced in federal securities matters (said counsel to be acceptable to the Company in the Company’s reasonable judgment), all Registrable Securities held by such Holder (and its Affiliates) may be sold pursuant to Rule 144 under the Securities Act during any ninety (90) day period.

 

(ee) “Registration Default” has the meaning specified in Section 8(a) hereof.

 

(ff) “Registration Expenses” means any and all reasonable out-of-pocket expenses incident to performance of or compliance with this Agreement, including, without limitation, (i) all SEC, FINRA and securities exchange registration and filing fees, (ii) all fees and expenses of complying with state securities or “blue sky” laws (including fees and disbursements of counsel for any underwriters in connection with blue sky qualifications of the Registrable Securities), (iii) all processing, printing, copying, messenger and delivery expenses, (iv) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange pursuant to Section 9(h) hereof, (v) all fees and disbursements of counsel for the Company and of its independent public accountants (including the expenses of any special audits or comfort letters), and (vi) the reasonable fees and expenses of any special experts retained in connection with a registration under this Agreement, but excluding (A) any underwriting discounts and commissions and transfer taxes relating to the sale or disposition of Registrable Securities pursuant to a Registration Statement, and (B) any fees, expenses or disbursements of counsel and other advisers to the Holders and any Other Rights Holders, other than the reasonable fees and disbursements of one counsel to all Holders.

 

(gg) “Registration Statement” means any registration statement (including a Shelf Registration) of the Company referred to in Section 2 or Section 3 hereof, including any Prospectus, amendments and supplements to any such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in any such registration statement.

 

(hh) “Restatement Date” has the meaning set forth in that certain Amended and Restated Credit Agreement, amended and restated as of March 5, 2013, among the Company and Cadiz Real Estate LLC, a Delaware limited liability company, each as borrowers, the lenders party thereto (the “Lenders”) and LC Capital Master Fund, Ltd., as administrative agent on behalf of the Lenders.

 

(ii) “Rule 144” means Rule 144 under the Securities Act, or any similar or successor rules or regulations hereafter adopted by the SEC.

 

(jj) “SEC” means the United States Securities and Exchange Commission and any successor federal agency having similar powers.

 

(kk) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time that reference is made thereto.

 

(ll) “Shelf Registration” means a “shelf” registration statement on an appropriate form pursuant to Rule 415 under the Securities Act (or any successor rule that may be adopted by the SEC).

 

(mm) “Sixth Amendment Warrants” has the meaning set forth in the Recitals hereof.

 

(nn) “Transfer” means, with respect to any security, any direct or indirect sale, transfer, assignment, hypothecation, pledge or any other disposition of such security or any interest therein.

 

(oo) “Uncontrolled Event” has the meaning specified in Section 5 hereof.

 

(pp) “Underwritten Offering” means an offering in which securities of the Company are sold to an underwriter for reoffering to the public pursuant to an effective Registration Statement under the Securities Act.

 

Section 2.            Demand Registration Rights.

 

(a) Any Holder may, subject to the terms hereof, request the Company in writing (each such request, a “Demand”) to effect a registration with the SEC under and in accordance with the provisions of the Securities Act of all or part of the Registrable Securities Beneficially Owned by such Holder (a “Demand Registration”).  The Demand shall specify the aggregate number of shares of Registrable Securities requested to be so registered on behalf of such Holder.  For purposes of this Agreement, Holders shall be deemed to have made a Demand, effective as of the Restatement Date, with respect to all of the Registrable Securities (the “Closing Demand”); provided, however, that notwithstanding Section 2(b) of this Agreement, (x) with respect to the shares of Common Stock of the Company underlying the Sixth Amendment Warrants and the Convertible Notes, the Company will use best efforts to file a registration statement on Form S-3 (or amend an existing registration statement) with respect thereto not later than ninety (90) days following the Restatement Date.  Any request received by the Company from a Holder as provided in this Section 2(a) shall be deemed to be a “Demand” for purposes of this Agreement, unless the Company, in accordance with the terms of this Agreement, shall have notified such Holder in writing, prior to its receipt of such request from such Holder, of its intention to register securities with the SEC, in which case the request from such Holder shall be governed by Section 3 hereof, not this Section 2.  All Demands to be made by a Holder pursuant to this Section 2(a) and any notifications by the Company pursuant to the preceding sentence must be based upon a good faith intent of such Holder or the Company, as the case may be, to effect the sale of securities pursuant to such registrations as promptly as practicable after the date of the Demand or notification, as the case may be, in accordance with the terms of this Agreement.

 

(b) After receipt of a Demand from a Holder, the Company shall use its best efforts to prepare and file a Registration Statement for the Registrable Securities so requested to be registered. With respect to the Closing Demand, the Company shall use its best efforts to prepare and file a Registration Statement for the Registrable Securities within 90 days and use its best efforts to cause such Registration Statement to become effective (i) 120 days, in the event that the Registration Statement consists of an amendment to an existing S-3 previously filed by the Company (or 150 days in the event such amendment to an existing Registration Statement is reviewed by the SEC) or (ii) 150 days, in the event that the Registration Statement consists of a newly filed S-3 (or 180 days in the event such newly filed Registration Statement is reviewed by the SEC).  With respect to any other Demand, the Company shall use its best efforts to prepare and file a Registration Statement for the Registrable Securities within 90 days and use its reasonable best efforts to cause such Registration Statement to become effective within 150 days (or 180 days in the event the Registration Statement is reviewed by the SEC).

 

(c) Notwithstanding anything in this Agreement to the contrary, the Company shall not be required to file a Registration Statement for Registrable Securities pursuant to a Demand:

 

(i) if the Company shall have previously effected a Demand Registration at any time during the immediately preceding ninety (90) day period;

 

(ii) if the Company shall have previously effected a registration of Registrable Securities to be issued and sold by the Company at any time during the immediately preceding ninety (90) day period (other than a registration on Form S-4, Form S-8 or Form S-3(with respect to dividend reinvestment plans and similar plans) or any successor forms thereto);

 

(iii) during the pendency of any Blackout Period;

 

(iv) during the pendency of any Ineligibility Accommodation Period;

 

(v) if the Company shall have, on or after the Restatement Date, previously effected four (4) Demand Registrations pursuant to the terms of this Agreement;

 

(vi) if the aggregate value of the Registrable Securities to be registered pursuant to a Demand Registration does not equal at least $2,500,000; or

 

(vii) if the Registrable Securities that are the subject of the Demand are the subject of an effective Shelf Registration.

 

(d) The Company shall be permitted to satisfy its obligations under this Section 2 by amending (to the extent permitted by applicable law) any Shelf Registration previously filed by the Company under the Securities Act so that such Shelf Registration (as amended) shall permit the disposition (in accordance with the intended methods of disposition specified as aforesaid) of all of the Registrable Securities for which a Demand shall have been made.  Notwithstanding the foregoing, the Company shall have no obligation under this Agreement to file any Shelf Registration.

 

(e) A requested Demand Registration shall not be deemed to count as a Demand Registration described in Section 2(c)(ii) hereof if: (i) such registration has not been declared effective by the SEC or does not become effective in accordance with the Securities Act, (ii) after becoming effective, such registration is materially interfered with by any stop order, injunction or similar order or requirement of the SEC or other governmental agency or court for any reason not attributable to a Holder and does not thereafter become effective, (iii) the conditions to closing specified in any underwriting agreement entered into in connection with such Demand Registration are not satisfied or waived other than by reason of an act or omission on the part of a Holder, or (iv) the Holder making a Demand shall have withdrawn its Demand or otherwise determined not to pursue such registration, provided that, in the case of this clause (iv), such Holder shall have reimbursed the Company for all of its out- of-pocket expenses incurred in connection with such Demand.

 

(f) If the lead managing underwriters of an Underwritten Offering made pursuant to a Demand shall advise the Holder making a Demand in writing (with a copy to the Company) that marketing or other factors require a limitation on the number of shares of Registrable Securities which can be sold in such offering within a price range acceptable to the Holder, then (i) if the Company shall have elected to include any securities to be issued and sold by the Company or sold on behalf of any of the Company’s security holders excluding such Holder (“Other Rights Holders”) in such Registration Statement, then the Company shall reduce the number of securities the Company shall intend to issue and sell (and, if applicable, the number of securities being sold on behalf of the Other Rights Holders) pursuant to such Registration Statement such that the total number of securities being sold by each such party shall be equal to the number which can be sold in such offering within a price range acceptable to such Holder, and (ii) if the Company shall not have elected to include any securities to be issued and sold by the Company or sold on behalf of Other Rights Holders in such Registration Statement or if the reduction referred to in the previous clause (i) shall not be sufficient, then, the Holder shall reduce the number of Registrable Securities requested to be included in such offering to the number that the lead managing underwriter advises can be sold in such offering within a price range acceptable to the Holder.  The Holder shall not be required to reduce the number of Registrable Securities requested to be included in any such offering until the number of securities referred to in the previous clause (i) shall have been reduced to zero (0).  A requested Demand reduced pursuant to this Section 2(f) shall count as a Demand Registration described in Section 2(c)(ii) hereof.  In the event that a requested Demand Registration so reduced does not result in at least $2,500,000 in aggregate gross sales proceeds being received by the Holder, such requested Demand Registration shall not be deemed to count as a Demand Registration described in Section 2(c)(ii) hereof, Provided that Holders shall have reimbursed the Company for all of its out-of- pocket expenses incurred in the preparation, filing and processing of the Registration Statement.

 

Section 3.            Piggy-Back Registration Rights.

 

(a) At any time on or after the date hereof, whenever the Company shall propose to file a Registration Statement under the Securities Act relating to the public offering of securities for sale for cash, the Company shall give written notice to the Holders as promptly as practicable, but in no event less than fifteen (15) days prior to the anticipated filing thereof, specifying the approximate date on which the Company proposes to file such Registration Statement and the intended method of distribution in connection therewith, and advising Holders of their right to have any or all of the Registrable Securities then Beneficially Owned by them included among the securities to be covered by such Registration Statement (the “Piggy-Back Rights”).

 

(b) Subject to Section 3(c) and Section 3(d) hereof, in the event that Holders have and shall elect to utilize their Piggy- Back Rights, the Company shall include in the Registration Statement the Registrable Securities identified by the Holders in a written request (a “Piggy-Back Request”) given to the Company not later than five (5) Business Days prior to the proposed filing date of the Registration Statement.  The Registrable Securities identified in a Piggy-Back Request shall be included in the Registration Statement on the same terms and conditions as the other securities included in the Registration Statement.

 

(c) Notwithstanding anything in this Agreement to the contrary, Holders shall not have Piggy-Back Rights with respect to (i) a Registration Statement on Form S-4 or Form S-8 or Form S-3 (with respect to dividend reinvestment plans and similar plans) or any successor forms thereto or (ii) a Registration Statement filed in connection with an exchange offer or an offering of securities solely to employees of the Company.

 

(d) If the lead managing underwriters selected by the Company for an Underwritten Offering for which Piggy-Back Rights are requested shall advise the Company in writing that marketing or other factors require a limitation on the number of shares of securities which can be sold in such offering within a price range acceptable to the Company, then, (i) such underwriters shall provide written notice thereof to the Holders and (ii) there shall be included in the offering, (A) first, all securities proposed by the Company to be sold for its account (or such lesser amount as shall equal the maximum number determined by the lead managing underwriters as aforesaid); (B) second, all Registrable Securities requested to be included in such Registration Statement by Holders, or such lesser number as shall equal, together with the amount referred to in (A), the maximum number determined by the lead managing underwriters as aforesaid; and (c) third, only that number of securities requested to be included by any Other Rights Holders that such lead managing underwriters reasonably and in good faith believe will not substantially interfere with (including, without limitation, adversely affecting the pricing of) the offering of all the securities that the Company desires to sell for its own account and all the Registrable Securities that the Holders desire to sell for their own accounts.

 

(e) Nothing contained in this Section 3 shall create any liability on the part of the Company to the Holders if the Company for any reason should decide not to file a Registration Statement for which Piggy-Back Rights are available or to withdraw such Registration Statement subsequent to its filing, regardless of any action whatsoever Holders may have taken, whether as a result of the issuance by the Company of any notice hereunder or otherwise.

 

(f) A request made by Holders pursuant to their Piggy- Back Rights to include Registrable Securities in a Registration Statement shall not be deemed to be a Demand Registration described in Section 2(c)(ii) hereof.

 

Section 4.            Selection of Underwriters.   In connection with any Underwritten Offering made pursuant to a Demand or a Piggy-Back Right, the Company may, at its sole discretion, select a book running managing underwriter to manage the Underwritten Offering with the prior written consent of the Holders (which consent shall not be unreasonably withheld); provided, however, that the Company shall have no obligation to use an underwriter in connection with any registration made pursuant to a Demand or Piggy-Back Request.

 

Section 5.            Blackout Periods.   If (i) within five (5) Business Days following the exercise by a Holder of a Demand, the Company determines in good faith and notifies such Holder in writing that the registration and distribution of Registrable Securities (or the use of the Registration Statement or related Prospectus) resulting from a Demand received from such Holder would materially and adversely interfere with any planned or proposed business combination transaction involving the Company, or any pending financing, acquisition, corporate reorganization or any other corporate development involving the Company or any of its subsidiaries or (ii) following the exercise by such Holder of a Demand but before the effectiveness of the Registration Statement, (A) a business combination, tender offer, acquisition or other corporate event involving the Company is proposed, initiated or announced by another Person beyond the control of the Company (an “Uncontrolled Event”), (B) in the reasonable judgment of at least a majority of the members of the Board of Directors of the Company (the “Board”), the filing or seeking the effectiveness of the Registration Statement would materially and adversely interfere with such Uncontrolled Event or would otherwise materially and adversely affect the Company and (C) the Company promptly so notifies such Holder, then the Company shall be entitled to (x) postpone the filing of the Registration Statement otherwise required to be filed by the Company pursuant to Section 2 hereof, or (y) elect that the effective Registration Statement not be used, in either case for a reasonable period of time, but not to exceed ninety (90) days after the date that (1) the Demand was made (in the case of an clause (i) above) or (2) the Company so notifies such Holder of such determination (in the case of clause (ii) above) (each, a “Blackout Period”).  Any such written notice shall contain a general statement of the reasons for such postponement or restriction on use and an estimate of the anticipated delay.  The Company shall (a) promptly notify the Holder making a Demand of the expiration or earlier termination of such Blackout Period and (b) use its reasonable best efforts to effect the Demand Registration as promptly as practicable after the end of the Blackout Period.

 

Section 6.            Holdback.

 

(a) If (i) at any time after the date hereof, the Company shall file a Registration Statement (other than a registration on Form S-4, Form S-8 or Form S-3 (with respect to dividend reinvestment plans and similar plans) or any successor forms thereto) with respect to any shares of its capital stock, and (ii) upon reasonable prior notice the managing underwriter or underwriters (in the case of an Underwritten Offering) advise the Company and the Holders in writing that a sale or distribution of Registrable Securities would adversely impact such offering, then the Holders shall, to the extent not inconsistent with applicable law, refrain from effecting any sale or distribution of Registrable Securities during the period commencing on the effective date of such Registration Statement and continuing until the ninetieth (90th) day after the effective date of such Registration Statement; provided that such restriction shall apply to the Holders only if in connection with such offering, the underwriters require the directors and executive officers of the Company to refrain from selling the Company’s securities for a like period and on like terms (such period, a “Holdback Period”).

 

(b) During the ninety (90) day period commencing on the effective date of a Registration Statement filed by the Company on behalf of Holders in connection with an Underwritten Offering pursuant to a Demand, the Company shall not effect (except pursuant to registrations on Form S-4 or Form S-8 or Form S-3 (with respect to dividend reinvestment plans and similar plans) or any successor forms thereto and except pursuant to Section 2(f) hereof) any public sale or distribution of its securities.

 

Section 7.            Ineligibility to Effect a Demand Registration.  If, following receipt of a Demand (other than the Closing Demand) from a Holder, after giving effect to any Holdback Period and any Blackout Period, the Company has not filed a Registration Statement for the Registrable Securities so requested to be registered or has not used its reasonable best efforts to cause such Registration Statement to become effective because it is not eligible to effect a registration pursuant to the Securities Act, the Company shall have 60 additional days to file such Registration Statement for the Registrable Securities so requested to be registered or to use its reasonable best efforts to cause such Registration Statement to become effective (such additional days, the “Ineligibility Accommodation Period”).

 

Section 8.            Liquidated Damages.

 

(a) The parties hereto agree that the Holders will suffer damages if the Company fails to perform its obligations under Section 2 or Section 3 hereof and that it would not be feasible to ascertain the extent of such damages. Accordingly, in the event that after a Holder has made a Demand and all Ineligibility Accommodation Periods, Blackout Periods and Holdback Periods have expired the Company has not filed a Registration Statement for the Registrable Securities so requested to be registered or has not caused such Registration Statement to become effective as provided in Section 2(b) hereof, or has not maintained the effectiveness of such Registration Statement as provided in Section 9(b) hereof (such events, a “Registration Default”), then damages (“Liquidated Damages”) will accrue in the form of additional interest on the portion of the Convertible Notes that are convertible or were converted into the Affected Registrable Securities with respect to each 30-day period immediately following the occurrence of such Registration Default during which, at any point during such period, such Registration Default is continuing, in an amount equal to 0.5% multiplied by the initial principal amount of the Convertible Notes that are convertible or were converted into the Affected Registrable Securities. Such additional interest shall continue to accrue until such Registration Default has been cured; provided, however, that, during which time at any point during such period, any Holder who has made a Demand that is the subject of a Registration Default and who is not a lender with respect to a Convertible Note that is convertible into Affected Registrable Securities shall be entitled to receive a cash payment from the Company in like amounts no later than 30 days after each such 30-day period.

 

(b) The parties hereto agree that the Liquidated Damages provided for in this Section 8 constitute a reasonable estimate of the damages that will be suffered by Holders of Securities by reason of the happening of any Registration Default.

 

Section 9.            Registration Procedures.   If and whenever the Company shall be required to use its reasonable best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, the Company shall and, with respect to Section 9(m) and Section 9(n), the Holders shall:

 

(a) prepare and file with the SEC a Registration Statement with respect to such Registrable Securities on any form for which the Company then qualifies or that counsel for the Company shall deem appropriate, and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, and use its reasonable best efforts to cause such Registration Statement to become and remain effective;

 

(b) prepare and file with the SEC amendments and post- effective amendments to such Registration Statement and such amendments and supplements to the Prospectus used in connection therewith as may be necessary to maintain the effectiveness of such registration or as may be required by the rules, regulations or instructions applicable to the registration form utilized by the Company or by the Securities Act for a Shelf Registration or otherwise necessary to keep such Registration Statement effective for at least ninety (90) days (or one hundred eighty (180) days in the case of a Shelf Registration) and cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to otherwise comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement until the earlier of (x) such 90th or 180th day, as the case may be, or (y) such time as all Registrable Securities covered by such Registration Statement shall have ceased to be Registrable Securities (it being understood that the Company at its option may determine to maintain such effectiveness for a longer period, whether pursuant to a Shelf Registration or otherwise); provided, however, that a reasonable time before filing a Registration Statement or Prospectus, or any amendments or supplements thereto (other than reports required to be filed by it under the Exchange Act), the Company shall furnish to the Holders, the managing underwriter and their respective counsel for review and comment, copies of all documents proposed to be filed;

 

(c) furnish, without charge, to the Holders and to any underwriter in connection with an Underwritten Offering such number of conformed copies of such Registration Statement and of each amendment and post-effective amendment thereto (in each case including all exhibits) and such number of copies of any Prospectus or Prospectus supplement and such other documents as Holders or such underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities by the Holders or the underwriter (the Company hereby consenting to the use (subject to the limitations set forth in Section 9(n) hereof) of the Prospectus or any amendment or supplement thereto in connection with such disposition);

 

(d) use its reasonable best efforts to register or qualify such Registrable Securities covered by such Registration Statement under such other securities or “blue sky” laws of such jurisdictions as Holders shall reasonably request, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this Section 9(d), it would not be obligated to be so qualified, to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction;

 

(e) as promptly as practicable, notify the managing underwriters (if any) and Holders, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act within the appropriate period mentioned in Section 9(b) hereof, of the Company’s becoming aware that the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and, as promptly as practicable, prepare and furnish to the Holders a reasonable number of copies of an amendment or supplement to such Registration Statement or related Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

(f) notify the Holders, as promptly as practicable, at any time:

 

(i) when the Prospectus or any Prospectus supplement or post- effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective;

 

(ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information;

 

(iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or any order preventing the use of a related Prospectus, or the initiation (or any overt threats) of any proceedings for such purposes;

 

(iv) of the receipt by the Company of any written notification of the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation (or overt threats) of any proceeding for that purpose; and

 

(v) if at any time the representations and warranties of the Company contemplated by Section 9(i) below cease to be true and correct in all material respects;

 

(g) otherwise comply with all applicable rules and regulations of the SEC, and make available to Holders an earnings statement that shall satisfy the provisions of Section 11(a) of the Securities Act, provided that the Company shall be deemed to have complied with this Section 9(g) if it shall have complied with Rule 158 under the Securities Act;

 

(h) use its reasonable best efforts to cause all such Registrable Securities to be listed on the NYSE, NASDAQ or any other national securities exchange or automated quotation system on which the class of Registrable Securities being registered is then listed, if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange, and to provide a transfer agent and registrar for such Registrable Securities covered by such Registration Statement no later than the effective date of such Registration Statement;

 

(i) enter into agreements (including, if applicable, an underwriting agreement and other customary agreements in the form customarily entered into by other companies in comparable underwritten offerings) and take all other appropriate and all commercially reasonable actions in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement shall be entered into and whether or not the registration shall be an underwritten registration:

 

(i) make such representations and warranties to the Holders and the underwriters, if any, in form, substance and scope as are customarily made by companies to underwriters in comparable underwritten offerings;

 

(ii) obtain opinions of counsel to the Company and updates thereof (which counsel and opinions shall be reasonably satisfactory (in form, scope and substance) to the managing underwriters) addressed to the underwriters covering the matters customarily covered in opinions requested in comparable underwritten offerings by the Company;

 

(iii) obtain “comfort letters” and updates thereof from the Company’s independent certified public accountants addressed to the Board and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in “comfort letters” by independent accountants in connection with comparable underwritten offerings on such date or dates as may be reasonably requested by the managing underwriters, or if such offering is not an Underwritten Offering, the Board; provided, however, that in connection with any non-Underwritten Offering, such comfort letter shall not be required except to the extent requested by the Board.

 

(iv) provide the indemnification in accordance with the provisions and procedures of Section 13 hereof to all parties to be indemnified pursuant to such Section 13 and any other indemnification customarily required in underwritten public offerings; and

 

(v) deliver such documents and certificates as may be reasonably requested by the Holders and the managing underwriters, if any, to evidence compliance with Section 9(f) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company;

 

(j) cooperate with the Holders and the managing underwriter or underwriters, if any, to facilitate, to the extent reasonable under the circumstances, the timely preparation and delivery of certificates representing the securities to be sold under such Registration Statement, and enable such securities to be in such denominations and registered in such names as the managing underwriter or underwriters, if any, or the Holders may request and/or in a form eligible for deposit with the Depository Trust Company;

 

(k) make available to the Holders, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by the Holders or such underwriter (collectively, the “Inspectors”), reasonable access to appropriate officers and employees of the Company and the Company’s subsidiaries to ask questions and to obtain information reasonably requested by such Inspector and all financial and other records and other information, pertinent corporate documents and properties of any of the Company and its subsidiaries and Affiliates (collectively, the “Records”), as shall be reasonably necessary to enable them to exercise their due diligence responsibility; provided, however, that the Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors in writing are confidential shall not be disclosed to any Inspector unless such Inspector signs a confidentiality agreement in customary form reasonably satisfactory to the Company or either (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission of a material fact in such Registration Statement, or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction; provided, further, that any decision regarding the disclosure of information pursuant to subclause (i) shall be made only after consultation with counsel for the applicable Inspectors; and provided, further, that the Holders agree that they shall, promptly after learning that disclosure of such Records is sought in a court having jurisdiction, give notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of such Records;

 

(l) in the event of the issuance of any stop order suspending the effectiveness of the Registration Statement or of any order suspending or preventing the use of any related Prospectus or suspending the qualification of any Registrable Securities included in the Registration Statement for sale in any jurisdiction, the Company shall use its reasonable best efforts promptly to obtain its withdrawal;

 

(m) the Holders shall furnish the Company with such information regarding them and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as the Company may from time to time reasonably request in writing or as shall be required in connection with the action to be taken by the Company hereunder; and

 

(n) the Holders shall, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 9(e) hereof, forthwith discontinue disposition of Registrable Securities pursuant to the Prospectus or Registration Statement covering such Registrable Securities until the Holders shall have received copies of the supplemented or amended Prospectus contemplated by Section 9(e) hereof, and, if so directed by the Company, the Holders shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in their possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice.

 

Section 10.            Registration Expenses.  Except as otherwise provided herein, in connection with all registrations of Registrable Securities made pursuant to a Demand Registration or Piggy-Back Rights, the Company shall pay all Registration Expenses; provided, however, that the Holders shall pay, and shall hold the Company harmless from, (i) any underwriting discounts and commissions and transfer taxes relating to the sale or disposition of Registrable Securities and (ii) any fees, expenses or disbursements of its counsel and other advisors.

 

Section 11.            Rule 144.   From and after the date which is more than one hundred eighty (180) days after the date hereof, the Company shall, at all times when the Holders Beneficially Own any Registrable Securities, take such measures and file and/or make available such information, documents and reports as shall be required by the SEC as a condition to the availability of Rule 144; provided, however, that the Company need not take any of the foregoing actions during any Ineligibility Accommodation Period.

 

Section 12.            Covenants of Holders.   Each Holder hereby covenants and agrees that it shall not sell any Registrable Securities in violation of the Securities Act or this Agreement.

 

Section 13.            Indemnification; Contribution.

 

(a) The Company shall indemnify and hold harmless each Holder, its respective officers and directors, and each Person, if any, who controls such Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act and any agents, representatives or advisers thereof against all losses, claims, damages, liabilities and expenses (including reasonable attorneys’ fees and expenses and reasonable costs of investigation) incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation arising out of or based upon (i) any untrue or alleged untrue statement of material fact contained in any Registration Statement, any Prospectus or preliminary Prospectus, or any amendment or supplement to any of the foregoing, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or a preliminary Prospectus, in light of the circumstances then existing) not misleading, or (iii) any violation or alleged violation by the Company of any United States federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration except in each case insofar as the same arise out of or are based upon, any such untrue statement or omission made in reliance on and in conformity with written information with respect to the Holders furnished in writing to the Company by the Holders or their counsel expressly for use therein.  In connection with an Underwritten Offering, the Company shall indemnify the underwriters thereof, their officers, directors and agents and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders.

 

(b) Any Person entitled to indemnification hereunder agrees to give prompt written notice to the indemnifying party after the receipt by such indemnified party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such indemnified party may claim indemnification or contribution pursuant to this Section 13 (provided that failure to give such notification shall not affect the obligations of the indemnifying party pursuant to this Section 13 except to the extent the indemnifying party shall have been materially prejudiced as a result of such failure).  In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 13 for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation.  Notwithstanding the foregoing, if (i) the indemnifying party shall not have employed counsel reasonably satisfactory to such indemnified party to take charge of the defense of such action within a reasonable time after notice of commencement of such action (so long as such failure to employ counsel is not the result of an unreasonable determination by such indemnified party that counsel selected pursuant to the immediately preceding sentence is unsatisfactory) or if the indemnifying party shall not have demonstrated to the reasonable satisfaction of the indemnified party its ability to finance such defense, or (ii) the indemnified party shall have reasonably concluded or been advised by counsel that there may be legal defenses available to other indemnified parties to such action which could result in a conflict of interest for such counsel or prejudice the prosecution of the defenses available to such indemnified party, then such indemnified party shall have the right to employ separate counsel of its choosing, at the expense of the indemnifying party.  No indemnifying party shall consent to entry of any judgment or enter into any settlement without the consent (which consent, in the case of an action, suit, claim or proceeding exclusively seeking monetary relief, shall not be unreasonably withheld) of the applicable indemnified party.

 

(c) If the indemnification from the indemnifying party provided for in this Section 13 is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the actions or omissions which resulted in such losses, claims, damages, liabilities and expenses, as well as any other relevant equitable considerations.  The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied (in writing, in the case of the Holders) by, such indemnifying party or indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action or omission.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 13(b) hereof, any legal and other fees and expenses reasonably incurred by such indemnified party in connection with any investigation or proceeding.  The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 13(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 13(c).  Any underwriter’s obligations in this Section 13(c) to contribute shall be several in proportion to the number of Registrable Securities underwritten by them and not joint.  Notwithstanding the provisions of this Section 13(c), no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  If indemnification is available under this Section 13, the indemnifying parties shall indemnify each indemnified party to the fullest extent provided in Section 13(a) hereof without regard to the relative fault of such indemnifying parties or indemnified party or any other equitable consideration provided for in this Section 13(c).

 

(d) The provisions of this Section 13 shall be in addition to any liability which any party may have to any other party and shall survive any termination of this Agreement.  The indemnification provided by this Section 13 shall survive the Transfer of such Registrable Securities by the Holders and shall remain in full force and effect irrespective of any investigation made by or on behalf of an indemnified party.

 

Section 14.            Injunctions.   EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH ITS SPECIFIC TERMS OR WERE OTHERWISE BREACHED.  THEREFORE, EACH PARTY SHALL BE ENTITLED TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THE PROVISIONS OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT HAVING JURISDICTION, SUCH REMEDY BEING IN ADDITION TO ANY OTHER REMEDY TO WHICH SUCH PARTY MAY BE ENTITLED AT LAW OR IN EQUITY.

 

Section 15.            Amendments and Waivers.   No amendment, modification, supplement, termination, consent or waiver of any provision of this Agreement, nor consent to any departure herefrom, shall in any event be effective unless the same is in writing and is signed by the party against whom enforcement of the same is sought.  Any waiver of any provision of this Agreement and any consent to any departure from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.

 

Section 16.            Notices.  All notices, consents, requests, demands and other communications hereunder must be in writing, and shall be deemed to have been duly given or made: (i) when delivered in person; (ii) three (3) days after deposited in the United States mail, first class postage prepaid; (iii) in the case of telegraph or overnight courier services, one (1) Business Day after delivery to the telegraph company or overnight courier service with payment provided; or (iv) in the case of telex or telecopy or fax, when sent, verification received; in each case addressed as follows:

 

if to the Company:

Cadiz Inc.

550 South Hope Street, Suite 2850

Los Angeles, CA 90071

Telephone: (213) 271-1600

Facsimile: (213) 271-1614

Attention: Chief Financial Officer

with a copy to:

Howard Unterberger, Esq.

Theodora Oringher P.C.

10880 Wilshire Boulevard, Suite 1700

Los Angeles, CA 90024

Telephone: (310) 557-2009

Facsimile: (310) 551-0283

if to the Holders, to the addresses set forth on the signature pages attached hereto.

with a copy to:

Manatt, Phelps & Phillips, LLP

7 Times Square

New York, NY 10036

Attention:  Neil S. Faden

Telephone:  212-790-4500

Facsimile: 212-790-4545

Section 17.            Successors and Assigns.   This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto, including, without the need for an express assignment or any consent by the Company thereto, subsequent Holders.  The Company hereby agrees to extend the benefits of this Agreement to any Holder and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto.

 

Section 18.            Representations and Warranties of the Company.   The Company represents and warrants to the other parties hereto as follows:

 

(a) Such party is duly organized and validly existing under the laws of its jurisdiction of organization.

 

(b) Such party has full corporate or other organizational power and authority to enter into this Agreement and to carry out and perform its obligations hereunder.  The execution, delivery and performance by such party of this Agreement have been duly authorized and approved by all necessary corporate or other organizational action.  This Agreement has been duly authorized, executed and delivered by such party and constitutes the legal, valid and binding obligation of such party enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.

 

(c) The execution, delivery and performance by such party of its obligations under this Agreement, and compliance by such party with the terms and conditions hereof will not (i) violate, with or without the giving of notice or the lapse of time, or both, or require any registration, qualification, approval or filing (other than registrations, qualifications, approvals and filings that have already been made or obtained) under, any provision of law, statute, ordinance or regulation applicable to it or any of its subsidiaries and (ii) conflict with, or require any consent or approval under, or result in the breach or termination of any provision of, or constitute a default under, or result in the acceleration of the performance of the obligations of such party or any of its subsidiaries under, or result in the creation of any claim, lien, charge or encumbrance upon any of the properties, assets or businesses of such party or any of its subsidiaries pursuant to (x) its organizational documents, (y) any order, judgment, decree, law, ordinance or regulation applicable to it or any of its subsidiaries or (z) any contract, instrument, agreement or restriction to which it or any of its subsidiaries is a party or by which it or any of its subsidiaries or any of its respective assets or properties is bound.

 

Section 19.            Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties.

 

Section 20.            Descriptive Headings.   The descriptive headings used herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

 

Section 21.            Choice of Law.   THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

 

Section 22.            Severability.  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, shall be held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that all remaining provisions contained herein shall not be in any way impaired thereby.

 

Section 23.            Entire Agreement.  This Agreement, including any schedules, exhibits or attachments referred to herein, is intended by the parties as a final expression and a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter hereof.  There are no restrictions, promises, warranties or undertakings with respect to the subject matter hereof, other than those set forth or referred to herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

Section 24.            Further Actions; Reasonable Best Efforts.   Each Holder shall use its reasonable best effort to take or cause to be taken all appropriate action and to do or cause to be done all things reasonably necessary, proper or advisable under applicable law and regulations to assist the Company in the performance of its obligations hereunder, including, without limitation, the preparation and filing of any Registration Statements pursuant to any Demand.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.

CADIZ INC.

By:__________________________

Name:

Title:

[Insert Holders’ Signature Blocks]

  

  

  

 

Exhibit D

Form of Cadwalader, Wickersham & Taft LLP Opinion

 

March 5, 2013

 

Addressees Listed on Schedule A

 

	
Re:  

	
Cadiz Notes Indenture

 

Ladies and Gentlemen:

 

We have acted as special counsel to Cadiz Inc. (the “Company”) in connection with the 7.00% Convertible Senior Notes Indenture, dated as of the date hereof, between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Indenture”).  We are rendering this opinion letter to you at the request of the Company pursuant to Section 5.1 of the Purchase Agreement (as defined below) and 5.1 of the Exchange Agreement (as defined below).  Capitalized terms used herein but not defined herein have the respective meanings given them in the Indenture.

 

In rendering the opinions set forth below, we have examined and relied upon the originals, copies or specimens, certified or otherwise identified to our satisfaction, of the Transaction Documents (as defined below) and such certificates, corporate and public records, agreements and instruments and other documents, including, among other things, the documents delivered on the date hereof, as we have deemed appropriate as a basis for the opinions expressed below. In such examination we have assumed the genuineness of all signatures, the authenticity of all documents, agreements and instruments submitted to us as originals, the conformity to original documents, agreements and instruments of all documents, agreements and instruments submitted to us as copies or specimens, the authenticity of the originals of such documents, agreements and instruments submitted to us as copies or specimens, the accuracy of the matters set forth in the documents, agreements and instruments we reviewed, and that such documents, agreements and instruments evidence the entire understanding between the parties thereto and have not been amended, modified or supplemented in any manner material to the opinions expressed herein.  As to matters of fact relevant to the opinions expressed herein, we have relied upon, and assumed the accuracy of, the representations and warranties contained in the Transaction Documents and we have relied upon certificates and oral or written statements and other information obtained from the Company, the other parties to the transaction referenced herein, and public officials.  Except as expressly set forth herein, we have not undertaken any independent investigation (including, without limitation, conducting any review, search or investigation of any public files, records or dockets) to determine the existence or absence of the facts that are material to our opinions, and no inference as to our knowledge concerning such facts should be drawn from our reliance on the representations of the Company in connection with the preparation and delivery of this letter.

 

In particular, we have examined and relied upon:

 

	
a)  

	
the Indenture;

 

	
b)  

	
the Notes;

	
c)  

	
Private Placement Purchase Agreement, dated as of March 4, 2013, by and among the Company and the purchasers set forth on Exhibit A thereto (the “Purchase Agreement”);

 

	
d)  

	
Exchange Agreement, dated as of March 4, 2013, by and among LC Capital Master Fund, Ltd., Milfam II L.P., Water Asset Management Managed Account #1, L.L.C. and the Company (“Exchange Agreement”);

 

	
e)  

	
a certificate, dated as of February 27, 2013, from the Secretary of State of Delaware as to the existence and good standing in the State of Delaware of the Company (the “Delaware Good Standing Certificate”);

 

	
f)  

	
a copy of the Certificate of Incorporation of the Company, certified by the Secretary of State of Delaware as of February 21, 2013 (“Certificate of Incorporation”);

 

	
g)  

	
a copy of the bylaws of the Company, as in effect on the date hereof and certified by Timothy J. Shaheen, Secretary of the Company (“Bylaws”);

 

	
h)  

	
a copy of certain resolutions of the board of directors of the Company adopted on February 26, 2013, as in effect on the date hereof and certified as of the date hereof by Timothy J. Shaheen, Secretary of the Company; and

 

	
i)  

	
the officer’s certificate attached hereto as Schedule B.

 

Items (a) to (d) above are referred to in this letter as the “Transaction Documents”.  References in this letter to “Applicable Laws” are to those laws, rules and regulations of the State of New York and of the United States of America that, in our experience, are normally applicable to transactions of the type contemplated by the Transaction Documents.  References in this letter to “Governmental Authorities” are to executive, legislative, judicial, administrative or regulatory bodies of the State of New York or the United States of America.  References in this letter to “Governmental Approval” are to any consent, approval, license, authorization or validation of, or filing, recording or registration with, any Governmental Authority pursuant to Applicable Laws.

 

We have also assumed (x) the legal capacity of all natural persons and (y) (except to the extent expressly opined on herein) that all documents, agreements and instruments have been duly authorized, executed and delivered by all parties thereto, that all such parties are validly existing and in good standing under the laws of their respective jurisdictions of organization, that all such parties had the power and legal right to execute and deliver all such documents, agreements and instruments, and that such documents, agreements and instruments constitute the legal, valid and binding obligations of such parties, enforceable against such parties in accordance with their respective terms.  As used herein, “to our knowledge,” “known to us” or words of similar import mean the actual knowledge, without independent investigation, of any lawyer in our firm actively involved in the transactions contemplated by the Agreements.

 

We have also assumed, for purposes of paragraph 3 below, that each of the Transaction Documents is in consideration of or relates to an obligation arising out of a transaction covering in the aggregate not less than $1,000,000.

 

We express no view as to whether one or more of the Transaction Documents or a portion thereof may constitute a “swap” under Section 1a of the Commodity Exchange Act, as amended, or a “security-based swap” under Section 3(a) of the Securities Exchange Act of 1934, as amended, and as such terms are further defined by joint regulations of the Commodity Futures Trading Commission and the Securities and Exchange Commission.  The opinions expressed herein do not take into account the effect of any portion of a Transaction Document constituting a “swap” or “security-based swap.”

 

We express no opinion concerning the laws of any jurisdiction other than the laws of the State of New York and, to the extent expressly referred to in this letter, the federal laws of the United States of America.

 

Based upon and subject to the foregoing, we are of the opinion that:

 

1. (i) Based solely on a review of the Delaware Good Standing Certificate, the Company is a corporation validly existing and in good standing under the laws of the State of Delaware and (ii) the Company has the requisite corporate power to enter into and perform its obligations under the Transaction Documents.

 

2. Each of the Transaction Documents constitutes a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, receivership or other laws relating to or affecting creditors’ rights generally, and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), and except that the enforcement of rights with respect to indemnification and contribution obligations and provisions (a) purporting to waive or limit rights to trial by jury, oral amendments to written agreements or rights of set-off, (b) relating to submission to jurisdiction, venue or service of process, or (c) purporting to prohibit, restrict or condition the assignment of, or the grant of a security interest in, rights under the Indenture or property subject thereto, may be limited by applicable law or considerations of public policy.

 

3. The execution and delivery by the Company of the Transaction Documents, and the performance by the Company of its obligations thereunder (a) do not result in a violation of any provision of the Bylaws or Certificate of Incorporation or any Applicable Laws applicable to the Company, and (b)  do not breach or result in a violation of, or default under the Amended and Restated Credit Agreement, dated as of the date hereof, by and among the Company, Cadiz Real Estate LLC, LC Capital Master Fund, Ltd. and the lenders party thereto.

 

4. The Company is not, nor is it required to register as, an investment company under the Investment Company Act of 1940, as amended.

 

This opinion letter is rendered to you in connection with the above-described transaction.  This opinion letter may not be relied upon by you for any other purpose, or relied upon by, or furnished to, any other person, firm or corporation without our prior written consent, except that the Trustee, solely in its capacity as trustee under the Indenture, may rely upon paragraphs 1, 2 and 3(a), in each case subject to the qualifications, assumptions and limitations relating thereto set forth herein.

 

In addition, we disclaim any obligation to update this letter for changes in fact or law, or otherwise.

 

Very truly yours,

  

  

  

Schedule A

 

Bryant and Carleen Riley JTWROS

 

B. Riley & Co., LLC 401(k) Profit Sharing Plan

 

B Riley & Co., LLC

 

Riley Family Trust DTd 6/20/89, Modified 01/25/07

 

Robert Antin Children Irrevocable Trust Dtd 01/01/01

 

Wolverine Flagship Fund Trading Limited

 

Nokomis Capital Master Fund, LP

 

Moussescapade, L.P.

 

Sphinx Trading, LP

 

Altima Global Special Situations Master Fund Ltd.

 

LC Capital Master Fund, Ltd.

 

Milfam II LP

 

Water Asset Management Managed Account #1, L.L.C.

  

  

  

Schedule B

Officer’s Certificate

March 5, 2013

I am a duly authorized officer of Cadiz Inc. (“Cadiz”).  I hereby certify on behalf of Cadiz as follows:

 

	
1.  

	
Opinion Letter.  This Officer’s Certificate (this “Certificate”) is being delivered in connection with the opinion to be delivered on the date hereof by Cadwalader, Wickersham & Taft LLP (the “Opinion Letter”) in connection with 7.00% Convertible Senior Notes Indenture, dated as of the date hereof, between the Company and The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Indenture”).  I am authorized by Cadiz to deliver this Certificate to Cadwalader, Wickersham & Taft LLP.  Capitalized terms used herein and not defined herein have the meanings ascribed to them in the Indenture.

 

	
2.  

	
Reliance.  Cadwalader, Wickersham & Taft LLP is authorized to rely on the statements in this Certificate in preparing and delivering the Opinion Letter.

 

	
3.  

	
Knowledge or Investigation of Facts.  I am familiar with the business of Cadiz.  I have personal knowledge of the facts certified in this Certificate, or have consulted with others at Cadiz who have such personal knowledge and have confirmed such facts to me.

 

	
4.  

	
Investment Company Act.  Cadiz is primarily engaged directly, or indirectly through one or more Majority-Owned Subsidiaries, in the business of acquiring and developing land; and Cadiz does not: (a) hold itself out as being engaged primarily, or propose to engage primarily, in the business of investing, reinvesting or trading in Securities; (b) engage, has not engaged, in, or proposes to engage in, the business of issuing Face-Amount Certificates of the Installment Type and has no such certificate outstanding; and (c) own or propose to acquire Investment Securities having a Value exceeding forty percent (40%) of the Value of the total assets of either Obligor (exclusive of Government Securities and cash items) on an unconsolidated basis.

 

As used in this Certificate, the following terms shall have the meanings ascribed below:

 

“Exempt Fund” means a company that is excluded from treatment as an investment company solely by Section 3(c)(1) or 3(c)(7) of the Investment Company Act of 1940, as amended (applicable to certain privately offered investment funds).

 

“Face-Amount Certificate of the Installment Type” means any certificate, investment contract, or other Security which represents an obligation on the part of its issuer to pay a stated or determinable sum or sums at a fixed or determinable date or dates more than 24 months after the date of issuance, in consideration of the payment of periodic installments of a stated or determinable amount.

 

“Government Securities” means all Securities issued or guaranteed as to principal or interest by the United States, or by a person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States; or any certificate of deposit for any of the foregoing.

 

“Investment Securities” includes all Securities except: (A) Government Securities; (B) Securities issued by companies the only shareholders in which are employees and former employees of a company and its subsidiaries, members of the immediate families of such persons and the company and its subsidiaries; and (C) Securities issued by Majority-Owned Subsidiaries of either Obligor which are not engaged and do not propose to be engaged in activities within the scope of clause (a), (b) or (c) of the fourth full paragraph of this Certificate or which are exempted or excepted from treatment as an investment company by statute, rule or governmental order (other than on the basis that they are Exempt Funds).

 

“Majority-Owned Subsidiary” of a person means a company fifty percent (50%) or more of the outstanding Voting Securities of which are owned by such person, or by a company which, within the meaning of this paragraph, is a Majority-Owned Subsidiary of such person.

 

“Security” means any note, stock, treasury stock, security future, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security (including a certificate of deposit) or on any group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

 

“Value” means: (A) with respect to Securities owned at the end of the last preceding fiscal quarter for which market quotations are readily available, the market value at the end of such quarter; (B) with respect to other Securities and assets owned at the end of the last preceding fiscal quarter, fair value at the end of such quarter, as determined in good faith by or under the direction of the board of directors; and (C) with respect to Securities and other assets acquired after the end of the last preceding fiscal quarter, the cost thereof.

 

“Voting Security” means any Security presently entitling the owner or holder thereof to vote for the election of directors of a company (or their equivalent, e.g., general partner or manager of a limited liability company).

 

IN WITNESS WHEREOF, I have executed and delivered this Certificate as of the date first above written.

 

	
  

	
Cadiz Inc.

 

	
  

	
By:

 

	
  

	
Name:

 

	
  

	
Title:

  

  

  

 

 

Exhibit E

Form of Theodora Oringher PC Opinion

March 5, 2013

 

Addressees Listed on Schedule A

(the “Addressees”)

Re:           Cadiz Inc. Notes Indenture

Ladies and Gentlemen:

We have acted as counsel to Cadiz Inc. (“Cadiz” or the “Company”) in connection with the 7.00% Convertible Senior Notes Indenture, dated as of the date hereof between the Company and The Bank of New York Mellon, as Trustee (the “Indenture”).  We are rendering this opinion letter to you at the request of the Company pursuant to Section 5.1 of the Purchase Agreement (as defined below) and 5.1 of the Exchange Agreement (as defined below).  Capitalized terms used herein but not defined herein have the respective meanings given them in the Indenture.

In our capacity as counsel in connection with the Indenture, we have examined originals (or copies identified to our satisfaction as true copies of the originals) a copy of each of the following documents:

(a)           the Indenture;

(b)           the Notes;

(c)           the Private Placement Purchase Agreement, dated as the date hereof by and among Cadiz, Inc. and those Purchasers listed on Schedule B (the “Purchase Agreement”); and

(d)           the Exchange Agreement, dated as of the date hereof by and among LC Capital Master Fund, Ltd., Milfam II L.P., Water Asset Management Managed Account #1, L.L.C. and Cadiz Inc. (“Exchange Agreement”).

The agreements, instruments and other documents referred to in the foregoing lettered clauses are referred to collectively as the “Transaction Documents”.

In connection with this opinion, we have (i) investigated such questions of law, (ii) examined such corporate documents and records of Cadiz, certificates of public officials and other documents, and (iii) received such information from officers and representatives of Cadiz, as we have deemed necessary for the purpose of this opinion.

Also in connection with this opinion, we reviewed a certificate executed by an officer of Cadiz for the benefit of Theodora Oringher PC, the accuracy of which we will not be held accountable for (the “Certificate of Due Inquiry”).

 

In rendering this opinion, we have, with your permission, assumed without independent verification the following assumptions, the accuracy of which we will not be held accountable for:

 

1.           The genuineness of all signatures affixed to the Transaction Documents, the authenticity of all items submitted to us as originals and the conformity with originals of all items submitted to us as copies including, without limitation, facsimile copies.

 

2.           There are no documents, understandings, negotiations or agreements between or among any of the parties to the Transaction Documents and others which would expand, modify or otherwise affect the terms of the Transaction Documents or the agreements or the obligations of the respective parties thereunder and which would have an effect on the opinion rendered hereinafter.

 

3.           Each natural person executing any such instrument, document, or agreement is legally competent to do so.

 

Whenever our opinion herein with respect to the existence or absence of facts is qualified by the phrase “to our knowledge,” or “known to us” or “we have no knowledge” or “to the best of our knowledge”, it is intended to mean the current actual knowledge of Howard J. Unterberger or Juliana Stamato, the attorneys in this firm who have represented Cadiz, of the existence or absence of any facts which would contradict the opinions set forth below.  Except for a review of our own files, and except as expressly stated otherwise herein, we have not undertaken any independent inquiry or investigation to determine the existence or absence of such facts, and no inference as to our knowledge of the existence or absence of such facts should be drawn from the fact of our representation of Cadiz.

 

In addition, as to factual matters, with your consent we have relied solely upon (1) the representations and warranties of the parties contained in the Transaction Documents and (2) the Certificate of Due Inquiry, in each case without independent investigation, to establish the truth and accuracy of the factual matters specified therein.

 

We offer no opinion as to any matter or any law not expressly contained in this opinion.

	
I.  

	
OPINIONS.

 

Based on and subject to the above, and subject to the assumptions, limitations, qualifications, exceptions and reservations set forth herein, it is our opinion that:

1.           Each of the Transaction Documents has been duly authorized by all necessary corporate action on the part of Cadiz and has been duly executed and delivered on behalf of Cadiz, and the performance by Cadiz of its obligations thereunder does not contravene (i) to the best of our knowledge, any law, rule or regulation applicable to Cadiz (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System) or (ii) any contractual or legal restriction binding on or affecting Cadiz or Cadiz Real Estate LLC in any agreement or contract filed by Cadiz with the Securities and Exchange Commission pursuant to Item 601(b)(10) of Regulation S-K.

2.           The shares of Common Stock issuable upon conversion of the Notes pursuant to the terms of the Indenture have been duly authorized and reserved for issuance by Cadiz and, upon due conversion of the Notes in accordance with the terms of the Indenture, said Common Stock will be validly issued, fully paid and non-assessable, free and clear of any Liens or encumbrances, other than transfer restrictions pursuant to the securities laws.

(a) 3.           The offer and sale of the Notes under the circumstances contemplated by the Indenture constitute exempt transactions under the Securities Act and applicable state law.

 

4.           To the best of our knowledge, based solely on the Certificate of Due Inquiry, except for the matters disclosed in the Transaction Documents or in public filings made by Cadiz with the U.S. Securities and Exchange Commission, there is no pending or threatened action or proceeding against Cadiz before any court, governmental agency or arbitrator which is likely to have a materially adverse effect upon the financial condition or operations of Cadiz.

5.           The execution and delivery by Cadiz of the Transaction Documents to which it is a party, and the performance of such Transaction Documents by Cadiz or the consummation of the transactions contemplated thereby, do not require any consent or approval of, notice to, filing with, or other action by, any California or Delaware governmental body, agency or court having jurisdiction over Cadiz other than such of the foregoing as (i) are specifically referred to or described in the Transaction Documents or any schedule pertaining thereto, or (ii) have already been obtained or completed in connection with the execution and delivery by Cadiz of the Transaction Documents to which it is a party.

6.           The execution, delivery and performance of, and compliance with, the terms of the Transaction Documents and the issuance of the Common Stock upon conversion of the Notes, do not violate any provision of Cadiz’ organizational documents.  To our knowledge, the issuance of the Common Stock issuable upon conversion of the Notes do not violate, or constitute a default under, any material contract of Cadiz relating to stockholder rights or the issuance of securities in existence prior to such issuance.

7.           No consent, approval or authorization of, or designation, declaration or filing with, any governmental authority on the part of Cadiz is required in connection with the offer, sale or issuance of the Common Stock issuable upon conversion of the Notes except as contemplated by the Transaction Documents.

8.           To our knowledge, except for rights described in the Transaction Documents or in public filings of Cadiz with the Commission, there are no other options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of capital stock or other securities of Cadiz or any other agreements to issue any such securities or rights.

	
II.  

	
EXCEPTIONS, QUALIFICATIONS, LIMITATIONS AND ASSUMPTIONS.

 

1. Choice of Law. Our opinions are expressed with respect only to the laws of the State of California, the federal laws of the United States, the Delaware General Corporation Law and the Delaware Limited Liability Company Act, and are expressed only as to the outcome that would pertain were the laws of the State of California, the federal laws of the United States and the Delaware General Corporation Laws the governing laws applicable to the relevant issue.  We express no opinion as to whether the laws of any particular jurisdiction apply.  We call your attention to the fact that Transaction Documents are stated therein to be governed by New York law and that we are not members of the Bar of the State of New York.  We understand that you will be relying on the opinion issued by Cadwalader, Wickersham & Taft LLP as to matters involving the laws of the State of New York.  Our opinions and confirmations herein are based upon our consideration of only those statutes, rules and regulations which, in our experience, are normally applicable to loan transactions, provided that no opinion or confirmation is expressed in paragraph 1 with respect to state securities laws, tax laws, antitrust or trade regulation laws, insolvency or fraudulent transfer laws, antifraud laws or compliance with fiduciary duty requirements.  We express no opinion as to any state or federal laws or regulations applicable to the subject transaction because of the nature or extent of the business of any parties to the Transaction Documents other than the Cadiz.

 

2. No Enforceability Opinion.  We express no opinion as to the enforceability of the Transaction Documents.

 

We bring to your attention the fact that our legal opinions are an expression of our professional judgment and are not a guarantee of a result.  This opinion is rendered as of the date set forth above solely for the benefit of the Addressees  and their permitted successors and assigns under the Transaction Documents and may not be relied upon, used, circulated, referred to or quoted to any party without our prior written consent, except that the Addressees may furnish copies thereof (1) to any person if required by law to do so, (2) to the independent auditors and attorneys of the Addressees, (3) to any governmental authority having regulatory jurisdiction over the Addressees, (4) pursuant to order or legal process of any court or governmental authority, (5) in connection with any legal action to which an Addressee is a party arising out of the transactions contemplated in the Transaction Documents, and (6) to any prospective assignee permitted under the Transaction Documents, and the attorneys and advisers of such assignee, and to any credit rating agency or bond insurer in connection with a securitization or other disposition of the Note.

 

We make no undertaking to supplement this opinion if, after the date hereof, facts or circumstances come to our attention or changes in the law occur which could affect such opinion.  The paragraph headings used herein are not intended to modify or otherwise alter the opinions, assumptions or exceptions herein.

 

 

Very truly yours,

THEODORA ORINGHER PC

  

  

  

SCHEDULE A

ADDRESSEES

LC Capital Master Fund, Ltd.

Milfam II L.P.

Water Asset Management Managed Account #1, L.L.C.

Bryant and Carleen Riley JTWROS

B. Riley & Co., LLC 401(k) Profit Sharing Plan

B. Riley & Co., LLC

Riley Family Trust Dtd 6/20/89, Modified 01/25/07

Robert Antin Children Irrevocable Trust Dtd 01/01/01

Wolverine Funds

Nokomis Capital Master Fund, LP

Moussescapade, L.P.

Sphinx Trading, LP

Altima Global Special Situations Master Fund Ltd.

  

  

  

SCHEDULE B

PURCHASERS UNDER PURCHASE AGREEMENT

Bryant and Carleen Riley JTWROS

B. Riley & Co., LLC 401(k) Profit Sharing Plan

B. Riley & Co., LLC

Riley Family Trust Dtd 6/20/89, Modified 01/25/07

Robert Antin Children Irrevocable Trust Dtd 01/01/01

Wolverine Funds

Nokomis Capital Master Fund, LP

Moussescapade, L.P.

Sphinx Trading, LP

Altima Global Special Situations Master Fund Ltd.

  

  

  

 

SCHEDULE 4.2

 

	
  

	
Altima Global Special Situations Master Fund Ltd

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