Document:

Exhibit 4.2

	
 
    	
 
    

 

 

SM ENERGY COMPANY

 

 

AND

 

 

U.S. BANK NATIONAL ASSOCIATION,

 

 

as Trustee

 

 

SECOND SUPPLEMENTAL INDENTURE

 

 

Dated as of August 12, 2016

 

 

1.50% Convertible Senior Notes due 2021

 

	
 
    	
 
    

 

 

TABLE OF CONTENTS

 

 

	
 
    	
PAGE
    
	
 
    	
 
    
	
ARTICLE 1
    
	
DEFINITIONS AND INCORPORATION BY REFERENCE
    
	
 
    	
 
    
	
Section 1.01. Scope
    	
2
    
	
Section 1.02. Definitions
    	
2
    
	
Section 1.03. References to Interest
    	
11
    
	
Section 1.04. References to Principal
    	
11
    
	
 
    	
 
    
	
ARTICLE 2
    
	
ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND   EXCHANGE OF NOTES
    
	
 
    	
 
    
	
Section 2.01. Designation and Amount
    	
11
    
	
Section 2.02. Form of Notes
    	
11
    
	
Section 2.03. Date and Denomination of Notes; Payments of Interest and Defaulted Amounts
    	
12
    
	
Section 2.04. [Reserved]
    	
13
    
	
Section 2.05. Exchange and Registration of Transfer of Notes; Restrictions on   Transfer; Depositary
    	
13
    
	
Section 2.06. Mutilated, Destroyed, Lost or Stolen Notes
    	
15
    
	
Section 2.07. [Reserved]
    	
15
    
	
Section 2.08. Cancellation of Notes Paid, Converted, Etc.
    	
15
    
	
Section 2.09. [Reserved]
    	
15
    
	
Section 2.10. Repurchases
    	
15
    
	
 
    	
 
    
	
ARTICLE 3
    
	
SATISFACTION AND DISCHARGE
    
	
 
    	
 
    
	
Section 3.01. Applicability of Article 12 of the Base Indenture
    	
16
    
	
Section 3.02. Satisfaction and Discharge
    	
16
    
	
 
    	
 
    
	
ARTICLE 4
    
	
PARTICULAR COVENANTS OF THE COMPANY
    
	
 
    	
 
    
	
Section 4.01. [Reserved]
    	
16
    
	
Section 4.02. Maintenance of Office or Agency
    	
16
    
	
Section 4.03. [Reserved]
    	
17
    
	
Section 4.04. Provisions as to Paying Agent
    	
17
    
	
Section 4.05. Existence
    	
18
    
	
Section 4.06.   Reports
    	
18
    
	
Section 4.07. Usury Laws
    	
19
    
	
Section 4.08. Statements as to Defaults
    	
19
    
	
Section 4.09. Further Instruments and Acts
    	
19
    
	
Section 4.10. Future Guarantees
    	
19
    

 

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Section 4.11. Future Liens
    	
19
    
	
 
    	
 
    
	
ARTICLE 5
    
	
LISTS OF HOLDERS AND REPORTS BY THE COMPANY AND THE   TRUSTEE
    
	
 
    	
 
    
	
Section 5.01. [Reserved]
    	
20
    
	
Section 5.02. Preservation and Disclosure of Lists
    	
20
    
	
 
    	
 
    
	
ARTICLE 6
    
	
DEFAULTS AND REMEDIES
    
	
 
    	
 
    
	
Section 6.01. Applicability of Article 6 of the Base Indenture
    	
20
    
	
Section 6.02. Events of Default
    	
20
    
	
Section 6.03.   Acceleration; Rescission and Annulment
    	
22
    
	
Section 6.04.   Additional Interest
    	
23
    
	
Section 6.05. Payments of Notes on Default; Suit Therefor
    	
23
    
	
Section 6.06. Application of Monies Collected by Trustee
    	
25
    
	
Section 6.07. Proceedings by Holders
    	
26
    
	
Section 6.08. Proceedings by Trustee
    	
27
    
	
Section 6.09. Remedies Cumulative and Continuing
    	
27
    
	
Section 6.10. Direction of Proceedings and Waiver of Defaults by Majority of   Holders
    	
27
    
	
Section 6.11. Notice of Defaults
    	
28
    
	
Section 6.12. Undertaking to Pay Costs
    	
28
    
	
 
    	
 
    
	
ARTICLE 7
    
	
CONCERNING THE TRUSTEE
    
	
 
    	
 
    
	
Section 7.01. Amendments to Article 7 of the Base Indenture
    	
28
    
	
 
    	
 
    
	
ARTICLE 8
    
	
CONCERNING THE HOLDERS
    
	
 
    	
 
    
	
Section 8.01. Action by Holders
    	
29
    
	
Section 8.02. [Reserved]
    	
29
    
	
Section 8.03. Who Are Deemed Absolute Owners
    	
29
    
	
Section 8.04. [Reserved]
    	
29
    
	
Section 8.05. [Reserved]
    	
29
    
	
 
    	
 
    
	
ARTICLE 9
    
	
HOLDERS’ MEETINGS
    
	
 
    	
 
    
	
Section 9.01. [Reserved]
    	
29
    
	
Section 9.02. Call Of Meetings By Trustee
    	
29
    
	
Section 9.03. [Reserved]
    	
29
    
	
Section 9.04. [Reserved]
    	
29
    
	
Section 9.05. Regulations
    	
30
    
	
Section 9.06. [Reserved]
    	
30
    
	
Section 9.07. [Reserved]
    	
30
    

 

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ARTICLE 10
    
	
SUPPLEMENTAL INDENTURES
    
	
 
    	
 
    
	
Section 10.01. Applicability of Article 10 of the Base Indenture
    	
30
    
	
Section 10.02. Supplemental Indentures Without Consent of Holders
    	
30
    
	
Section 10.03. Supplemental Indentures with Consent of Holders
    	
31
    
	
Section 10.04. [Reserved]
    	
32
    
	
Section 10.05. [Reserved]
    	
32
    
	
Section 10.06. [Reserved]
    	
32
    
	
 
    	
 
    
	
ARTICLE 11
    
	
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
    
	
 
    	
 
    
	
Section 11.01. Applicability of Article 11 of the Base Indenture
    	
32
    
	
Section 11.02. Company May Consolidate, Etc. on Certain Terms
    	
32
    
	
Section 11.03. Successor Corporation to Be Substituted
    	
33
    
	
 
    	
 
    
	
ARTICLE 12
    
	
INTENTIONALLY OMITTED
    
	
 
    	
 
    
	
ARTICLE 13
    
	
INTENTIONALLY OMITTED
    
	
 
    	
 
    
	
ARTICLE 14
    
	
CONVERSION OF NOTES
    
	
 
    	
 
    
	
Section 14.01. Conversion Privilege
    	
34
    
	
Section 14.02. Conversion Procedure; Settlement Upon Conversion
    	
37
    
	
Section 14.03.   Increased Conversion Rate Applicable to Certain Notes Surrendered in   Connection with Make-Whole Fundamental Changes
    	
41
    
	
Section 14.04. Adjustment of Conversion Rate
    	
43
    
	
Section 14.05. Adjustments of Prices
    	
52
    
	
Section 14.06. Shares to Be Fully Paid
    	
52
    
	
Section 14.07. Effect of Recapitalizations, Reclassifications and Changes of the   Common Stock
    	
52
    
	
Section 14.08. Certain Covenants
    	
55
    
	
Section 14.09. Responsibility of Trustee
    	
55
    
	
Section 14.10. Notice to Holders Prior to Certain Actions
    	
56
    
	
Section 14.11. Stockholder Rights Plans
    	
57
    
	
 
    	
 
    
	
ARTICLE 15
    
	
REPURCHASE OF NOTES AT OPTION OF HOLDERS
    
	
 
    	
 
    
	
Section 15.01. Intentionally Omitted
    	
57
    
	
Section 15.02. Repurchase at Option of Holders Upon a Fundamental Change
    	
57
    
	
Section 15.03. Withdrawal of Fundamental Change Repurchase Notice
    	
59
    

 

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Section 15.04. Deposit of Fundamental Change Repurchase Price
    	
60
    
	
Section 15.05.   Covenant to Comply with Applicable Laws Upon   Repurchase of Notes
    	
61
    
	
 
    	
 
    
	
ARTICLE 16
    
	
NO REDEMPTION
    
	
 
    	
 
    
	
Section 16.01.   No Redemption
    	
61
    
	
 
    	
 
    
	
ARTICLE 17
    
	
MISCELLANEOUS   PROVISIONS
    
	
 
    	
 
    
	
Section 17.01. [Reserved]
    	
61
    
	
Section 17.02. [Reserved]
    	
61
    
	
Section 17.03. [Reserved]
    	
61
    
	
Section 17.04. Jurisdiction
    	
61
    
	
Section 17.05. Evidence of Compliance with Conditions Precedent; Certificates and   Opinions of Counsel to Trustee
    	
62
    
	
Section 17.06. Legal Holidays
    	
62
    
	
Section 17.07. No Security Interest Created
    	
62
    
	
Section 17.08. Benefits of Indenture
    	
62
    
	
Section 17.09. [Reserved]
    	
62
    
	
Section 17.10. [Reserved]
    	
62
    
	
Section 17.11. Execution in Counterparts
    	
62
    
	
Section 17.12. [Reserved]
    	
62
    
	
Section 17.13. Waiver of Jury Trial
    	
62
    
	
Section 17.14. [Reserved]
    	
63
    
	
Section 17.15. Calculations
    	
63
    
	
Section 17.16.   USA PATRIOT Act
    	
63
    
	
 
    
	
EXHIBIT
    
	
 
    
	
Exhibit A
    	
Form of Note
    	
A-1
    
			

 

iv

 

SECOND SUPPLEMENTAL INDENTURE (this “Second Supplemental Indenture”) dated as of August 12, 2016 between SM ENERGY COMPANY, a Delaware corporation, as issuer (the “Company,” as more fully set forth in Section 1.02) and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, as trustee (the “Trustee,” as more fully set forth in Section 1.02).

 

W I T N E S S E T H:

 

WHEREAS, the Company and the Trustee executed and delivered an Indenture, dated as of May 21, 2015 (the “Base Indenture” and as supplemented by this Second Supplemental Indenture and as may be further supplemented or amended with respect to the Notes, the “Indenture”), to provide for the issuance by the Company from time to time of its debentures, notes or other debt instruments (the “Securities”);

 

WHEREAS, Section 2.2 and Section 10.1(c) of the Base Indenture provide that the Trustee and the Company, when authorized by a Board Resolution, at any time and from time to time, may enter into one or more indentures supplemental to the Base Indenture, without the consent of any Holders, to, among other things, establish the form or terms of Securities of any series as permitted by the Base Indenture;

 

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its 1.50% Convertible Senior Notes due 2021 (the “Notes”), initially in an aggregate principal amount not to exceed $172,500,000, and in order to provide the terms and conditions upon which the Notes are to be authenticated, issued and delivered, the Company has duly authorized the execution and delivery of this Second Supplemental Indenture; and

 

WHEREAS, the Company desires to issue $172,500,000 aggregate principal amount of the Notes as of the date hereof;

 

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

 

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

 

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

 

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

 

NOW, THEREFORE:

 

 

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

 

ARTICLE 1
 DEFINITIONS AND INCORPORATION BY REFERENCE

 

Section 1.01.  Scope.  This Second Supplemental Indenture constitutes a supplement to the Base Indenture and an integral part of the Indenture and shall be read together with the Base Indenture as though all the provisions thereof are contained in one instrument.  Except as expressly amended by this Second Supplemental Indenture, the terms and provisions of the Base Indenture shall remain in full force and effect.  Notwithstanding the foregoing, this Second Supplemental Indenture shall only apply to the Notes.  For all purposes under the Base Indenture, the Notes shall constitute a single Series, and with regard to any matter requiring the consent under the Base Indenture of Securityholders of multiple series of Securities voting together as a single class, the consent of Holders issued hereunder voting as a separate class shall also be required and the same threshold shall apply.  With respect to the Notes, if the terms of the Base Indenture are inconsistent with the terms of this Second Supplemental Indenture, then the terms of this Second Supplemental Indenture shall control.

 

Section 1.02.  Definitions.  For all purposes of this Second Supplemental Indenture, unless otherwise specified herein:

 

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

 

(b)                       the words “herein,” “hereof,” “hereto” and “hereunder” and other words of similar import in this Second Supplemental Indenture shall refer to this Second Supplemental Indenture as a whole and not to the Base Indenture or any particular Article, Section or other subdivision of the Base Indenture or this Second Supplemental Indenture; and

 

(c)                        Section 1.1 of the Base Indenture is amended and supplemented, solely with respect to the Notes, by inserting the following additional defined terms in their appropriate alphabetical positions and deleting any defined terms therein that are also defined in this  Section 1.02.

 

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

 

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

 

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

 

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“Bid Solicitation Agent” means the Person appointed by the Company to solicit bids for the Trading Price of the Notes in accordance with Section 14.01(b)(i).  The Bid Solicitation Agent, in accepting the appointment as Bid Solicitation Agent and acting as such under the Second Supplemental Indenture, is entitled to the protections, immunities, limitations from liability and indemnification provided to the Trustee under the Base Indenture.  The Trustee shall initially act as the Bid Solicitation Agent. The Company may appoint another Person, including itself, to act as the Bid Solicitation Agent without prior notice to the Holders.  The Trustee may at any time resign from acting as the Bid Solicitation Agent by giving written notice of such resignation to the Company.  Upon receiving such notice of resignation, the Company shall promptly appoint a successor Bid Solicitation Agent.

 

“Board of Directors” means the board of directors of the Company or a committee of such board duly authorized to act for it hereunder.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Conversion Agent” shall have the meaning specified in Section 4.02.

 

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

 

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

 

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

 

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

 

3

 

“Custodian” means the Trustee, as custodian for the Depositary, or any successor entity thereto.

 

“Daily Conversion Value” means, for each of the 20 consecutive Trading Days during the Observation Period, 1/20th of the product of (a) the Conversion Rate on such Trading Day and (b) the Daily VWAP for such Trading Day.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Defaulted Amounts” means any amounts on any Note (including, without limitation, the Fundamental Change Repurchase Price, principal and interest) that are due but are not punctually paid or duly provided for, taking into account the grace periods, if any for such payments.

 

“Depositary” means, with respect to each Global Note, the Person specified in Section 2.05(c) to be a “Depositary” as defined in the Base Indenture with respect to such Notes, until a successor shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, “Depositary” shall mean or include such successor.

 

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

 

“Effective Date” shall have the meaning specified in Section 14.03(c), except that, as used in Section 14.04 and Section 14.05, “Effective Date” means the first date on which shares 

 

4

 

of the Common Stock trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable.

 

“Event of Default” shall have the meaning specified in Section 6.02.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

provided, however, that a transaction or transactions described in clause (a) or clause (b) immediately above shall not constitute a Fundamental Change, if at least 90% of the consideration received or to be received by the common stockholders of the Company, excluding cash payments for fractional shares, in connection with such transaction or transactions consists of shares of common stock that are listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors) or will be so listed or quoted when issued or exchanged in connection with such transaction or transactions and as a result of such transaction or transactions the Notes become convertible into such consideration, excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights (subject to the provisions of Section 14.02(a)).  If any transaction in which the Common Stock is replaced by the securities of another entity occurs, following completion of any related Make-Whole Fundamental Change Period (or, in the case of a transaction that would have been a Fundamental Change or a Make-Whole Fundamental Change but for the proviso immediately following clause (d) immediately above, following the effective date of such transaction) references to the Company in this definition shall instead be references to such other entity.

 

“Fundamental Change Company Notice” shall have the meaning specified in Section 15.02(c).

 

“Fundamental Change Repurchase Date” shall have the meaning specified in Section 15.02(a).

 

“Fundamental Change Repurchase Notice” shall have the meaning specified in Section 15.02(b)(i).

 

“Fundamental Change Repurchase Price” shall have the meaning specified in Section 15.02(a).

 

“Global Note” shall have the meaning specified in Section 2.05(c).

 

“Holder,” as applied to any Note, or other similar terms (but excluding the term “beneficial holder”), means any Person in whose name at the time a particular Note is registered on the Security Register.

 

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

 

“Interest Payment Date” means each January 1 and July 1 of each year, beginning on January 1, 2017.

 

6

 

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

 

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

 

“Make-Whole Fundamental Change Period” shall have the meaning specified in Section 14.03(a).

 

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

 

“Maturity Date” means July 1, 2021.

 

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

 

“Merger Common Stock” shall have the meaning specified in Section 14.07(e)(i).

 

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

 

“Merger Valuation Percentage” for any Merger Event shall be equal to (x) the arithmetic average of the Last Reported Sale Prices of one share of such Merger Common Stock over the relevant Merger Valuation Period (determined as if references to “Common Stock” in the definition of “Last Reported Sale Price” were references to the “Merger Common Stock” for such Merger Event), divided by (y) the arithmetic average of the Last Reported Sale Prices of one share of Common Stock over the relevant Merger Valuation Period.

 

“Merger Valuation Period” for any Merger Event means the five consecutive Trading Day period immediately preceding, but excluding, the effective date for such Merger Event.

 

7

 

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

 

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

 

“Observation Period” with respect to any Note surrendered for conversion means: (i) if the relevant Conversion Date occurs prior to January 1, 2021, the 20 consecutive Trading Day period beginning on, and including, the second Trading Day immediately succeeding such Conversion Date; and (ii) if the relevant Conversion Date occurs on or after January 1, 2021, the 20 consecutive Trading Days beginning on, and including, the 22nd Scheduled Trading Day immediately preceding the Maturity Date.

 

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

 

“outstanding,” when used with reference to Notes, shall, subject to the provisions of Section 8.4 of the Base Indenture, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under the Indenture, except:

 

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

 

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

 

(c)                                  Notes that have been paid pursuant to Section 2.8 of the Base Indenture and  Section 2.06 of this Second Supplemental Indenture or Notes in lieu of which, or in substitution for which, other Notes shall have been authenticated and delivered pursuant to the terms of Section 2.8 of the Base Indenture and Section 2.06 of this Second Supplemental Indenture unless proof satisfactory to the Trustee is presented that any such Notes are held by protected purchasers in due course;

 

(d)                                 Notes converted pursuant to Article 14 or any Notes required to be cancelled pursuant to Section 2.08 of this Second Supplemental Indenture; and

 

(e)                                  Notes required to be delivered to the Trustee for cancellation pursuant to Section 2.10 of the Base Indenture.

 

“Paying Agent” shall have the meaning specified in Section 4.02.

 

“Physical Notes” means permanent certificated Notes in registered form issued in denominations of $1,000 principal amount and integral multiples thereof.

 

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

 

 

8

 

“Predecessor Note” of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such particular Note; and, for the purposes of this definition, any Note authenticated and delivered under Section 2.8 of the Base Indenture and Section 2.06 of this Second Supplemental Indenture in lieu of or in exchange for a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same debt as the mutilated, lost, destroyed or stolen Note that it replaces.

 

“Prospectus Supplement” means the preliminary prospectus supplement dated August 8, 2016, as supplemented by the related pricing term sheet dated August 8, 2016, relating to the offering and sale of the Notes.

 

“Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock (or such other security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors, by statute, by contract or otherwise).

 

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

 

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

 

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

 

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

 

“Senior Note” means any of the Company’s 6.50% Senior Notes due 2021, 6.125% Senior Notes due 2022, 6.50% Senior Notes due 2023, 5.00% Senior Notes due 2024 and 5.625% Senior Notes due 2025, collectively, the “Senior Notes.”

 

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

 

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

 

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

 

“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.

 

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

 

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

 

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

 

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

 

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

 

“Trading Price” of the Notes on any date of determination means the average of the secondary market bid quotations obtained by the Bid Solicitation Agent for $5,000,000 principal amount of Notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers the Company selects for this purpose; provided that if three such bids cannot reasonably be obtained by the Bid Solicitation Agent but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid can reasonably be obtained by the Bid Solicitation Agent, that one bid shall be used. If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $5,000,000 principal amount of Notes from a nationally recognized securities dealer on any determination date, then the Trading Price per $1,000 principal amount of Notes on such determination date shall be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate.

 

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

 

“Trustee” means the Person named as the “Trustee” in the first paragraph of this Second Supplemental Indenture until a successor trustee shall have become such pursuant to the

 

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applicable provisions of the Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee hereunder.

 

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

 

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

 

“Wholly Owned Subsidiary” means, with respect to any Person, any Subsidiary of such Person, except that, solely for purposes of this definition, the reference to “more than 50%” in the definition of “Subsidiary” shall be deemed replaced by a reference to “100%”.

 

Section 1.03.  References to Interest.  Unless the context otherwise requires, any reference to interest on, or in respect of, any Note in the Indenture shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to  Section 6.04. Unless the context otherwise requires, any express mention of Additional Interest in any provision hereof shall not be construed as excluding Additional Interest in those provisions hereof where such express mention is not made.

 

Section 1.04.  References to Principal.  Unless the context otherwise requires, any reference to the principal of, or the principal amount of, any Note in the Base Indenture or this Second Supplemental Indenture shall be deemed to include the Fundamental Change Repurchase Price, if, in such context, the Fundamental Change Repurchase Price is, was or would be payable in accordance with Article 15. Unless the context otherwise requires, any express mention of the Fundamental Change Repurchase Price in any provision hereof shall not be construed as excluding the Fundamental Change Repurchase Price in those provisions hereof where such express mention is not made.

 

ARTICLE 2
 ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES

 

Section 2.01.  Designation and Amount.  The Notes shall be designated as the “1.50% Convertible Senior Notes due 2021.” The aggregate principal amount of Notes that may be authenticated and delivered under the Indenture is initially limited to $172,500,000, subject to Section 2.2 of the Base Indenture and except for Notes authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of other Notes pursuant to Section 2.6, Section 2.8, Section 2.9 and Section 10.4 of the Base Indenture as amended, in each case as applicable, by this Second Supplemental Indenture and to the extent expressly permitted hereunder.

 

Section 2.02.  Form of Notes.  The Notes and the Trustee’s certificate of authentication to be borne by such Notes shall be substantially in the respective forms set forth in Exhibit A, the terms and provisions of which shall constitute, and are hereby expressly incorporated in and made a part of the Indenture.  To the extent applicable, the Company and the Trustee, by their execution and delivery of this Second Supplemental Indenture, expressly agree to such terms and provisions and to be bound thereby.

 

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

 

Any endorsement 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 or the Custodian, at the direction of the Trustee, in such manner and upon instructions given by the Holder of such Notes in accordance with the Indenture.  Payment of principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, a Global Note shall be made to the Holder of such Note on the date of payment, unless a record date or other means of determining Holders eligible to receive payment is provided for herein.

 

Section 2.03.  Date and Denomination of Notes; Payments of Interest and Defaulted Amounts.  (a)  The Notes shall be in denominations of $1,000 principal amount and integral multiples thereof.  Each Note shall bear interest from the date specified on the face of such Note.

 

(b)         Section 2.4 of the Base Indenture shall not apply to the Notes.  The Person in whose name any Note (or its Predecessor Note) is registered on the Security Register at the close of business on any Regular Record Date with respect to any Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date.  The principal amount of any Note (x) in the case of any Physical Note, shall be payable at the office or agency of the Company maintained by the Company for such purposes in Denver, Colorado or the Borough of Manhattan, The City of New York, which shall initially be the Principal Office of the Trustee and (y) in the case of any Global Note, shall be payable by wire transfer of immediately available funds to the account of the Depositary or its nominee.  The Company shall pay interest (i) on any Physical Notes (A) to Holders holding Physical Notes having an aggregate principal amount of $5,000,000 or less, by check mailed to the Holders of these Notes at their address as it appears in the Security Register and (B) to Holders holding Physical Notes having an aggregate principal amount of more than $5,000,000, either by check mailed to each Holder or, upon application by such a Holder to the Security Registrar not later than the relevant Regular Record Date, by wire transfer in immediately available funds to that Holder’s account within the United States, which application shall remain in effect until the Holder notifies, in writing, the Security Registrar to the contrary or (ii) on any Global Note by wire transfer of immediately available funds to the account of the Depositary or its nominee.

 

(c)          Any Defaulted Amounts shall forthwith cease to be payable to the Holder on the relevant payment date but shall accrue interest per annum at the rate borne by the Notes plus one percent, subject to the enforceability thereof under applicable law, from, and including, such relevant payment date, and such Defaulted Amounts together with such interest thereon shall be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below:

 

(i)                                     The Company may elect to make payment of any Defaulted Amounts to the Persons in whose names the Notes (or their respective Predecessor Notes) are

 

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registered at the close of business on a special record date for the payment of such Defaulted Amounts, which shall be fixed in the following manner.  The Company shall notify the Trustee in writing of the amount of the Defaulted Amounts proposed to be paid on each Note and the date of the proposed payment.  Thereupon the Company shall fix a special record date for the payment of such Defaulted Amounts which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment, and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Company shall promptly notify the Trustee of such special record date and the Trustee, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Amounts and the special record date therefor to be delivered, to each Holder, not less than 10 days prior to such special record date.  Notice of the proposed payment of such Defaulted Amounts and the special record date therefor having been so delivered, such Defaulted Amounts shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such special record date and shall no longer be payable pursuant to the following clause (ii) of this Section 2.03(c).

 

(ii)                                  The Company may make payment of any Defaulted Amounts in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Notes may be listed or designated for issuance, and upon such notice as may be required by such exchange or automated quotation system, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

 

Section 2.04.  [Reserved]

 

Section 2.05.  Exchange and Registration of Transfer of Notes; Restrictions on Transfer; Depositary.

 

(a)                       The last two paragraphs of Section 2.6 of the Base Indenture and Section 2.7 of the Base Indenture shall not apply to the Notes.

 

(b)                       No service charge shall be imposed by the Company, the Trustee, the Security Registrar, any co-Security Registrar or the Paying Agent for any exchange or registration of transfer of Notes, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax required in connection therewith as a result of the name of the Holder of new Notes issued upon such exchange or registration of transfer being different from the name of the Holder of the old Notes surrendered for exchange or registration of transfer.

 

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

 

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

 

(c)                        So long as the Notes are eligible for book-entry settlement with the Depositary, unless otherwise required by law, subject to the second paragraph of Section 2.05(d), all Notes shall be represented by one or more Global Securities registered in the name of the Depositary or the nominee of the Depositary (each, a “Global Note”).  The transfer and exchange of beneficial interests in a Global Note that does not involve the issuance of a Physical Note shall be effected through the Depositary (but not the Trustee or the Custodian) in accordance with the Indenture and the procedures of the Depositary therefor.  The Company initially appoints The Depository Trust Company to act as Depositary with respect to each Global Note.  Initially, each Global Note shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee as custodian for Cede & Co.

 

(d)                       Notwithstanding any other provisions of the Indenture (other than the provisions set forth in this  Section 2.05(d)), a Global Note may not be transferred as a whole or in part except (i) by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary and (ii) for exchange of a Global Note or a portion thereof for one or more Physical Notes in accordance with the second immediately succeeding paragraph.

 

If (i) the Depositary notifies the Company at any time that the Depositary is unwilling or unable to continue as depositary for the Global Notes and a successor depositary is not appointed within 90 days, (ii) the Depositary ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days or (iii) an Event of Default with respect to the Notes has occurred and is continuing and a beneficial owner of any Note requests that its beneficial interest therein be issued as a Physical Note, the Company shall execute, and the Trustee, upon receipt of an Officers’ Certificate and a Company Order for the authentication and delivery of Notes, shall authenticate and deliver (x) in the case of clause (iii), a Physical Note to such beneficial owner in a principal amount equal to the principal amount of such Global Note that corresponds to such beneficial owner’s beneficial interest in such Global Note and (y) in the case of clause (i) or (ii), Physical Notes to each beneficial owner of the related Global Notes (or a portion thereof) in a principal amount and to the principal amount of such Global Notes that corresponds to such beneficial owner’s beneficial interest in such Global Notes, in exchange for such Global Notes, and upon delivery of the Global Notes to the Trustee such Global Notes shall be canceled.

 

Physical Notes issued in exchange for all or a part of the Global Note pursuant to this Section 2.05(d) shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, or, in the case of clause (iii) of the immediately preceding paragraph, the relevant beneficial owner, shall instruct the Trustee.  Upon execution and authentication, the Trustee shall deliver such Physical Notes to the Persons in whose names such Physical Notes are so registered.

 

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At such time as all interests in a Global Note have been converted, canceled, repurchased or transferred, such Global Note shall be, upon receipt thereof, canceled by the Trustee in accordance with standing procedures and existing instructions between the Depositary and the Custodian.  At any time prior to such cancellation, if any interest in a Global Note is exchanged for Physical Notes, converted, canceled, repurchased or transferred to a transferee who receives Physical Notes therefor or any Physical Note is exchanged or transferred for part of such Global Note, the principal amount of such Global Note shall, in accordance with the standing procedures and instructions existing between the Depositary and the Custodian, be appropriately reduced or increased, as the case may be, and an endorsement shall be made on such Global Note, by the Trustee or the Custodian, at the direction of the Trustee, to reflect such reduction or increase.

 

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

 

Section 2.06.  Mutilated, Destroyed, Lost or Stolen Notes. The second paragraph of Section 2.8 of the Base Indenture shall not apply to the Notes.  No service charge shall be imposed by the Company, the Trustee, the Security Registrar, any co-Security Registrar or the Paying Agent upon the issuance of any substitute Note, but the Company may require a Holder to pay a sum sufficient to cover any documentary, stamp or similar issue or transfer tax required in connection therewith as a result of the name of the Holder of the new substitute Note being different from the name of the Holder of the old Note that became mutilated or was destroyed, lost or stolen.  In case any Note that has matured or is about to mature or has been surrendered for required repurchase or is about to be converted in accordance with Article 14 shall become mutilated or be destroyed, lost or stolen, the Company may, in its sole discretion, instead of issuing a substitute Note, pay or authorize the payment of or convert or authorize the conversion of the same (without surrender thereof except in the case of a mutilated Note), as the case may be, if the applicant for such payment or conversion shall furnish to the Company, to the Trustee and, if applicable, to such authenticating agent such security or indemnity as may be required by them to save each of them harmless for any loss, liability, cost or expense caused by or connected with such substitution, and, in every case of destruction, loss or theft, evidence satisfactory to the Company, the Trustee and, if applicable, any Paying Agent or Conversion Agent evidence of their satisfaction of the destruction, loss or theft of such Note and of the ownership thereof.

 

Section 2.07.  [Reserved]

 

Section 2.08.  Cancellation of Notes Paid, Converted, Etc. The first sentence of Section 2.10 of the Base Indenture shall, with respect to the Notes, also apply to the surrender of Notes to any of the Company’s Subsidiaries or Affiliates.

 

Section 2.09.  [Reserved]

 

Section 2.10.  Repurchases.  The Company may, to the extent permitted by law, and directly or indirectly (regardless of whether such Notes are surrendered to the Company), repurchase Notes in the open market or otherwise, whether by the Company or its Subsidiaries or through a private or public tender or exchange offer or through counterparties to private 

 

15

 

agreements, including by cash-settled swaps or other derivatives.  The Company shall cause any Notes so repurchased (other than Notes repurchased pursuant to cash-settled swaps or other derivatives) to be surrendered to the Trustee for cancellation in accordance with Section 2.10 of the Base Indenture and such Notes shall no longer be considered outstanding under the Indenture upon their repurchase.

 

ARTICLE 3
 SATISFACTION AND DISCHARGE

 

Section 3.01.  Applicability of Article 12 of the Base Indenture.  Article 12 of the Base Indenture shall not apply to the Notes.  Instead, the satisfaction and discharge provisions set forth in this Article 3 shall, with respect to the Notes, supersede in their entirety such Article 12 of the Base Indenture, and all references in the Base Indenture to such Article 12 or any Sections thereof and satisfaction and discharge provisions therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this Article 3 and the satisfaction and discharge provisions set forth in this  Article 3.

 

Section 3.02.  Satisfaction and Discharge.  The Indenture shall upon request of the Company contained in an Officers’ Certificate cease to be of further effect, and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of the Indenture, when (a) (i) all Notes theretofore authenticated and delivered (other than Notes which have been destroyed, lost or stolen and which have been replaced, paid or converted as provided in Section 2.8 of the Base Indenture, as supplemented by Section 2.06 of this Second Supplemental Indenture) have been delivered to the Trustee for cancellation; or (ii) the Company has deposited with the Trustee or delivered to Holders, as applicable, after the Notes have become due and payable, whether on the Maturity Date, any Fundamental Change Repurchase Date, upon conversion or otherwise, cash, Common Stock or a combination thereof, as applicable, solely to satisfy the Company’s Conversion Obligation, sufficient to pay all of the outstanding Notes and all other sums due and payable under the Indenture by the Company; and (b) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent in the Indenture provided for relating to the satisfaction and discharge of the Indenture have been complied with.  Notwithstanding the satisfaction and discharge of the Indenture, the obligations of the Company to the Trustee under Section 7.6 under the Base Indenture shall survive.

 

ARTICLE 4
 PARTICULAR COVENANTS OF THE COMPANY

 

Section 4.01. [Reserved]

 

Section 4.02.  Maintenance of Office or Agency.  Pursuant to Section 2.2 of the Base Indenture, the Company hereby initially designates the Trustee as the Paying Agent (the “Paying Agent”), Registrar, Custodian and Conversion Agent (the “Conversion Agent”) and the Principal Office of the Trustee as the office or agency where the Notes may be surrendered for registration of transfer or exchange or for presentation for payment or repurchase or for

 

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conversion and where notices and demands to or upon the Company in respect of the Notes and the Indenture may be served.

 

The Company may also from time to time designate as co-Security Registrars one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in Denver, Colorado or the Borough of Manhattan, The City of New York, for such purposes.  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.  The terms “Paying Agent” and “Conversion Agent” include any such additional or other offices or agencies, as applicable.

 

Section 4.03.  [Reserved]

 

Section 4.04.  Provisions as to Paying Agent.

 

(a)                       Section 4.4 and Section 12.5 of the Base Indenture shall not apply to the Notes.

 

(b)                       If the Company shall appoint a Paying Agent other than the Trustee, the Company will cause such Paying Agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 4.04:

 

(i)                                     that it will hold all sums held by it as such agent for the payment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes in trust for the benefit of the Holders of the Notes;

 

(ii)                                  that it will give the Trustee prompt notice of any failure by the Company to make any payment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes when the same shall be due and payable; and

 

(iii)                               that at any time during the continuance of an Event of Default, upon request of the Trustee, it will forthwith pay to the Trustee all sums so held in trust.

 

The Company shall, on or before each due date of the principal (including the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes, deposit with the Paying Agent a sum sufficient to pay such principal (including the Fundamental Change Repurchase Price, if applicable) or accrued and unpaid interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of any failure to take such action; provided that if such deposit is made on the due date, such deposit must be received by the Paying Agent by 1:00 p.m., New York City time, on such date.

 

(c)                        If the Company shall act as its own Paying Agent, it will, on or before each due date of the principal (including the Fundamental Change Repurchase Price, if applicable) of, and accrued and unpaid interest on, the Notes, set aside, segregate and hold in trust for the benefit of the Holders of the Notes a sum sufficient to pay such principal (including the Fundamental

 

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Change Repurchase Price, if applicable) and accrued and unpaid interest so becoming due and will promptly notify the Trustee in writing of any failure to take such action and of any failure by the Company to make any payment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, the Notes when the same shall become due and payable.

 

(d)                       Anything in this Section 4.04 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge of the Indenture, or for any other reason, pay, cause to be paid or deliver to the Trustee all sums or amounts held in trust by the Company or any Paying Agent hereunder as required by this Section 4.04, such sums or amounts to be held by the Trustee upon the trusts herein contained and upon such payment or delivery by the Company or any Paying Agent to the Trustee, the Company or such Paying Agent shall be released from all further liability but only with respect to such sums or amounts.

 

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

 

Section 4.05.  Existence.  Subject to Article 11, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence.

 

Section 4.06.  Reports.

 

(a)                       Section 5.2 of the Base Indenture shall not apply to the Notes.

 

(b)                       The Company shall file with the Trustee, within 15 days after the same are required to be filed with the Commission, copies of any documents or reports that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (giving effect to any grace period provided by Rule 12b-25 under the Exchange Act).  Any such document or report that the Company files with the Commission via the Commission’s EDGAR system shall be deemed to be filed with the Trustee for purposes of this Section 4.06(b) at the time such documents are filed via the EDGAR system.

 

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

 

Section 4.07.  Usury Laws.  The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that would reasonably expect to materially and adversely affect the covenants or the performance by the Company of its obligations under this Indenture; and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

Section 4.08.  Statements as to Defaults.  The Company shall deliver to the Trustee, as soon as possible, and in any event within 30 days after the occurrence of any Event of Default or Default, an Officers’ Certificate setting forth the details of such Event of Default or Default, its status and the action that the Company is taking or proposing to take in respect thereof.

 

Section 4.09.  Further Instruments and Acts.  Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of the Indenture.

 

Section 4.10. Future Guarantees.  If, on or following the date of this Second Supplemental Indenture, any of the Company’s Senior Notes (as such Senior Notes may be amended, extended, modified or refinanced from time to time) is guaranteed by one or more of the Company’s Subsidiaries, the Company shall cause each Subsidiary that guarantees such Senior Notes to concurrently guarantee the Notes on the same basis as the guarantee of such Senior Notes, to the extent as may be limited as necessary to prevent that guarantee from constituting a fraudulent conveyance or fraudulent transfer under applicable law. Any such Subsidiary guarantee of the Notes shall be released upon the release of the guarantee under the applicable Senior Notes that triggered such Subsidiary guarantee of the Notes.

 

Section 4.11. Future Liens.  If, on or following the date of this Second Supplemental Indenture, any of the Company’s Senior Notes or Subsidiary guarantees of the Senior Notes (in each case, as may be amended, extended, modified or refinanced from time to time) is secured, then contemporaneously with the provision of such security, the Company shall cause effective provision to be made to secure the Notes or the relevant Subsidiary guarantee of the Notes on an equal and ratable basis with such Senior Notes or such Subsidiary guarantee of such Senior Notes, as the case may be, for so long as such Senior Notes or such Subsidiary guarantee of such Senior Notes are secured.

 

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Any security created for the benefit of the Holders pursuant to the preceding paragraph will provide by its terms that such security shall be automatically and unconditionally released and discharged upon the release and discharge of the security under the applicable Senior Notes or Subsidiary guarantee of such Senior Notes.

 

ARTICLE 5
 LISTS OF HOLDERS AND REPORTS BY THE COMPANY AND THE TRUSTEE

 

Section 5.01.  [Reserved]

 

Section 5.02.  Preservation and Disclosure of Lists.  The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders contained in the most recent list furnished to it as provided in Section 5.1 of the Base Indenture or maintained by the Trustee in its capacity as Security Registrar, if so acting.  The Trustee may destroy any list furnished to it as provided in Section 5.1 of the Base Indenture upon receipt of a new list so furnished.

 

ARTICLE 6
 DEFAULTS AND REMEDIES

 

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

 

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

 

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

 

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

 

(c)                        failure by the Company to comply with its obligation to convert the Notes in accordance with the Indenture upon proper and timely exercise of a Holder’s conversion right and such failure continues for five Business Days;

 

(d)                       failure by the Company to issue a Fundamental Change Company Notice in accordance with Section 15.02(c) or notice of a specified corporate event in accordance with Section 14.01(b)(ii) or 14.01(b)(iii), in each case when due;

 

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

 

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

 

(g)                        default by the Company or any Subsidiary of the Company with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any indebtedness for money borrowed in the aggregate of the Company and/or any such Subsidiary, whether such indebtedness now exists or shall hereafter be created (i) resulting in such indebtedness becoming or being declared due and payable or (ii) constituting a failure to pay the principal or interest of any such debt when due and payable at its stated maturity, upon required repurchase, upon declaration of acceleration or otherwise; provided that in each case of clauses (i) and (ii), the principal amount of such indebtedness aggregates to more than $30,000,000 or more, in each case after the expiration of any applicable grace period and such acceleration shall not have been rescinded or annulled or such failure to pay or default shall not have been cured or waived or such indebtedness is not paid or discharged, as the case may be, within 30 days after written notice to the Company from the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Notes then outstanding;

 

(h)                       a final judgment or judgments for the payment of $30,000,000 (or its foreign currency equivalent) or more (excluding any amounts covered by insurance) in the aggregate rendered against the Company or any Subsidiary of the Company, which judgment is not discharged, bonded, paid, waived or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has commenced, or (ii) the date on which all rights to appeal have been extinguished;

 

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

 

(j)                          an involuntary case or other proceeding shall be commenced against the Company or any Significant Subsidiary seeking liquidation, reorganization or other relief with respect to the Company or such Significant Subsidiary or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or such Significant Subsidiary or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 consecutive days; or

 

(k)                       any Subsidiary guarantee of a Significant Subsidiary or group of Subsidiary guarantors that, taken together (as of the latest audited consolidated financial statements for the Company and its Subsidiaries) would constitute a Significant Subsidiary, ceases to be in full

 

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force and effect (except as contemplated by the terms of the Indenture) or is declared null and void in a judicial proceeding or any Subsidiary guarantor that is a Significant Subsidiary or group of Subsidiary guarantors that, taken together (as of the latest audited consolidated financial statements of the Company and its Subsidiaries) would constitute a Significant Subsidiary, denies or disaffirms its obligations under this Indenture or its Subsidiary guarantee.

 

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

 

The immediately preceding paragraph, however, is subject to the conditions that if, at any time after the principal of the Notes shall have been so declared due and payable, and before any judgment or decree for the payment of the monies due shall have been obtained or entered as hereinafter provided, the Company shall pay or shall deposit with the Trustee a sum sufficient to pay installments of accrued and unpaid interest upon all Notes and the principal of any and all Notes that shall have become due otherwise than by acceleration (with interest on overdue installments of accrued and unpaid interest to the extent that payment of such interest is enforceable under applicable law, and on such principal at the rate borne by the Notes at such time, plus one percent) and amounts due to the Trustee pursuant to Section7.6 of the Base Indenture, and if (1) rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (2) any and all existing Events of Default under the Indenture, other than the nonpayment of the principal of and accrued and unpaid interest, if any, on Notes that shall have become due solely by such acceleration, shall have been cured or waived pursuant to Section 6.10, then and in every such case (except as provided in the immediately succeeding sentence) the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Company and to the Trustee, may waive all Defaults or Events of Default with respect to the Notes and rescind and annul such declaration and its consequences and such Default shall cease to exist, and any Event of Default so waived shall be deemed to have been cured for every purpose of the Indenture; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent Default or Event of Default, or shall impair any right consequent thereon.  Notwithstanding anything to the contrary herein, no such waiver or rescission and annulment shall extend to or shall affect any Default or Event of Default resulting from (i) the nonpayment of the principal (including the Fundamental Change Repurchase Price, if applicable) of, or accrued and unpaid interest on, any Notes, (ii) a failure to repurchase any

 

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

 

Section 6.04.  Additional Interest.  Notwithstanding anything in the Indenture or in the Notes to the contrary, to the extent the Company elects, the sole remedy for an Event of Default relating to the Company’s failure to comply with its obligations as set forth in  Section 4.06 of this Second Supplemental Indenture, shall after the occurrence of such an Event of Default consist exclusively of the right to receive Additional Interest on the Notes at a rate equal to (x) 0.25% per annum of the principal amount of the Notes outstanding for each day during the 90-day period on which such Event of Default is continuing beginning on, and including, the date on which such an Event of Default first occurs and ending on, but excluding, the earlier of (A) the date on which such Event of Default is no longer continuing and (B) the 91st day following the date on which such an Event of Default first occurs, and (y) 0.50% per annum of the principal amount of the Notes outstanding for each day during the 90-day period on which such Event of Default is continuing beginning on, and including, the 91st day following the date on which such an Event of Default first occurs and ending on, but excluding, the date on which such Event of Default is no longer continuing.  In no event will Additional Interest exceed an aggregate of 0.50% per annum on any Note.

 

If the Company so elects, such Additional Interest shall be payable in the same manner and on the same dates as the stated interest payable on the Notes.  On the 181st day after such Event of Default (if the Event of Default relating to the Company’s failure to file is not cured or waived prior to such 181st day), the Notes shall be immediately subject to acceleration as provided in Section 6.03.  The provisions of this paragraph will not affect the rights of Holders of Notes in the event of the occurrence of any Event of Default other than the Company’s failure to comply with its obligations as set forth in Section 4.06 of this Second Supplemental Indenture.  In the event the Company does not elect to pay Additional Interest following an Event of Default described in this Section 6.04 or the Company elected to make such payment but does not pay the Additional Interest when due, the Notes shall be immediately subject to acceleration as provided in Section 6.03.

 

To elect to pay Additional Interest as the sole remedy during the first 180 days after the occurrence of any Event of Default described in the immediately preceding paragraph, the Company must notify all Holders of the Notes, the Trustee and the Paying Agent of such election prior to the beginning of such 180-day period.  Upon the failure to timely give such notice, the Notes shall be immediately subject to acceleration as provided in Section 6.03.

 

Section 6.05.  Payments of Notes on Default; Suit Therefor.  If an Event of Default described in clause (a) or (b) of Section 6.02 shall have occurred, the Company shall, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of the Notes, the whole amount then due and payable on the Notes for principal and interest, if any, with interest on any overdue principal and interest, if any, at the rate borne by the Notes at such time, plus one percent, and, in addition thereto, such further amount as shall be sufficient to cover any amounts due to the Trustee under Section 7.6 of the Base Indenture.  If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the

 

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Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated.

 

In the event there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Notes under Title 11 of the United States Code, or any other applicable law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Company or such other obligor, the property of the Company or such other obligor, or in the event of any other judicial proceedings relative to the Company or such other obligor upon the Notes, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 6.05, shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount of principal and accrued and unpaid interest, if any, in respect of the Notes, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents and to take such other actions as it may deem necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceedings relative to the Company or any other obligor on the Notes, its or their creditors, or its or their property, and to collect and receive any monies or other property payable or deliverable on any such claims, and to distribute the same after the deduction of any amounts due to the Trustee under Section 7.6 under the Base Indenture, and any receiver, assignee or trustee in bankruptcy or reorganization, liquidator, custodian or similar official is hereby authorized by each of the Holders to make such payments to the Trustee, as administrative expenses, and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for reasonable compensation, expenses, advances and disbursements, including agents and counsel fees, and including any other amounts due to the Trustee under Section 7.6 under the Base Indenture, incurred by it up to the date of such distribution.  To the extent that such payment of reasonable compensation, expenses, advances and disbursements out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, monies, securities and other property that the Holders of the Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.

 

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting such Holder 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.

 

All rights of action and of asserting claims under the Indenture, or under any of the Notes, may be enforced by the Trustee without the possession of any of the Notes, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, 

 

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disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes.

 

In any proceedings brought by the Trustee (and in any proceedings involving the interpretation of any provision of the Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the Holders of the Notes, and it shall not be necessary to make any Holders of the Notes parties to any such proceedings.

 

If the Trustee shall have proceeded to enforce any right under the Indenture and such proceedings shall have been discontinued or abandoned because of any waiver pursuant to Section 6.10 or any rescission and annulment pursuant to Section 6.03 or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company, the Holders and the Trustee shall, subject to any determination in such proceeding, be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Holders and the Trustee shall continue as though no such proceeding had been instituted.

 

Section 6.06.  Application of Monies Collected by Trustee.  Any monies collected by the Trustee pursuant to this Article 6 with respect to the Notes shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such monies, upon presentation of the several Notes, and stamping thereon the payment, if only partially paid, and upon surrender thereof, if fully paid:

 

First, to the payment of all amounts due the Trustee under Section 7.6 of the Base Indenture;

 

Second, in case the principal of the outstanding Notes shall not have become due and be unpaid, to the payment of interest on, and any cash due upon conversion of, the Notes in default in the order of the date due of the payments of such interest and cash due upon conversion, as the case may be, with interest (to the extent that such interest has been collected by the Trustee) upon such overdue payments at the rate borne by the Notes at such time, plus one percent, such payments to be made ratably to the Persons entitled thereto;

 

Third, in case the principal of the outstanding Notes shall have become due, by declaration or otherwise, and be unpaid, to the payment of the whole amount (including, if applicable, the payment of the Fundamental Change Repurchase Price and any cash due upon conversion) then owing and unpaid upon the Notes for principal and interest, if any, with interest on the overdue principal and, to the extent that such interest has been collected by the Trustee, upon overdue installments of interest at the rate borne by the Notes at such time plus one percent, and in case such monies shall be insufficient to pay in full the whole amounts so due and unpaid upon the Notes, then to the payment of such principal (including, if applicable, the Fundamental Change Repurchase Price and the cash due upon conversion) and interest without preference or priority of principal over interest, or of interest over principal or of any installment of interest over any other installment of interest, or of any Note over any other Note, ratably to the aggregate of such principal (including, if applicable, the Fundamental Change Repurchase Price and any cash due upon conversion) and accrued and unpaid interest; and

 

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Fourth, to the payment of the remainder, if any, to the Company.

 

Section 6.07.  Proceedings by Holders.  Except to enforce the right to receive payment of principal (including, if applicable, the Fundamental Change Repurchase Price) or interest when due, or the right to receive payment or delivery of the consideration due upon conversion, no Holder of any Note shall have any right by virtue of or by availing of any provision of the Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to the Indenture, or for the appointment of a receiver, trustee, liquidator, custodian or other similar official, or for any other remedy hereunder, unless:

 

(a)                       such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof, as herein provided;

 

(b)                       Holders of at least 25% in aggregate principal amount of the Notes then outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee hereunder;

 

(c)                        such Holders shall have offered to the Trustee such security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense to be incurred therein or thereby;

 

(d)                       the Trustee for 60 days after its receipt of such notice, request and offer of such security or indemnity, shall have neglected or refused to institute any such action, suit or proceeding; and

 

(e)                        no direction that, in the opinion of the Trustee, is inconsistent with such written request shall have been given to the Trustee by the Holders of a majority of the aggregate principal amount of the Notes then outstanding within such 60-day period pursuant to Section 6.10,

 

it being understood and intended, and being expressly covenanted by the Holder of every Note with every other Holder and the Trustee that no one or more Holders shall have any right in any manner whatever by virtue of or by availing of any provision of the Indenture to affect, disturb or prejudice the rights of any other Holder, or to obtain or seek to obtain priority over or preference to any other such Holder, or to enforce any right under the Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders (except as otherwise provided herein).  For the protection and enforcement of this Section 6.07, each and every Holder and the Trustee shall be entitled to such relief as can be given either at law or in equity.

 

Notwithstanding any other provision of the Indenture and any provision of any Note, each Holder shall have the right to receive payment or delivery, as the case may be, of (x) the principal (including the Fundamental Change Repurchase Price, if applicable) of, (y) accrued and unpaid interest, if any, on, and (z) the consideration due upon conversion of, such Note, on or after the respective due dates expressed or provided for in such Note or in the Indenture, or to institute suit for the enforcement of any such payment or delivery, as the case may be.

 

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Section 6.08.  Proceedings by Trustee.  In case of an Event of Default that is continuing, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by the Indenture by such appropriate judicial proceedings as are necessary to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in the Indenture or in aid of the exercise of any power granted in the Indenture, or to enforce any other legal or equitable right vested in the Trustee by the Indenture or by law.

 

Section 6.09.  Remedies Cumulative and Continuing.  Except as provided in the last sentence of Section 2.8 of the Base Indenture, all powers and remedies given by this Article 6 to the Trustee or to the Holders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any thereof or of any other powers and remedies available to the Trustee or the Holders of the Notes, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in the Indenture, and no delay or omission of the Trustee or of any Holder of any of the Notes to exercise any right or power accruing upon any Default or Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Default or Event of Default or any acquiescence therein; and, subject to the provisions of Section 6.07, every power and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders.

 

Section 6.10.  Direction of Proceedings and Waiver of Defaults by Majority of Holders.  The Holders of a majority of the aggregate principal amount of the Notes at the time outstanding shall have the right to 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 with respect to the Notes; provided, however, that (a) such direction shall not be in conflict with any rule of law or with the Indenture, and (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction.  The Trustee may refuse to follow any direction that it determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability.  The Holders of a majority in aggregate principal amount of the Notes at the time outstanding may on behalf of the Holders of all of the Notes waive any past Default or Event of Default hereunder and its consequences except (i) a default in the payment of accrued and unpaid interest, if any, on, or the principal (including any Fundamental Change Repurchase Price) of, the Notes when due that has not been cured pursuant to the provisions of Section 6.02, (ii) a failure by the Company to pay or deliver, as the case may be, the consideration due upon conversion of the Notes or (iii) a default in respect of a covenant or provision hereof which under Article 10 cannot be modified or amended without the consent of each Holder of an outstanding Note affected.  Upon any such waiver the Company, the Trustee and the Holders of the Notes shall be restored to their former positions and rights hereunder; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.  Whenever any Default or Event of Default hereunder shall have been waived as permitted by this Section 6.10, said Default or Event of Default shall for all purposes of the Notes and the Indenture be deemed to have been cured and to be not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

 

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Section 6.11.  Notice of Defaults.  The Trustee shall, within 90 days after the occurrence and continuance of a Default of which a Responsible Officer has actual knowledge, deliver to all Holders, notice of all Defaults known to a Responsible Officer, unless such Defaults shall have been cured or waived before the giving of such notice; provided that, except in the case of a Default in the payment of the principal of (including the Fundamental Change Repurchase Price, if applicable), or accrued and unpaid interest on, any of the Notes or a Default in the payment or delivery of the consideration due upon conversion, the Trustee shall be protected in withholding such notice if and so long as a committee of Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders.

 

Section 6.12.  Undertaking to Pay Costs.  All parties to the Indenture agree, and each Holder of any Note by its acceptance thereof shall be deemed to have agreed, that any court may, in its discretion, require, in any suit for the enforcement of any right or remedy under the Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section 6.12 (to the extent permitted by law) shall not apply to any suit (a) instituted by the Trustee, (b) instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Notes at the time outstanding, (c) instituted by any Holder for the enforcement of the payment of the principal of or accrued and unpaid interest, if any, on any Note (including, but not limited to, the Fundamental Change Repurchase Price, if applicable) on or after the due date expressed or provided for in such Note or (d) for the enforcement of the right to convert any Note, or receive the consideration due upon conversion, in accordance with the provisions of Article 14.

 

ARTICLE 7
 CONCERNING THE TRUSTEE

 

Section 7.01.  Amendments to Article 7 of the Base Indenture.

 

(a)                       Unless the context otherwise requires, all references in the Base Indenture to “money” shall be deemed, solely with respect to the Notes, to include shares of Common Stock or other Reference Property underlying the Notes.

 

(b)                       Section 7.6 of the Base Indenture is hereby amended with respect to the Notes by replacing the second sentence thereof with the sentence: “The Company also covenants to indemnify the Trustee in any capacity under this Indenture (including in its capacity as Bid Solicitation Agent) for, and to hold it harmless against, any loss, liability or expense incurred without negligence, willful misconduct or bad faith on the part of the Trustee, arising out of or in connection with the acceptance or administration of this Indenture or in any other capacity (including in its capacity as Bid Solicitation Agent) hereunder, including the costs and expenses of defending itself against any claim of liability in the premises.”

 

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ARTICLE 8
 CONCERNING THE HOLDERS

 

Section 8.01.  Action by Holders.  The last paragraph of Section 8.2 of the Base Indenture shall not apply to the Notes. Whenever the Company or the Trustee solicits the taking of any action by the Holders of the Notes, the Company or the Trustee may, but shall not be required to, fix in advance of such solicitation a date as the record date for determining Holders entitled to take such action.  The record date if one is selected shall be not more than fifteen days prior to the date of commencement of solicitation of such action.

 

Section 8.02.  [Reserved]

 

Section 8.03.  Who Are Deemed Absolute Owners.  Notwithstanding anything to the contrary in the Indenture or the Notes, following an Event of Default that is continuing, any holder of a beneficial interest in a Global Note may directly enforce against the Company, without the consent, solicitation, proxy, authorization or any other action of the Depositary or any other Person, such holder’s right to exchange such beneficial interest for a Note in certificated form in accordance with the provisions of the Indenture.

 

Section 8.04.  [Reserved]

 

Section 8.05.  [Reserved]

 

ARTICLE 9
 HOLDERS’ MEETINGS

 

Section 9.01.  [Reserved]

 

Section 9.02.  Call Of Meetings By Trustee.  Section 9.3 of the Base Indenture shall not apply to the Notes. The Trustee may at any time call a meeting of Holders to take any action specified in Section 9.1 of the Base Indenture, to be held at such time and at such place as the Trustee shall determine.  Notice of every meeting of the Holders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting and the establishment of any record date pursuant to Section 8.01, shall be delivered to Holders of such Notes.  Such notice shall also be delivered to the Company.  Such notices shall be delivered not less than 20 nor more than 90 days prior to the date fixed for the meeting.

 

Any meeting of Holders shall be valid without notice if the Holders of all Notes then outstanding are present in person or by proxy or if notice is waived before or after the meeting by the Holders of all Notes then outstanding, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice.

 

Section 9.03.  [Reserved]

 

Section 9.04.  [Reserved]

 

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Section 9.05.  Regulations.  Notwithstanding anything to the contrary in Section 9.6 of the Base Indenture, at any meeting of Holders, each Holder or proxyholder shall be entitled to one vote for each $1,000 principal amount of Notes held or represented by him or her.

 

Section 9.06.  [Reserved]

 

Section 9.07.  [Reserved]

 

ARTICLE 10
 SUPPLEMENTAL INDENTURES

 

Section 10.01.  Applicability of Article 10 of the Base Indenture.  Section 10.1 and Section 10.2 of the Base Indenture shall not apply to the Notes.  Instead, Section 10.02 and Section 10.03 of this Second Supplemental Indenture, shall, with respect to the Notes, supersede in their entirety Section 10.1 and Section 10.2 of the Base Indenture, and all references in the Base Indenture to such Sections and amendment and waiver provisions therein, as the case may be, shall, with respect to the Notes, be deemed to be references to Section 10.02 and Section 10.03 of the Second Supplemental Indenture, as applicable, and the supplemental indenture provisions set forth therein.

 

Section 10.02.  Supplemental Indentures Without Consent of Holders.  The Company, when authorized by the resolutions of the Board of Directors and the Trustee, at the Company’s expense, may from time to time and at any time, without the consent of the Holders, enter into an indenture or indentures supplemental hereto for one or more of the following purposes:

 

(a)                       to cure any ambiguity, omission, defect or inconsistency;

 

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

 

(c)                        to add guarantees with respect to the Notes;

 

(d)                       to secure the Notes;

 

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

 

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

 

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

 

(h)                       to comply with any requirement of the Securities and Exchange Commission in connection with the qualification of the Indenture under the Trust Indenture Act;

 

(i)                           to appoint a successor trustee with respect to the Notes;

 

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(j)                          to conform the provisions of the Indenture or the Notes to the “Description of notes” section of the Prospectus Supplement;

 

(k)                       to comply with the rules of any applicable securities depositary, including the Depositary, so long as such amendment does not adversely affect the rights of any Holder in any material respect;

 

(l)                           to irrevocably elect or eliminate one of the Settlement Methods and/or irrevocably elect a minimum Specified Dollar Amount;

 

(m)                   to provide for the issuance of additional Notes; or

 

(n)                       to increase the Conversion Rate as provided in this Second Supplemental Indenture.

 

Upon the written request of the Company, the Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to, but may in its discretion, enter into any supplemental indenture that affects the Trustee’s own rights, duties or immunities under the Indenture or otherwise.

 

Any supplemental indenture authorized by the provisions of this Section 10.02 may be executed by the Company and the Trustee without the consent of the Holders of any of the Notes at the time outstanding, notwithstanding any of the provisions of Section 10.03.

 

Section 10.03.  Supplemental Indentures with Consent of Holders.  With the consent (evidenced as provided in Article 8 of the Base Indenture and  Article 8 of this Second Supplemental Indenture) of the Holders of at least a majority of the aggregate principal amount of the Notes then outstanding (determined in accordance with Article 8 and including, without limitation, consents obtained in connection with a repurchase of, or tender or exchange offer for, Notes), the Trustee and the Company, when authorized by the resolutions of the Board of Directors, at the Company’s expense, may from time to time and at any time enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or any supplemental indenture or of modifying in any manner the rights of the Holders; provided, however, that, without the consent of each Holder of an outstanding Note affected, no such supplemental indenture shall:

 

(a)                       reduce the percentage in principal amount of Notes whose Holders must consent to an amendment;

 

(b)                       reduce the rate of or extend the stated time for payment of interest on any Note;

 

(c)                        reduce the principal of or extend the Maturity Date of any Note;

 

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

 

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

 

(f)                         make any Note payable in a currency other than that stated in the Note;

 

(g)                        change the ranking of the Notes that would adversely affect the Holders; or

 

(h)                       make any change in this Article 10 that requires each Holder’s consent or in the waiver provisions in Section 6.03 or Section 6.10.

 

Upon the written request of the Company, and upon the filing with the Trustee of evidence of the consent of Holders as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under the Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

 

Holders do not need under this Section 10.03 to approve the particular form of any proposed supplemental indenture.  It shall be sufficient if such Holders approve the substance thereof.  After any such supplemental indenture or any supplemental indenture described in Section 10.02 becomes effective, the Company shall deliver to the Holders a notice briefly describing the amendment adopted in such supplemental indenture. However, the failure to give such notice to all the Holders, or any defect in the notice, will not impair or affect the validity of the supplemental indenture.

 

Section 10.04.  [Reserved]

 

Section 10.05.  [Reserved]

 

Section 10.06.  [Reserved]

 

ARTICLE 11
 CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

 

Section 11.01.  Applicability of Article 11 of the Base Indenture.  Article 11 of the Base Indenture shall not apply to the Notes.  Instead, the consolidation, merger, sale, conveyance and lease provisions set forth in this Article 11 shall, with respect to the Notes, supersede in their entirety such Article 11 of the Base Indenture, and all references in the Base Indenture to such Article and the Company successor provisions therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this Article 11 and the consolidation, merger, sale, conveyance and lease provisions set forth in this Article 11.

 

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

 

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

 

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

 

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

 

Section 11.03.  Successor Corporation to Be Substituted.  In case of any such consolidation, merger, sale, conveyance, transfer or lease and upon the assumption by the Successor Company, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and accrued and unpaid interest on all of the Notes, the due and punctual delivery or payment, as the case may be, of any consideration due upon conversion of the Notes and the due and punctual performance of all of the covenants and conditions of the Indenture to be performed by the Company, such Successor Company (if not the Company) shall succeed to and, except in the case of a lease of all or substantially all of the Company’s properties and assets, shall be substituted for the Company, with the same effect as if it had been named herein as the party of the first part.  Such Successor Company thereupon may cause to be signed, and may issue either in its own name or in the name of the Company any or all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such Successor Company instead of the Company and subject to all the terms, conditions and limitations in the Indenture prescribed, the Trustee shall authenticate and shall deliver, or cause to be authenticated and delivered, any Notes that previously shall have been signed and delivered by the Officers of the Company to the Trustee for authentication, and any Notes that such Successor Company thereafter shall cause to be signed and delivered to the Trustee for that purpose.  All the Notes so issued shall in all respects have the same legal rank and benefit under the Indenture as the Notes theretofore or thereafter issued in accordance with the terms of the Indenture as though all of such Notes had been issued at the date of the execution hereof.  In the event of any such consolidation, merger, sale, conveyance or transfer (but not in the case of a lease), upon compliance with this Article 11 the Person named as the “Company” in the first paragraph of this Second Supplemental Indenture (or any successor that shall thereafter have become such in the manner prescribed in this Article 11) may be dissolved, wound up and liquidated at any time thereafter and, except in the case of a lease, such Person shall automatically, without further action of the Trustee, any Holder or any other Person, be released from its liabilities as obligor and maker of the Notes and from its obligations under the Indenture and the Notes.

 

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

 

ARTICLE 12
 INTENTIONALLY OMITTED

 

ARTICLE 13
 INTENTIONALLY OMITTED

 

ARTICLE 14
 CONVERSION OF NOTES

 

Section 14.01.  Conversion Privilege.  (a) Subject to and upon compliance with the provisions of this Article 14, each Holder of a Note shall have the right, at such Holder’s option, to convert all or any portion (if the portion to be converted is $1,000 principal amount or an integral multiple thereof) of such Note (i) subject to satisfaction of the conditions described in Section 14.01(b), at any time prior to the close of business on the Business Day immediately preceding January 1, 2021 and (ii) regardless of the conditions described in Section 14.01(b), on or after January 1, 2021 and prior to the close of business on the second Scheduled Trading Day  immediately preceding the Maturity Date, in each case, at an initial conversion rate of 24.6914 shares of Common Stock (subject to adjustment as provided in this Article 14, the “Conversion Rate”) per $1,000 principal amount of Notes (subject to, and in accordance with, the settlement provisions of Section 14.02, the “Conversion Obligation”).

 

(b)                       (i) Prior to the close of business on the Business Day immediately preceding January 1, 2021, a Holder may surrender all or any portion of its Notes for conversion at any time during the five Business Day period immediately after any five consecutive Trading Day period (the “Measurement Period”) in which the Trading Price per $1,000 principal amount of Notes, as determined following a request by a Holder of Notes in accordance with this subsection (b)(i), for each Trading Day of the Measurement Period was less than 98% of the product of the Last Reported Sale Price of the Common Stock on each such Trading Day and the Conversion Rate on each such Trading Day.  The Trading Prices shall be determined by the Bid Solicitation Agent pursuant to this subsection (b)(i) and the definition of Trading Price set forth in the Indenture.  The Company shall provide written notice to the Bid Solicitation Agent (if other than the Company) of the three independent nationally recognized securities dealers selected by the Company pursuant to the definition of Trading Price, along with appropriate contact information for each.  The Bid Solicitation Agent (if other than the Company) shall have no obligation to 

 

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determine the Trading Price per $1,000 principal amount of Notes unless the Company has requested such determination and provided written notice to the Bid Solicitation Agent of the three independent nationally recognized securities dealers selected by the Company pursuant to the definition of Trading Price, and the Company shall have no obligation to make such request or, if the Company is acting as Bid Solicitation Agent, the Company shall have no obligation to determine the Trading Price per $1,000 principal amount of Notes unless a Holder provides the Company with reasonable evidence that the Trading Price per $1,000 principal amount of Notes on any Trading Day would be less than 98% of the product of the Last Reported Sale Price of the Common Stock on such Trading Day and the Conversion Rate on such Trading Day, at which time the Company shall instruct the Bid Solicitation Agent (if other than the Company) to determine, or if the Company is acting as Bid Solicitation Agent, the Company shall determine, the Trading Price per $1,000 principal amount of Notes beginning on the next Trading Day and on each successive Trading Day until the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate.  If (x) the Company is not acting as Bid Solicitation Agent, and the Company does not instruct the Bid Solicitation Agent to determine the Trading Price per $1,000 principal amount of Notes when obligated as provided in the preceding sentence, or if the Company instructs the Bid Solicitation Agent to obtain bids and the Bid Solicitation Agent fails to make such determination, or (y) the Company is acting as Bid Solicitation Agent and the Company fails to make such determination when obligated as provided in the preceding sentence, then, in either case, the Trading Price per $1,000 principal amount of Notes shall be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate on each Trading Day of such failure.  If the Trading Price condition set forth above has been met, the Company shall so notify the Holders, the Trustee and the Conversion Agent (if other than the Trustee).  If, at any time after the Trading Price condition set forth above has been met, the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Conversion Rate for such date, the Company shall so notify the Holders of the Notes, the Trustee and the Conversion Agent (if other than the Trustee).

 

(ii)                                  If, prior to the close of business on the Business Day immediately preceding January 1, 2021, the Company elects to:

 

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

 

(B)                                    distribute to all or substantially all holders of the Common Stock (other than a distribution of the Common Stock as to which an adjustment was effected pursuant to Section 14.04(a)) the Company’s assets, securities or rights to purchase securities (other than in connection with a stockholders’ rights plan so long as such rights have not separated from the Common Stock) of the Company, which distribution has a per share value, as reasonably determined by the Board of Directors, exceeding 10% of the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending 

 

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on, and including, the Trading Day preceding the date of announcement for such distribution,

 

then, in either case, the Company shall notify all Holders of the Notes at least 30 Scheduled Trading Days prior to the Ex-Dividend Date for such issuance or distribution.  Once the Company has given such notice, a Holder may surrender all or any portion of its Notes for conversion at any time until the earlier of (1) the close of business on the Business Day immediately preceding the Ex-Dividend Date for such issuance or distribution and (2) the Company’s announcement that such issuance or distribution will not take place, in each case, even if the Notes are not otherwise convertible at such time, except that Holders may not surrender its Notes for conversion if Holders are entitled to participate, at the same time and upon the same terms as holders of the Common Stock and solely as a result of holding the Notes, in any of the transactions described in  Section 14.01(b)(ii), without having to convert their Notes, in such issuance or distribution as if they held a number of shares of Common Stock equal to the Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Holder.

 

(iii)                               If a transaction or event that constitutes a Fundamental Change or a Make-Whole Fundamental Change occurs prior to the close of business on the Business Day immediately preceding January 1, 2021, regardless of whether a Holder has the right to require the Company to repurchase the Notes pursuant to Section 15.02, or if the Company is a party to a consolidation, merger, binding share exchange, or transfer or lease of all or substantially all of its assets that occurs prior to the close of business on the Business Day immediately preceding January 1, 2021, in each case, pursuant to which the Common Stock would be converted into cash, securities or other assets, all or any portion of a Holder’s Notes may be surrendered for conversion at any time from or after the date that is 30 Scheduled Trading Days prior to the anticipated effective date of the transaction (or, if later, the Business Day after the Company gives notice of such transaction) until 35 Trading Days after the actual effective date of such transaction or, if such transaction also constitutes a Fundamental Change, until the related Fundamental Change Repurchase Date.  The Company shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) (x) as promptly as practicable following the date the Company publicly announces such transaction but in no event less than 30 Scheduled Trading Days prior to the anticipated effective date of such transaction or (y) if the Company does not have knowledge of such transaction at least 30 Scheduled Trading Days prior to the anticipated effective date of such transaction, within one Business Day after the date upon which the Company receives notice, or otherwise becomes aware, of such transaction or, in the case of any merger, consolidation, binding share exchange, or transfer or lease of all or substantially all of the Company’s assets, enter into a definitive agreement with respect to such transaction, but in no event later than the actual effective date of such transaction.

 

(iv)                              Prior to the close of business on the Business Day immediately preceding January 1, 2021, a Holder may surrender all or any portion of its Notes for conversion at any time during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2016 (and only during such calendar quarter), if the Last Reported Sale Price of the Common Stock for at least 20 Trading Days (whether or not consecutive) during the period of 30 consecutive 

 

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Trading Days ending on the last Trading Day of the immediately preceding calendar quarter is greater than or equal to 130% of the Conversion Price on each applicable Trading Day.  The Conversion Agent, on behalf of the Company, shall determine at the beginning of each calendar quarter commencing after September 30, 2016 whether the Notes may be surrendered for conversion in accordance with this clause (iv) and shall notify the Company and the Trustee if the Notes become convertible in accordance with this clause (iv).

 

Section 14.02.  Conversion Procedure; Settlement Upon Conversion.

 

(a)                       Subject to this Section 14.02, Section 14.03(b) and Section 14.07(a), upon conversion of any Note, the Company shall pay or deliver, as the case may be, to the converting Holder, in respect of each $1,000 principal amount of Notes being converted, cash (“Cash Settlement”), shares of Common Stock, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection (j) of this Section 14.02 (“Physical Settlement”) or a combination of cash and shares of Common Stock, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with subsection (j) of this Section 14.02 (“Combination Settlement”), at its election, as set forth in this Section 14.02.

 

(i)                                     All conversions for which the relevant Conversion Date occurs on or after January 1, 2021 shall be settled using the same Settlement Method.

 

(ii)                                  Except for any conversions for which the relevant Conversion Date occurs on or after January 1, 2021, the Company shall use the same Settlement Method for all conversions with the same Conversion Date, but the Company shall not have any obligation to use the same Settlement Method with respect to conversions with different Conversion Dates.

 

(iii)                               If, in respect of any Conversion Date (or the period described in the third immediately succeeding set of parentheses, as the case may be), the Company elects to deliver a notice (the “Settlement Notice”) of the relevant Settlement Method in respect of such Conversion Date (or such period, as the case may be), the Company, through the Trustee, shall deliver such Settlement Notice to converting Holders no later than the close of business on the Trading Day immediately following the relevant Conversion Date (or, in the case of any conversions for which the relevant Conversion Date occurs on or after January 1, 2021, no later than January 1, 2021).  If the Company does not elect a Settlement Method prior to the deadline set forth in the immediately preceding sentence, the Company shall no longer have the right to elect Cash Settlement or Physical Settlement and the Company shall be deemed to have elected Combination Settlement in respect of its Conversion Obligation, and the Specified Dollar Amount per $1,000 principal amount of Notes shall be equal to $1,000.  Such Settlement Notice shall specify the relevant Settlement Method and in the case of an election of Combination Settlement, the relevant Settlement Notice shall indicate the Specified Dollar Amount per $1,000 principal amount of Notes.  If the Company delivers a Settlement Notice electing Combination Settlement in respect of its Conversion Obligation but does not indicate a Specified Dollar Amount per $1,000 principal amount of Notes in such Settlement Notice, 

 

37

 

the Specified Dollar Amount per $1,000 principal amount of Notes shall be deemed to be $1,000.

 

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

 

(A)                                    if the Company elects to satisfy its Conversion Obligation in respect of such conversion by Physical Settlement, the Company shall deliver to the converting Holder in respect of each $1,000 principal amount of Notes being converted a number of shares of Common Stock equal to the Conversion Rate in effect on the Conversion Date;

 

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

 

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

 

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

 

(b)                                 Subject to Section 14.02(e), before any Holder of a Note shall be entitled to convert a Note as set forth above, such Holder shall (i) in the case of a Global Note, comply with the procedures of the Depositary in effect at that time and, if required, pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in Section 14.02(h) and (ii) in the case of a Physical Note (1) complete, manually sign and deliver an irrevocable notice to the Conversion Agent as set forth in the Form of Notice of Conversion (or a facsimile thereof) (a “Notice of Conversion”) at the office of the Conversion Agent and state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for any shares of 

 

38

 

Common Stock to be delivered upon settlement of the Conversion Obligation to be registered, (2) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Conversion Agent, (3) if required, furnish appropriate endorsements and transfer documents and (4) if required, pay funds equal to interest payable on the next Interest Payment Date to which such Holder is not entitled as set forth in Section 14.02(h).  The Trustee (and if different, the Conversion Agent) shall notify the Company of any conversion pursuant to this Article 14 on the Conversion Date for such conversion.  No Notice of Conversion with respect to any Notes may be surrendered by a Holder thereof if such Holder has also delivered a Fundamental Change Repurchase Notice to the Company in respect of such Notes and has not validly withdrawn such Fundamental Change Repurchase Notice in accordance with Section 15.03.

 

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

 

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

 

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

 

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

 

39

 

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

 

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

 

(g)                        Upon the conversion of an interest in a Global Note, the Trustee, or the Custodian at the direction of the Trustee, shall make a notation on such Global Note as to the reduction in the principal amount represented thereby.  The Company shall notify the Trustee in writing of any conversion of Notes effected through any Conversion Agent other than the Trustee.

 

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

 

(i)                           The Person in whose name the shares of Common Stock shall be issuable upon conversion shall be treated as a stockholder of record as of the close of business on the relevant Conversion Date (if the Company elects to satisfy the related Conversion Obligation by Physical Settlement) or the last Trading Day of the relevant Observation Period (if the Company elects to satisfy the related Conversion Obligation by Combination Settlement), as the case may be.  Upon a conversion of Notes, such Person shall no longer be a Holder of such Notes surrendered for conversion.

 

(j)                          The Company shall not issue any fractional share of Common Stock upon conversion of the Notes and shall instead pay cash in lieu of delivering any fractional share of Common Stock issuable upon conversion based on the Daily VWAP for the relevant Conversion

 

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Date (in the case of Physical Settlement) or based on the Daily VWAP for the last Trading Day of the relevant Observation Period (in the case of Combination Settlement). For each Note surrendered for conversion, if the Company has elected Combination Settlement, the full number of shares that shall be issued upon conversion thereof shall be computed on the basis of the aggregate Daily Settlement Amounts for the relevant Observation Period and any fractional shares remaining after such computation shall be paid in cash.

 

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

 

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

 

(c)                        The number of Additional Shares, if any, by which the Conversion Rate shall be increased shall be determined by reference to the table below, based on the date on which the Make-Whole Fundamental Change occurs or becomes effective (the “Effective Date”) and the price (the “Stock Price”) paid (or deemed to be paid) per share of the Common Stock in the Make-Whole Fundamental Change.  If the holders of the Common Stock receive in exchange for their Common Stock only cash in a Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the Stock Price shall be the cash amount paid per share.  Otherwise, the Stock Price shall be the average of the Last Reported Sale Prices of the Common Stock over the five Trading Day period ending on, and including, the Trading Day immediately 

 

41

 

preceding the Effective Date of the Make-Whole Fundamental Change.  The Board of Directors shall make appropriate adjustments to the Stock Price, in its good faith determination, to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date, Effective Date (as such term is used in Section 14.04) or expiration date of the event occurs during such five consecutive Trading Day period.

 

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

 

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

 

	
 
    	
 
    	
Stock Price
    	
 
    
	
Effective Date
    	
 
    	
$30.00
    	
 
    	
$35.00
    	
 
    	
$40.50
    	
 
    	
$45.00
    	
 
    	
$50.00
    	
 
    	
$60.00
    	
 
    	
$70.00
    	
 
    	
$80.00
    	
 
    	
$100.00
    	
 
    	
$120.00
    	
 
    	
$140.00
    	
 
    	
$160.00
    	
 
    
	
August 12, 2016
    	
 
    	
8.6419
    	
 
    	
6.3246
    	
 
    	
4.6264
    	
 
    	
3.6504
    	
 
    	
2.8508
    	
 
    	
1.8078
    	
 
    	
1.1899
    	
 
    	
0.8018
    	
 
    	
0.3732
    	
 
    	
0.1648
    	
 
    	
0.0562
    	
 
    	
0.0031
    	
 
    
	
July 1, 2017
    	
 
    	
8.6419
    	
 
    	
6.2403
    	
 
    	
4.4654
    	
 
    	
3.4607
    	
 
    	
2.6502
    	
 
    	
1.6190
    	
 
    	
1.2090
    	
 
    	
0.6710
    	
 
    	
0.2938
    	
 
    	
0.1218
    	
 
    	
0.0381
    	
 
    	
0.0018
    	
 
    
	
July 1, 2018
    	
 
    	
8.6419
    	
 
    	
6.0691
    	
 
    	
4.2032
    	
 
    	
3.1704
    	
 
    	
2.3562
    	
 
    	
1.3583
    	
 
    	
0.8171
    	
 
    	
0.5058
    	
 
    	
0.1999
    	
 
    	
0.0738
    	
 
    	
0.0192
    	
 
    	
0.0004
    	
 
    
	
July 1, 2019
    	
 
    	
8.6419
    	
 
    	
5.7466
    	
 
    	
3.7654
    	
 
    	
2.7089
    	
 
    	
1.9094
    	
 
    	
0.9930
    	
 
    	
0.5424
    	
 
    	
0.3065
    	
 
    	
0.1002
    	
 
    	
0.0275
    	
 
    	
0.0027
    	
 
    	
0.0000
    	
 
    
	
July 1, 2020
    	
 
    	
8.6419
    	
 
    	
5.1146
    	
 
    	
2.9521
    	
 
    	
1.8956
    	
 
    	
1.1758
    	
 
    	
0.4818
    	
 
    	
0.2151
    	
 
    	
0.1021
    	
 
    	
0.0223
    	
 
    	
0.0014
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    
	
July 1, 2021
    	
 
    	
8.6419
    	
 
    	
3.8800
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    	
0.0000
    	
 
    

 

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

 

(i)                                     if the Stock Price is between two Stock Prices in the table above or the Effective Date is between two Effective Dates in the table, the number of Additional Shares shall be determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Stock Prices and the earlier and later Effective Dates, as applicable, based on a 365-day year;

 

(ii)                                  if the Stock Price is greater than $160.00 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table above pursuant to subsection (d) above), no Additional Shares shall be added to the Conversion Rate; and

 

(iii)                               if the Stock Price is less than $30.00 per share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table above pursuant to subsection (d) above), no Additional Shares shall be added to the Conversion Rate.

 

42

 

Notwithstanding the foregoing, in no event shall the Conversion Rate per $1,000 principal amount of Notes exceed 33.3333 shares of Common Stock, subject to adjustment in the same manner as the Conversion Rate pursuant to Section 14.04.

 

(f)                         Nothing in this Section 14.03 shall prevent an adjustment to the Conversion Rate pursuant to Section 14.04 in respect of a Make-Whole Fundamental Change.

 

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

 

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

 

 

where,

 

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

 

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

 

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

 

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

 

Any adjustment made under this Section 14.04(a) shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately after the open of business on the Effective Date for such share split or share combination, as applicable.  If any dividend or distribution of the type described in this Section 14.04(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, to the 

 

43

 

Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

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

 

 

where,

 

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

 

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

 

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

 

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

 

Y                                            =                            the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants, divided by the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants.

 

Any increase made under this Section 14.04(b) shall be made successively whenever any such rights, options or warrants are issued and shall become effective immediately after the open of business on the Ex-Dividend Date for such issuance.  To the extent that shares of the Common Stock are not delivered after the expiration of such rights, options or warrants, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.  If such rights, options or warrants are not so issued, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such Ex-Dividend Date for such issuance had not occurred.

 

For purposes of this Section 14.04(b) and for the purpose of Section 14.01(b)(ii)(A), in determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of the Common Stock at less than such average of the Last Reported Sale Prices 

 

44

 

of the Common Stock for the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement for such issuance, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be determined by the Board of Directors.

 

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

 

 

where,

 

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

 

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

 

SP0                                  =                            the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution; and

 

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

 

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

 

45

 

determines the “FMV” (as defined above) of any distribution for purposes of this Section 14.04(c) by reference to the actual or when-issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in computing the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution.

 

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

 

 

where,

 

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

 

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

 

FMV0                    =                            the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of the Common Stock applicable to one share of the Common Stock (determined by reference to the definition of Last Reported Sale Price as set forth in Section 1.02 as if references therein to Common Stock were to such Capital Stock or similar equity interest) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off (the “Valuation Period”); and

 

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

 

The increase to the Conversion Rate under the preceding paragraph shall occur at the close of business on the last Trading Day of the Valuation Period; provided that (x) in respect of any conversion of Notes for which Physical Settlement is applicable, if the relevant Conversion Date occurs during the Valuation Period, references to “10” in the preceding paragraph shall be deemed to be replaced with such lesser number of Trading Days as have elapsed between the Ex-Dividend Date of such Spin-Off and the Conversion Date in determining the Conversion Rate and (y) in respect of any conversion of Notes for which Cash Settlement or Combination Settlement is applicable, for any Trading Day that falls within the relevant Observation Period for such conversion and within the Valuation Period, references to “10” in the preceding paragraph shall be deemed to be replaced with such lesser number of Trading Days as have elapsed between the Ex-Dividend Date of such Spin-Off and such Trading Day in determining the Conversion Rate as of such Trading Day.  If the Ex-Dividend Date of the Spin-Off is after the 10th Trading Day immediately preceding, and including, the end of any Observation Period in respect of a conversion of Notes, references to “10” or “10th” in the preceding paragraph and 

 

46

 

this paragraph shall be deemed to be replaced, solely in respect of that conversion of Notes, with such lesser number of Trading Days as have elapsed from, and including, the Ex-Dividend Date for the Spin-Off to, and including, the last Trading Day of such Observation Period.  If any dividend or distribution in connection with a Spin-Off is not so paid or made, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

 

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

 

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

 

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

 

47

 

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

 

then, in either case, (1) such dividend or distribution, other than the Clause A Distribution and the Clause B Distribution, shall be deemed to be a dividend or distribution to which this Section 14.04(c) is applicable (the “Clause C Distribution”) and any Conversion Rate adjustment required by this Section 14.04(c) with respect to such Clause C Distribution shall then be made, and (2) the Clause A Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C Distribution and any Conversion Rate adjustment required by Section 14.04(a) and Section 14.04(b) with respect thereto shall then be made, except that, if determined by the Company (I) the “Ex-Dividend Date” of the Clause A Distribution and the Clause B Distribution shall be deemed to be the Ex-Dividend Date of the Clause C Distribution and (II) any shares of Common Stock included in the Clause A Distribution or Clause B Distribution shall be deemed not to be “outstanding immediately prior to the open of business on such Ex-Dividend Date or Effective Date” within the meaning of Section 14.04(a) or “outstanding immediately prior to the open of business on such Ex-Dividend Date” within the meaning of Section 14.04(b).

 

(d)         If any cash dividend or distribution is made to all or substantially all holders of the Common Stock, other than a regular, semi-annual cash dividend that does not exceed $0.05 per share (the “Initial Dividend Threshold”), the Conversion Rate shall be adjusted based on the following formula:

 

 

where,

 

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

 

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

 

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

 

T                                             =                            the Initial Dividend Threshold; provided that if the dividend or distribution is not a regular semi-annual cash dividend, the Initial Dividend Threshold shall be deemed to be zero; and

 

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

 

The Initial Dividend Threshold shall be subject to adjustment in a manner inversely proportional to adjustments to the Conversion Rate; provided that no adjustment shall be made to the Initial Dividend Threshold for any adjustment to the Conversion Rate pursuant to this Section 14.04(d).

 

48

 

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

 

(e)                        If the Company or any of its Subsidiaries make a payment in respect of a tender or exchange offer for the Common Stock , to the extent that the cash and value of any other consideration included in the payment per share of the Common Stock exceeds the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period commencing on, and including, the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer, the Conversion Rate shall be increased based on the following formula:

 

 

where,

 

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

 

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

 

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

 

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

 

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

 

49

 

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

 

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

 

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

 

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

 

(h)         In addition to those adjustments required by clauses (a), (b), (c), (d) and (e) of this Section 14.04, and to the extent permitted by applicable law and subject to the applicable rules of any exchange on which any of the Company’s securities are then listed, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 Business

 

50

 

Days if the Board of Directors determines that such increase would be in the Company’s best interest.  In addition, to the extent permitted by applicable law and subject to the applicable rules of any exchange on which any of the Company’s securities are then listed, the Company may (but is not required to) increase the Conversion Rate to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock in connection with a dividend or distribution of shares of Common Stock (or rights to acquire shares of Common Stock) or similar event.  Whenever the Conversion Rate is increased pursuant to either of the preceding two sentences, the Company shall deliver to the Holder of each Note a notice of the increase at least 15 days prior to the date the increased Conversion Rate takes effect, and such notice shall state the increased Conversion Rate and the period during which it will be in effect.

 

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

 

(i)                                     upon the issuance of Common Stock at a price below the Conversion Price or otherwise, unless described as set forth in this Section 14.04;

 

(ii)                                  on account of open market repurchases or other buy-back transactions that are not tender or exchange offers referred to in Section 14.04(e), including structured or derivative transactions, or pursuant to a share repurchase program approved by the Board of Directors or otherwise;

 

(iii)                               upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;

 

(iv)                              upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any of the Company’s Subsidiaries;

 

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

 

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

 

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

 

(j)                          All calculations and other determinations under this Article 14 shall be made by the Company and shall be made to the nearest one-ten thousandth (1/10,000th) of a share. Notwithstanding anything in this Section 14.04 to the contrary, the Company shall not be required to adjust the Conversion Rate unless the adjustment would result in a change of at least 1% of such Conversion Rate.  However, the Company shall carry forward any adjustments that are less than 1% of such Conversion Rate and take them into account when determining subsequent adjustments.  In addition, the Company shall make any carried-forward adjustment not otherwise effected: (i) when all such deferred adjustments would result in an aggregate

 

51

 

change of at least 1% to the Conversion Rate; (ii) on the Conversion Date and each Trading Day in the Observation Period for the Notes upon conversion of the Notes, (iii) upon required repurchases of the Notes in connection with a Fundamental Change and (iv) on January 1, 2021.

 

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

 

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

 

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

 

Section 14.06.  Shares to Be Fully Paid.  The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to provide for conversion of the Notes from time to time as such Notes are presented for conversion (assuming delivery of the maximum number of Additional Shares pursuant to Section 14.03 and that at the time of computation of such number of shares, all such Notes would be converted by a single Holder and that Physical Settlement were applicable).

 

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

 

(a)                       In the case of:

 

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(i)                                     any recapitalization, reclassification or change of the Common Stock (other a change to par value, or from par value to no par value, or changes resulting from a subdivision or combination),

 

(ii)                                  any consolidation, merger, combination or similar transaction involving the Company,

 

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

 

(iv)                              any statutory share exchange,

 

in each case, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “Merger Event”), then, at and after the effective time of such Merger Event, the right to convert each $1,000 principal amount of Notes shall be changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such Merger Event would have owned or been entitled to receive (the “Reference Property,” with each “unit of Reference Property” meaning the kind and amount of Reference Property that a holder of one share of Common Stock is entitled to receive) upon such Merger Event and, prior to or at the effective time of such Merger Event, the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a supplemental indenture permitted under Section 10.02(g) providing for such change in the right to convert each $1,000 principal amount of Notes; provided, however, that at and after the effective time of the Merger Event (A) the Company shall continue to have the right to determine the form of consideration to be paid or delivered, as the case may be, upon conversion of Notes in accordance with Section 14.02 and (B) (I) any amount payable in cash upon conversion of the Notes in accordance with Section 14.02 shall continue to be payable in cash, (II) any shares of Common Stock that the Company would have been required to deliver upon conversion of the Notes in accordance with Section 14.02 shall instead be deliverable in the amount and type of Reference Property that a holder of that number of shares of Common Stock would have been entitled to receive in such Merger Event, (III) the Daily VWAP shall be calculated based on the value of a unit of Reference Property and (IV) references to Common Stock under Section 14.01(b)(i), Section 14.01(b)(ii) and Section 14.01(b)(iv) shall be deemed to refer to a unit of Reference Property.

 

If the Merger Event causes the Common Stock to be converted into, or exchanged for, the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), then (i) the Reference Property into which the Notes will be convertible shall be deemed to be (x) the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election or (y) if no holders of Common Stock affirmatively make such an election, the types and amounts of consideration actually received by the holders of Common Stock, and (ii) the unit of Reference Property for purposes of the immediately preceding paragraph shall refer to the consideration referred to in clause (i) attributable to one share of Common Stock.  If the holders of the Common Stock receive only cash in such Merger Event, then for all conversions for which the

 

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relevant Conversion Date occurs after the effective date of such Merger Event (A) the consideration due upon conversion of each $1,000 principal amount of Notes shall be solely cash in an amount equal to the Conversion Rate in effect on the Conversion Date (as may be increased by any Additional Shares pursuant to Section 14.03), multiplied by the price paid per share of Common Stock in such Merger Event and (B) the Company shall satisfy the Conversion Obligation by paying cash to converting Holders on the third Business Day immediately following the relevant Conversion Date.  The Company shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) of such weighted average as soon as practicable after such determination is made.

 

Such supplemental indenture described in the second immediately preceding paragraph shall provide for anti-dilution and other adjustments that shall be as nearly equivalent as is possible to the adjustments provided for in this Article 14.  If, in the case of any Merger Event, the Reference Property includes shares of stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the successor or purchasing corporation, as the case may be, in such Merger Event, then such supplemental indenture shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including the provisions providing for the purchase rights set forth in Article 15.

 

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

 

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

 

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

 

(e)                        In connection with any Merger Event, the Initial Dividend Threshold shall be subject to adjustment as described in clause (i), clause (ii) or clause (iii) below, as the case may be.

 

(i)                                     In the case of a Merger Event in which the Reference Property (determined, as appropriate, pursuant to subsection (a) above and excluding any dissenters’ appraisal rights) is composed entirely of shares of common stock (the

 

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“Merger Common Stock”), the Initial Dividend Threshold at and after the effective time of such Merger Event will be equal to (x) the Initial Dividend Threshold immediately prior to the effective time of such Merger Event, divided by (y) the number of shares of Merger Common Stock that a holder of one share of Common Stock would receive in such Merger Event (such quotient rounded down to the nearest cent).

 

(ii)                                  In the case of a Merger Event in which the Reference Property (determined, as appropriate, pursuant to subsection  (a) above and excluding any dissenters’ appraisal rights) is composed in part of shares of Merger Common Stock, the Initial Dividend Threshold at and after the effective time of such Merger Event will be equal to (x) the Initial Dividend Threshold immediately prior to the effective time of such Merger Event, multiplied by (y) the Merger Valuation Percentage for such Merger Event (such product rounded down to the nearest cent).

 

For the avoidance of doubt, in the case of a Merger Event in which the Reference Property (determined, as appropriate, pursuant to subsection  (a) above and excluding any dissenters’ appraisal rights) is composed entirely of consideration other than shares of common stock, the Initial Dividend Threshold at and after the effective time of such Merger Event will be equal to zero.

 

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

 

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

 

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

 

Section 14.09.  Responsibility of Trustee.  The Trustee and any other Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine the Conversion Rate (or any adjustment thereto) or whether any facts exist that may require any adjustment (including any increase) of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same.  The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities, property or cash that may at any time be issued or delivered upon the conversion of any Note; and the Trustee and any other Conversion Agent make no representations with respect thereto.  Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or 

 

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property or cash upon the surrender of any Note for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article.  Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 14.07 relating either to the kind or amount of shares of stock or securities or property (including cash) receivable by Holders upon the conversion of their Notes after any event referred to in such Section 14.07 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 7.1 of the Base Indenture, may accept (without any independent investigation) as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers’ Certificate (which the Company shall be obligated to file with the Trustee prior to the execution of any such supplemental indenture) with respect thereto.  Neither the Trustee nor the Conversion Agent shall be responsible for determining whether any event contemplated by Section 14.01(b) has occurred that makes the Notes eligible for conversion or no longer eligible therefor until the Company has delivered to the Trustee and the Conversion Agent the notices referred to in Section 14.01(b) with respect to the commencement or termination of such conversion rights, on which notices the Trustee and the Conversion Agent may conclusively rely, and the Company agrees to deliver such notices to the Trustee and the Conversion Agent immediately after the occurrence of any such event or at such other times as shall be provided for in Section 14.01(b).

 

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

 

(a)                       action by the Company or one of its Subsidiaries that would require an adjustment in the Conversion Rate pursuant to Section 14.04 or Section 14.11;

 

(b)                       Merger Event; or

 

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

 

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

 

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Section 14.11.  Stockholder Rights Plans.  If the Company has a stockholder rights plan in effect upon conversion of the Notes, each share of Common Stock, if any, issued upon such conversion shall be entitled to receive the appropriate number of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan, as the same may be amended from time to time. However, if, prior to any conversion of Notes, the rights have separated from the shares of Common Stock in accordance with the provisions of the applicable stockholder rights plan, the Conversion Rate shall be adjusted at the time of separation as if the Company distributed to all or substantially all holders of the Common Stock Distributed Property as provided in Section 14.04(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.

 

ARTICLE 15
 REPURCHASE OF NOTES AT OPTION OF HOLDERS

 

Section 15.01.  Intentionally Omitted.

 

Section 15.02.  Repurchase at Option of Holders Upon a Fundamental Change.  (a)  If a Fundamental Change occurs at any time, each Holder shall have the right, at such Holder’s option, to require the Company to repurchase for cash all of such Holder’s Notes, or any portion thereof that is equal to $1,000 or an integral multiple of $1,000, on the date (the “Fundamental Change Repurchase Date”) specified by the Company that is not less than 20 calendar days or more than 35 calendar days following the date of the Fundamental Change Company Notice, provided that the Fundamental Change Repurchase Date shall be subject to postponement caused by a change in applicable law after the date of this Second Supplemental Indenture, at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase Price”), unless the Fundamental Change Repurchase Date falls after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of accrued and unpaid interest to Holders of record as of such Regular Record Date, and the Fundamental Change Repurchase Price shall be equal to 100% of the principal amount of Notes to be repurchased pursuant to this Article 15.

 

(b)                       Repurchases of Notes under this Section 15.02 shall be made, at the option of the Holder thereof, upon:

 

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

 

(ii)                                  delivery of the Notes, if the Notes are Physical Notes, to the Paying Agent at any time after delivery of the Fundamental Change Repurchase Notice (together with 

 

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all necessary endorsements for transfer) at the Principal Office of the Trustee, or book-entry transfer of the Notes, if the Notes are Global Notes, in compliance with the procedures of the Depositary, in each case such delivery being a condition to receipt by the Holder of the Fundamental Change Repurchase Price therefor.

 

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

 

(i)                                     in the case of Physical Notes, the certificate numbers of the Notes to be delivered for repurchase;

 

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

 

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

 

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

 

Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Fundamental Change Repurchase Notice contemplated by this Section 15.02 shall have the right to withdraw, in whole or in part, such Fundamental Change Repurchase Notice at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 15.03.

 

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

 

(c)                        On or before the 20th calendar day after the occurrence of the effective date of a Fundamental Change, the Company shall provide to all Holders of Notes and the Trustee and the Paying Agent (in the case of a Paying Agent other than the Trustee) a notice (the “Fundamental Change Company Notice”) of the occurrence of the effective date of the Fundamental Change and of the repurchase right at the option of the Holders arising as a result thereof.  In the case of Physical Notes, such notice shall be by first class mail or, in the case of Global Notes, such notice shall be delivered in accordance with the applicable procedures of the Depositary.  Each Fundamental Change Company Notice shall specify:

 

(i)                                     the events causing the Fundamental Change;

 

(ii)                                  the effective date of the Fundamental Change;

 

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

 

(iv)                              the Fundamental Change Repurchase Price;

 

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(v)                                 the Fundamental Change Repurchase Date;

 

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

 

(vii)                           if applicable, the Conversion Rate and any adjustments to the Conversion Rate as a result of the Fundamental Change;

 

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

 

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

 

No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Notes pursuant to this Section 15.02.

 

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

 

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

 

(e)                        Notwithstanding the foregoing, the Company shall not be required to make an offer to repurchase the Notes upon a Fundamental Change if a third party makes such an offer in the manner, and at the times required and otherwise in compliance with the requirements, set forth in this Article 15 and such third party purchases all of the Notes validly surrendered and not validly withdrawn under such offer. Such third party’s failure to repurchase the Notes will not relieve the Company of its obligation to effect to pay the Fundamental Change Repurchase Price as set forth herein.

 

Section 15.03.  Withdrawal of Fundamental Change Repurchase Notice.  (a)  A Fundamental Change Repurchase Notice may be withdrawn (in whole or in part) by means of a 

 

59

 

written notice of withdrawal delivered to the Principal Office of the Trustee of the Paying Agent in accordance with this Section 15.03 at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date, specifying:

 

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

 

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

 

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

 

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

 

Section 15.04.  Deposit of Fundamental Change Repurchase Price.  (a)  The Company will deposit with the Trustee (or other Paying Agent appointed by the Company, or if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 4.04) on or prior to 11:00 a.m., New York City time, on the Fundamental Change Repurchase Date an amount of money sufficient to repurchase all of the Notes to be repurchased at the appropriate Fundamental Change Repurchase Price.  Subject to receipt of funds and/or Notes by the Trustee (or other Paying Agent appointed by the Company), payment for Notes surrendered for repurchase (and not withdrawn prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date) will be made on the later of (i) the Fundamental Change Repurchase Date (provided the Holder has satisfied the conditions in Section 15.02) and (ii) the time of book-entry transfer or the delivery of such Note to the Trustee (or other Paying Agent appointed by the Company) by the Holder thereof in the manner required by Section 15.02 by mailing checks for the amount payable to the Holders of such Notes entitled thereto as they shall appear in the Security Register; provided, however, that payments to the Depositary shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee.  The Trustee shall, promptly after such payment and upon written demand by the Company, return to the Company any funds in excess of the Fundamental Change Repurchase Price.

 

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

 

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(c)        Upon surrender of a Note that is to be repurchased in part pursuant to  Section 15.02, 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 unrepurchased portion of the Note surrendered.

 

Section 15.05.  Covenant to Comply with Applicable Laws Upon Repurchase of Notes.  In connection with any repurchase offer, the Company will, if required:

 

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

 

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

 

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

 

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

 

ARTICLE 16
 NO REDEMPTION

 

Section 16.01.  No Redemption.  Article 3 of the Base Indenture shall not apply to the Notes.  The Notes shall not be redeemable by the Company and no sinking fund is provided for the Notes.

 

ARTICLE 17
 MISCELLANEOUS PROVISIONS

 

Section 17.01.  [Reserved]

 

Section 17.02.  [Reserved]

 

Section 17.03.  [Reserved]

 

Section 17.04.  Jurisdiction.  The Company irrevocably consents and agrees, for the benefit of the Holders from time to time of the Notes and the Trustee, that any legal action, suit or proceeding against it with respect to obligations, liabilities or any other matter arising out of or in connection with the Indenture or the Notes may be brought in the courts of the State of New York or the courts of the United States located in the Borough of Manhattan, New York City, New York and, until amounts due and to become due in respect of the Notes have been paid, hereby irrevocably consents and submits to the non-exclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for itself in respect of its properties, assets and revenues.

 

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

 

Section 17.05.  Evidence of Compliance with Conditions Precedent; Certificates and Opinions of Counsel to Trustee.  Notwithstanding anything to the contrary in Section 14.6 of the Base Indenture, if any provision in the Indenture specifically provides that the Trustee shall or may receive an Opinion of Counsel in connection with any action to be taken by the Trustee or the Company hereunder, the Trustee shall be entitled to, or entitled to request, such Opinion of Counsel.

 

Section 17.06.  Legal Holidays.  Section 14.7 of the Base Indenture shall not apply to the Notes.  In any case where any Interest Payment Date, Fundamental Change Repurchase Date or Maturity Date is not a Business Day, then any action to be taken on such date need not be taken on such date, but may be taken on the next succeeding Business Day with the same force and effect as if taken on such date, and no interest shall accrue in respect of the delay.

 

Section 17.07.  No Security Interest Created.  Nothing in the Indenture or in the Notes, expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction.

 

Section 17.08.  Benefits of Indenture.  Nothing in the Indenture or in the Notes, expressed or implied, shall give to any Person, other than the Holders, the parties hereto, any Paying Agent, any Conversion Agent, any authenticating agent, any Security Registrar and their successors hereunder, any benefit or any legal or equitable right, remedy or claim under the Indenture.

 

Section 17.09.  [Reserved]

 

Section 17.10.  [Reserved]

 

Section 17.11.  Execution in Counterparts.  The exchange of copies of this Second Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Second Supplemental Indenture as to the parties hereto and may be used in lieu of the original Second Supplemental Indenture for all purposes.  Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

Section 17.12.  [Reserved]

 

Section 17.13.  Waiver of Jury Trial.  (a) Section 14.5 of the Base Indenture shall not apply to the Notes.

 

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(b)        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 THE INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

Section 17.14.  [Reserved]

 

Section 17.15.  Calculations.  Except as otherwise provided herein, the Company shall be responsible for making all calculations called for under the Notes.  These calculations include, but are not limited to, determinations of the Last Reported Sale Prices of the Common Stock, the Daily VWAPs, the Daily Conversion Values, the Daily Settlement Amounts, accrued interest payable on the Notes and the Conversion Rate of the Notes.  The Company shall make all these calculations in good faith and, absent manifest error, the Company’s calculations shall be final and binding on Holders of Notes.  The Company shall provide a schedule of its calculations to each of the Trustee and the Conversion Agent, and each of the Trustee and Conversion Agent is entitled to rely conclusively upon the accuracy of the Company’s calculations without independent verification.  The Trustee will forward the Company’s calculations to any Holder of Notes upon the request of that Holder at the sole cost and expense of the Company.

 

Section 17.16.  USA PATRIOT Act.  The parties hereto acknowledge that in accordance with Section 326 of the USA PATRIOT Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee.  The parties to this Second Supplemental Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the USA PATRIOT Act.

 

[Remainder of page intentionally left blank]

 

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

 

 

	
 
    	
SM ENERGY COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ David W.   Copeland
    
	
 
    	
 
    	
Name:
    	
David W. Copeland
    
	
 
    	
 
    	
Title:
    	
Executive Vice   President, General Counsel and Corporate Secretary
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
U.S. BANK NATIONAL   ASSOCIATION, as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Leland Hansen
    
	
 
    	
 
    	
Name:
    	
Leland Hansen
    
	
 
    	
 
    	
Title:
    	
Vice President
    

 

 

EXHIBIT A

 

[FORM OF FACE OF NOTE]

 

[INCLUDE FOLLOWING LEGEND IF A GLOBAL NOTE]

 

[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 HEREUNDER IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

 

A-1

 

SM Energy Company

 

[ .  ]% Convertible Senior Note due 2021

 

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

 

 

CUSIP No. [         ]

 

SM Energy Company, a corporation duly organized and validly existing under the laws of the State of Delaware (the “Company,” which term includes any successor corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to [CEDE & CO.](2) [                ](3), or registered assigns, the principal sum [as set forth in the “Schedule of Exchanges of Notes” attached hereto](4) [of $[                ]](5), which amount, taken together with the principal amounts of all other outstanding Notes, shall not, unless permitted by the Indenture, exceed $[                ] in aggregate at any time [(or $[                ] if the Underwriters exercise their over-allotment option in full as set forth in the Underwriting Agreement)](6), in accordance with the rules and procedures of the Depositary, on July 1, 2021, and interest thereon as set forth below.

 

This Note shall bear interest at the rate of [  .    ]% per year from August [      ], 2016, or from the most recent date to which interest had been paid or provided for to, but excluding, the next scheduled Interest Payment Date until July 1, 2021.  Interest is payable semi-annually in arrears on each January 1 and July 1, commencing on January 1, 2017, to Holders of record at the close of business on the preceding December 15 and June 15 (whether or not such day is a Business Day), respectively.  Additional Interest will be payable as set forth in Section 6.04 of the within-mentioned Second Supplemental Indenture, and any reference to interest on, or in respect of, any Note therein shall be deemed to include Additional Interest if, in such context, Additional Interest is, was or would be payable pursuant to  Section 6.04, and any express mention of the payment of Additional Interest in any provision therein shall not be construed as excluding Additional Interest in those provisions thereof where such express mention is not made.

 

Any Defaulted Amounts shall accrue interest per annum at the rate borne by the Notes plus one percent, subject to the enforceability thereof under applicable law, from, and including, the relevant payment date to, but excluding, the date on which such Defaulted Amounts shall have been paid by the Company, at its election, in accordance with Section 2.03(c) of the Second Supplemental Indenture.

 

The Company shall pay the principal of and interest on this Note, if and so long as such Note is a Global Note, in immediately available funds to the Depositary or its nominee, as the

 

(1)  Include if a global note.

(2)  Include if a global note.

(3)  Include if a physical note.

(4)  Include if a global note.

(5)  Include if a physical note.

(6)  Delete if greenshoe is exercised in full before initial closing and will be settled on closing date for initial issuance.

 

A-2

 

case may be, as the registered Holder of such Note.  As provided in and subject to the provisions of the Indenture, the Company shall pay the principal of any Notes (other than Notes that are Global Notes) at the office or agency designated by the Company for that purpose.  The Company has initially designated the Trustee as its Paying Agent and Security Registrar in respect of the Notes and the Principal Office of the Trustee as a place where Notes may be presented for payment or for registration of transfer and exchange.

 

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

 

This Note, and any claim, controversy or dispute arising under or related to this Note, shall be construed in accordance with and governed by the laws of the State of New York (without regard to the conflicts of laws provisions thereof).

 

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

 

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

 

[Remainder of page intentionally left blank]

 

A-3

 

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

 

	
 
    	
SM ENERGY COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Dated:

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

U.S. BANK NATIONAL ASSOCIATION
 as Trustee, certifies that this is one of the Notes described
 in the within-named Indenture.

 

	
By:
    	
 
    	
 
    
	
 
    	
Authorized Officer
    	
 
    

 

A-4

 

[FORM OF REVERSE OF NOTE]

 

SM Energy Company
 [  .    ]% Convertible Senior Note due 2021

 

This Note is one of a duly authorized issue of Notes of the Company, designated as its [ .  ]% Convertible Senior Notes due 2021 (the “Notes”), limited to the aggregate principal amount of $[                    ] [[                    ] (as increased by an amount equal to the aggregate principal amount of any additional Notes purchased by the Underwriters pursuant to the exercise of their over-allotment option as set forth in the Underwriting Agreement)](7) all issued or to be issued under and pursuant to the Second Supplemental Indenture dated as of August [  ], 2016 (the “Second Supplemental Indenture”), between the Company and U.S. Bank National Association (the “Trustee”), which amends and supplements the Indenture dated as of May 21, 2015 between the Company and the Trustee (the “Base Indenture” and, as amended and supplemented by the Second Supplemental Indenture and from time to time with respect to the Notes, the “Indenture”) to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Notes.  Additional Notes may be issued in an unlimited aggregate principal amount, subject to certain conditions specified in the Indenture.  Capitalized terms used in this Note and not defined in this Note shall have the respective meanings set forth in the Indenture.

 

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

 

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

 

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

 

(7)  Delete if greenshoe is exercised in full before initial closing and will be settled on closing date for initial issuance.

 

A-5

 

No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay or deliver, as the case may be, the principal (including the Fundamental Change Repurchase Price, if applicable) of, accrued and unpaid interest on, and the consideration due upon conversion of, this Note at the place, at the respective times, at the rate and in the lawful money or shares of Common Stock, as the case may be, herein prescribed.

 

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

 

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

 

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

 

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

 

A-6

 

ABBREVIATIONS

 

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

 

TEN COM = as tenants in common

 

UNIF GIFT MIN ACT = Uniform Gifts to Minors Act

 

CUST = Custodian

 

TEN ENT = as tenants by the entireties

 

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

 

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

 

A-7

 

SCHEDULE A(8)

 

SCHEDULE OF EXCHANGES OF NOTES

 

SM Energy Company
 [ .  ]% Convertible Senior Notes due 2021

 

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

 

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

 

(8)  Include if a global note.

 

A-8

 

ATTACHMENT 1

 

[FORM OF NOTICE OF CONVERSION]

 

To:                             [               ]

 

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

 

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

 

Fill in for   registration of shares if
   to be issued, and Notes if to
    	
 
    	
 
    

 

1

 

	
be delivered,   other than to and in the
   name of the registered holder:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Name)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Street Address)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(City, State and   Zip Code)
    	
 
    	
 
    
	
Please print name   and address
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Principal amount   to be converted (if less than all):  $           ,000

 

NOTICE:  The above signature(s) of the   Holder(s) hereof must correspond with the name as written upon the face   of the Note in every particular without alteration or enlargement or any   change whatever.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Social Security or   Other Taxpayer
   Identification Number
    

 

2

 

ATTACHMENT 2

 

[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]

 

To:                             [                ]

 

The undersigned registered owner of this Note hereby acknowledges receipt of a notice from SM Energy Company (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Repurchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with Section 15.02 of the Second Supplemental Indenture referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not fall during the period after a Regular Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest, if any, thereon to, but excluding, such Fundamental Change Repurchase Date.  Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture.

 

In the case of Physical Notes, the certificate numbers of the Notes to be repurchased are as set forth below:

 

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

 

1

 

ATTACHMENT 3

 

[FORM OF ASSIGNMENT AND TRANSFER]

 

For value received                              hereby sell(s), assign(s) and transfer(s) unto                   (Please insert social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes and appoints                       attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.

 

In connection with any transfer of the within Note occurring prior to the Resale Restriction Termination Date, as defined in the Second Supplemental Indenture governing such Note, the undersigned confirms that such Note is being transferred:

 

o                                    To [         ] or a subsidiary thereof; or

 

o                                    Pursuant to a registration statement that has become or been declared effective under the Securities Act of 1933, as amended; or

 

o                                    Pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or

 

o                                    Pursuant to and in compliance with Rule 144 under the Securities Act of 1933, as amended, or any other available exemption from the registration requirements of the Securities Act of 1933, as amended.

 

1

 

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

 

NOTICE:  The signature on the assignment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.

 

2Exhibit 10.1

 

 

Wells Fargo Bank, National Association

 

375 Park Avenue
 New York, NY 10152
 Attn: Structuring Services Group
 CorporateDerivativeNotifications@wellsfargo.com

	
 
    	
August 8, 2016
    

 

To: SM Energy Company 
 1775 Sherman Street, Suite 1200
 Denver, Colorado 80203
 Attention:              General Counsel
 Telephone No.:    303-863-4325

 

Re: Base Call Option Transaction

 

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the call option transaction entered into between Wells Fargo Bank, National Association (“Dealer”) and SM Energy Company (“Counterparty”) as of the Trade Date specified below (the “Transaction”).  This letter agreement constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below.  Each party further agrees that this Confirmation together with the Agreement evidence a complete binding agreement between Counterparty and Dealer as to the subject matter and terms of the Transaction to which this Confirmation relates, and shall supersede all prior or contemporaneous written or oral communications with respect thereto.

 

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc. (“ISDA”) are incorporated into this Confirmation.  In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern.  Certain defined terms used herein are based on terms that are defined in the Prospectus dated August 8, 2016, as supplemented by the Prospectus Supplement dated August 8, 2016 (as so supplemented, the “Prospectus”) relating to the 1.50% Convertible Senior Notes due 2021 (as originally issued by Counterparty, the “Convertible Notes” and each USD 1,000 principal amount of Convertible Notes, a “Convertible Note”) issued by Counterparty in an aggregate initial principal amount of USD 150,000,000 (as increased by up to an aggregate principal amount of USD 22,500,000 if and to the extent that the Underwriters (as defined herein) exercise their option to purchase additional Convertible Notes pursuant to the Underwriting Agreement (as defined herein)) pursuant to an Indenture dated May 21, 2015 (the “Base Indenture”), as supplemented by a Supplemental Indenture thereto to be dated August 12, 2016 (the “Supplemental Indenture”), between Counterparty and U.S. Bank National Association, as trustee (the Base Indenture as so supplemented, the “Indenture”).  In the event of any inconsistency between the terms defined in the Prospectus, the Indenture and this Confirmation, this Confirmation shall govern.  The parties acknowledge that this Confirmation is entered into on the date hereof with the understanding that (i) definitions set forth in the Indenture which are also defined herein by reference to the Indenture and (ii) sections of the Indenture that are referred to herein will conform to the descriptions thereof in the Prospectus.  If any such definitions in the Indenture or any such sections of the Indenture differ from the descriptions thereof in the Prospectus, the descriptions thereof in the Prospectus will govern for purposes of this Confirmation.  The parties further acknowledge that the Supplemental Indenture section numbers used herein are based on the draft of the Supplemental Indenture last reviewed by Dealer as of the date of this Confirmation, and if any such section numbers are changed in the Supplemental Indenture as executed, the parties will amend this Confirmation in good faith to preserve the intent of the parties.  Subject to the foregoing, references to the Base Indenture or Supplemental Indenture herein are references to the Base Indenture or the Supplemental Indenture, as the case may be, as in effect on the date hereof and on the date of its execution, respectively, and if either the Base Indenture or the Supplemental Indenture is amended or supplemented following such date (other than any amendment or supplement (x) pursuant to Section 10.02(i) of the Supplemental Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of Convertible Notes in the Prospectus or (y) pursuant to Section 14.07 of the Supplemental Indenture, subject, in the case of this clause (y), to the second paragraph under “Method of Adjustment” in Section 3), any such amendment or supplement will be disregarded for purposes of this Confirmation (other than as provided in Section 9(i)(iii) below) unless the parties agree otherwise in writing.

 

 

Each party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other material actions in reliance upon the parties’ entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below.

 

1.             This Confirmation evidences a complete and binding agreement between Dealer and Counterparty as to the terms of the Transaction to which this Confirmation relates.  This Confirmation shall supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master Agreement (the “Agreement”) as if Dealer and Counterparty had executed an agreement in such form (but without any Schedule except for (i) the election of the laws of the State of New York as the governing law (without reference to choice of law doctrine) and (ii) the election that the “Cross Default” provisions of Section 5(a)(vi) of the Agreement shall apply to Dealer with a “Threshold Amount” of 3% of Dealer’s shareholders’ equity (provided that (a) the phrase “, or becoming capable at such time of being declared,” shall be deleted from clause (1) of such Section 5(a)(vi) of the Agreement, (b) “Specified Indebtedness” shall have the meaning specified in Section 14 of the Agreement, except that such term shall not include obligations in respect of deposits received in the ordinary course of Dealer’s banking business and (c) the following sentence shall be added to the end of Section 5(a)(vi) of the Agreement: “Notwithstanding the foregoing, a default under subsection (2) hereof shall not constitute an Event of Default if (x) the default was caused solely by error or omission of an administrative or operational nature; (y) funds were available to enable the relevant party to make the payment when due; and (z) the payment is made within two Local Business Days of such party’s receipt of written notice of its failure to pay.”) on the Trade Date.  In the event of any inconsistency between provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of the Transaction to which this Confirmation relates.  The parties hereby agree that no transaction other than the Transaction to which this Confirmation relates shall be governed by the Agreement.

 

2.             The terms of the particular Transaction to which this Confirmation relates are as follows:

 

General Terms.

 

	
Trade Date:
    	
August 8, 2016
    
	
 
    	
 
    
	
Effective Date:
    	
The Trade Date
    
	
 
    	
 
    
	
Option Style:
    	
“Modified American”, as   described under “Procedures for Exercise” below
    
	
 
    	
 
    
	
Option Type:
    	
Call
    
	
 
    	
 
    
	
Buyer:
    	
Counterparty
    
	
 
    	
 
    
	
Seller:
    	
Dealer
    
	
 
    	
 
    
	
Shares:
    	
The common stock of   Counterparty, par value USD 0.01 per share (Exchange symbol “SM”).
    
	
 
    	
 
    
	
Number of Options:
    	
150,000.  For the avoidance of doubt, the Number of   Options shall be reduced by any Options exercised by Counterparty.  In no event will the Number of Options be   less than zero.
    
	
 
    	
 
    
	
Applicable Percentage:
    	
38.50%
    
	
 
    	
 
    
	
Option Entitlement:
    	
A number equal to the   product of the Applicable Percentage and 24.6914.
    
	
 
    	
 
    
	
Strike Price:
    	
USD 40.50
    
	
 
    	
 
    
	
Cap Price:
    	
USD 60.00
    

 

2

 

	
Premium:
    	
USD 8,056,125.00
    
	
 
    	
 
    
	
Premium Payment Date:
    	
August 12, 2016
    
	
 
    	
 
    
	
Exchange:
    	
The   New York Stock Exchange
    
	
 
    	
 
    
	
Related Exchange(s):
    	
All Exchanges
    
	
 
    	
 
    
	
Excluded Provisions:
    	
Section 14.04(h) and   Section 14.03 of the Supplemental Indenture.
    

 

Procedures for Exercise.

 

	
Conversion Date:
    	
With respect to any   conversion of a Convertible Note (other than any conversion of Convertible   Notes with a Conversion Date occurring prior to the Free Convertibility Date   (any such conversion, an “Early Conversion”),   to which the provisions of Section 9(i)(i) of this Confirmation   shall apply), the date on which the Holder (as such term is defined in the   Indenture) of such Convertible Note satisfies all of the requirements for   conversion thereof as set forth in Section 14.02(b) of the   Supplemental Indenture.
    
	
 
    	
 
    
	
Free Convertibility   Date:
    	
January 1, 2021
    
	
 
    	
 
    
	
Expiration Time:
    	
The Valuation Time
    
	
 
    	
 
    
	
Expiration Date:
    	
July 1, 2021, subject   to earlier exercise.
    
	
 
    	
 
    
	
Multiple Exercise:
    	
Applicable, as   described under “Automatic Exercise” below.
    
	
 
    	
 
    
	
Automatic Exercise:
    	
Notwithstanding   Section 3.4 of the Equity Definitions, on each Conversion Date occurring   on or after the Free Convertibility Date, in respect of which a Notice of   Conversion that is effective as to Counterparty has been delivered by the   relevant converting Holder, a number of Options equal to the number of   Convertible Notes in denominations of USD 1,000 as to which such Conversion   Date has occurred shall be deemed to be automatically exercised; provided that such Options shall be exercised or deemed   exercised only if Counterparty has provided a Notice of Exercise to Dealer in   accordance with “Notice of Exercise” below.
    
	
 
    	
 
    
	
 
    	
Notwithstanding the   foregoing, in no event shall the number of Options that are exercised or   deemed exercised hereunder exceed the Number of Options.
    
	
 
    	
 
    
	
Notice of Exercise:
    	
Notwithstanding   anything to the contrary in the Equity Definitions or under “Automatic   Exercise” above, in order to exercise any Options relating to Convertible   Notes with a Conversion Date occurring on or after the Free Convertibility   Date, Counterparty must notify Dealer in writing before 5:00 p.m. (New   York City time) on the
    

 

3

 

	
 
    	
Scheduled Valid Day   immediately preceding the Expiration Date specifying the number of such   Options; provided that if the   Relevant Settlement Method for such Options is (x) Net Share Settlement   and the Specified Cash Amount (as defined below) is not USD 1,000,   (y) Cash Settlement or (z) Combination Settlement, Dealer shall   have received a separate notice (the “Notice of Final   Settlement Method”) in respect of all such Convertible Notes   before 5:00 p.m. (New York City time) on the Free Convertibility Date   specifying (1) the Relevant Settlement Method for such Options, and   (2) if the settlement method for the related Convertible Notes is not   Settlement in Shares or Settlement in Cash (each as defined below), the   “Specified Dollar Amount” that Counterparty has elected (as such term is   defined in the Indenture) (the “Specified Cash Amount”).   Counterparty acknowledges its responsibilities under applicable securities   laws, and in particular Section 9 and Section 10(b) of the   Exchange Act (as defined below) and the rules and regulations   thereunder, in respect of any election of a settlement method with respect to   the Convertible Notes.
    
	
 
    	
 
    
	
Valuation Time:
    	
At the close of trading   of the regular trading session on the Exchange; provided   that if the principal trading session is extended, the Calculation Agent   shall determine the Valuation Time in its reasonable discretion.
    
	
 
    	
 
    
	
Market Disruption   Event:
    	
Section 6.3(a) of   the Equity Definitions is hereby replaced in its entirety by the following:
    
	
 
    	
 
    
	
 
    	
“‘Market Disruption   Event’ means, in respect of a Share, (i) a failure by the primary United   States national or regional securities exchange or market on which the Shares   are listed or admitted for trading to open for trading during its regular   trading session or (ii) the occurrence or existence prior to 1:00   p.m. (New York City time) on any Scheduled Valid Day for the Shares for   more than one half-hour period in the aggregate during regular trading hours   of any suspension or limitation imposed on trading (by reason of movements in   price exceeding limits permitted by the relevant stock exchange or otherwise)   in the Shares or in any options contracts or futures contracts relating to   the Shares.”
    

 

Settlement Terms.

 

	
Settlement Method:
    	
For any Option, Net   Share Settlement; provided that   if the Relevant Settlement Method set forth below for such Option is not Net   Share Settlement, then the Settlement Method for such Option shall be such   Relevant Settlement Method, but only if Counterparty shall have notified   Dealer of the Relevant Settlement Method in the Notice of Final Settlement   Method for such Option.
    
	
 
    	
 
    
	
Relevant Settlement   Method:
    	
In respect of any   Option:
    

 

4

 

	
 
    	
(i)    if Counterparty has elected   to settle its conversion obligations in respect of the related Convertible   Note (A) entirely in Shares pursuant to   Section 14.02(a)(iv)(A) of the Supplemental Indenture (together   with cash in lieu of fractional Shares) (such settlement method, “Settlement in Shares”), (B) in a combination of cash   and Shares pursuant to Section 14.02(a)(iv)(C) of the Supplemental   Indenture with a Specified Cash Amount less than USD 1,000 (such settlement   method, “Low Cash Combination Settlement”)   or (C) in a combination of cash and Shares pursuant to   Section 14.02(a)(iv)(C) of the Supplemental Indenture with a   Specified Cash Amount equal to USD 1,000, then, in each case, the   Relevant Settlement Method for such Option shall be Net Share Settlement;
    
	
 
    	
 
    
	
 
    	
(ii)   if Counterparty has elected   to settle its conversion obligations in respect of the related Convertible   Note in a combination of cash and Shares pursuant to   Section 14.02(a)(iv)(C) of the Supplemental Indenture with a   Specified Cash Amount greater than USD 1,000, then the Relevant Settlement   Method for such Option shall be Combination Settlement; and
    
	
 
    	
 
    
	
 
    	
(iii)  if Counterparty has elected to   settle its conversion obligations in respect of the related Convertible Note   entirely in cash pursuant to Section 14.02(a)(iv)(B) of the Supplemental   Indenture (such settlement method, “Settlement in Cash”),   then the Relevant Settlement Method for such Option shall be Cash Settlement.
    
	
 
    	
 
    
	
Net Share Settlement:
    	
If Net Share Settlement   is applicable to any Option exercised or deemed exercised hereunder, Dealer   will deliver to Counterparty, on the relevant Settlement Date for each such   Option, a number of Shares (the “Net Share Settlement   Amount”) equal to the sum, for each Valid Day during the   Settlement Averaging Period for each such Option, of (i) (a) the   Daily Option Value for such Valid Day, divided by   (b) the Relevant Price on such Valid Day, divided by   (ii) the number of Valid Days in the Settlement Averaging Period; provided that in no event shall the Net   Share Settlement Amount for any Option exceed a number of Shares equal to the   Applicable Limit for such Option divided by the Applicable Limit Price on the   Settlement Date for such Option.
    
	
 
    	
 
    
	
 
    	
Dealer will pay cash in   lieu of delivering any fractional Shares to be delivered with respect to any   Net Share Settlement Amount valued at the Relevant Price for the last Valid   Day of the Settlement Averaging Period.
    
	
 
    	
 
    
	
Combination Settlement:
    	
If Combination   Settlement is applicable to any Option exercised or deemed exercised   hereunder, Dealer will pay or deliver, as the case may be, to Counterparty,   on the relevant Settlement Date for each such Option:
    

 

5

 

	
 
    	
(i)    cash (the “Combination Settlement Cash Amount”) equal to the sum, for   each Valid Day during the Settlement Averaging Period for such Option, of   (A) an amount (the “Daily Combination   Settlement Cash Amount”) equal to the lesser of (1) the   product of (x) the Applicable Percentage and (y) the Specified Cash   Amount minus USD 1,000 and (2) the Daily   Option Value, divided by (B) the number   of Valid Days in the Settlement Averaging Period; provided   that if the calculation in clause (A) above results in zero or a   negative number for any Valid Day, the Daily Combination Settlement Cash   Amount for such Valid Day shall be deemed to be zero; and
    
	
 
    	
 
    
	
 
    	
(ii)   Shares (the “Combination Settlement Share Amount”) equal to the sum,   for each Valid Day during the Settlement Averaging Period for such Option, of   a number of Shares for such Valid Day (the “Daily   Combination Settlement Share Amount”) equal to   (A) (1) the Daily Option Value on such Valid Day minus the Daily Combination Settlement Cash Amount for   such Valid Day, divided by (2) the   Relevant Price on such Valid Day, divided by   (B) the number of Valid Days in the Settlement Averaging Period; provided that if the calculation in sub-clause   (A)(1) above results in zero or a negative number for any Valid Day, the   Daily Combination Settlement Share Amount for such Valid Day shall be deemed   to be zero;
    
	
 
    	
 
    
	
 
    	
provided   that in no event shall the sum of (x) the Combination Settlement Cash   Amount for any Option and (y) the Combination Settlement Share Amount   for such Option multiplied by   the Applicable Limit Price on the Settlement Date for such Option, exceed the   Applicable Limit for such Option.
    
	
 
    	
 
    
	
 
    	
Dealer will pay cash in   lieu of delivering any fractional Shares to be delivered with respect to any   Combination Settlement Share Amount valued at the Relevant Price for the last   Valid Day of the Settlement Averaging Period.
    
	
 
    	
 
    
	
Cash Settlement:
    	
If Cash Settlement is   applicable to any Option exercised or deemed exercised hereunder, in lieu of   Section 8.1 of the Equity Definitions, Dealer will pay to Counterparty,   on the relevant Settlement Date for each such Option, an amount of cash (the   “Cash Settlement Amount”) equal to the   sum, for each Valid Day during the Settlement Averaging Period for such   Option, of (i) the Daily Option Value for such Valid Day, divided by (ii) the number of Valid Days in the   Settlement Averaging Period.
    
	
 
    	
 
    
	
Daily Option Value:
    	
For any Valid Day, an   amount equal to (i) the Option Entitlement on such Valid Day, multiplied by (ii) (A) the 
    

 

6

 

	
 
    	
lesser of the Relevant   Price on such Valid Day and the Cap Price, less   (B) the Strike Price on such Valid Day; provided   that if the calculation contained in clause (ii) above results in a   negative number, the Daily Option Value for such Valid Day shall be deemed to   be zero.  In no event will the Daily   Option Value be less than zero.
    
	
 
    	
 
    
	
Applicable Limit
    	
For any Option, an amount   of cash equal to the Applicable Percentage multiplied   by the excess of (i) the aggregate of (A) the amount of   cash, if any, paid to the Holder of the related Convertible Note upon   conversion of such Convertible Note and (B) the number of Shares, if any,   delivered to the Holder of the related Convertible Note upon conversion of   such Convertible Note multiplied by the Applicable Limit Price on the   Settlement Date for such Option, over (ii) USD 1,000.
    
	
 
    	
 
    
	
Applicable Limit Price
    	
On any day, the opening   price as displayed under the heading “Op” on Bloomberg page SM   <equity> (or any successor thereto).
    
	
 
    	
 
    
	
Valid Day:
    	
A day on which   (i) there is no Market Disruption Event and (ii) trading in the   Shares generally occurs on the Exchange or, if the Shares are not then listed   on the Exchange, on the principal other United States national or regional   securities exchange on which the Shares are then listed or, if the Shares are   not then listed on a United States national or regional securities exchange,   on the principal other market on which the Shares are then listed or admitted   for trading. If the Shares are not so listed or admitted for trading, “Valid   Day” means a Business Day.
    
	
 
    	
 
    
	
Scheduled Valid Day:
    	
A day that is scheduled   to be a Valid Day on the principal United States national or regional   securities exchange or market on which the Shares are listed or admitted for   trading.  If the Shares are not so   listed or admitted for trading, “Scheduled Valid Day” means a Business Day.
    
	
 
    	
 
    
	
Business Day:
    	
Any day other than a   Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is   authorized or required by law or executive order to close or be closed.
    
	
 
    	
 
    
	
Relevant Price:
    	
On any Valid Day, the   per Share volume-weighted average price as displayed under the heading   “Bloomberg VWAP” on Bloomberg page SM <equity> AQR (or its   equivalent successor if such page is not available) in respect of the   period from the scheduled opening time of the Exchange to the Scheduled   Closing Time of the Exchange on such Valid Day (or if such volume-weighted   average price is unavailable at such time, the market value of one Share on   such Valid Day, as determined by the Calculation Agent using, if practicable,   a volume-weighted average method). The Relevant Price will be determined   without regard to after-hours trading or any
    

 

7

 

	
 
    	
other trading outside   of the regular trading session trading hours.
    
	
 
    	
 
    
	
Settlement Averaging   Period:
    	
For any Option and   regardless of the Settlement Method applicable to such Option, the 20   consecutive Valid Days commencing on, and including, the 22nd   Scheduled Valid Day immediately prior to the Expiration Date.
    
	
 
    	
 
    
	
Settlement Date:
    	
For any Option, the third   Business Day immediately following the final Valid Day of the Settlement   Averaging Period for such Option.
    
	
 
    	
 
    
	
Settlement Currency:
    	
USD
    
	
 
    	
 
    
	
Other Applicable   Provisions:
    	
The provisions of   Sections 9.1(c), 9.8, 9.9 and 9.11 of the Equity Definitions will be   applicable, except that all references in such provisions to   “Physically-settled” shall be read as references to “Share Settled”.  “Share Settled” in relation to any Option   means that Net Share Settlement or Combination Settlement is applicable to that   Option.
    
	
 
    	
 
    
	
Representation and   Agreement:
    	
Notwithstanding   anything to the contrary in the Equity Definitions (including, but not   limited to, Section 9.11 thereof), the parties acknowledge that   (i) any Shares delivered to Counterparty shall be, upon delivery,   subject to restrictions and limitations arising from Counterparty’s status as   issuer of the Shares under applicable securities laws, (ii) Dealer may   deliver any Shares required to be delivered hereunder in certificated form in   lieu of delivery through the Clearance System and (iii) any Shares   delivered to Counterparty may be “restricted securities” (as defined in   Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”)).
    

 

 

3.             Additional Terms applicable to the Transaction.

 

Adjustments applicable to the Transaction:

 

	
Potential Adjustment   Events:
    	
Notwithstanding   Section 11.2(e) of the Equity Definitions, a “Potential Adjustment   Event” means an occurrence of any event or condition, as set forth in any   Dilution Adjustment Provision, that would result in an adjustment under the   Indenture to the “Conversion Rate” or the composition of a “unit of Reference   Property” or to any “Last Reported Sale Price”, “Daily VWAP,” “Daily   Conversion Value” or “Daily Settlement Amount” (each as defined in the   Indenture). For the avoidance of doubt, Dealer shall not have any delivery or   payment obligation hereunder, and no adjustment shall be made to the terms of   the Transaction, on account of (x) any distribution of cash, property or   securities by Counterparty to holders of the Convertible Notes (upon   conversion or otherwise) or (y) any other transaction in which holders   of the Convertible Notes are entitled to participate, in each case, in lieu   of an adjustment under the Indenture of the type referred to in the   immediately preceding sentence
    

 

8

 

	
 
    	
(including, without   limitation, pursuant to the fourth sentence of Section 14.04(c) of   the Supplemental Indenture or the fifth sentence of Section 14.04(d) of   the Supplemental Indenture).
    
	
 
    	
 
    
	
Method of Adjustment:
    	
Calculation Agent   Adjustment, which means that, notwithstanding Section 11.2(c) of   the Equity Definitions, upon any Potential Adjustment Event, the Calculation   Agent shall make a corresponding adjustment to any one or more of the Strike   Price, Number of Options, Option Entitlement and any other variable relevant   to the exercise, settlement or payment for the Transaction, in each case, to   the extent an analogous adjustment is made under the Indenture.
    
	
 
    	
 
    
	
 
    	
Notwithstanding the   foregoing and “Consequences of Merger Events / Tender Offers” below:
    
	
 
    	
 
    
	
 
    	
(i)    if the Calculation Agent in   good faith disagrees with any adjustment to the Convertible Notes that   involves an exercise of discretion by Counterparty or its board of directors   (including, without limitation, pursuant to Section 14.04(c) of the   Supplemental Indenture, Section 14.05 of the Supplemental Indenture,   Section 14.07 of the Supplemental Indenture or any supplemental   indenture entered into thereunder or in connection with any proportional   adjustment or the determination of the fair value of any securities,   property, rights or other assets), then in each such case, the Calculation   Agent will determine the adjustment to be made to any one or more of the   Strike Price, Number of Options, Option Entitlement and any other variable   relevant to the exercise, settlement or payment for the Transaction in a   commercially reasonable manner; provided   that, notwithstanding the foregoing, if   any Potential Adjustment Event occurs during the Settlement Averaging Period   but no adjustment was made to any Convertible Note under the Indenture   because the relevant Holder (as such term is defined in the Indenture) was   deemed to be a record owner of the underlying Shares on the related   Conversion Date, then the Calculation Agent shall make an adjustment, as   determined by it, to the terms hereof in order to account for such Potential   Adjustment Event;
    
	
 
    	
 
    
	
 
    	
(ii)   in connection with any   Potential Adjustment Event as a result of an event or condition set forth in   Section 14.04(b) of the Supplemental Indenture or   Section 14.04(c) of the Supplemental Indenture where, in either   case, the period for determining “Y” (as such term is used
    

 

9

 

	
 
    	
in   Section 14.04(b) of the Supplemental Indenture) or “SP0” (as such term is used in   Section 14.04(c) of the Supplemental Indenture), as the case may   be, begins before Counterparty has publicly announced the event or condition   giving rise to such Potential Adjustment Event, then the Calculation Agent   shall have the right to adjust any variable relevant to the exercise,   settlement or payment for the Transaction as appropriate to reflect the costs   (including, but not limited to, hedging mismatches and market losses) and   expenses incurred by Dealer in connection with its commercially reasonable   hedging activities as a result of such event or condition not having been   publicly announced prior to the beginning of such period; and
    
	
 
    	
 
    
	
 
    	
(iii)  if any Potential Adjustment   Event is declared and (a) the event or condition giving rise to such   Potential Adjustment Event is subsequently amended, modified, cancelled or   abandoned, (b) the “Conversion Rate” (as defined in the Indenture) is   otherwise not adjusted at the time or in the manner contemplated by the   relevant Dilution Adjustment Provision based on such declaration or   (c) the “Conversion Rate” (as defined in the Indenture) is adjusted as a   result of such Potential Adjustment Event and subsequently re-adjusted (each   of clauses (a), (b) and (c), a “Potential   Adjustment Event Change”) then, in each case, the Calculation   Agent shall have the right to adjust any variable relevant to the exercise,   settlement or payment for the Transaction as appropriate to reflect the costs   (including, but not limited to, hedging mismatches and market losses) and   expenses incurred by Dealer in connection with its commercially reasonable   hedging activities as a result of such Potential Adjustment Event Change.
    
	
 
    	
 
    
	
Dilution Adjustment   Provisions:
    	
Sections 14.04(a), (b),   (c), (d) and (e) and Section 14.05 of the Supplemental   Indenture.
    

 

Extraordinary Events applicable to the Transaction:

 

	
Merger Events:
    	
Applicable; provided that notwithstanding Section 12.1(b) of   the Equity Definitions, a “Merger Event” means the occurrence of any event or   condition set forth in the definition of “Merger Event” in Section 14.07   of the Supplemental Indenture.
    
	
 
    	
 
    
	
Tender Offers:
    	
Applicable; provided that notwithstanding Section 12.1(d) of   the Equity Definitions, a “Tender Offer” means the
    

 

10

 

	
 
    	
occurrence of any event   or condition set forth in Section 14.04(e) of the Indenture.
    
	
 
    	
 
    
	
Consequences of Merger   Events/ Tender Offers:
    	
Notwithstanding   Section 12.2 and Section 12.3 of the Equity Definitions, upon the   occurrence of a Merger Event or a Tender Offer, the Calculation Agent shall   make a corresponding adjustment in respect of any adjustment under the   Indenture to any one or more of the nature of the Shares (in the case of a   Merger Event), Strike Price, Number of Options, Option Entitlement and any   other variable relevant to the exercise, settlement or payment for the   Transaction, subject to the second paragraph under “Method of Adjustment”; provided, however,   that such adjustment shall be made without regard to any adjustment to the   Conversion Rate pursuant to any Excluded Provision; provided   further that if, with respect to a Merger Event or a Tender Offer,   (i) the consideration for the Shares includes (or, at the option of a   holder of Shares, may include) shares of an entity or person that is not a   corporation or is not organized under the laws of the United States, any   State thereof or the District of Columbia or (ii) the Counterparty to   the Transaction following such Merger Event or Tender Offer will not be a   corporation, then, in either case, Cancellation and Payment (Calculation   Agent Determination) may apply at Dealer’s sole election; provided further that, for the avoidance of doubt,   adjustments shall be made pursuant to the provisions set forth above   regardless of whether any Merger Event or Tender Offer gives rise to an Early   Conversion.
    
	
 
    	
 
    
	
Consequences of   Announcement Events:
    	
Modified Calculation   Agent Adjustment as set forth in Section 12.3(d) of the Equity   Definitions; provided that, in respect of an Announcement Event,   (x) references to “Tender Offer” shall be replaced by references to   “Announcement Event” and references to “Tender Offer Date” shall be replaced   by references to “date of such Announcement Event”, (y) the word “shall”   in the second line shall be replaced with “may” and the phrase “exercise,   settlement, payment or any other terms of the Transaction (including, without   limitation, the spread)” shall be replaced with the phrase “Cap Price   (provided that in no event shall the Cap Price be less than the Strike   Price)”, and (z) for the avoidance of doubt, the Calculation Agent may   determine whether the relevant Announcement Event has had an economic effect   on the Transaction (and, if so, may adjust the Cap Price accordingly) on one   or more occasions on or after the date of the Announcement Event up to, and   including, the Expiration Date, any Early Termination Date and/or any other   date of cancellation, it being understood that any adjustment in respect of   an Announcement Event shall take into account any earlier adjustment relating   to the same Announcement Event.  An   Announcement Event 
    

 

11

 

	
 
    	
shall be an   “Extraordinary Event” for purposes of the Equity Definitions, to which   Article 12 of the Equity Definitions is applicable.
    
	
 
    	
 
    
	
Announcement Event:
    	
(i)    The public announcement by   any third party reasonably capable (as determined by the Calculation Agent)   of executing the Merger Event or Tender Offer of a firm intention (or in the   case of the Issuer or its affiliates, any public announcement) of   (x) any transaction or event that, if completed, would constitute a   Merger Event or Tender Offer, (y) any potential acquisition by Issuer   and/or its subsidiaries where the aggregate consideration exceeds 20% of the   market capitalization of Issuer as of the date of such announcement (an “Acquisition Transaction”) or (z) the   intention to enter into a Merger Event or Tender Offer or an Acquisition   Transaction, (ii) the public announcement by Issuer of an intention to   solicit or enter into, or to explore strategic alternatives or other similar   undertaking that may include, a Merger Event or Tender Offer or an   Acquisition Transaction or (iii) any subsequent public announcement by   any entity of a change to a transaction or intention that is the subject of   an announcement of the type described in clause (i) or (ii) of this   sentence (including, without limitation, a new announcement, whether or not   by the same party, relating to such a transaction or intention or the   announcement of a withdrawal from, or the abandonment or discontinuation of,   such a transaction or intention), as determined by the Calculation   Agent.  For the avoidance of doubt, the   occurrence of an Announcement Event with respect to any transaction or   intention shall not preclude the occurrence of a later Announcement Event   with respect to such transaction or intention. For purposes of this   definition of “Announcement Event,” (A) “Merger Event” shall mean such   term as defined under Section 12.1(b) of the Equity Definitions   (but, for the avoidance of doubt, the remainder of the definition of “Merger   Event” in Section 12.1(b) of the Equity Definitions following the   definition of “Reverse Merger” therein shall be disregarded) and   (B) “Tender Offer” shall mean such term as defined under   Section 12.1(d) of the Equity Definitions.
    
	
 
    	
 
    
	
Nationalization, Insolvency   or Delisting:
    	
Cancellation and   Payment (Calculation Agent Determination); provided   that, in addition to the provisions of Section 12.6(a)(iii) of the   Equity Definitions, it will also constitute a Delisting if the Exchange is   located in the United States and the Shares are not immediately re-listed,   re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ   Global Select Market or The NASDAQ Global Market (or their respective   successors); if the Shares are immediately re-listed, re-traded or re-quoted   on any of the New York Stock Exchange, The NASDAQ Global Select Market or 
    

 

12

 

	
 
    	
The NASDAQ Global   Market (or their respective successors), such exchange or quotation system shall   thereafter be deemed to be the Exchange.
    
	
Additional Disruption   Events:
    	
 
    
	
 
    	
 
    
	
Change in Law:
    	
Applicable; provided that Section 12.9(a)(ii) of the Equity   Definitions is hereby amended by (i) replacing the word “Shares” with   the phrase “Hedge Positions” in clause (X) thereof and   (ii) inserting the parenthetical “(including, for the avoidance of doubt   and without limitation, adoption or promulgation of new regulations   authorized or mandated by existing statute)” at the end of clause   (A) thereof.
    
	
 
    	
 
    
	
Failure to Deliver:
    	
Applicable
    
	
 
    	
 
    
	
Hedging Disruption:
    	
Applicable; provided that:
    
	
 
    	
 
    
	
 
    	
(i)    Section 12.9(a)(v) of   the Equity Definitions is hereby amended by (a) inserting the following   words at the end of clause (A) thereof:    “in the manner contemplated by the Hedging Party on the Trade Date”   and (b) inserting the following two phrases at the end of such Section:
    
	
 
    	
 
    
	
 
    	
“For the avoidance of   doubt, the term “equity price risk” shall be deemed to include, but shall not   be limited to, stock price and volatility risk. And, for the further   avoidance of doubt, any such transactions or assets referred to in phrases   (A) or (B) above must be available on commercially reasonable   pricing terms.”; and
    
	
 
    	
 
    
	
 
    	
(ii)   Section 12.9(b)(iii) of the Equity   Definitions is hereby amended by inserting in the third line thereof, after   the words “to terminate the Transaction”, the words “or a portion of the   Transaction affected by such Hedging Disruption”.
    
	
 
    	
 
    
	
Increased Cost of   Hedging:
    	
Not applicable
    
	
 
    	
 
    
	
Hedging Party:
    	
For all applicable   Additional Disruption Events, Dealer.
    
	
 
    	
 
    
	
Determining Party:
    	
For all applicable   Extraordinary Events, Dealer.
    
	
 
    	
 
    
	
Non-Reliance:
    	
Applicable
    
	
 
    	
 
    
	
Agreements and   Acknowledgments Regarding Hedging Activities:
    	
Applicable
    
	
 
    	
 
    
	
Additional   Acknowledgments:
    	
Applicable
    
	
 
    	
 
    
	
4.             Calculation Agent.
    	
Dealer; provided that if an Event of Default of   the type described in Section 5(a)(vii) of the Agreement occurs   with respect to Dealer, Counterparty shall have the right to appoint a   successor calculation agent which shall be a 
    

 

13

 

	
 
    	
nationally recognized   third-party dealer in over-the-counter corporate equity derivatives.
    

 

5.             Account Details.

 

(a)           Account for payments to Counterparty:

 

Bank:              Wells Fargo Bank, N.A.

ABA#:             121000248

Acct No.:        1010811249

Name:             SM Energy Company

 

Account for delivery of Shares to Counterparty:

 

To be provided separately.

 

(b)           Account for payments to Dealer:

 

Bank:              Wells Fargo Bank, N.A.

ABA#:             121000248

Acct No.:        01020304464228

Name:             WFB Equity Derivatives

 

Account for delivery of Shares from Dealer:

 

To be provided separately.

 

6.             Offices.

 

(a)           The Office of Counterparty for the Transaction is:  Inapplicable, Counterparty is not a Multibranch Party.

 

(b)           The Office of Dealer for the Transaction is: New York

 

7.             Notices.

 

(a)           Address for notices or communications to Counterparty:

 

SM Energy Company
 1775 Sherman Street, Suite 1200
 Denver, Colorado 80203
 Attention:              General Counsel
 Telephone No.:    303-863-4325

 

(b)           Address for notices or communications to Dealer:

 

Notwithstanding anything to the contrary in the Agreement, all notices to Dealer in connection with the Transaction are effective only upon receipt of email message to CorporateDerivativeNotifications@wellsfargo.com.

 

8.             Representations and Warranties of Counterparty.

 

Each of the representations and warranties of Counterparty set forth in Section 1 of the Underwriting Agreement (the “Underwriting Agreement”) dated as of August 8, 2016, between Counterparty and Wells Fargo Securities, LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities

 

14

 

LLC, as representatives of the Underwriters party thereto (the “Underwriters”), are true and correct and are hereby deemed to be repeated to Dealer as if set forth herein.  Counterparty hereby further represents and warrants to Dealer on the date hereof and on and as of the Premium Payment Date that:

 

(a)           Counterparty has all necessary corporate power and authority to execute, deliver and perform its obligations in respect of the Transaction; such execution, delivery and performance have been duly authorized by all necessary corporate action on Counterparty’s part; and this Confirmation has been duly and validly executed and delivered by Counterparty and constitutes its valid and binding obligation, enforceable against Counterparty in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution hereunder may be limited by federal or state securities laws or public policy relating thereto.

 

(b)           Neither the execution and delivery of this Confirmation nor the incurrence or performance of obligations of Counterparty hereunder will conflict with or result in a breach of the certificate of incorporation or by-laws (or any equivalent documents) of Counterparty, or any applicable law or regulation, or any order, writ, injunction or decree of any court or governmental authority or agency, or any agreement or instrument to which Counterparty or any of its subsidiaries is a party or by which Counterparty or any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is subject, or constitute a default under, or result in the creation of any lien under, any such agreement or instrument.

 

(c)           No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required in connection with the execution, delivery or performance by Counterparty of this Confirmation, except such as have been obtained or made and such as may be required under the Securities Act or state securities laws.

 

(d)           Counterparty is not and, after consummation of the transactions contemplated hereby, will not be required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

 

(e)           Counterparty is an “eligible contract participant” (as such term is defined in Section 1a(18) of the Commodity Exchange Act, as amended, other than a person that is an eligible contract participant under Section 1a(18)(C) of the Commodity Exchange Act).

 

(f)            It is not, on the date hereof, in possession of any material non-public information with respect to Counterparty or the Shares.

 

(g)           No state or local (including any non-U.S. jurisdiction’s) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of Dealer or its affiliates owning or holding (however defined) Shares.

 

(h)           Counterparty (A) is capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities; (B) will exercise independent judgment in evaluating the recommendations of any broker-dealer or its associated persons, unless it has otherwise notified the broker-dealer in writing; and (C) has total assets of at least USD 50 million.

 

9.             Other Provisions.

 

(a)           Opinions.  Counterparty shall deliver to Dealer opinions of counsel, dated as of the Premium Payment Date, with respect to the matters set forth in Sections 8(a) through (c) of this

 

15

 

Confirmation.  Delivery of such opinions to Dealer shall be a condition precedent for the purpose of Section 2(a)(iii) of the Agreement with respect to each obligation of Dealer under Section 2(a)(i) of the Agreement.

 

(b)           Repurchase Notices.  Counterparty shall, on any day on which Counterparty effects any repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase Notice”) on such day if following such repurchase, the number of outstanding Shares as determined on such day is (i) less than 56.64 million (in the case of the first such notice) or (ii) thereafter more than 8.34 million less than the number of Shares included in the immediately preceding Repurchase Notice.  Counterparty agrees to indemnify and hold harmless Dealer and its affiliates and their respective officers, directors, employees, affiliates, advisors, agents and controlling persons (each, an “Indemnified Person”) from and against any and all losses (including losses relating to Dealer’s hedging activities as a consequence of becoming, or of the risk of becoming, a Section 16 “insider”, including without limitation, any forbearance from hedging activities or cessation of hedging activities and any losses in connection therewith with respect to the Transaction), claims, damages, judgments, liabilities and expenses (including reasonable attorney’s fees), joint or several, which an Indemnified Person may become subject to, as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice on the day and in the manner specified in this paragraph, and to reimburse, within 30 days, upon written request, each of such Indemnified Persons for any commercially reasonable legal or other expenses incurred in connection with investigating, preparing for, providing testimony or other evidence in connection with or defending any of the foregoing.  If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against the Indemnified Person as a result of Counterparty’s failure to provide Dealer with a Repurchase Notice in accordance with this paragraph, such Indemnified Person shall promptly notify Counterparty in writing, and Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others Counterparty may designate in such proceeding and shall pay the commercially reasonable fees and expenses of such counsel related to such proceeding.  Counterparty shall not be liable for any settlement of any proceeding contemplated by this paragraph that is effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified Person from and against any loss or liability by reason of such settlement or judgment.  Counterparty shall not, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding contemplated by this paragraph that is in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding on terms reasonably satisfactory to such Indemnified Person.  If the indemnification provided for in this paragraph is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then Counterparty, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities.  The remedies provided for in this paragraph (b) are not exclusive and shall not limit any rights or remedies which may otherwise be available to any Indemnified Person at law or in equity.  The indemnity and contribution agreements contained in this paragraph shall remain operative and in full force and effect regardless of the termination of the Transaction.

 

(c)           Regulation M.  Counterparty is not on the Trade Date engaged in a distribution, as such term is used in Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of any securities of Counterparty, other than (i) a distribution meeting the requirements of the exception set forth in Rules 101(b)(10) and 102(b)(7) of Regulation M and (ii) the distribution of the Convertible Notes and the concurrent distribution of Shares.  Counterparty shall not, until the second Scheduled Trading Day immediately following the Effective Date, engage in any such distribution.

 

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(d)           No Manipulation.  Counterparty is not entering into the Transaction to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the price of the Shares (or any security convertible into or exchangeable for the Shares) or otherwise in violation of the Exchange Act.

 

(e)           Transfer or Assignment.

 

(i)            Counterparty may not transfer any of its rights or obligations under the Transaction without the prior written consent of Dealer.

 

(ii)           Dealer may, without Counterparty’s consent, transfer or assign all or any part of its rights or obligations under the Transaction (A) to any affiliate of Dealer (1) that has a long-term issuer rating or a rating for its long term, unsecured and unsubordinated indebtedness that is equal to or better than Dealer’s long-term issuer rating or the rating for Dealer’s long-term, unsecured and unsubordinated indebtedness at the time of such transfer or assignment, or (2) whose obligations hereunder will be guaranteed, pursuant to the terms of a customary guarantee in a form used by Dealer generally for similar transactions, by Dealer (or its ultimate parent), or (B) if any Excess Ownership Position exists, with Counterparty’s consent (such consent not to be unreasonably withheld or delayed), to any third party financial institution that is a recognized dealer in the market for U.S. corporate equity derivatives.  Notwithstanding anything to the contrary set forth herein, no transfer or assignment by dealer shall be permitted to any third party unless such third party provides Counterparty with a duly executed IRS Form W-9 or applicable IRS Form W-8.

 

(iii)          If at any time at which (A) the Section 16 Percentage exceeds 8.5%, (B) the Option Equity Percentage exceeds 14.5% or (C) the Share Amount exceeds the Applicable Share Limit (if any applies) (any such condition described in clauses (A), (B) or (C), an “Excess Ownership Position”), Dealer is unable after using its commercially reasonable efforts to effect a transfer or assignment of Options to a third party financial institution pursuant to clause (ii)(B) of this Section 9(e) on pricing terms reasonably acceptable to Dealer and within a time period reasonably acceptable to Dealer such that no Excess Ownership Position exists, then Dealer may designate any Exchange Business Day as an Early Termination Date with respect to a portion of the Transaction (the “Terminated Portion”), such that following such partial termination no Excess Ownership Position exists.  In the event that Dealer so designates an Early Termination Date with respect to a portion of the Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Options underlying the Terminated Portion, (2) Counterparty were the sole Affected Party with respect to such partial termination and (3) the Terminated Portion were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this sentence as if Counterparty was not the Affected Party).  The “Section 16 Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the number of Shares that Dealer and any of its affiliates or any other person subject to aggregation with Dealer for purposes of the “beneficial ownership” test under Section 13 of the Exchange Act, or any “group” (within the meaning of Section 13 of the Exchange Act) of which Dealer is or may be deemed to be a part beneficially owns (within the meaning of Section 13 of the Exchange Act), without duplication, on such day (or, to the extent that for any reason the equivalent calculation under Section 16 of the Exchange Act and the rules and regulations thereunder results in a higher number, such higher number) and (B) the denominator of which is the number of Shares outstanding on such day.  The “Option Equity Percentage” as of any day is the fraction, expressed as a percentage, (A) the numerator of which is the sum of (1) the product of the Number of Options and the Option Entitlement and (2) the aggregate number of Shares underlying

 

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any other call option transaction sold by Dealer to Counterparty, and (B) the denominator of which is the number of Shares outstanding.  The “Share Amount” as of any day is the number of Shares that Dealer and any person whose ownership position would be aggregated with that of Dealer (Dealer or any such person, a “Dealer Person”) under any law, rule, regulation, regulatory order or organizational documents or contracts of Counterparty that are, in each case, applicable to ownership of Shares (“Applicable Restrictions”), owns, beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets a relevant definition of ownership under any Applicable Restriction, as determined by Dealer in its reasonable discretion.  The “Applicable Share Limit” means a number of Shares equal to (A) the minimum number of Shares that could give rise to reporting or registration obligations or other requirements (including obtaining prior approval from any person or entity, but excluding any filings of Form 13F, Schedule 13D or Schedule 13G under the Exchange Act) of a Dealer Person, or could result in an adverse effect on a Dealer Person, under any Applicable Restriction, as determined by Dealer in its reasonable discretion, minus (B) 1% of the number of Shares outstanding.

 

(iv)          Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other securities, or make or receive any payment in cash, to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell, receive or deliver such Shares or other securities, or to make or receive such payment in cash, and otherwise to perform Dealer’s obligations in respect of the Transaction and any such designee may assume such obligations.  Dealer shall be discharged of its obligations to Counterparty to the extent of any such performance.

 

(f)            Staggered Settlement.  If upon advice of counsel with respect to applicable legal and regulatory requirements, including any requirements relating to Dealer’s hedging activities hereunder, Dealer reasonably determines that it would not be practicable or advisable to deliver, or to acquire Shares to deliver, any or all of the Shares to be delivered by Dealer on any Settlement Date for the Transaction, Dealer may, by notice to Counterparty on or prior to any Settlement Date (a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered Settlement Date”) as follows:

 

(i)            in such notice, Dealer will specify to Counterparty the related Staggered Settlement Dates (the first of which will be such Nominal Settlement Date and the last of which will be no later than the twentieth (20th) Exchange Business Day following such Nominal Settlement Date) and the number of Shares that it will deliver on each Staggered Settlement Date;

 

(ii)           the aggregate number of Shares that Dealer will deliver to Counterparty hereunder on all such Staggered Settlement Dates will equal the number of Shares that Dealer would otherwise be required to deliver on such Nominal Settlement Date; and

 

(iii)          if the Net Share Settlement terms or the Combination Settlement terms set forth above were to apply on the Nominal Settlement Date, then the Net Share Settlement terms or the Combination Settlement terms, as the case may be, will apply on each Staggered Settlement Date, except that the Shares otherwise deliverable on such Nominal Settlement Date will be allocated among such Staggered Settlement Dates as specified by Dealer in the notice referred to in clause (i) above.

 

(g)           [Reserved]

 

(h)           Dividends. If at any time during the period from and including the Effective Date, to but excluding the Expiration Date, (i) an ex-dividend date for a regular semi-annual cash dividend occurs with respect to the Shares (an “Ex-Dividend Date”), and that dividend is less than the Regular

 

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Dividend on a per Share basis or (ii) if no Ex-Dividend Date for a regular semi-annual cash dividend occurs with respect to the Shares in any semi-annual dividend period of Counterparty, then the Calculation Agent will adjust the Cap Price to preserve the fair value of the Options to Dealer after taking into account such dividend or lack thereof. “Regular Dividend” shall mean USD 0.05 per Share per semi-annual dividend period of Counterparty.  Upon any adjustment to the Initial Dividend Threshold (as defined in the Indenture) for the Convertible Notes pursuant to the Indenture, the Calculation Agent will make a corresponding adjustment to the Regular Dividend for the Transaction.

 

(i)            Additional Termination Events.

 

(i)            Notwithstanding anything to the contrary in this Confirmation, upon any Early Conversion in respect of which a Notice of Conversion that is effective as to Counterparty has been delivered by the relevant converting Holder:

 

(A)          Counterparty shall, within one Scheduled Trading Day of the Conversion Date for such Early Conversion, provide written notice (an “Early Conversion Notice”) to Dealer specifying the number of Convertible Notes surrendered for conversion on such Conversion Date (such Convertible Notes, the “Affected Convertible Notes”), and the giving of such Early Conversion Notice shall constitute an Additional Termination Event as provided in this clause (i);

 

(B)          upon receipt of any such Early Conversion Notice, Dealer shall designate an Exchange Business Day as an Early Termination Date (which Exchange Business Day shall be no earlier than one Scheduled Trading Day following the Conversion Date for such Early Conversion) with respect to the portion of the Transaction corresponding to a number of Options (the “Affected Number of Options”) equal to the lesser of (x) the number of Affected Convertible Notes and (y) the Number of Options as of the Conversion Date for such Early Conversion;

 

(C)          any payment hereunder with respect to such termination shall be calculated pursuant to Section 6 of the Agreement as if (x) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the Affected Number of Options, (y) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (z) the terminated portion of the Transaction were the sole Affected Transaction; provided that the amount payable with respect to such termination shall not be greater than (1) the Applicable Percentage, multiplied by (2) the Affected Number of Options, multiplied by (3) (x) the sum of (i) the amount of cash paid (if any) and (ii) the number of Shares delivered (if any) to the Holder (as such term is defined in the Indenture) of an Affected Convertible Note upon conversion of such Affected Convertible Note, multiplied by the Applicable Limit Price on the date on which such payment is made, minus (y) USD 1,000.

 

(D)          for the avoidance of doubt, in determining the amount payable in respect of such Affected Transaction pursuant to Section 6 of the Agreement, the Calculation Agent shall assume that (x) the relevant Early Conversion and any conversions, adjustments, agreements, payments, deliveries or acquisitions by or on behalf of Counterparty leading thereto had not occurred, (y) no adjustments to the Conversion Rate have occurred pursuant to any Excluded Provision and (z) the corresponding Convertible Notes remain outstanding; and

 

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(E)           the Transaction shall remain in full force and effect, except that, as of the Conversion Date for such Early Conversion, the Number of Options shall be reduced by the Affected Number of Options.

 

(ii)           Notwithstanding anything to the contrary in this Confirmation if an event of default with respect to Counterparty occurs under the terms of the Convertible Notes as set forth in Section 6.02 of the Supplemental Indenture, then such event of default shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.

 

(iii)          Notwithstanding anything to the contrary in this Confirmation, the occurrence of an Amendment Event shall constitute an Additional Termination Event applicable to the Transaction and, with respect to such Additional Termination Event, (A) Counterparty shall be deemed to be the sole Affected Party, (B) the Transaction shall be the sole Affected Transaction and (C) Dealer shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement. “Amendment Event” means that Counterparty amends, modifies, supplements, waives or obtains a waiver in respect of any term of the Indenture or the Convertible Notes governing the principal amount, coupon, maturity, repurchase obligation of Counterparty, any term relating to conversion of the Convertible Notes (including changes to the conversion rate, conversion rate adjustment provisions, conversion settlement dates or conversion conditions), or any term that would require consent of the holders of not less than 100% of the principal amount of the Convertible Notes to amend (other than, in each case, any amendment or supplement (x) pursuant to Section 10.02(i) of the Supplemental Indenture that, as determined by the Calculation Agent, conforms the Indenture to the description of Convertible Notes in the Prospectus or (y) pursuant to Section 14.07 of the Supplemental Indenture), in each case, without the consent of Dealer.

 

(iv)          Promptly (but in any event within five Scheduled Trading Days) following any Repurchase Event (as defined below), Counterparty may notify Dealer of such Repurchase Event and the aggregate principal amount of Convertible Notes subject to such Repurchase Event (any such notice, a “Convertible Notes Repurchase Notice”); provided that any such Convertible Notes Repurchase Notice shall contain an acknowledgment by Counterparty of its responsibilities under applicable securities laws, and in particular Section 9 and Section 10(b) of the Exchange Act and the rules and regulations thereunder, in respect of such Repurchase Event and the delivery of such Convertible Notes Repurchase Notice. The receipt by Dealer from Counterparty of any Convertible Notes Repurchase Notice shall constitute an Additional Termination Event as provided in this Section 9(i)(iv). Upon receipt of any such Convertible Notes Repurchase Notice, Dealer shall designate an Exchange Business Day following receipt of such Convertible Notes Repurchase Notice (which Exchange Business Day shall be on or as promptly as reasonably practicable after the related settlement date for the relevant Repurchase Event) as an Early Termination Date with respect to the portion of the Transaction corresponding to a number of Options (the “Repurchase Options”) equal to the lesser of (A) the aggregate principal amount of such Convertible Notes specified in such Convertible Notes Repurchase Notice, divided by USD 1,000 and (B) the Number of Options as of the date Dealer designates such Early Termination Date and, as of such date, the Number of Options shall be reduced by the number of Repurchase Options. Any payment hereunder with respect to such termination (the “Repurchase Unwind Payment”) shall be calculated pursuant to Section 6 of the Agreement as if (1) an Early Termination Date had been designated in respect of a Transaction having terms identical to the Transaction and a Number of Options equal to the number of Repurchase Options,

 

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(2) Counterparty were the sole Affected Party with respect to such Additional Termination Event and (3) the terminated portion of the Transaction were the sole Affected Transaction (and, for the avoidance of doubt, the provisions of Section 9(l) shall apply to any amount that is payable by Dealer to Counterparty pursuant to this Section  9(i)(iv) as if Counterparty was not the Affected Party). “Repurchase Event” means that (i) any Convertible Notes are repurchased (whether pursuant to Section 15.02 of the Supplemental Indenture or otherwise) by Counterparty or any of its subsidiaries, (ii) any Convertible Notes are delivered to Counterparty in exchange for delivery of any property or assets of Counterparty or any of its subsidiaries (howsoever described), (iii) any principal of any of the Convertible Notes is repaid prior to the final maturity date of the Convertible Notes (other than upon acceleration of the Convertible Notes described in Section 9(i)(ii)), or (iv) any Convertible Notes are exchanged by or for the benefit of the Holders (as defined in the Indenture) thereof for any other securities of Counterparty or any of its Affiliates (or any other property, or any combination thereof) pursuant to any exchange offer or similar transaction; provided that any conversion of Convertible Notes pursuant to the terms of the Indenture shall not constitute a Repurchase Event.

 

(j)                                    Amendments to Equity Definitions.

 

(i)                                     Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative” and replacing them with the words “a material” and adding the phrase “or the Options” at the end of the sentence.

 

(ii)                                  Section 12.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting from the fourth line thereof the word “or” after the word “official” and inserting a comma therefor, and (2) deleting the semi-colon at the end of subsection (B) thereof and inserting the following words therefor “or (C) the occurrence of any of the events specified in Section 5(a)(vii) (1) through (9) of  the ISDA Master Agreement with respect to that Issuer.”

 

(iii)                               Section 12.9(b)(i) of the Equity Definitions is hereby amended by (1) replacing “either party may elect” with “Dealer may elect” and (2) replacing “notice to the other party” with “notice to Counterparty” in the first sentence of such section.

 

(iv)                              Section 12.9(b)(vi) of the Equity Definitions is hereby amended by (1) adding the word “or” immediately before subsection “(B)”, (2) deleting the comma at the end of subsection (A), (3) deleting subsection (C) in its entirety, (4) deleting the word “or” immediately preceding subsection (C) and (5) replacing the words “either party” in the last sentence of such Section with “Dealer”.

 

(k)                                 No Collateral or Setoff.  Notwithstanding any provision of the Agreement or any other agreement between the parties to the contrary, the obligations of Counterparty hereunder are not secured by any collateral. Obligations under the Transaction shall not be set off against any other obligations of the parties, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and no other obligations of the parties shall be set off against obligations under the Transaction, whether arising under the Agreement, this Confirmation, under any other agreement between the parties hereto, by operation of law or otherwise, and each party hereby waives any such right of setoff.

 

(l)                                     Alternative Calculations and Payment on Early Termination and on Certain  Extraordinary Events.  If (a) an Early Termination Date (whether as a result of an Event of Default or a Termination Event) occurs or is designated with respect to the Transaction or (b) the Transaction is cancelled or terminated upon the occurrence of an Extraordinary Event (except as a result of (i) a Nationalization, Insolvency or Merger Event in which the consideration to be paid to all holders of Shares consists solely of cash, (ii) a Merger Event or Tender Offer that is within Counterparty’s control, or (iii) an Event of Default in which Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the Affected Party other than an Event of Default of the type 

 

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described in Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement or a Termination Event of the type described in Section 5(b) of the Agreement, in each case that resulted from an event or events outside Counterparty’s control), and if Dealer would owe any amount to Counterparty pursuant to Section 6(d)(ii) of the Agreement or any Cancellation Amount pursuant to Article 12 of the Equity Definitions (any such amount, a “Payment Obligation”), then Dealer shall satisfy the Payment Obligation by the Share Termination Alternative (as defined below), unless (a) Counterparty gives irrevocable telephonic notice to Dealer, confirmed in writing within one Scheduled Trading Day, no later than 12:00 p.m. (New York City time) on the Merger Date, Tender Offer Date, Announcement Date (in the case of a Nationalization, Insolvency or Delisting), Early Termination Date or date of cancellation, as applicable, of its election that the Share Termination Alternative shall not apply, (b) Counterparty remakes the representation set forth in Section 8(f) as of the date of such election and (c) Dealer consents to such election (such consent not to be unreasonably withheld or delayed), in which case the provisions of Section 12.7 or Section 12.9 of the Equity Definitions, or the provisions of Section 6(d)(ii) of the Agreement, as the case may be, shall apply.

 

	
Share Termination   Alternative:
    	
If applicable, Dealer   shall deliver to Counterparty the Share Termination Delivery Property on, or   within a commercially reasonable period of time after, the date when the   relevant Payment Obligation would otherwise be due pursuant to   Section 12.7 or 12.9 of the Equity Definitions or   Section 6(d)(ii) and 6(e) of the Agreement, as applicable, in   satisfaction of such Payment Obligation in the manner reasonably requested by   Counterparty free of payment.
    
	
 
    	
 
    
	
Share Termination   Delivery Property:
    	
A number of Share   Termination Delivery Units, as calculated by the Calculation Agent, equal to   the Payment Obligation divided by the Share Termination Unit Price.  The Calculation Agent shall adjust the   Share Termination Delivery Property by replacing any fractional portion of a   security therein with an amount of cash equal to the value of such fractional   security based on the values used to calculate the Share Termination Unit   Price.
    
	
 
    	
 
    
	
Share Termination Unit   Price:
    	
The value to Dealer of   property contained in one Share Termination Delivery Unit, as determined by   the Calculation Agent in its discretion by commercially reasonable means and   notified by the Calculation Agent to Dealer at the time of notification of   the Payment Obligation. For the avoidance of doubt, the parties agree that in   determining the Share Termination Delivery Unit Price the Calculation Agent   may consider the purchase price paid in connection with the purchase of Share   Termination Delivery Property acquired by Dealer to satisfy its delivery   obligations hereunder.
    
	
 
    	
 
    
	
Share Termination   Delivery Unit:
    	
One Share or, if the   Shares have changed into cash or any other property or the right to receive   cash or any other property as the result of a Nationalization, Insolvency or   Merger Event (any such cash or other property, the “Exchange   Property”), a unit consisting of the type and amount of such   Exchange 
    

 

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Property received by a   holder of one Share (without consideration of any requirement to pay cash or   other consideration in lieu of fractional amounts of any securities) in such   Nationalization, Insolvency or Merger Event, as determined by the   Calculation Agent.
    
	
 
    	
 
    
	
Failure to Deliver:
    	
Applicable
    
	
 
    	
 
    
	
Other applicable   provisions:
    	
If Share Termination   Alternative is applicable, the provisions of Sections 9.8, 9.9 and 9.11 (as   modified above) of the Equity Definitions and the provisions set forth   opposite the caption “Representation and Agreement” in Section 2 will be   applicable, except that all references in such provisions to   “Physically-settled” shall be read as references to “Share Termination   Settled” and all references to “Shares” shall be read as references to “Share   Termination Delivery Units”.  “Share   Termination Settled” in relation to the Transaction means that Share   Termination Alternative is applicable to the Transaction.
    

 

(m)                             Waiver of Jury Trial.  Each party waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding relating to the Transaction.  Each party (i) certifies that no representative, agent or attorney of either party has represented, expressly or otherwise, that such other party would not, in the event of such a suit, action or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party have been induced to enter into the Transaction, as applicable, by, among other things, the mutual waivers and certifications provided herein.

 

(n)                                 Registration.  Counterparty hereby agrees that if, in the good faith reasonable judgment of Dealer, the Shares  (“Hedge Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction cannot be sold in the public market by Dealer without registration under the Securities Act, Counterparty shall, at its election, either (i) in order to allow Dealer to sell the Hedge Shares in a registered offering, make available to Dealer an effective registration statement under the Securities Act and enter into an agreement, in form and substance satisfactory to Dealer, substantially in the form of an underwriting agreement for a registered secondary offering of a similar size; provided, however, that if Dealer, in its sole reasonable discretion, is not satisfied with access to due diligence materials, the results of its due diligence investigation, or the procedures and documentation for the registered offering referred to above, then clause (ii) or clause (iii) of this paragraph shall apply at the election of Counterparty, (ii) in order to allow Dealer to sell the Hedge Shares in a private placement, enter into a private placement agreement substantially similar to private placement purchase agreements customary for private placements of equity securities, in form and substance satisfactory to Dealer (in which case, the Calculation Agent shall make any adjustments to the terms of the Transaction that are necessary, in its commercially reasonable judgment, to compensate Dealer for any discount from the public market price of the Shares incurred on the sale of Hedge Shares in a private placement), or (iii) purchase the Hedge Shares from Dealer at the Relevant Price on such Exchange Business Days, and in the amounts, requested by Dealer.

 

(o)                                 Tax Disclosure.  Effective from the date of commencement of discussions concerning the Transaction, Counterparty and each of its employees, representatives, or other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the 

 

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Transaction and all materials of any kind (including opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment and tax structure.

 

(p)                                 Right to Extend.  Dealer may postpone or add, in whole or in part, any Valid Day or Valid Days during the Settlement Averaging Period or any other date of valuation, payment or delivery by Dealer, with respect to some or all of the Options hereunder, if (i) Dealer reasonably determines, in its commercially reasonable discretion, that such action is reasonably necessary or appropriate to preserve Dealer’s commercially reasonable hedging or hedge unwind activity hereunder in light of existing liquidity conditions (but only in the case of a material decrease in liquidity relative to the Trade Date) or (ii) Dealer determines, based on the advice of counsel, that such action is reasonably necessary or appropriate to enable Dealer to effect purchases of Shares in connection with its hedging, hedge unwind or settlement activity hereunder in a manner that would, if Dealer were Counterparty or an affiliated purchaser of Counterparty, be in compliance with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Dealer.

 

(q)                                 Status of Claims in Bankruptcy.  Dealer acknowledges and agrees that this Confirmation is not intended to convey to Dealer rights against Counterparty with respect to the Transaction that are senior to the claims of common stockholders of Counterparty in any United States bankruptcy proceedings of Counterparty; provided that nothing herein shall limit or shall be deemed to limit Dealer’s right to pursue remedies in the event of a breach by Counterparty of its obligations and agreements with respect to the Transaction; provided, further that nothing herein shall limit or shall be deemed to limit Dealer’s rights in respect of any transactions other than the Transaction.

 

(r)                                    Securities Contract; Swap Agreement.  The parties hereto intend for (i) the Transaction to be a “securities contract” and a “swap agreement” as defined in the Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”), and the parties hereto to be entitled to the protections afforded by, among other Sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code, (ii) a party’s right to liquidate the Transaction and to exercise any other remedies upon the occurrence of any Event of Default under the Agreement with respect to the other party to constitute a “contractual right” as described in the Bankruptcy Code, and (iii) each payment and delivery of cash, securities or other property hereunder to constitute a “margin payment” or “settlement payment” and a “transfer” as defined in the Bankruptcy Code.

 

(s)                                   Notice of Certain Other Events. Counterparty covenants and agrees that:

 

(i)                                     promptly following the public announcement of the results of any election by the holders of Shares with respect to the consideration due upon consummation of any Merger Event, Counterparty shall give Dealer written notice of (x) the weighted average of the types and amounts of consideration that holders of Shares have elected to receive upon consummation of such Merger Event or (y) if no holders of Shares affirmatively make such election, the types and amounts of consideration actually received by holders of Shares (the date of such notification, the “Consideration Notification Date”); provided that in no event shall the Consideration Notification Date be later than the date on which such Merger Event is consummated; and

 

(ii)                                  promptly following any adjustment to the Convertible Notes in connection with any Potential Adjustment Event, Merger Event or Tender Offer, Counterparty shall give Dealer written notice of the details of such adjustment.

 

(t)                                    Wall Street Transparency and Accountability Act.  In connection with Section 739 of the Wall Street Transparency and Accountability Act of 2010 (“WSTAA”), the parties hereby agree that neither the enactment of WSTAA or any regulation under the WSTAA, nor any requirement under WSTAA or an amendment made by WSTAA, shall limit or otherwise impair either party’s otherwise applicable rights to terminate, renegotiate, modify, amend or supplement this Confirmation or the Agreement, as applicable, arising from a termination event, force majeure, 

 

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illegality, increased costs, regulatory change or similar event under this Confirmation, the Equity Definitions incorporated herein, or the Agreement (including, but not limited to, rights arising from Change in Law, Hedging Disruption, Increased Cost of Hedging, an Excess Ownership Position, or Illegality (as defined in the Agreement)).

 

(u)                                 Agreements and Acknowledgements Regarding Hedging. Counterparty understands, acknowledges and agrees that: (A) at any time on and prior to the Expiration Date, Dealer and its affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or enter into swaps or other derivative securities in order to adjust its hedge position with respect to the Transaction; (B) Dealer and its affiliates also may be active in the market for Shares other than in connection with hedging activities in relation to the Transaction; (C) Dealer shall make its own determination as to whether, when or in what manner any hedging or market activities in securities of Issuer shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Relevant Prices; and (D) any market activities of Dealer and its affiliates with respect to Shares may affect the market price and volatility of Shares, as well as the Relevant Prices, each in a manner that may be adverse to Counterparty.

 

(v)                                 Early Unwind. In the event the sale of the “Firm Notes” (as defined in the Underwriting Agreement) is not consummated with the Underwriter for any reason, or Counterparty fails to deliver to Dealer opinions of counsel as required pursuant to Section 9(a), in each case by 5:00 p.m. (New York City time) on the Premium Payment Date, or such later date as agreed upon by the parties (the Premium Payment Date or such later date the “Early Unwind Date”), the Transaction shall automatically terminate (the “Early Unwind”), on the Early Unwind Date and (i) the Transaction and all of the respective rights and obligations of Dealer and Counterparty under the Transaction shall be cancelled and terminated and (ii) each party shall be released and discharged by the other party from and agrees not to make any claim against the other party with respect to any obligations or liabilities of the other party arising out of and to be performed in connection with the Transaction either prior to or after the Early Unwind Date; provided that Counterparty shall purchase from Dealer on the Early Unwind Date all Shares purchased by Dealer or one or more of its affiliates in connection with the Transaction at the then prevailing market price.  Each of Dealer and Counterparty represents and acknowledges to the other that, subject to the proviso included in this Section 9(v), upon an Early Unwind, all obligations with respect to the Transaction shall be deemed fully and finally discharged.

 

(w)                               Payment by Counterparty. In the event that, following payment of the Premium, (i) an Early Termination Date occurs or is designated with respect to the Transaction as a result of a Termination Event or an Event of Default (other than an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of the Agreement) and, as a result, Counterparty owes to Dealer an amount calculated under Section 6(e) of the Agreement, or (ii) Counterparty owes to Dealer, pursuant to Section 12.7 or Section 12.9 of the Equity Definitions, an amount calculated under Section 12.8 of the Equity Definitions, such amount shall be deemed to be zero.

 

(x)                                 Other Adjustments Pursuant to the Equity Definitions.  Notwithstanding anything to the contrary in this Confirmation, solely for the purpose of adjusting the Cap Price, the terms “Potential Adjustment Event,” “Merger Event,” and “Tender Offer” shall each have the meanings assigned to such term in the Equity Definitions (as amended by Section 9(j)(i)), and upon the occurrence of a Merger Date, the occurrence of a Tender Offer Date, or declaration by Counterparty of the terms of any Potential Adjustment Event, respectively, as such terms are defined in the Equity Definitions, the Calculation Agent may, in its sole discretion, adjust the Cap Price to preserve the fair value of the Options to Dealer; provided that in no event shall the Cap Price be less than the Strike Price.

 

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(y)                                 Determinations; Adjustments.

 

(i)                                     All calculations, adjustments and determinations made by Dealer hereunder, whether as Calculation Agent, as Determining Party, as Hedging Party, or following the occurrence of an Early Termination Date, shall be made in good faith and in a commercially reasonable manner. Following any determination, adjustment or calculation by Calculation Agent hereunder, Calculation Agent shall deliver to Counterparty, within five Exchange Business Days after a written request by Counterparty, a report in a commonly used file format for the storage and manipulation of financial data (including the methodology, interest rates, quotations and market data (including volatility) but without disclosing any proprietary or confidential models or other proprietary or confidential information) displaying in reasonable detail the basis for such determination, adjustment or calculation, as the case may be.

 

(ii)                                  For the avoidance of doubt, whenever the Calculation Agent or Determining Party is called upon to make an adjustment pursuant to the terms of this Confirmation or the Equity Definitions to take into account the effect of an event, the Calculation Agent or Determining Party shall make such adjustment by reference to the effect of such event on the Hedging Party, assuming that the Hedging Party maintains a commercially reasonable hedge position.

 

(z)                                  Tax Matters. For purposes of Section 4(a)(i) of the Agreement, each party (including any successor, transferee or assignee of a party) shall deliver to the other party one duly executed and completed United States Internal Revenue Service Form W-9 (or successor thereto) or appropriate Form W-8 (or succesor thereto), together with any appropriate attachments.

 

(aa)                          FATCA and Dividend Equivalent Tax. “Indemnifiable Tax” as defined in Section 14 of the Agreement shall not include (i) any U.S. federal withholding tax imposed or collected pursuant to Sections 1471 through 1474 of the United States Internal Revenue Code of 1986, as amended (the Code”), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b) of the Code, or any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code (a “FATCA Withholding Tax”) or (ii) any U.S. federal withholding tax imposed under Section 871(m) of the Code (or any Treasury regulations or other guidance issued thereunder). For the avoidance of doubt, a FATCA Withholding Tax is a Tax the deduction or withholding of which is required by applicable law for the purposes of Section 2(d) of the Agreement.

 

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Please confirm that the foregoing correctly sets forth the terms of our agreement by executing this Confirmation and returning it to Dealer.

 

	
 
    	
Very truly yours,
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Wells   Fargo Bank, National Association
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Craig McCracken
    
	
 
    	
Authorized Signatory
    
	
 
    	
Name: Craig McCracken
    
				

 

 

Accepted and confirmed
 as of the Trade Date:

 

	
SM Energy Company
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ A. Wade Pursell
    	
 
    
	
Name:   A. Wade Pursell
    	
 
    
	
Title: Executive Vice   President and Chief Financial Officer

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