Document:

Exhibit 4.3

 

FLUOR CORPORATION, AS ISSUER,

 

AND

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 

AS TRUSTEE

 

SENIOR DEBT SECURITIES

 

INDENTURE

 

DATED AS OF SEPTEMBER 8, 2011

 

 

CROSS REFERENCE SHEET(1)

 

Provisions of Sections 310 through 318(a) inclusive of the Trust Indenture Act of 1939, as amended, and the Indenture dated as of September 8, 2011, between Fluor Corporation and Wells Fargo Bank, National Association, as Trustee.

 

	
Section of Act
    	
 
    	
Section of
    Indenture
    
	
310(a)(1)
    	
 
    	
6.10
    
	
310(a)(2)
    	
 
    	
6.10
    
	
310(a)(3)
    	
 
    	
N/A
    
	
310(a)(4)
    	
 
    	
N/A
    
	
310(a)(5)
    	
 
    	
6.10
    
	
310(b)
    	
 
    	
6.10
    
	
310(c)
    	
 
    	
N/A
    
	
311(a)
    	
 
    	
6.11
    
	
311(b)
    	
 
    	
6.11
    
	
311(c)
    	
 
    	
N/A
    
	
312(a)
    	
 
    	
4.01
    
	
312(b)
    	
 
    	
4.02(b)
    
	
312(c)
    	
 
    	
4.02(c)
    
	
313(a)
    	
 
    	
6.06
    
	
313(b)
    	
 
    	
6.06
    
	
313(c)
    	
 
    	
6.06
    
	
313(d)
    	
 
    	
6.06
    
	
314(a)
    	
 
    	
3.04 and   4.03
    
	
314(b)
    	
 
    	
N/A
    
	
314(c)(1)
    	
 
    	
2.04 and   11.05
    
	
314(c)(2)
    	
 
    	
2.04 and   11.05
    
	
314(c)(3)
    	
 
    	
N/A
    
	
314(d)
    	
 
    	
N/A
    
	
314(e)
    	
 
    	
11.05
    
	
315(a)
    	
 
    	
6.01(b)
    
	
315(b)
    	
 
    	
6.05
    
	
315(c)
    	
 
    	
6.01(a)
    
	
315(d)
    	
 
    	
6.01(c)
    
	
315(e)
    	
 
    	
5.10
    
	
316(a)(1)(A)
    	
 
    	
5.08
    
	
316(a)(1)(B)
    	
 
    	
5.09
    
	
316(a)(2)
    	
 
    	
N/A
    
	
316(b)
    	
 
    	
5.06
    
	
316(c)
    	
 
    	
2.07
    
	
317(a)(1)
    	
 
    	
5.02
    
	
317(a)(2)
    	
 
    	
5.02
    
	
317(b)
    	
 
    	
3.02 and   3.03
    
	
318(a)
    	
 
    	
11.07
    

 

(1)  This cross reference sheet shall not, for any purpose, be deemed to be a part of the Indenture

 

Attention should also be directed to Section 318(c) of the Trust Indenture Act of 1939, as amended, which provides that the provisions of Sections 310 through 317 of such Act are a part of and govern every qualified indenture, whether or not physically contained therein.

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
 
    
	
ARTICLE 1
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 1.01
    	
Certain Terms Defined
    	
1
    
	
 
    	
 
    	
 
    
	
ARTICLE 2
    	
SECURITIES
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 2.01
    	
Forms Generally
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 2.02
    	
Form of Trustee’s Certificate of   Authentication
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 2.03
    	
Amount Unlimited; Issuable in Series
    	
6
    
	
 
    	
 
    	
 
    
	
SECTION 2.04
    	
Authentication and Delivery of Securities
    	
8
    
	
 
    	
 
    	
 
    
	
SECTION 2.05
    	
Execution of Securities
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 2.06
    	
Certificate of Authentication
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 2.07
    	
Denomination and Date of Securities;   Payments of Interest
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 2.08
    	
Registration, Registration of Transfer and   Exchange
    	
11
    
	
 
    	
 
    	
 
    
	
SECTION 2.09
    	
Mutilated, Defaced, Destroyed, Lost and   Stolen Securities
    	
12
    
	
 
    	
 
    	
 
    
	
SECTION 2.10
    	
Cancellation of Securities
    	
12
    
	
 
    	
 
    	
 
    
	
SECTION 2.11
    	
Temporary Securities
    	
13
    
	
 
    	
 
    	
 
    
	
SECTION 2.12
    	
Securities in Global Form
    	
13
    
	
 
    	
 
    	
 
    
	
SECTION 2.13
    	
CUSIP Numbers
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE 3
    	
COVENANTS OF THE COMPANY
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 3.01
    	
Payment of Principal and Interest
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 3.02
    	
Offices for Payment, Etc.
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 3.03
    	
Paying Agents
    	
14
    
	
 
    	
 
    	
 
    
	
SECTION 3.04
    	
Officers’ Certificate
    	
15
    
	
 
    	
 
    	
 
    
	
SECTION 3.05
    	
Calculation of Original Issue Discount
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE 4
    	
SECURITYHOLDERS’ LISTS AND REPORTS BY THE   COMPANY
    	
15
    
	
 
    	
 
    	
 
    
	
SECTION 4.01
    	
Company to Furnish Trustee Information as   to Names and Addresses of Securityholders
    	
15
    
	
 
    	
 
    	
 
    
	
SECTION 4.02
    	
Preservation and Disclosure of   Securityholders’ Lists
    	
16
    
	
 
    	
 
    	
 
    
	
SECTION 4.03
    	
Reports by the Company
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE 5
    	
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS   ON EVENT OF DEFAULT
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 5.01
    	
Event of Default Defined; Acceleration of   Maturity; Waiver of Default
    	
17
    
	
 
    	
 
    	
 
    
	
SECTION 5.02
    	
Collection of Indebtedness by Trustee;   Trustee May Prove Debt
    	
19
    
				

 

i

 

TABLE OF CONTENTS (cont.)

 

	
 
    	
 
    	
 
    
	
SECTION 5.03
    	
Application of Proceeds
    	
21
    
	
 
    	
 
    	
 
    
	
SECTION 5.04
    	
Restoration of Rights on Abandonment of   Proceedings
    	
21
    
	
 
    	
 
    	
 
    
	
SECTION 5.05
    	
Limitations on Suits by Securityholders
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 5.06
    	
Unconditional Right of Securityholders to   Institute Certain Suits
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 5.07
    	
Powers and Remedies Cumulative; Delay or   Omission Not Waiver of Default
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 5.08
    	
Control by Securityholders
    	
23
    
	
 
    	
 
    	
 
    
	
SECTION 5.09
    	
Waiver of Past Defaults
    	
23
    
	
 
    	
 
    	
 
    
	
SECTION 5.10
    	
Right of Court to Require Filing of   Undertaking to Pay Costs
    	
23
    
	
 
    	
 
    	
 
    
	
SECTION 5.11
    	
Suits for Enforcement
    	
23
    
	
 
    	
 
    	
 
    
	
ARTICLE 6
    	
CONCERNING THE TRUSTEE
    	
24
    
	
 
    	
 
    	
 
    
	
SECTION 6.01
    	
Duties of Trustee
    	
24
    
	
 
    	
 
    	
 
    
	
SECTION 6.02
    	
Rights of Trustee
    	
25
    
	
 
    	
 
    	
 
    
	
SECTION 6.03
    	
Individual Rights of Trustee
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 6.04
    	
Trustee’s Disclaimer
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 6.05
    	
Notice of Defaults
    	
26
    
	
 
    	
 
    	
 
    
	
SECTION 6.06
    	
Reports by Trustee to Holders
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 6.07
    	
Compensation and Indemnity
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 6.08
    	
Replacement of Trustee
    	
28
    
	
 
    	
 
    	
 
    
	
SECTION 6.09
    	
Successor Trustee by Merger
    	
28
    
	
 
    	
 
    	
 
    
	
SECTION 6.10
    	
Eligibility; Disqualification
    	
28
    
	
 
    	
 
    	
 
    
	
SECTION 6.11
    	
Preferential Collection of Claims Against   Company
    	
29
    
	
 
    	
 
    	
 
    
	
ARTICLE 7
    	
CONCERNING THE SECURITYHOLDERS
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.01
    	
Evidence of Action Taken by Securityholders
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.02
    	
Proof of Execution of Instruments
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.03
    	
Holders to Be Treated as Owners
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.04
    	
Securities Owned by Company Deemed Not   Outstanding
    	
29
    
	
 
    	
 
    	
 
    
	
SECTION 7.05
    	
Right of Revocation of Action Taken
    	
30
    
	
 
    	
 
    	
 
    
	
ARTICLE 8
    	
SUPPLEMENTAL INDENTURES
    	
30
    
	
 
    	
 
    	
 
    
	
SECTION 8.01
    	
Supplemental Indentures Without Consent of   Securityholders
    	
30
    
	
 
    	
 
    	
 
    
	
SECTION 8.02
    	
Supplemental Indentures with Consent of   Securityholders
    	
31
    
				

 

ii

 

TABLE OF CONTENTS (cont.)

 

	
 
    	
 
    	
 
    
	
SECTION 8.03
    	
Effect of Supplemental Indenture
    	
32
    
	
 
    	
 
    	
 
    
	
SECTION 8.04
    	
Documents to Be Given to Trustee
    	
32
    
	
 
    	
 
    	
 
    
	
SECTION 8.05
    	
Notation on Securities in Respect of   Supplemental Indentures
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE 9
    	
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
    	
33
    
	
 
    	
 
    	
 
    
	
SECTION 9.01
    	
Company May Consolidate, Etc. on   Certain Terms
    	
33
    
	
 
    	
 
    	
 
    
	
SECTION 9.02
    	
Successor Person Substituted
    	
33
    
	
 
    	
 
    	
 
    
	
SECTION 9.03
    	
Opinion of Counsel to Trustee
    	
34
    
	
 
    	
 
    	
 
    
	
ARTICLE 10
    	
SATISFACTION AND DISCHARGE OF INDENTURE;   UNCLAIMED FUNDS
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 10.01
    	
Satisfaction and Discharge of Indenture
    	
34
    
	
 
    	
 
    	
 
    
	
SECTION 10.02
    	
Application by Trustee of Funds Deposited   for Payment of Securities
    	
36
    
	
 
    	
 
    	
 
    
	
SECTION 10.03
    	
Repayment of Amounts Held by Paying Agent
    	
37
    
	
 
    	
 
    	
 
    
	
SECTION 10.04
    	
Return of Unclaimed Amounts Held by Trustee   and Paying Agent
    	
37
    
	
 
    	
 
    	
 
    
	
SECTION 10.05
    	
Reinstatement of Company’s Obligations
    	
37
    
	
 
    	
 
    	
 
    
	
ARTICLE 11
    	
MISCELLANEOUS PROVISIONS
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 11.01
    	
Incorporators, Shareholders, Officers and   Directors of Company Exempt from Individual Liability
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 11.02
    	
Provisions of Indenture for the Sole   Benefit of Parties and Securityholders
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 11.03
    	
Successors and Assigns of Company Bound by   Indenture
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 11.04
    	
Notices and Demands on Company, Trustee and   Securityholders
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 11.05
    	
Officers’ Certificates and Opinions of   Counsel; Statements to Be Contained Therein
    	
39
    
	
 
    	
 
    	
 
    
	
SECTION 11.06
    	
Payments Due on Saturdays, Sundays and   Holidays
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 11.07
    	
Conflict of Any Provision of Indenture with   Trust Indenture Act
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 11.08
    	
New York Law to Govern; Waiver of Jury   Trial
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 11.09
    	
Counterparts
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 11.10
    	
Effect of Headings; Gender
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 11.11
    	
Force Majeure
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 11.12
    	
U.S.A. Patriot Act
    	
41
    
				

 

iii

 

TABLE OF CONTENTS (cont.)

 

	
 
    	
 
    	
 
    
	
ARTICLE 12
    	
REDEMPTION OF SECURITIES AND SINKING FUNDS
    	
41
    
	
 
    	
 
    	
 
    
	
SECTION 12.01
    	
Applicability of Article
    	
41
    
	
 
    	
 
    	
 
    
	
SECTION 12.02
    	
Notice of Redemption; Partial Redemptions
    	
41
    
	
 
    	
 
    	
 
    
	
SECTION 12.03
    	
Payment of Securities Called for Redemption
    	
42
    
	
 
    	
 
    	
 
    
	
SECTION 12.04
    	
Exclusion of Certain Securities from   Eligibility for Selection for Redemption
    	
43
    
	
 
    	
 
    	
 
    
	
SECTION 12.05
    	
Mandatory and Optional Sinking Funds
    	
43
    
	
 
    	
 
    	
 
    
	
SECTION 12.06
    	
Repayment at the Option of the Holders
    	
45
    
	
 
    	
 
    	
 
    
	
SECTION 12.07
    	
Conversion Arrangement on Call for   Redemption
    	
46
    
	
 
    	
 
    	
 
    
	
ARTICLE 13
    	
CONVERSION OF SECURITIES
    	
46
    
	
 
    	
 
    	
 
    
	
SECTION 13.01
    	
Applicability of Article
    	
46
    
	
 
    	
 
    	
 
    
	
SECTION 13.02
    	
Right of Holders to Convert Securities into   Common Shares
    	
46
    
	
 
    	
 
    	
 
    
	
SECTION 13.03
    	
Issuance of Common Shares on Conversions
    	
47
    
	
 
    	
 
    	
 
    
	
SECTION 13.04
    	
No Payment or Adjustment for Interest or   Dividends
    	
48
    
	
 
    	
 
    	
 
    
	
SECTION 13.05
    	
Adjustment of Conversion Price
    	
48
    
	
 
    	
 
    	
 
    
	
SECTION 13.06
    	
No Fractional Shares to Be Issued. No   fractional Common Shares shall be issued upon any conversion of Securities
    	
51
    
	
 
    	
 
    	
 
    
	
SECTION 13.07
    	
Preservation of Conversion Rights upon Consolidation,   Merger, Sale or Conveyance
    	
52
    
	
 
    	
 
    	
 
    
	
SECTION 13.08
    	
Notice to Holders of the Securities of a   Series Prior to Taking Certain Types of Action
    	
52
    
	
 
    	
 
    	
 
    
	
SECTION 13.09
    	
Covenant to Reserve Shares for Issuance on   Conversion of Securities
    	
53
    
	
 
    	
 
    	
 
    
	
SECTION 13.10
    	
Compliance with Governmental Requirements
    	
53
    
	
 
    	
 
    	
 
    
	
SECTION 13.11
    	
Payment of Taxes upon Certificates for   Shares Issued upon Conversion
    	
53
    
	
 
    	
 
    	
 
    
	
SECTION 13.12
    	
Trustee’s Duties with Respect to Conversion   Provisions
    	
54
    
	
 
    	
 
    	
 
    
	
SECTION 13.13
    	
Conversion of Securities into Preferred   Shares or Other Securities
    	
54
    
				

 

iv

 

This INDENTURE (this “INDENTURE”), dated as of September 8, 2011 between FLUOR CORPORATION, a Delaware corporation (the “COMPANY”), and Wells Fargo Bank, National Association, a national banking association, as trustee (the “TRUSTEE”).

 

RECITALS

 

A.                                   The Company has duly authorized the issue from time to time of its unsecured debentures, notes or other evidences of indebtedness (the “SECURITIES”) to be issued in one or more Series.

 

B.                                     All things necessary to make this Indenture a legal, valid and binding indenture and agreement according to its terms have been done.

 

NOW, THEREFORE, in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually agreed for the equal and ratable benefit of the Holders from time to time of the Securities or of Series thereof as follows:

 

ARTICLE 1
 DEFINITIONS

 

SECTION 1.01                    Certain Terms Defined.  The following terms (except as otherwise expressly provided or unless the context otherwise clearly requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section 1.01. All other terms (except as herein otherwise expressly provided or unless the context otherwise clearly requires) used in this Indenture that are defined in the Trust Indenture Act or the definitions of which in the Securities Act are referred to in the Trust Indenture Act, including terms defined therein by reference to the Securities Act, shall have the meanings assigned to such terms in the Trust Indenture Act and the Securities Act as in force at the date of this Indenture. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with GAAP. The words “HEREIN”, “HEREOF” and “HEREUNDER” and other words of similar import refer to this Indenture as a whole, as supplemented and amended from time to time, and not to any particular Article, Section or other subdivision. The terms defined in this Article 1 have the meanings assigned to them in this Article 1 and include the plural as well as the singular.

 

“BOARD OF DIRECTORS” means either the Board of Directors of the Company or any duly authorized committee of that Board or any duly authorized committee created by that Board.

 

“BUSINESS DAY”, except as may otherwise be provided in the form of Securities of any particular Series, with respect to any Place of Payment or place of publication means any day, other than a Saturday, Sunday or day on which banking institutions are authorized or required by law or regulation to close in that Place of Payment or place of publication.

 

“COMMISSION” means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act, or if at any time after the execution and delivery of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.

 

1

 

“COMMON SHARES” means the shares of common stock, par value $0.01 per share, of the Company as they exist on the date of this Indenture, or any other shares of capital stock of the Company into which such shares shall be reclassified or changed.

 

“COMPANY” means the Person identified as the “Company” in the first paragraph hereof until a successor corporation shall have become such pursuant to the applicable provisions hereof, and thereafter “Company” shall mean such successor corporation.

 

“CORPORATE TRUST OFFICE” means the principal corporate trust office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of execution of this Indenture is located at 707 Wilshire Blvd, 17th Floor, Los Angeles, CA 90017, Attention: Corporate Trust Department.  With respect to presentation of notes, registration of exchange or transfer of notes, 608 2nd Avenue South, Minneapolis, MN 55402, Attention: Bondholder Communications.

 

“DEFAULTED INTEREST” has the meaning specified in Section 2.07.

 

“DEFEASANCE” has the meaning specified in Section 10.01(b).

 

“DEPOSITORY”, with respect to Securities of any Series for which the Company shall determine that such Securities will be issued as a Depository Security, means The Depository Trust Company or another clearing agency or any successor registered under the Securities Exchange Act or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to Sections 2.03 and 2.12.

 

“DEPOSITORY SECURITY”, with respect to any Series of Securities, means a Security executed by the Company and authenticated and delivered by the Trustee to the Depository or pursuant to the Depository’s instruction, all in accordance with this Indenture and pursuant to a resolution of the Board of Directors or an indenture supplemental hereto as contemplated by Section 2.03, which shall be registered as to principal and interest in the name of the Depository or its nominee and shall represent, and shall be denominated in an amount equal to the aggregate principal amount of, all of the Outstanding Securities of such Series.

 

“EVENT OF DEFAULT” has the meaning specified in Section 5.01.

 

“GAAP” means such accounting principles as are generally accepted at the time of any computation hereunder.

 

“GOVERNMENT OBLIGATIONS”, unless otherwise specified pursuant to Section 2.03, means securities that are (i) direct obligations of the United States government or (ii) obligations of a Person controlled or supervised by, or acting as an agency or instrumentality of, the United States government, the payment of which obligations is unconditionally guaranteed by such government, and that, in either case, are full faith and credit obligations of such government and are not callable or redeemable at the option of the issuer thereof.

 

“HOLDER”, “HOLDER OF SECURITIES”, “REGISTERED HOLDER”, “SECURITYHOLDER” or other similar terms mean the Person in whose name at the time a particular Security is registered in the Security register.

 

2

 

“INDENTURE” means this instrument as originally executed or as it may from time to time be amended or supplemented as herein provided, as so amended or supplemented or both, and shall include the forms and terms of particular Series of Securities established as contemplated by Section 2.03.

 

“INSTRUCTIONS” means instructions acceptable to the Trustee issued pursuant to the written order of the Company, signed by its chief executive officer, president or any vice president, and by its treasurer, secretary or any assistant treasurer or assistant secretary. Instructions need not comply with the provisions of Section 11.05.

 

“OFFICERS’ CERTIFICATE” means a certificate signed on behalf of the Company by the chief executive officer, president or any vice president and by the treasurer, controller, secretary, or any assistant treasurer or any assistant secretary of the Company and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 11.05.

 

“OPINION OF COUNSEL” means a written opinion of legal counsel who may be an employee of or counsel to the Company and who shall be reasonably acceptable to the Trustee. Each Opinion of Counsel shall include the statements provided for in Section 11.05, if and to the extent required hereby.

 

“ORIGINAL ISSUE DATE” of any Security means the date set forth as such on such Security.

 

“ORIGINAL ISSUE DISCOUNT SECURITY” means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Section 5.01.

 

“OUTSTANDING”, when used with reference to Securities of any Series as of any particular time, subject to the provisions of Section 7.04, means all Securities of that Series authenticated and delivered under this Indenture, except:

 

(a) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

 

(b) Securities, or portions thereof, for the payment or redemption of which the necessary funds in the required currency shall have been deposited in trust with the Trustee or with any Paying Agent other than the Company, or shall have been set aside, segregated and held in trust by the Company for the holders of such Securities if the Company shall act as its own Paying Agent, provided that if such securities, or portions thereof, are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as herein provided, or provision satisfactory to the Trustee shall have been made for giving such notice;

 

(c) Securities in substitution for which other Securities shall have been authenticated and delivered pursuant to the terms of Section 2.09, except with respect to any such Security as to which proof satisfactory to the Trustee and the Company is presented that such Security is held by a person in whose hands such Security is a legal, valid and binding obligation of the Company;

 

3

 

(d) Securities converted into Common Shares or Preferred Shares in accordance with or as contemplated by this Indenture; and

 

(e) Securities with respect to which the Company has effected defeasance as provided in Article 10.

 

“PAYING AGENT” means any Person, which may include the Company, authorized by the Company to pay the principal of or interest, if any, on any Security of any Series on behalf of the Company.

 

“PERIODIC OFFERING” means an offering of Securities of a Series from time to time, during which any or all of the specific terms of the Securities, including the rate or rates of interest, if any, thereon, the maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities.

 

“PERSON” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

“PLACE OF PAYMENT’, when used with respect to the Securities of any Series, means the place or places where the principal of and interest, if any, on the Securities of that Series are payable as specified pursuant to Section 3.02.

 

“PREFERRED SHARES” means any shares of capital stock issued by the Company that are entitled to a preference or priority over the Common Shares upon any distribution of the Company’s assets, whether by dividend or upon liquidation.

 

“PRINCIPAL” whenever used with reference to the Securities or any Security or any portion thereof shall be deemed to include “and premium, if any”.

 

“RESPONSIBLE OFFICER”, when used with respect to the Trustee, means any officer within the corporate trust department of the Trustee including any vice president, assistant vice president, assistant secretary, senior trust officer, trust officer or any other officer or assistant officer of the Trustee customarily performing functions similar to those performed by the individuals who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the Corporate Trust Office because of his or her knowledge of and familiarity with the particular subject.

 

“SECURITIES ACT” means the Securities Act of 1933, as amended, as in force at the date as of which this Indenture was originally executed.

 

“SECURITIES EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended, as in force at the date as of which this Indenture was originally executed.

 

“SECURITY” or “SECURITIES” has the meaning stated in the first recital of this Indenture and more particularly means any securities authenticated and delivered under this Indenture.

 

4

 

“SERIES” or “SERIES OF SECURITIES” means all Securities of a similar tenor authorized by a particular resolution of the Board of Directors or in one or more indentures supplemental hereto.

 

“TRUST INDENTURE ACT”, except as otherwise provided in Sections 8.01 and 8.02, means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this Indenture was originally executed.

 

“TRUSTEE” means the Person identified as the “Trustee” in the first paragraph hereof until a successor Trustee shall have become such pursuant to the applicable provisions hereof, and thereafter “Trustee” shall mean each Person who is then a Trustee hereunder. If at any time there is more than one such Person, “Trustee” as used with respect to the Securities of any Series means the Trustee with respect to Securities of that Series.

 

“UNITED STATES OF AMERICA” means the United States of America, including the states and the District of Columbia, its territories, possessions, the Commonwealth of Puerto Rico and other areas subject to its jurisdiction.

 

“VICE PRESIDENT” when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title of “vice president.”

 

ARTICLE 2
 SECURITIES

 

SECTION 2.01                    Forms Generally.  The Securities of each Series shall be substantially in such form, including temporary or definitive global form, as shall be established by or pursuant to a resolution of the Board of Directors or in one or more indentures supplemental hereto or, in the case of a Periodic Offering, Instructions, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have imprinted or otherwise reproduced thereon such legend or legends, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the officers executing such Securities as evidenced by their execution of the Securities.

 

The definitive Securities may be printed or reproduced in any other manner, all as determined by the officers executing such Securities as evidenced by their execution of such Securities.

 

SECTION 2.02                    Form of Trustee’s Certificate of Authentication.  The Trustee’s certificate of authentication on all Securities shall be in substantially the following form:

 

This is one of the Securities of the Series designated herein and referred to in the within-mentioned Indenture.

 

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Wells Fargo Bank, National Association, as   Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Signatory
    

 

SECTION 2.03                    Amount Unlimited; Issuable in Series.  The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is unlimited.

 

The Securities may be issued in one or more Series. There shall be established in or pursuant to a resolution of the Board of Directors and set forth in an Officers’ Certificate, or established in one or more indentures supplemental hereto, or in the case of a Periodic Offering, Instructions, prior to the issuance of Securities of any Series:

 

(a)                                  the title of the Securities of the Series, which shall distinguish the Securities of the Series from all other Securities issued by the Company;

 

(b)                                 any limit upon the aggregate principal amount of the Securities of the Series that may be authenticated and delivered under this Indenture, except for Securities authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, other Securities of the Series pursuant to Section 2.08, 2.09, 2.11, 8.05 or 12.03;

 

(c)                                  if other than 100% of their principal amount, the percentage of their principal amount at which the Securities of the Series will be offered for sale to the public;

 

(d)                                 the date or dates on which the principal of the Securities of the Series is payable or the method of determination thereof, including the Record Dates;

 

(e)                                  the rate or rates, which may be fixed or variable, or the method or methods of determination thereof (including any procedures to vary or reset such rate or rates), at which the Securities of the Series shall bear interest, if any, the date or dates from which such interest shall accrue, the interest payment dates on which such interest shall be payable or the manner of determination of such interest payment dates and the record dates for the determination of Holders to whom interest is payable;

 

(f)                                    the place or places where the principal and interest, if any, on Securities of the Series shall be payable if other than as provided in Section 3.02;

 

(g)                                 the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the Series may be redeemed, in whole or in part, at the option of the Company;

 

(h)                                 if other than the principal amount thereof, the portion of the principal amount of Securities of the Series which shall be payable upon declaration of acceleration of the maturity thereof pursuant to Section 5.01 or provable in bankruptcy pursuant to Section 5.02;

 

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(i)                                     the obligation, if any, of the Company to redeem, purchase or repay Securities of the Series whether pursuant to any sinking fund or analogous provisions or pursuant to other provisions set forth therein or at the option of a Holder thereof and the price or prices at which and the period or periods within which and the terms and conditions upon which Securities of the Series shall be redeemed, purchased or repaid, in whole or in part;

 

(j)                                     the right, if any, of the Company to extend the interest payment periods or defer the payment of interest and the duration of such extension or deferral;

 

(k)                                  if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the Series shall be issuable;

 

(l)                                     the form of the Securities, including such legends as required by law or as the Company deems necessary or appropriate and the form of any temporary global security that may be issued;

 

(m)                               whether, and under what circumstances, the Securities of any Series shall be convertible into other securities of the Company and, if so, the terms and conditions upon which such conversion will be effected, including the initial conversion price or rate, the conversion period and other provisions in addition to or in lieu of those described herein;

 

(n)                                 the currency or currencies in which payment of the principal of and interest on, Securities of such Series shall be payable;

 

(o)                                 the terms of any repurchase or remarketing rights;

 

(p)                                 if other than the Trustee, any trustees, authenticating agents, Paying Agents, transfer agents or registrars or any other agents with respect to the Securities of such Series;

 

(q)                                 if the Securities of such Series do not bear interest, the applicable dates for purposes of Section 4.01;

 

(r)                                    whether the Securities of such Series are to be issuable in whole or in part in the form of one or more Depository Securities and, in such case, the Depository for such Securities;

 

(s)                                  any restrictive covenants or additional Events of Default that will apply to the Securities of such Series, or any changes to the Events of Default set forth in Section 5.01 that will apply to the Securities of such Series, which may consist of establishing different terms or provisions from those set forth in Article 3 or Section 5.01 or eliminating any such Event of Default with respect to the Securities of such Series;

 

(t)                                    the application, if any, of Section 10.01(b) to the Securities of such Series;

 

(u)                                 any and all additional, eliminated or changed terms that shall apply to the Securities of such Series, including any terms which may be required by or advisable under United States laws or regulations (including the Securities Act and the rules and regulations promulgated thereunder) or advisable in connection with the marketing of Securities of such Series; and

 

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(v)                                 whether the Securities of such Series shall be subject to a Periodic Offering.

 

All Securities of any one Series shall be substantially identical except as to denomination and except as otherwise may be provided in or pursuant to such resolution of the Board of Directors or in any such indenture supplemental hereto. All Securities of any one Series need not be issued at the same time and, unless otherwise provided, a Series may be reopened for issuances of additional Securities of such Series.

 

SECTION 2.04                    Authentication and Delivery of Securities.  At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any Series executed by the Company to the Trustee for authentication, together with a written order of the Company, signed by its chief executive officer, president or any vice president, and by its treasurer, secretary, or any assistant treasurer or any assistant secretary for the authentication and delivery of such Securities and the Trustee, in accordance with such order of the Company, shall authenticate and deliver such Securities. In the case of Securities offered in a Periodic Offering, however, the Trustee shall authenticate and deliver such Securities from time to time in accordance with Instructions or such other procedures acceptable to the Trustee as may be specified by or pursuant to a supplemental indenture or the written order of the Company delivered to the Trustee prior to the time of the first authentication of Securities of such Series. At the time of the first authentication of Securities of a Series that provides for the issuance of Securities of that Series from time to time, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall receive and subject to Section 6.01 shall be fully protected in relying upon:

 

(a)                                  a copy of any resolution or resolutions of the Board of Directors relating to such Series, in each case certified by the secretary or an assistant secretary of the Company;

 

(b)                                 a supplemental indenture, if any;

 

(c)                                  an Officers’ Certificate setting forth the form and terms of the Securities of such Series as required pursuant to Sections 2.01 and 2.03, respectively, and prepared in accordance with Section 11.05; and

 

(d)                                 an Opinion of Counsel, prepared in accordance with Section 11.05, which shall state:

 

(i)                                     that the form or forms and terms of such Securities have been established by or pursuant to a resolution of the Board of Directors or by a supplemental indenture as permitted by Sections 2.01 and 2.03 in conformity with the provisions of this Indenture; and

 

(ii)                                  that such Securities have been duly authorized and, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such opinion of counsel, will constitute legal, valid and binding obligations of the Company enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or other laws relating to or affecting the enforcement of creditors’ rights generally and by general

 

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equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law.

 

With respect to Securities of a Series subject to a Periodic Offering, however, the Trustee may conclusively rely, as to the authorization by the Company of any of such Securities, the forms and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the written order of the Company, Opinion of Counsel, Officers’ Certificate and other documents delivered pursuant to this Section 2.04 at or prior to the time of the first authentication of Securities of such Series unless and until such written order, Opinion of Counsel, Officers’ Certificate or other documents have been superseded or revoked or expire by their terms.

 

The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section 2.04 if the issue of such Securities pursuant to this Indenture will affect the Trustee’s own rights, duties or immunities under this Indenture in a manner not reasonably acceptable to the Trustee.

 

SECTION 2.05                    Execution of Securities.  The Securities shall be signed on behalf of the Company by its chief executive officer, president or any vice president and its treasurer, secretary or any assistant treasurer or assistant secretary, under its corporate seal, if any. Such signatures may be the manual or facsimile signatures of such officers. The seal of the Company may be in the form of a facsimile thereof and may be impressed, affixed, imprinted or otherwise reproduced on the Securities. Typographical and other minor errors or defects in any such reproduction of the seal or any such signature shall not affect the legality, validity or enforceability of any Security that has been duly authenticated and delivered by the Trustee.

 

In case any officer of the Company who shall have signed any of the Securities shall cease to be such officer before the Security so signed shall be authenticated and delivered by the Trustee or disposed of by the Company, such Security nevertheless may be authenticated and delivered or disposed of as though the person who signed such Security had not ceased to be such officer of the Company. Any Security may be signed on behalf of the Company by such individuals as, at the actual date of the execution of such Security, shall be the proper officers of the Company, although at the date of the execution and delivery of this Indenture any such individual was not such an officer.

 

SECTION 2.06                    Certificate of Authentication.  Only such Securities as shall bear thereon a certificate of authentication substantially in the form set forth in Section 2.02 and executed by the Trustee by the manual signature of one of its authorized signatories shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee upon any Security executed by the Company shall be conclusive evidence that the Security so authenticated has been duly authenticated and delivered hereunder and that the Holder is entitled to the benefits of this Indenture.

 

SECTION 2.07                    Denomination and Date of Securities; Payments of Interest.  The Securities shall be issuable in denominations as shall be specified as contemplated by Section 2.03. In the absence of any such specification with respect to the Securities of any Series, Securities shall be issuable in minimum denominations of $2,000 and in integral multiples of $1,000 thereafter, and interest shall be computed on the basis of a 360-day year of twelve 30-day

 

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months. The Securities shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the officers of the Company executing the same may determine with the approval of the Trustee as evidenced by its execution and authentication thereof.

 

Each Security shall be dated the date of its authentication.

 

Unless otherwise provided as contemplated by Section 2.03, interest on any Security that is payable, and is punctually paid or duly provided for, on any interest payment date shall be paid to the person in whose name that Security, or one or more predecessor securities, is registered at the close of business on the regular record date for the payment of such interest.

 

The term “RECORD DATE” as used with respect to any interest payment date (except for a date for payment of defaulted interest) means the date specified as such in the terms of the Securities of any particular Series or, if no such date is so specified, the close of business on the fifteenth day preceding such interest payment date, whether or not such record date is a Business Day.

 

Any interest on any Security of any Series that is payable but not punctually paid or duly provided for (“DEFAULTED INTEREST’) on any interest payment date shall forthwith cease to be payable to the Registered Holder on the relevant record date by virtue of such Holder having been a Holder on such record date. Such defaulted interest may be paid by the Company, at its election in each case, as provided in clause (a) or clause (b) below:

 

(a)                                  The Company may elect to make payment of any defaulted interest to the persons in whose names any such Securities (or their respective predecessor Securities) are registered at the close of business on a special record date for the payment of such defaulted interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Security of such Series and the date of the proposed payment and at the same time the Company shall deposit with the Trustee funds equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment. Such funds when deposited shall be held in trust for the benefit of the Persons entitled to such defaulted interest as provided in this clause (a). Thereupon the Trustee promptly shall fix a special record date for the payment of such defaulted interest in respect of Securities of such Series, which shall be not more than 15 nor less than ten days prior to the date of the proposed payment. The Trustee promptly shall notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such defaulted interest and the special record date thereof to be mailed, first class postage prepaid, to each Registered Holder at his address as it appears in the Security register, not less than ten days prior to such special record date.  Notice of the proposed payment of such defaulted interest and the special record date therefor having been mailed as aforesaid, such defaulted interest in respect of Securities of such Series shall be paid to the persons in whose names such Securities (or their respective predecessor Securities) are registered on such special record date and such defaulted interest shall no longer be payable pursuant to the following clause (b).

 

(b)                                 The Company may make payment of any defaulted interest on the Securities of any Series in any other lawful manner not inconsistent with the requirements of any securities

 

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exchange on which the Securities of that Series may be listed, and upon such notice as may be required by such exchange, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.

 

Subject to the foregoing provisions of this Section 2.07, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.

 

SECTION 2.08                    Registration, Registration of Transfer and Exchange.  The Company will cause to be kept at each office or agency to be maintained for the purpose as provided in Section 3.02 a register or registers (the “SECURITY REGISTER”) in which, subject to such reasonable regulations as it may prescribe, the Company will provide for the registration and the registration of transfer of the Securities. The Trustee is hereby appointed Security registrar for purposes of registering, and registering transfers of, the Securities.

 

Upon surrender for registration of transfer of any Security of any Series at any such office or agency to be maintained for the purpose as provided in Section 3.02, the Company shall execute, and the Trustee shall authenticate and make available for delivery in the name of the transferee or transferees, a new Security or Securities of the same Series and of like tenor and containing the same terms (other than the principal amount thereof, if more than one Security is executed, authenticated and delivered with respect to any security so presented, in which case the aggregate principal amount of the executed, authenticated and delivered Securities shall equal the principal amount of the Security presented in respect thereof) and conditions.

 

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

 

Every Security presented or surrendered for registration of transfer or exchange, if so required by the Company or the Trustee, shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Trustee, duly executed by the Holder thereof or his attorney and duly authorized in writing.

 

No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of an amount sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 2.11, 8.05 or 12.03 not involving any transfer.

 

The Company shall not be required (i) to issue, register the transfer of or exchange any Security during the 15-day period prior to the day of mailing of the relevant notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any Security to be redeemed in part, the portion thereof not redeemed.

 

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SECTION 2.09                    Mutilated, Defaced, Destroyed, Lost and Stolen Securities.  In case any temporary or definitive Security shall become mutilated or defaced or be destroyed, lost or stolen, the Company shall execute, and upon the written request of any officer of the Company, the Trustee shall authenticate and make available for delivery a new Security of the same Series and of like tenor and principal amount and with the same terms and conditions, bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated or defaced Security or in lieu of and substitution for the Security so destroyed, lost or stolen. In every case the applicant for a substitute Security shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to indemnify and defend and to save each of them harmless and, in every case of destruction, loss or theft, evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.

 

Upon the issuance of any substitute Security, the Company may require the payment of an amount sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses, including the reasonable fees and expenses of the Trustee, connected therewith. In case any Security which has matured or is about to mature or has been called for redemption in full shall become mutilated or defaced or be destroyed, lost or stolen, the Company, instead of issuing a substitute Security, may pay or authorize the payment of the same without surrender thereof except in the case of a mutilated or defaced Security. The applicant for such payment shall furnish to the Company and to the Trustee such security or indemnity as any of them may require to save each of them harmless. In every case of destruction, loss or theft, the applicant also shall furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of such Security and of the ownership thereof.

 

Every substitute Security of any Series issued pursuant to the provisions of this Section 2.09 by virtue of the fact that any Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone and shall be entitled to all the benefits of and shall be subject to all the limitations of rights set forth in this Indenture equally and proportionately with any and all other Securities of such Series duly authenticated and delivered hereunder. All Securities shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced, destroyed, lost or stolen Securities and shall preclude any and all other rights or remedies, notwithstanding any law or statute to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

 

SECTION 2.10                    Cancellation of Securities.  All Securities surrendered for payment, redemption, registration of transfer or exchange, or for credit against any payment in respect of a sinking or analogous fund, if surrendered to the Company or any agent of the Company or the Trustee shall be delivered to the Trustee for cancellation or, if surrendered to the Trustee, shall be cancelled by it; and no Securities shall be issued in lieu thereof except as expressly permitted by the provisions of this Indenture. The Company at any time may deliver to the Trustee for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold and all Securities so delivered shall be promptly cancelled by the Trustee. The Trustee or its agent shall dispose of cancelled Securities held by it in accordance with its customary procedures and deliver a certificate of disposition to the Company. If the Company

 

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shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless the same are delivered to the Trustee for cancellation.

 

SECTION 2.11                    Temporary Securities.  Pending the preparation of definitive Securities for any Series, the Company may execute and the Trustee shall authenticate and make available for delivery temporary Securities for such Series, which may be printed, typewritten or otherwise reproduced, in each case in form reasonably acceptable to the Trustee. Temporary Securities of any Series may be issued in any authorized denomination and substantially in the form of the definitive Securities of such Series but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company with the reasonable concurrence of the Trustee. Temporary Securities may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Security shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Securities. Without unreasonable delay the Company shall execute and shall furnish definitive securities of such Series and thereupon temporary Securities of such Series may be surrendered in exchange therefor without charge at each office or agency to be maintained by the Company for that purpose pursuant to Section 3.02, and the Trustee shall authenticate and make available for delivery in exchange for such temporary Securities of such Series a like aggregate principal amount of definitive Securities of the same Series of authorized denominations. Until so exchanged, the temporary Securities of any Series shall be entitled to the same benefits under this Indenture as definitive Securities of such Series.

 

SECTION 2.12                    Securities in Global Form.  If Securities of a Series are issuable in global form, as specified as contemplated by Section 2.03, then, notwithstanding the provisions of Sections 2.03(k) and Section 2.07, such Security shall represent such of the Outstanding Securities of such Series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby from time to time may be reduced to reflect exchanges.  Any endorsement of a Security in global form to reflect the amount, or any increase or decrease in the amount, of Outstanding Securities represented thereby may be made by the Trustee in such manner and upon written instructions given by such Person or Persons as shall be specified therein or in the Company order to be delivered to the Trustee pursuant to Section 2.04. Subject to the provisions of Section 2.04, the Trustee shall deliver and redeliver any Security in definitive global form in the manner and upon written instructions given by the Person or Persons specified therein or in the applicable Company order. If a Company order pursuant to Section 2.04 has been, or simultaneously is, delivered, any instructions by the Company with respect to endorsement or delivery or redelivery of a Security in global form shall be in writing but need not comply with Section 11.05 and need not be accompanied by an Opinion of Counsel.

 

Unless otherwise specified as contemplated by Section 2.03, payment of principal of and any interest on any Security in definitive global form shall be made to the Person or Persons specified therein.

 

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Except as provided in the preceding paragraph, the Company, the Trustee and any agent of the Company and the Trustee shall treat a Person as the Holder of such principal amount of outstanding Securities represented by a definitive global Security as shall be specified in a written statement of the Holder of such definitive global Security.

 

SECTION 2.13                    CUSIP Numbers.  The Company in issuing the Securities may use “CUSIP” numbers if then generally in use and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders. Any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities. No such redemption shall be affected by any defect in or omission of such numbers. The Company promptly will notify the Trustee in writing of any change in the CUSIP numbers.

 

ARTICLE 3
 COVENANTS OF THE COMPANY

 

SECTION 3.01                    Payment of Principal and Interest.  The Company covenants and agrees for the benefit of each particular Series of Securities that it will duly and punctually pay or cause to be paid the principal of, and interest on, each of the Securities of such Series in accordance with the terms of the Securities of such Series and this Indenture.

 

SECTION 3.02                    Offices for Payment, Etc.  So long as any of the Securities remain outstanding, the Company will maintain the following for each Series: an office or agency where the Securities may be presented for payment or conversion; where the Securities may be presented for registration of transfer and for exchange; and where notices and demands to or upon the Company in respect of the Securities or of this Indenture may be served. The Company will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. In case the Company shall fail to so designate or maintain any such office or agency or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Corporate Trust Office. Unless otherwise specified pursuant to Section 2.03, the Trustee is hereby appointed Paying Agent.

 

SECTION 3.03                    Paying Agents.  Whenever the Company shall appoint a Paying Agent other than the Trustee with respect to the Securities of any Series, it 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 3.03:

 

(a)                                  that it will hold all amounts received by it as such Paying Agent for the payment of the principal of or interest on the Securities of such Series in trust for the benefit of the Holders of the Securities of such Series and, upon the occurrence of an Event of Default and upon the written request of the Trustee, pay over all such amounts received by it to the Trustee; and

 

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(b)           that it will give the Trustee written notice of any failure by the Company or by any other obligor on the Securities of such Series to make any payment of the principal of or interest on the Securities of such Series when the same shall be due and payable.

 

On or prior to each due date of the principal of or interest on the Securities of such Series, the Company will deposit with the Paying Agent sufficient funds to pay such principal or interest so becoming due and, unless such Paying Agent is the Trustee, notify the Trustee in writing of any failure to take such action.

 

If the Company shall act as its own Paying Agent with respect to the Securities of any Series, on or before each due date of the principal of or interest on the Securities of such Series it will set aside, segregate and hold in trust for the benefit of the Holders of the Securities of such Series sufficient funds to pay such principal or interest so becoming due. The Company will promptly notify the Trustee in writing of any failure to take such action.

 

At any time, for the purpose of obtaining a satisfaction and discharge with respect to one or more or all Series of Securities or for any other reason, the Company may pay or cause to be paid to the Trustee all amounts held in trust for any such Series by the Company or any Paying Agent, such amounts to be held by the Trustee in trust pursuant to this Indenture.

 

The agreement to hold amounts in trust as provided in this Section 3.03 is subject to the provisions of Sections 10.03 and 10.04.

 

SECTION 3.04       Officers’ Certificate.  The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an officers’ certificate signed by the principal executive officer, principal financial officer or principal accounting officer, which need not constitute an Officers’ Certificate, as to the Company’s compliance with all conditions and covenants under the Indenture (such compliance to be determined without regard to any period of grace or requirement of notice provided under the Indenture).

 

SECTION 3.05       Calculation of Original Issue Discount.  The Company shall file with the Trustee, within 60 days after the end of each calendar year, a written notice specifying the amount of original issue discount, if any, including daily rates and accrual periods, accrued on each Series of Outstanding Securities as of the end of such year.

 

ARTICLE 4
 SECURITYHOLDERS’ LISTS AND REPORTS BY THE COMPANY

 

SECTION 4.01       Company to Furnish Trustee Information as to Names and Addresses of Securityholders.  The Company will furnish or cause to be furnished to the Trustee a list in such form as the Trustee reasonably may require of the names and addresses of the Holders of the Securities of each Series:

 

(a)           semiannually, and not more than 15 days after each record date for the payment of interest on such Securities, as of such record date; and

 

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(b)           at such other times as the Trustee reasonably may request in writing, within 30 days after receipt by the Company of any such request, such list to be as of a date not more than 15 days prior to the time such information is furnished.

 

If the Trustee shall be the Security registrar for such Series, no such list shall be required to be furnished to the Trustee.

 

SECTION 4.02       Preservation and Disclosure of Securityholders’ Lists.

 

(a)           The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders of each Series of Securities contained in the most recent list furnished to it as provided in Section 4.01 or maintained by the Trustee in its capacity as Security registrar for such Series. The Trustee may destroy any list furnished to it as provided in Section 4.01 upon receipt of a new list so furnished.

 

(b)           In case three or more Holders of Securities of any Series (“APPLICANTS”) apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Security of such Series for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders of Securities of such Series or with Holders of all Securities with respect to their rights under this Indenture or under such Securities and such application is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee, within five Business Days after the receipt of such application, at its election, either:

 

(i)            shall afford to such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of Section 4.02(a); or

 

(ii)           shall inform such applicants as to the approximate number of Holders of Securities of such Series or all Securities, as the case may be, whose names and addresses appear in the information preserved at the time by the Trustee, in accordance with the provisions of Section 4.02(a), and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application.

 

If the Trustee shall elect not to afford to such applicants access to such information, the Trustee, upon the written request of such applicants, shall mail to each Securityholder of such Series or all Securities, as the case may be, whose name and address appear in the information preserved at the time by the Trustee in accordance with the provisions of Section 4.02(a), a copy of the form of proxy or other communication that is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Commission together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the Holders of Securities of such Series or all Securities, as the case may be, or could be in violation of applicable law. Such written statement shall specify the basis of such opinion. If the Commission, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order

 

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refusing to sustain any of such objections or if, after the entry of such order sustaining one or more of such objections, the Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met, and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

 

(c)           Each and every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of the Company or the Trustee shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders of Securities in accordance with the provisions of Section 4.02(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under such Section 4.02(b).

 

SECTION 4.03       Reports by the Company.  The Company:

 

(a)           will file with the Trustee, within 15 days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission from time to time by rules and regulations may prescribe) that the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act, or if the Company is not required to file information, documents or reports pursuant to either of such Sections, then to file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports that may be required pursuant to Section 13 of the Securities Exchange Act or in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;

 

(b)           will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations; and

 

(c)           will transmit by mail to the Holders of Securities in the manner and to the extent required by Section 6.06, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to Sections 4.03(a) and (b) as may be required to be transmitted to such Holders by rules and regulations prescribed from time to time by the Commission.

 

ARTICLE 5
 REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
 ON EVENT OF DEFAULT

 

SECTION 5.01       Event of Default Defined; Acceleration of Maturity; Waiver of Default.  “EVENT OF DEFAULT”, with respect to Securities of any Series, means any one of

 

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the following events which 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) unless it is either inapplicable to a particular Series or it is specifically deleted or modified in or pursuant to the supplemental indenture or resolution of the Board of Directors establishing such Series of Securities or in the form of Security for such Series:

 

(a)           default in the payment of any installment of interest upon any of the Securities of such Series as and when the same shall become due and payable, and continuance of such default for a period of 30 days;

 

(b)           default in the payment of all or any part of the principal of any of the Securities of such Series as and when the same shall become due and payable, either at maturity, upon any redemption, by declaration or otherwise;

 

(c)           default in the performance or breach of any covenant or warranty contained in the Securities of such Series or in this Indenture (other than a covenant or warranty a default in whose performance or whose breach is elsewhere in this Section 5.01 specifically dealt with or which has expressly been included in this Indenture solely for the benefit of one or more Series of Securities other than that Series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the Outstanding Securities of that Series, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;

 

(d)           the entry by a court having jurisdiction in the premises of (A) a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law or (B) a decree or order (1) adjudging the Company a bankrupt or insolvent, (2) approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable federal or state law, (3) appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property or (4) ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 90 consecutive days;

 

(e)           the commencement by the Company of a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee,

 

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sequestrator or similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors; or

 

(f)            any other Event of Default provided with respect to Securities of such Series in the supplemental indenture or resolution of the Board of Directors establishing such Series.

 

If an Event of Default occurs and is continuing with respect to the Securities of any Series, then and in each and every such case, unless the principal of all Securities of such Series shall have already become due and payable, either the Trustee for such Series or the Holders of not less than 25% in aggregate principal amount at maturity of the Securities of such Series then Outstanding, by notice in writing to the Company and to the Trustee if given by such Holders, may declare the principal of all the Securities of such Series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable. This provision, however, is subject to the condition that if at any time after the principal of the Securities of such Series shall have been so declared due and payable, and before any judgment or decree for the payment of the amounts due shall have been obtained or entered as hereinafter provided, the Company shall have paid or deposited with the Trustee sufficient funds to pay all matured installments of interest, if any, upon all the Securities of such Series and the principal of the Securities of such Series that shall have become due other than by such acceleration (with interest upon such principal and, to the extent that payment of such interest is enforceable under applicable law, upon overdue installments of interest, at the rate borne by the Securities of such Series to the date of such payment or deposit) and all other defaults under this Indenture, other than the nonpayment of the principal of Securities of such Series that shall have become due by such acceleration, shall have been remedied, then and in every such case the Holders of a majority in aggregate principal amount at maturity of the Securities of such Series then Outstanding, by written notice to the Company and to the Trustee for the Securities of such Series, may waive all defaults and rescind and annul such declaration and its consequences; but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.

 

SECTION 5.02       Collection of Indebtedness by Trustee; Trustee May Prove Debt.  If the Company shall fail to pay any installment of interest on any of the Securities of any Series when such interest shall have become due and payable, and such default shall have continued for a period of 30 days or shall fail to pay the principal of any of the Securities of any Series when the same shall have become due and payable, whether upon maturity of the Securities of such Series or upon any redemption or by declaration or otherwise, then upon demand of the Trustee for the Securities of such Series, the Company will pay to the Trustee for the Securities of such Series for the benefit of the Holders of the Securities of such Series the whole amount that then shall have become due and payable on all Securities of such Series for principal of or interest, as the case may be (with interest to the date of such payment upon the overdue principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest at the same rate as the rate of interest specified in the Securities of such Series) and such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation to and expenses incurred by the Trustee and each predecessor Trustee and their respective agents, attorneys and counsel.

 

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Until such demand is made by the Trustee, the Company may pay the principal of and interest on the Securities of any Series to the persons entitled thereto, whether or not the principal of and interest on the Securities of such Series are overdue.

 

If the Company shall fail to pay such amounts upon such demand, the Trustee for the Securities of such Series, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the amounts so due and unpaid. In any such case, the Trustee may prosecute any such action or proceedings to judgment or final decree and may enforce any such judgment or final decree against the Company or other obligor upon such Securities and collect in the manner provided by law out of the property of the Company or other obligor upon such Securities, wherever situated, the amounts adjudged or decreed to be payable.

 

If (i) there shall be pending proceedings relative to the Company or any other obligor upon the Securities under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, (ii) 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 its property or such other obligor or (iii) any other comparable judicial proceedings relative to the Company or other obligor under the Securities of any Series, or to the creditors or property of the Company or such other obligor, shall be pending, and irrespective of whether the principal of any Securities shall then be due and payable or whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.02, the Trustee shall be entitled and empowered, by intervention in such proceedings or otherwise:

 

(a)           to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Securities of any Series and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to, and expenses incurred by, the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel) and of the Securityholders allowed in any judicial proceedings relative to the Company or other obligor upon all Securities of any Series, or to the creditors or property of the Company or such other obligor; and

 

(b)           to collect and receive any funds or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Securityholders and of the Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Holders to make payments to the Trustee for the Securities of such Series, and, in the event that such Trustee shall consent to the making of payments directly to the Securityholders, to pay to such Trustee such amounts as shall be sufficient to cover reasonable compensation to and expenses incurred by such Trustee, each predecessor Trustee and their respective agents, attorneys and counsel and all other amounts due to such Trustee or any predecessor Trustee pursuant to Section 6.07.

 

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

 

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thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.

 

All rights of action and of asserting claims under this Indenture or under any of the Securities may be enforced by the Trustee for the Securities of such Series without the possession of any of the Securities of such Series or the production thereof at any trial or other proceedings relative thereto. Any such action or proceedings instituted by the Trustee shall be brought in its own name as trustee of an express trust. Any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Trustee, each predecessor Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Holders of the Securities in respect of which such action was taken.

 

In any proceedings brought by the Trustee for the Securities of such Series, the Trustee shall be held to represent all the Holders of the Securities in respect of which such action was taken, and it shall not be necessary to make any Holders of such Securities parties to any such proceedings.

 

SECTION 5.03       Application of Proceeds.  Any amounts collected by the Trustee for the Securities of such Series pursuant to this Article 5 in respect of the Securities of any Series shall be applied in the following order at the date or dates fixed by such Trustee and, in case of the distribution of such amounts on account of principal or interest, upon presentation of the several Securities in respect of which amounts have been collected and stamping or otherwise noting thereon the payment, or issuing Securities of such Series in reduced principal amounts in exchange for the presented Securities of like Series if only partially paid, or upon surrender thereof if fully paid:

 

FIRST: to the payment of costs and expenses applicable to such Series in respect of which amounts have been collected, including reasonable compensation to and expenses incurred by the Trustee and each predecessor Trustee and their respective agents and attorneys and all other amounts due to the Trustee or any predecessor Trustee pursuant to Section 6.07;

 

SECOND: to the payment of the amounts then due and unpaid for principal of and interest on the Securities of such Series in respect of which amounts have been collected, such payments to be made ratably to the persons entitled thereto, without discrimination or preference, according to the amounts then due and payable on such Securities for principal and interest; and

 

THIRD: to the payment of the remainder, if any, to the Company or any other Person lawfully entitled thereto.

 

SECTION 5.04       Restoration of Rights on Abandonment of Proceedings.  If the Trustee for the Securities of any Series shall have proceeded to enforce any right under this Indenture and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, the Company and the Trustee, subject to the determination in any such proceeding, shall be restored to their former positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the Securityholders shall continue as though no such proceedings had been taken.

 

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SECTION 5.05       Limitations on Suits by Securityholders.  No Holder of any Security of any Series shall have any right, by virtue or by availing of any provision of this Indenture, to institute any action or proceeding at law or in equity or in bankruptcy or otherwise with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof and the Holders of not less than 25% in aggregate principal amount of the Securities of such Series then Outstanding shall have made written request upon the Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Trustee indemnity reasonably satisfactory to it as it may require, against the costs, expenses and liabilities to be incurred therein or thereby and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceeding and no direction inconsistent with such written request shall have been given to the Trustee during such 60-day period by Holders of a majority in principal amount of the Securities of such Series then Outstanding; it being understood and intended, and being expressly covenanted by the Holder of every Security with every other Holder of a Security and the Trustee, that no one or more Holders of Securities of any Series shall have any right in any manner whatever, by virtue or by availing of any provision of this Indenture, to affect disturb or prejudice the rights of any other such Holder of Securities, or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Securities of the applicable Series.

 

SECTION 5.06       Unconditional Right of Securityholders to Institute Certain Suits.  Notwithstanding any provision in this Indenture and any provision of any Security, the right of any Holder of any Security to receive payment of the principal of and (subject to Section 2.07) interest on such Security at the respective rates, in the respective amount on or after the respective due dates expressed in such Security, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

SECTION 5.07       Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default.  Except as provided in Sections 2.09 and 5.05, no right or remedy herein conferred upon or reserved to the Trustee or to the Securityholders is intended to be exclusive of any other right or remedy, and every right and remedy, to the extent permitted by law, shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

No delay or omission of the Trustee or of any Securityholder to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or an acquiescence therein, Subject to Section 5.05, every power and remedy given by this Indenture or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as necessary, by the Trustee or the Securityholders.

 

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SECTION 5.08       Control by Securityholders.  The Holders of a majority in aggregate principal amount of the Securities of each Series affected 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 by this Indenture on the Trustee with respect to the Securities of such Series; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture. The Trustee shall have the right to decline to follow any such direction if the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability or if the Trustee in good faith shall so determine that the actions or forbearances specified in or pursuant to such direction would be unduly prejudicial to the interests of Holders of the Securities of all Series so affected not joining in the giving of said direction, it being understood that the Trustee shall have no duty to ascertain whether or not such actions or forbearances are unduly prejudicial to such Holders.

 

SECTION 5.09       Waiver of Past Defaults.  The Holders of a majority in aggregate principal amount of the Securities of such Series at the time Outstanding, on behalf of the Holders of all the Securities of such Series, may waive any past default hereunder or its consequences, except a default in the payment of the principal of or interest on any of the Securities of such Series.

 

Upon any such waiver, such default shall cease to exist and be deemed to have been cured and not to have occurred, and any Event of Default arising therefrom shall be deemed to have been cured and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

 

SECTION 5.10       Right of Court to Require Filing of Undertaking to Pay Costs.  Any court in its discretion may require, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken, suffered 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. Any such court in its discretion may 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. The provisions of this Section 5.10 shall not apply, however, to any suit instituted by the Trustee, to any suit instituted by any Securityholder or group of Securityholders of any Series holding in the aggregate more than 10% in aggregate principal amount of the Securities of such Series or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on any Security on or after the due date expressed in such Security.

 

SECTION 5.11       Suits for Enforcement.  If an Event of Default has occurred, has not been waived and is continuing, the Trustee in its discretion may proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law.

 

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ARTICLE 6
 CONCERNING THE TRUSTEE

 

SECTION 6.01       Duties of Trustee.

 

(a)           If an Event of Default has occurred and is continuing with respect to the Securities of any Series, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

 

(b)           Except during the continuance of an Event of Default with respect to the Securities of any Series:

 

(i)            the Trustee need perform only those duties that are specifically set forth in this Indenture and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

(ii)           in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

 

(c)           The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

 

(i)            this paragraph (c) does not limit the effect of paragraph (b) of this Section 6.01;

 

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

 

(iii)          the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.08.

 

(d)           Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 6.01.

 

(e)           No provision of this Indenture shall require the Trustee to extend or risk its own funds or otherwise incur any financial liability unless it receives indemnity satisfactory to it against any loss, liability or expense.

 

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(f)            Amounts held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any amounts received by it hereunder except as otherwise agreed in writing with the Company.

 

SECTION 6.02       Rights of Trustee.

 

(a)           The Trustee may rely on, and shall be protected in relying upon, any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

 

(b)           Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel.

 

(c)           Subject to the provisions of Section 6.01(c), the Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

 

(d)           Before the Trustee acts or refrains from acting, the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon in accordance with such advice or Opinion of Counsel.

 

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

 

(f)            The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.

 

(g)           Prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, Officers’ Certificate or other certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of each affected Series; provided that, if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation, in the opinion of the Trustee, is not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require indemnity reasonably satisfactory to it against such expenses or liabilities as a condition to proceeding.

 

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

 

(i)            The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreements on the part of the Company, except as otherwise set forth herein, but the Trustee may require of the Company full information and advice as to the performance of the covenants, conditions and agreements contained herein and shall be entitled in connection herewith to examine the books, records and premises of the Company.

 

(j)            The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful default.

 

(k)           Except for (i) a default under Section 5.01(a) or (b) or (ii) any other event of which the Trustee has actual knowledge and which event, with the giving of notice or the passage of time or both, would constitute an Event of Default under this Indenture, the Trustee shall not be deemed to have notice of any default or event unless specifically notified in writing of such event by the Company or the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of each affected Series.

 

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

 

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

 

SECTION 6.03       Individual Rights of Trustee.  The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, registrar or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 6.10 and 6.11.

 

SECTION 6.04       Trustee’s Disclaimer.  The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities. The Trustee shall not be accountable for the Company’s use of the proceeds from the Securities and shall not be responsible for any statement in any registration statement for the Securities filed with the Commission under the Securities Act (other than its Statement of Eligibility on Form T-1) or in the Indenture (other than its eligibility under Section 6.10) or the Securities (other than its certificate of authentication).

 

SECTION 6.05       Notice of Defaults.  If a default occurs and is continuing with respect to any Securities of any Series and if the Trustee has actual knowledge of such default, the Trustee shall give to each Securityholder of such Series notice of the default within 90 days

 

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after such default occurs. Except in the case of a default described in Section 5.01(a) or (b), the Trustee may withhold the notice if and so long as it in good faith determines that withholding the notice is in the interests of Securityholders of such Series.

 

SECTION 6.06       Reports by Trustee to Holders.  Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, the Trustee shall mail to each Securityholder of any Series and each other Person specified in Section 313(c) of the Trust Indenture Act a brief report dated as of such May 15 that complies with Section 313(a) of the Trust Indenture Act to the extent required thereby. The Trustee also shall comply with Section 313(b) of the Trust Indenture Act.

 

The Trustee will file a copy of each report, at the time of its mailing to Securityholders of any Series, with the Commission and each securities exchange on which the Securities of any Series are listed. The Company promptly will notify the Trustee in writing whenever the Securities of any Series become listed on any securities exchange and of any delisting thereof.

 

SECTION 6.07       Compensation and Indemnity.  The Company:

 

(a)           will pay to the Trustee from time to time, and the Trustee shall receive such compensation as shall be agreed to in writing between the Company and the Trustee for all services rendered by it hereunder, which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust;

 

(b)           will reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture, including the reasonable compensation and expenses of its agents and counsel, except to the extent any such compensation or expense may be attributable to its negligence or willful misconduct; and

 

(c)           will indemnify the Trustee for, and hold it harmless against, any loss, liability or expense arising out of or in connection with the acceptance or administration of this trust or the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against or investigating any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent that any such loss, liability or expense may be attributable to its negligence or willful misconduct.

 

As security for the performance of the Company’s obligations under this Section 6.07, the Trustee shall have a lien prior to the Securities on all funds or property held or collected by the Trustee, except for those funds that are held in trust to pay the principal of or interest, if any, on particular Securities.

 

“Trustee” for purpose of this Section 6.07 includes any predecessor trustee; provided that the negligence or bad faith of any Trustee shall not be attributable to any other Trustee.

 

The Company’s payment obligations pursuant to this Section 6.07 shall constitute additional indebtedness hereunder and shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a default specified in Sections 5.01(d) and (e),

 

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such expenses, including reasonable fees and expenses of counsel, are intended to constitute expenses of administration under bankruptcy law.

 

SECTION 6.08       Replacement of Trustee.  The Trustee may resign at any time with respect to Securities of one or more Series by so notifying the Company. No such resignation, however, shall be effective until a successor Trustee has accepted its appointment pursuant to this Section 6.08. The Holders of a majority in aggregate principal amount of the Outstanding Securities of any Series may remove the Trustee with respect to such Series by so notifying the Trustee and the Company. The Company shall remove the Trustee if:

 

(a)           the Trustee fails to comply with Section 6.10;

 

(b)           the Trustee is adjudged bankrupt or insolvent;

 

(c)           a receiver or public officer takes charge of the Trustee or its property; or

 

(d)           the Trustee otherwise becomes incapable of acting.

 

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, with respect to the Securities of one or more Series, the Company shall promptly appoint, by resolution of its Board of Directors, a successor Trustee with respect to the Securities of such Series.

 

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture with respect to the Securities of such Series. The successor Trustee shall mail a notice of its succession to Securityholders so affected. The retiring Trustee shall promptly transfer all funds and property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 6.07.

 

If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate principal amount of the Outstanding Securities of each affected Series may petition any court of competent jurisdiction for the appointment of a successor Trustee.

 

If the Trustee fails to comply with Section 6.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

 

SECTION 6.09       Successor Trustee by Merger.  If the Trustee consolidates with, merges or converts into or transfers all or substantially all its corporate trust business or assets to another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

 

SECTION 6.10       Eligibility; Disqualification.  The Trustee shall at all times satisfy the requirements of Section 310(a) of the Trust Indenture Act. The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published

 

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annual report of condition. Neither the Company nor any person directly or indirectly controlling, controlled by or under common control with the Company shall serve as Trustee hereunder. The Trustee shall comply with Section 310(b) of the Trust Indenture Act.

 

SECTION 6.11       Preferential Collection of Claims Against Company.  The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent indicated therein.

 

ARTICLE 7
 CONCERNING THE SECURITYHOLDERS

 

SECTION 7.01       Evidence of Action Taken by Securityholders.

 

(a)           Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by a specified percentage in principal amount of the Securityholders of any or all Series may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Securityholders in person or by agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and, subject to Sections 6.01 and 6.02, conclusive in favor of the Trustee and the Company, if made in the manner provided in this Article 7.

 

(b)           The ownership of Securities shall be proved by the Security register.

 

SECTION 7.02       Proof of Execution of Instruments.  Subject to Sections 6.01 and 6.02, the execution of any instrument by a Securityholder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee.

 

SECTION 7.03       Holders to Be Treated as Owners.  The Company, the Trustee and any agent of the Company or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Security register for such Series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and interest on such Security and for all other purposes. Neither the Company nor the Trustee nor any agent of the Company or the Trustee shall be affected by any notice to the contrary. All payments made to any such person, or upon his order, shall be valid and, to the extent of the amounts so paid, effectual to satisfy and discharge the liability for amounts payable upon any such Security.

 

SECTION 7.04       Securities Owned by Company Deemed Not Outstanding.  In determining whether the Holders of the requisite aggregate principal amount of Outstanding Securities of any or all Series have concurred in any direction, consent or waiver under this Indenture, Securities that are owned by the Company or any other obligor on the Securities with respect to which such determination is being made, or by any person directly or indirectly

 

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controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Securities with respect to which such determination is being made, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination. For the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Securities that the Trustee knows are so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Securities.

 

SECTION 7.05       Right of Revocation of Action Taken.  At any time prior to the evidencing to the Trustee, as provided in Section 7.01, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Securities of any Series specified in this Indenture in connection with such action, any Holder of a Security the serial number of which is shown by the evidence to be included among the serial numbers of the Securities the Holders of which have consented to such action, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article 7, may revoke such action so far as concerns such Security. Except as aforesaid any such action taken by the Holder of any Security shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Security and of any Securities issued in exchange or substitution therefor, irrespective of whether or not any notation in regard thereto is made upon any such Security. Any action taken by the Holders of the percentage in aggregate principal amount of the Securities of any Series specified in this Indenture in connection with such action shall be binding upon the Company, the Trustee and the Holders of all the Securities affected by such action.

 

ARTICLE 8
 SUPPLEMENTAL INDENTURES

 

SECTION 8.01       Supplemental Indentures Without Consent of Securityholders.  The Company, when authorized by a resolution of its Board of Directors, and the Trustee for the Securities of any Series from time to time and at any time may enter into an indenture or indentures supplemental hereto, which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof, in form satisfactory to such Trustee, for one or more of the following purposes:

 

(a)           to convey, transfer, assign, mortgage or pledge any property or assets to the Trustee as security for the Securities of one or more Series or to provide that any of the Company’s obligations under any Series of the Securities or this Indenture shall be guaranteed and the terms and conditions for the release or substitution of such security or guarantee;

 

(b)           to evidence the succession of another Person to the Company, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Company pursuant to Article 9;

 

(c)           to add to the covenants of the Company such further covenants, restrictions, conditions or provisions for the protection of the Holders of Securities of any Series and, if such

 

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additional covenants are to be for the benefit of less than all the Series of Securities, stating that such covenants are being added solely for the benefit of such Series;

 

(d)           to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture that may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Board of Directors may deem necessary or desirable and that shall not materially and adversely affect the interests of the Holders of the Securities;

 

(e)           to establish the form or terms of Securities of any Series as permitted by Sections 2.01 and 2.03; or

 

(f)            to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more Series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than the one Trustee, pursuant to the requirements of Section 6.08.

 

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 and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

Any supplemental indenture authorized by the provisions of this Section 8.01 may be executed without the consent of the Holders of any of the Securities at the time Outstanding, notwithstanding any of the provisions of Section 8.02.

 

SECTION 8.02       Supplemental Indentures with Consent of Securityholders.  With the consent (evidenced as provided in Article 7) of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities of each Series affected by such supplemental indenture the Company when authorized by a resolution of its Board of Directors, and the Trustee for such Series of Securities, from time to time and at any time, may enter into an indenture or indentures supplemental hereto, which shall conform to the provisions of the Trust Indenture Act as in force at the date of execution thereof, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Securities of each such Series. No such supplemental indenture, however, shall:

 

(a)           extend the final maturity date of any Security, reduce the principal amount thereof, reduce the rate or extend the time of payment of interest thereon, reduce any amount payable on redemption thereof, impair or affect the right of any Securityholder to institute suit for payment thereof or, if the Securities provide therefor, affect any right of repayment at the option of the Securityholder without the consent of the Holder of each Security so affected;

 

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(b)           reduce the aforesaid percentage of Securities of any Series, the consent of the Holders of which is required for any such supplemental indenture, without the consent of the Holders of each Security so affected; or

 

(c)           reduce the amount of principal payable upon acceleration of the maturity date of any Original Issue Discount Security.

 

Upon the written request of the Company, accompanied by a copy of a resolution of the Board of Directors certified by the secretary or an assistant secretary of the Company authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee for such Series of Securities of evidence of the consent of the Securityholders as aforesaid and other documents, if any, required by Section 7.01, the Trustee for such Series of Securities shall join with the Company in the execution of such supplemental indenture. If such supplemental indenture affects such Trustee’s own rights, duties or immunities under this Indenture or otherwise, such Trustee in its discretion may, but shall not be obligated to, enter into such supplemental indenture.

 

It shall not be necessary for the consent of the Securityholders under this Section 8.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

 

Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section 8.02, the Company shall give notice in the manner and to the extent provided in Section 11.04 to the Holders of Securities of each Series affected thereby at their addresses as they shall appear on the Security register, setting forth in general terms the substance of such supplemental indenture. Any failure of the Company to mail such notice, or any defect therein, shall not in any way impair or affect the validity of any such supplemental indenture.

 

SECTION 8.03       Effect of Supplemental Indenture.  Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders of Securities of each Series affected thereby shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

 

SECTION 8.04       Documents to Be Given to Trustee.  The Trustee, subject to the provisions of Sections 6.01 and 6.02, shall receive an Officers’ Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article 8 complies with the applicable provisions of this Indenture and constitutes a legal, valid and binding obligation enforceable against the Company in accordance with its terms.

 

SECTION 8.05       Notation on Securities in Respect of Supplemental Indentures.  Securities of any Series authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article 8 may bear, upon the direction of the

 

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Company, a notation in form satisfactory to the Trustee for the Securities of such Series as to any matter provided for by such supplemental indenture. If the Company or the Trustee shall so determine, new Securities of any Series so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared by the Company, authenticated by the Trustee and delivered in exchange for the Outstanding Securities of such Series.

 

ARTICLE 9
 CONSOLIDATION, MERGER, SALE OR CONVEYANCE

 

SECTION 9.01       Company May Consolidate, Etc. on Certain Terms.  The Company may consolidate with or merge with or into, or sell, convey or lease all or substantially all of its assets to, any other corporation; provided that in any such case:

 

(a)           either the Company shall be the continuing Person, or the successor Person shall be organized and validly existing under the laws of the United States of America or any State thereof or the District of Columbia and shall expressly assume the due and punctual payment of the principal of and interest on all the Securities according to their tenor, and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Company by supplemental indenture satisfactory to the Trustee, executed and delivered to the Trustee by such Person, and

 

(b)           the Company or such successor Person, as the case may be, shall not be in material default immediately after such consolidation, merger, sale, conveyance or lease in the performance or observance of any such covenant or condition of this Indenture.

 

SECTION 9.02       Successor Person Substituted.  In case of any such consolidation, merger, sale, lease or conveyance, and following such an assumption by the successor Person, such successor Person shall succeed to and be substituted for the Company, with the same effect as if it had been named herein. Such successor Person may cause to be signed, and may issue either in its own name or in the name of the Company prior to such succession any or all of the Securities issuable hereunder that shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture, the Trustee shall authenticate and shall make available for delivery any Securities that shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities which such successor Person thereafter shall cause to be signed and delivered to the Trustee for that purpose. All of the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Securities had been issued at the date of the execution hereof.

 

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

 

In the event of any such sale or conveyance, the Company (or any successor Person which shall theretofore have become such in the manner described in this Article 9) shall be

 

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discharged from all obligations and covenants under this Indenture and the Securities and may be liquidated and dissolved.

 

SECTION 9.03       Opinion of Counsel to Trustee.  The Trustee, subject to the provisions of Sections 6.01 and 6.02, shall receive an Opinion of Counsel, prepared in accordance with Section 11.05, as conclusive evidence that any such consolidation, merger, sale, lease or conveyance, and any such assumption, and any such liquidation or dissolution, complies with the applicable provisions of this Indenture.

 

ARTICLE 10
 SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED FUNDS

 

SECTION 10.01     Satisfaction and Discharge of Indenture.

 

(a)           If at any time:

 

(i)            the Company shall have paid or caused to be paid the principal of and interest on all the Outstanding Securities of any Series as and when the same shall have become due and payable,

 

(ii)           the Company shall have delivered to the Trustee for cancellation all Securities of any Series theretofore authenticated (other than any Securities of such Series which have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.09) or

 

(iii)          all the Securities of such Series not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and (B) the Company shall have irrevocably deposited or caused to be deposited with the Trustee as trust funds the entire amount or Government Obligations maturing as to principal and interest in such amounts and at such times as will ensure the availability of funds sufficient to pay at maturity or upon redemption all Securities of such Series (other than any Securities of such Series which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.09) not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity as the case may be, and if, in any such case, the Company shall also pay or cause to be paid all other amounts payable hereunder by the Company with respect to Securities of such Series, then this Indenture shall cease to be of further effect with respect to Securities of such Series (except as to (1) rights of registration of transfer and exchange, (2) substitution of mutilated, defaced, destroyed, lost or stolen Securities, (3) rights of Holders to receive payments of principal thereof and interest thereon upon the original stated due dates therefor and remaining rights of the Holders to receive mandatory sinking fund payments, if any, (4) the rights, obligations and immunities of the Trustee hereunder and (5) the rights of the Securityholders of such Series as beneficiaries hereof with respect to the property so deposited with the Trustee payable to all or any of them). Subject to Section 10.05, the Trustee, on written demand of the

 

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Company accompanied by an Officers’ Certificate and an Opinion of Counsel and at the cost and expense of the Company, shall execute proper instruments acknowledging such satisfaction of and discharging this Indenture with respect to such Series. The Company will reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred and will compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this Indenture and the Securities of such Series.

 

(b)           In addition to its rights to discharge this Indenture pursuant to Section 10.01(a), the Company may defease the covenants applicable to any Series of Securities, as provided in this Section 10.01(b), by complying with the provisions of this Section 10.01(b):

 

(i)  The Company, at its option at any time, may exercise its right to elect to have defeasance under Section 10.01(b)(ii) be applied to the Outstanding Securities of any Series; provided that provision is made for such right pursuant to Section 2.03 and the applicable conditions thereto as set forth in this Section 10.01(b) have been satisfied.

 

(ii)  Upon the Company’s exercise of the right referenced in Section 10.01(b) applicable to this Section 10.0l(b)(ii), the Company may terminate its obligations under the Outstanding Securities of any Series and this Indenture with respect to such Series on the date the conditions set forth in Section 10.01(b)(iii) are satisfied (“DEFEASANCE”). For this purpose, defeasance means that the Company shall be deemed to have paid and discharged the entire indebtedness represented by the Outstanding Securities of such Series and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned except for the following (A) the rights of Holders of Outstanding Securities of such Series to receive payments in respect of the principal of and interest on such Securities when such payments are due; (B) the Company’s obligations with respect to such Securities under Sections 2.08, 2.09, 3.02, 6.07, 10.04 and 10.05; (C) the rights, powers, trusts, duties and immunities of the Trustee hereunder; and (D) this Section 10.01(b).

 

(iii)  The following shall be the conditions to the application of Section 10.01(b)(ii) to the Outstanding Securities of such Series:

 

(A)          The Company shall have irrevocably deposited or caused to be deposited with the Trustee under the terms of an irrevocable trust agreement, as trust funds in trust solely for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of Securities of such Series, (I) cash in the currency or currency unit required, (II) Government Obligations maturing as to principal and interest in such amounts (payable in the currency in which the Securities of such Series are payable) and at such times as are sufficient to pay the principal of and interest on the Outstanding Securities of such Series to maturity or redemption, as the case may be, or (III) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee to pay and discharge, (x) the principal of

 

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and each installment of interest, if any, on the Outstanding Securities of such Series on the stated maturity of such principal or installment of interest, if any, and (y) any mandatory sinking fund payments or analogous payments applicable to the Outstanding Securities of such Series on the day on which such payments are due and payable in accordance with the terms of this Indenture and of such Securities. Such irrevocable trust agreement shall include, among other things, (a) provision for the payments referenced in clauses (x) and (y) of the immediately preceding sentence, (b) the payment of the reasonable expenses of the Trustee incurred or to be incurred in connection with carrying out such trust provisions, (c) rights of registration of transfer, substitution and exchange of Securities of such Series in accordance with the terms stated in this Indenture and (d) continuation of the rights and obligations and immunities of the Trustee as against the Holders of Securities of such Series as stated in this Indenture.

 

(B)           No Event of Default or event which with notice or lapse of time or both would constitute an Event of Default with respect to the Securities of such Series shall have occurred and be continuing on the date of such deposit or, insofar as Sections 5.01(d) and 5.01(e) are concerned, at any time during the period ending on the 91st day after the date of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period).

 

(C)           Such defeasance shall not result in a breach or violation of, or constitute a default under, this Indenture with respect to the Securities of such Series.

 

(D)          The Company shall have delivered to the Trustee an Opinion of Counsel to the effect that Securityholders of such Series will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and discharge and will be subject to federal income tax on the same amounts and in the same manner and at the same time as would have been the case if such deposit and defeasance had not occurred, and which Opinion of Counsel must be based upon (x) a ruling of the U.S. Internal Revenue Service to the same effect or (y) a change in applicable U.S. federal income tax law after the date of the Indenture such that a ruling is no longer required.

 

(E)           The Company shall have delivered to the Trustee an Officers’ Certificate and Opinion of Counsel, each stating that all conditions precedent provided for herein relating to the deposit and defeasance contemplated by this Section 10.01(b) have been complied with.

 

SECTION 10.02     Application by Trustee of Funds Deposited for Payment of Securities.  Subject to Section 10.04, all funds deposited with the Trustee pursuant to Section 10.01 shall be held in trust and applied by it to the payment, either directly or through any Paying Agent, to the Holders of the particular Securities of such Series for the payment or redemption of which such funds have been deposited with the Trustee, of all amounts due and to become due

 

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thereon for principal and interest; but such funds need not be segregated from other funds except to the extent required by law.

 

SECTION 10.03     Repayment of Amounts Held by Paying Agent.  In connection with the satisfaction and discharge of this Indenture with respect to Securities of any Series, all amounts then held by any Paying Agent (other than the Company) under the provisions of this Indenture with respect to such Series of Securities, upon written demand of the Company, shall be paid to the Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such amounts.

 

SECTION 10.04     Return of Unclaimed Amounts Held by Trustee and Paying Agent.  Any amounts deposited with or paid to the Trustee or any Paying Agent (including the Company acting as its own Paying Agent) for the payment of the principal of or interest on any Security of any Series and not applied but remaining unclaimed for two years after the date upon which such principal or interest shall have become due and payable, upon the written request of the Company, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, promptly shall be repaid to the Company by the Trustee for such Series or such Paying Agent (except that with respect to any amounts then held by the Company in trust as its own Paying Agent no such request need be given and at such time the Company shall be discharged from its duty to hold such amounts in trust as Paying Agent). The Holder of the Security of such Series, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property laws, thereafter shall look only to the Company for any payment which such Holder may be entitled to collect, and all liability of the Trustee or any Paying Agent with respect to such amounts thereupon shall cease. Anything in this Article 10 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the written request of the Company any funds or Government Obligations held by it as provided in Section 10.01(b)(iii) which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect such defeasance in accordance with the provisions of this Indenture.

 

SECTION 10.05     Reinstatement of Company’s Obligations.  If the Trustee is unable to apply any funds or Government Obligations in accordance with Section 10.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under this Indenture and the Securities of any Series for which such application is prohibited shall be revived and reinstated as if no deposit had occurred pursuant to Section 10.01 until such time as the Trustee is permitted to apply all such funds or Government Obligations in accordance with Section 10.01. If the Company has made any payment of interest on or principal of any of such Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Securityholders of such Securities to receive such payment from the funds or Government Obligations held by the Trustee.

 

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ARTICLE 11
 MISCELLANEOUS PROVISIONS

 

SECTION 11.01     Incorporators, Shareholders, Officers and Directors of Company Exempt from Individual Liability.  No recourse under or upon any obligation, covenant or agreement contained in this Indenture or in any Security shall be had against any incorporator as such or against any past, present or future shareholder, officer or director of the Company or of any successor, either directly or through the Company or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities by the Holders thereof and as part of the consideration for the issue of the Securities.

 

SECTION 11.02     Provisions of Indenture for the Sole Benefit of Parties and Securityholders.  Nothing in this Indenture or in the Securities, expressed or implied, shall give or be construed to give to any Person, firm or corporation, other than the parties hereto, any Paying Agent and their successors hereunder and the Holders of the Securities any legal or equitable right, remedy or claim under this Indenture or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto and their successors and of the Holders of the Securities.

 

SECTION 11.03     Successors and Assigns of Company Bound by Indenture.  All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company shall bind its successors and assigns, whether so expressed or not.

 

SECTION 11.04     Notices and Demands on Company, Trustee and Securityholders.  Any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Securities to or on the Company may be given or served by being deposited postage prepaid, first-class mail (except as otherwise specifically provided herein) addressed (until another address of the Company is filed by the Company with the Trustee) to Fluor Corporation, 6700 Las Colinas Boulevard, Irving, Texas 75039, Attention: Chief Financial Officer. Any notice, direction, request or demand by the Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made at the Corporate Trust Office.

 

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed by first-class mail, postage prepaid to such Holders as their names and addresses appear in the Security register within the time prescribed (in the case of notes held in book entry form, by electronic transmission). Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver, In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed to any particular Holder shall affect the sufficiency of such notice with respect to other Holders, and any notice

 

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which is mailed in the manner herein provided shall be conclusively presumed to have been duly given.

 

In case, by reason of the suspension of or irregularities in regular mail service, it shall be impracticable to mail notice to the Company and Securityholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be reasonably acceptable to the Trustee shall be deemed to be a sufficient giving of such notice.

 

SECTION 11.05     Officers’ Certificates and Opinions of Counsel; Statements to Be Contained Therein.  Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished.

 

Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

(a)           a statement that the person making such certificate or opinion has read such covenant or condition;

 

(b)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

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

 

(d)           a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

 

Any certificate, statement or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous. Any certificate, statement or opinion of counsel may be based, insofar as it relates to factual matters or information with respect to which is in the possession of the Company, upon the certificate, statement or opinion of or representations by an officer or officers of the Company, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

 

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Any certificate, statement or opinion of an officer of the Company or of counsel may be based, insofar as it relates to accounting matters, upon a certificate or opinion of or representations by an accountant or firm of accountants in the employ of the Company, unless such officer or counsel, as the case may be, knows that the certificate or opinion or representations with respect to the accounting matters upon which his certificate, statement or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should know that the same are erroneous.

 

SECTION 11.06     Payments Due on Saturdays, Sundays and Holidays.  Unless otherwise specified in a Security, if the date of maturity of interest on or principal of the Securities of any Series or the date fixed for redemption or repayment of any such Security shall not be a Business Day, payment of interest or principal need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the date of maturity or the date fixed for redemption, and no interest shall accrue for the period after such date.

 

SECTION 11.07     Conflict of Any Provision of Indenture with Trust Indenture Act.  If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision included in this Indenture which is required by the Trust Indenture Act, such required provision shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or to be excluded, as the case may be.

 

SECTION 11.08     New York Law to Govern; Waiver of Jury Trial.  This Indenture and each Security shall be deemed to be a contract under the internal laws of the State of New York, without regard to conflicts of law principles thereof, and for all purposes shall be construed and enforced in accordance with and governed by the laws of said State. EACH OF THE COMPANY AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

 

SECTION 11.09     Counterparts.  This Indenture may be executed in any number of counterparts, each of which shall be an original; but such counterparts shall together constitute but one and the same instrument. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

 

SECTION 11.10     Effect of Headings; Gender.  The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. The use of the masculine, feminine or neuter gender herein shall not limit in any way the applicability of any term or provision hereof.

 

SECTION 11.11     Force Majeure.  In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or

 

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caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

SECTION 11.12     U.S.A. Patriot Act.  The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee.  The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.

 

ARTICLE 12
 REDEMPTION OF SECURITIES AND SINKING FUNDS

 

SECTION 12.01     Applicability of Article.  The provisions of this Article 12 shall be applicable to the Securities of any Series which are redeemable before their maturity or to any sinking fund for the retirement of Securities of a Series, except as otherwise specified as contemplated by Section 2.03 for Securities of such Series.

 

SECTION 12.02     Notice of Redemption; Partial Redemptions.  Notice of redemption to the Holders of Securities of any Series required to be redeemed or to be redeemed as a whole or in part at the option of the Company shall be given by giving notice of such redemption as provided in Section 11.04, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such Series. Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a Series designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security of such Series.

 

The notice of redemption to each such Holder shall specify the date fixed for redemption, the “CUSIP” number or numbers for such Securities, the redemption price, the Place or Places of Payment, that payment will be made upon presentation and surrender of such Securities, that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case, that interest accrued to the date fixed for redemption will be paid as specified in such notice, that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue and, if applicable, that a Holder of Securities who desires to convert Securities for redemption must satisfy the requirements for conversion contained in such Securities, the then existing conversion price or rate and the date and time when the option to convert shall expire. If less than all of the Securities of any Series are to be redeemed, the notice of redemption shall specify the numbers of the Securities of such Series to be redeemed. In case any Security of a Series is to be redeemed in part, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such Series in principal amount equal to the unredeemed portion thereof will be issued.

 

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The notice of redemption of Securities of any Series to be redeemed at the option of the Company shall be given by the Company or, at the Company’s written request, by the Trustee in the name and at the expense of the Company. If such notice is to be given by the Trustee, the Company shall provide notice of such redemption to the Trustee at least 60 days prior to the date fixed for redemption (unless a shorter notice shall be satisfactory to the Trustee). If such notice is given by the Company, the Company shall provide a copy of such notice given to the Holders of such redemption to the Trustee at least three Business Days prior to the date such notice is given to such Holders, but in any event at least 30 days prior to the date fixed for redemption (unless a shorter notice shall be satisfactory to the Trustee).

 

Unless otherwise specified pursuant to Section 2.03, not later than 12:00 p.m. New York City time on the redemption date specified in the notice of redemption given as provided in this Section 12.02, the Company will have on deposit with the Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 3.03) funds available on such date (or other forms of property, if permitted by the terms of the Securities of such Series) sufficient to redeem on the redemption date all the Securities of such Series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption. If less than all the Outstanding Securities of a Series are to be redeemed, the Company will deliver to the Trustee at least 60 days prior to the date fixed for redemption an Officers’ Certificate stating the aggregate principal amount of Securities to be redeemed (unless a shorter notice shall be satisfactory to the Trustee).

 

If less than all the Securities of a Series are to be redeemed, the Trustee shall select, in such manner as it shall deem appropriate and fair, Securities of such Series to be redeemed in whole or in part and the Trustee shall promptly notify the Company in writing of the Securities of such Series selected for redemption and, in the case of any Securities of such Series selected for partial redemption, the principal amount thereof to be redeemed. However, if less than all the Securities of any Series with differing issue dates, interest rates and stated maturities are to be redeemed, the Company in its sole discretion shall select the particular securities to be redeemed and shall notify the Trustee in writing thereof at least 60 days prior to the relevant redemption date (unless a shorter notice shall be satisfactory to the Trustee). Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such Series or any multiple thereof. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities of any Series shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed.

 

SECTION 12.03     Payment of Securities Called for Redemption.  If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after said date (unless the Company shall default in the payment of such Securities at the redemption price, together with interest accrued to said date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue. Except as provided in Sections 6.01 and 10.04, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit or security under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and

 

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unpaid interest to the date fixed for redemption. On presentation and surrender of such Securities at a Place of Payment specified in said notice, said Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable redemption price, together with interest accrued thereon to the date fixed for redemption. If for any Securities the date fixed for redemption is a regular interest payment date, payment of interest becoming due on such date shall be payable to the Holders of such Securities registered as such on the relevant record date subject to the terms and provisions of Section 2.07.

 

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest borne by the Security.

 

Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to or on the order of the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.

 

SECTION 12.04     Exclusion of Certain Securities from Eligibility for Selection for Redemption.  Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by an authorized officer of the Company and delivered to the Trustee at least 30 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially by, and not pledged or hypothecated by, either (a) the Company or (b) an entity specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with the Company.

 

SECTION 12.05     Mandatory and Optional Sinking Funds.  The minimum amount of any sinking fund payment provided for by the terms of Securities of any Series is referred to as a “MANDATORY SINKING FUND PAYMENT”, and any payment in excess of such minimum amount provided for by the terms of Securities of any Series is referred to as an “OPTIONAL SINKING FUND PAYMENT”. The date on which a sinking fund payment is to be made is referred to as the “SINKING FUND PAYMENT DATE”.

 

In lieu of providing funds for all or any part of any mandatory sinking fund payment with respect to any Series of Securities, the Company at its option:

 

(a)           may deliver to the Trustee securities of such Series theretofore purchased or otherwise acquired (except upon redemption pursuant to the mandatory sinking fund) by the Company or receive credit for Securities of such Series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Company and delivered to the Trustee for cancellation pursuant to Section 2.10;

 

(b)           may receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section 12.05; or

 

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(c)           may receive credit for Securities of such Series (not previously so credited) redeemed by the Company through any optional redemption provision contained in the terms of such Series.

 

Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities.

 

On or before the forty-fifth day next preceding each sinking fund payment date for any Series of Securities, the Company will deliver to the Trustee a written statement (which need not contain the statements required by Section 11.05) signed by an authorized officer of the Company which will:

 

(a)           specify the portion of the mandatory sinking fund payment to be satisfied by delivery of funds, except as otherwise specified pursuant to Section 2.03 for the Securities of such Series, and the portion to be satisfied by delivery or credit of Securities of such Series;

 

(b)           state that none of the Securities of such Series for which credit is sought has theretofore been so credited;

 

(c)           state that no defaults in the payment of interest or Events of Default with respect to such Series have occurred (which have not been waived or cured) and are continuing;

 

(d)           state whether or not the Company intends to exercise its right to make an optional sinking fund payment with respect to such Series and, if so, specifying the amount of such optional sinking fund payment which the Company intends to pay on or before the next succeeding sinking fund payment date; and

 

(e)           specify such sinking fund payment date.

 

Any Securities of such Series to be credited and required to be delivered on the Trustee in order for the Company to be entitled to credit therefor that have not previously been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.10 to the Trustee with such written statement. Such written statement shall be irrevocable. Upon its receipt by the Trustee the Company shall become unconditionally obligated to make all the payments, if any, therein referred to on or before the next succeeding sinking fund payment date. Failure of the Company, on or before any such forty- fifth day, to deliver such written statement and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Company (i) that the mandatory sinking fund payment for such Series due on the next succeeding sinking fund payment date shall be paid entirely in funds without the option to deliver or credit Securities of such Series in respect thereof and (ii) that the Company will make no optional sinking fund payment with respect to such Series as provided in this Section 12.05.

 

If the sinking fund payment or payments (mandatory or optional or both) to be made in funds on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in funds shall exceed $100,000 (or a lesser amount if the Company shall so request) with respect to the Securities of any particular Series, such funds shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of

 

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such Series at the sinking fund redemption price together with accrued interest to the date fixed for redemption. If such amount shall be $100,000 or less and the Company makes no such request then it shall be carried over until an amount in excess of $100,000 is available. The Trustee shall select, in the manner provided in Section 12.02 and giving effect to any exclusions required pursuant to Section 12.04, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such Series to absorb, as nearly as may be possible, such funds and shall inform the Company of the serial numbers of the Securities of such Series (or portions thereof) so selected. The Trustee, in the name and at the expense of the Company, shall cause notice of redemption of the Securities of such Series to be given in substantially the manner provided in Section 12.02 for the redemption of Securities of such Series. The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such Series shall be added to the next sinking fund payment for such Series and, together with such payment, shall be applied in accordance with the provisions of this Section 12.05. Any and all sinking fund amounts held on the stated maturity date of the Securities of any particular Series (or earlier, if such maturity is accelerated) that are not held for the payment or redemption of particular Securities of such Series shall be applied, together with other amounts, if necessary, sufficient for the purpose, to the payment of the principal of, and interest on, the Securities of such Series at maturity.

 

Unless otherwise specified pursuant to Section 2.03, not later than the sinking fund payment date, the Company shall have paid to the Trustee or shall otherwise provide funds available on such date for the payment of all principal and interest accrued to the date fixed for redemption on Securities to be redeemed on such sinking fund payment date.

 

The Trustee shall not redeem or cause to be redeemed any Securities of a Series with sinking fund amounts or mail or publish any notice of redemption of Securities for such Series by operation of the sinking fund during the continuance of a default in payment of interest on such Securities or of any Event of Default except that, where the mailing or publication of notice of redemption of Securities of any Series previously shall have been made, the Trustee shall redeem or cause to be redeemed such Securities; provided that it shall have received from the Company amounts sufficient for such redemption. Except as aforesaid, any amounts in the sinking fund for Securities of such Series at the time when any such default or Event of Default shall occur, and any amounts thereafter paid into the sinking fund, during the continuance of such default or Event of Default, shall be deemed to have been collected under Article 5 and held for the payment of all Securities of such Series. In case such Event of Default shall have been waived as provided in Section 5.09 or the default cured on or before the sixtieth day preceding the sinking fund payment date in any year, such amounts thereafter shall be applied on the next succeeding sinking fund payment date in accordance with this Section 12.05 to the redemption of such Securities.

 

SECTION 12.06     Repayment at the Option of the Holders.  Securities of any Series that are repayable at the option of the Holders before their stated maturity shall be repaid in accordance with the terms of the Securities of such Series.

 

The repayment of any principal amount of Securities pursuant to such option of the Holder to require repayment of Securities before their stated maturity, for purposes of Section 10.01, shall not operate as a payment, redemption or satisfaction of the indebtedness represented

 

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by such Securities unless and until the Company, at its option, shall deliver or surrender the same to the Trustee with a written directive that such Securities be cancelled.

 

SECTION 12.07     Conversion Arrangement on Call for Redemption.  In connection with any redemption of Securities of any Series, the Company may arrange for the purchase and conversion of any Securities of any Series called for redemption by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to the Trustee or the Paying Agent in trust for the Holders of such Securities, on or before 12:00 p.m. New York time on the redemption date, an amount not less than the redemption price, together with interest, if any, accrued to the redemption date of such Securities, in immediately available funds. Notwithstanding anything to the contrary contained in this Article 12, the obligation of the Company to pay the redemption price of such Securities, including all accrued interest, if any, shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers. If such an agreement is entered into, any Securities not duly surrendered for conversion by the Holders thereof, at the option of the Company, may be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and surrendered by such purchasers for conversion, all as of immediately prior to the close of business on the last day on which such Securities called for redemption may be converted in accordance with this Indenture and the terms of such Securities, subject to payment to the Trustee or Paying Agent of the above-described amount. The Trustee or the Paying Agent shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it in the same manner as it would pay funds deposited with it by the Company for the redemption of Securities of such Series. Without the Trustee’s and the Paying Agent’s prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Trustee and the Paying Agent as set forth in this Indenture. The Company agrees to indemnify the Trustee and the Paying Agent from, and hold them harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of Securities of any Series between the Company and such purchasers, including the reasonable costs and expenses incurred by the Trustee and the Paying Agent in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of their powers, duties, responsibilities or obligations under this Indenture.

 

ARTICLE 13
 CONVERSION OF SECURITIES

 

SECTION 13.01     Applicability of Article.  Securities of any Series that are convertible into Common Shares at the option of the Holder of such Securities shall be convertible in accordance with their terms and, unless otherwise specified as contemplated by Section 2.03 for the Securities of any Series, in accordance with this Article 13. Each reference in this Article 13 to “a Security” or “the Securities” refers to the Securities of the particular Series that is convertible into Common Shares. If more than one Series of Securities with conversion privileges are Outstanding at any time, the provisions of this Article 13 shall be applied separately to each such Series.

 

SECTION 13.02     Right of Holders to Convert Securities into Common Shares.  Subject to the provisions of Section 12.07 and this Article 13, at the option of the Holder thereof,

 

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any Security of any Series that is convertible into Common Shares, or any portion of the principal amount thereof which is $1,000 or any integral multiple of $l,000, may be converted into duly authorized, validly issued, fully paid and nonassessable Common Shares at any time during the period specified in the Securities of such Series, or in case such Security or portion thereof shall have been called for redemption, then in respect of such Security or portion thereof until (unless the Company shall default in payment due upon the redemption thereof) the close of business on the redemption date (except that in the case of repayment at the option of the Holder, if specified in the terms of the relevant Security, such right shall terminate upon the Company’s receipt of written notice of the exercise of such option), as specified in such Security, at the conversion price or conversion rate for each $1,000 principal amount of Securities (such initial conversion rate reflecting an initial conversion price specified in such Security) in effect on the conversion date, or, in case an adjustment in the conversion price has taken place pursuant to the provisions of this Article 13, then at the applicable conversion price as so adjusted, upon surrender of the Security or Securities, the principal amount of which is so to be converted, to the Company at any time during usual business hours at the office or agency to be maintained by it in accordance with the provisions of Section 3.02, accompanied by a written notice of election to convert as provided in Section 13.03. If the Holder requests that the Common Shares be registered in a name other than that of the Holder, such notice also shall be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee, duly executed by the Holder thereof or his attorney duly authorized in writing. All Securities surrendered for conversion shall, if surrendered to the Company or any conversion agent, be delivered to the Trustee for cancellation and cancelled by it, or shall, if surrendered to the Trustee, be cancelled by it, as provided in Section 2.10.

 

The initial conversion price or conversion rate in respect of a Series of Securities shall be as specified in the Securities of such Series. The conversion price or conversion rate will be subject to adjustment on the terms set forth in Section 13.05 or such other or different terms, if any, as may be specified by Section 2.03 for Securities of such Series.  Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of any portion of such Security.

 

SECTION 13.03     Issuance of Common Shares on Conversions.  As promptly as practicable after the surrender, as herein provided, of any Security or Securities for conversion into Common Shares, the Company shall deliver or cause to be delivered at the office or agency to be maintained by it in accordance with the provisions of Section 3.02 to or upon the written order of the Holder of the Security or Securities so surrendered a certificate or certificates representing the number of duly authorized, validly issued, fully paid and nonassessable Common Shares into which such Security or Securities may be converted in accordance with the terms thereof and the provisions of this Article 13. Prior to delivery of such certificate or certificates, the Company shall require written notice at its said office or agency from the Holder of the Security or Securities so surrendered stating that the Holder irrevocably elects to convert such Security or Securities, or, if less than the entire principal amount thereof is to be converted, stating the portion thereof to be converted. Such notice shall also state the name or names (with address and social security or other taxpayer identification number) in which said certificate or certificates are to be issued. Such conversion shall be deemed to have been made at the time that such Security or Securities shall have been surrendered for conversion and such notice shall have been received by the Company or the Trustee and such conversion shall be at the conversion

 

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price in effect at such time. The rights of the Holder of such Security or Securities as a Holder shall cease at such time, and the Person or Persons entitled to receive the Common Shares upon conversion of such Security or Securities shall be treated for all purposes as having become either record holder or holders of such Common Shares at such time. In the case of any Security of any Series that is converted in part only, upon such conversion the Company shall execute and, upon the Company’s written request and at the Company’s expense, the Trustee or an authenticating agent shall authenticate and deliver to the Holder thereof, as requested by such Holder, a new Security or Securities of such Series of authorized denominations in aggregate principal amount equal to the unconverted portion of such Security.

 

If the last day on which such Security may be converted is not a Business Day in a place where the conversion agent for that Security is located such Security may be surrendered to that conversion agent on the next succeeding day that is a Business Day.

 

The Company shall not be required to deliver certificates for Common Shares upon conversion while its stock transfer books are closed for a meeting of shareholders or for the payment of dividends or for any other purpose, but certificates for Common Shares shall be delivered as soon as the stock transfer books shall again be opened.

 

SECTION 13.04     No Payment or Adjustment for Interest or Dividends.  Unless otherwise specified as contemplated by Section 2.03 for Securities of such Series, Securities surrendered for conversion into Common Shares during the period from the close of business on any regular record date or special record date next preceding any interest payment date to the opening of business on such interest payment date (except Securities called for redemption on a redemption date within such period) when surrendered for conversion must be accompanied by payment, by certified or official bank check to the order of the Company payable in clearing house funds at the location where the Securities are surrendered, of an amount equal to the interest thereon which the Holder is entitled to receive on such interest payment date. Payment of interest shall be made, on such interest payment date or such other payment date (as set forth in Section 2.07), as the case may be, to the Holder of the Securities as of such regular record date or special record date, as applicable. Except where Securities surrendered for conversion must be accompanied by payment as described above, no interest on converted Securities will be payable by the Company on any interest payment date subsequent to the date of conversion. No other payment or adjustment for interest or dividends is to be made upon conversion. Notwithstanding the foregoing, upon conversion of any Original Issue Discount Security, the fixed number of Common Shares into which such Security is convertible delivered by the Company to the Holder thereof shall be applied, first, to the portion attributable to the accrued original issue discount relating to the period from the date of issuance to the date of conversion of such Security, and, second, to the portion attributable to the balance of the principal amount of such Security.

 

SECTION 13.05     Adjustment of Conversion Price.  Unless otherwise specified as contemplated by Section 2.03 for Securities of such Series, the conversion price for Securities convertible into Common Shares shall be adjusted from time to time as follows:

 

(a)           If the Company shall (x) pay a dividend or make a distribution on Common Shares in Common Shares, (y) subdivide the outstanding Common Shares into a greater number of shares or (z) combine the outstanding Common Shares into a smaller number of shares, the

 

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conversion price for the Securities of such Series shall be adjusted so that the Holder of any such Security thereafter surrendered for conversion shall be entitled to receive the number of Common Shares that such Holder would have owned or have been entitled to receive after the happening of any of the events described above had such Security been converted immediately prior to the record date in the case of a dividend or the effective date in the case of subdivision or combination. An adjustment made pursuant to this Section 13.05(a) shall become effective immediately after the record date in the case of a dividend, except as provided in Section 13.05(h), and shall become effective immediately after the effective date in the case of a subdivision or combination.

 

(b)           If the Company shall issue rights or warrants to all holders of Common Shares entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase Common Shares at a price per share less than the current market price per share of Common Shares (as defined for purposes of this Section 13.05(b) in Section 13.05(e)), at the record date for the determination of shareholders entitled to receive such rights or warrants, the conversion price in effect immediately prior thereto shall be adjusted so that the same shall equal the price determined by multiplying the conversion price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Common Shares outstanding on such record date plus the number of Common Shares which the aggregate offering price of the total number of Common Shares so offered would purchase at such current market price, and the denominator of which shall be the number of Common Shares outstanding on such record date plus the number of additional Common Shares receivable upon exercise of such rights or warrants. Such adjustment shall be made successively whenever any such rights or warrants are issued, and shall become effective immediately, except as provided in Section 13.05(h), after such record date. In determining whether any rights or warrants entitle the Holders of the Securities of such Series to subscribe for or purchase Common Shares at less than such current market price and in determining the aggregate offering price of such Common Shares, there shall be taken into account any consideration received by the Company for such rights or warrants plus the exercise price thereof, the value of such consideration or exercise price, as the case may be, if other than cash, to be determined by the Board of Directors.

 

(c)           If the Company shall distribute to all holders of Common Shares any shares of capital stock of the Company (other than Common Shares) or evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings of the Company) or rights or warrants to subscribe for or purchase any of its securities (excluding those rights or warrants referred to in Section 13.05(b)) (any of the foregoing being herein in this Section 13.05(c) called the “SPECIAL SECURITIES”), the conversion price shall be adjusted as provided in the next sentence unless the Company elects to reserve such Special Securities for distribution to the Holders of Securities of such Series upon the conversion so that any such Holder converting such Securities will receive upon such conversion, in addition to the Common Shares to which such Holder is entitled, the amount and kind of Special Securities which such Holder would have received if such Holder had, immediately prior to the record date for the distribution of the Special Securities, converted Securities into Common Shares. The conversion price, as adjusted, shall equal the price determined by multiplying the conversion price in effect immediately prior to such record date by a fraction the numerator of which shall be the current market price per share (as defined for purposes of this Section 13.05(c) in Section 13.05(e)) of Common Shares on the record date mentioned above less the then fair market value (as

 

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determined by the Board of Directors, whose determination shall, if made in good faith, be conclusive) of the portion of the Special Securities so distributed applicable to one Common Share, and the denominator of which shall be the current market price per Common Shares (as defined in Section 13.05(e)). In the event the then fair market value (as so determined) of the portion of the Special Securities so distributed applicable to one Common Share is equal to or greater than the current market price per Common Share (as defined in Section 13.05(e)) on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of Securities of such Series shall have the right to receive the amount and kind of Special Securities such holder would have received had he converted such Securities immediately prior to the record date for the distribution of the Special Securities. Such adjustment shall become effective immediately, except as provided in Section 13.05(h), after the record date for the determination of shareholders entitled to receive such distribution.

 

(d)           If, pursuant to Section 13.05(b) or 13.05(c), the conversion price shall have been adjusted because the Company has declared a dividend, or made a distribution, on the outstanding Common Shares in the form of any right or warrant to purchase securities of the Company, or the Company has issued any such right or warrant, then, upon the expiration of any such unexercised right or unexercised warrant, the conversion price shall forthwith be adjusted to equal the conversion price that would have applied had such right or warrant never been declared, distributed or issued.

 

(e)           For the purpose of any computation under Section 13.05(b), the current market price per Common Share on any date shall be deemed to be the average of the reported last sales prices for the 30 consecutive Trading Days (as defined below) commencing 45 Trading Days before the date in question. For the purpose of any computation under Section 13.05(c), the current market price per Common Share on any date shall be deemed to be the average of the reported last sales prices for the ten consecutive Trading Days before the date in question. The reported last sales price for each day (whether for purposes of Section 13.05(b) or 13.05(c)) shall be the reported last sales price, regular way, or, in case no sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in either case as reported on the New York Stock Exchange Composite Tape or, if the Common Shares are not listed or admitted to trading on the New York Stock Exchange, on the principal national securities exchange on which the Common Shares are listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, on the Nasdaq National Market or, if the Common Shares are not quoted on the Nasdaq National Market, the average of the closing bid and asked prices on such day in the over-the- counter market as furnished by any New York Stock Exchange member firm regularly making a market in the Common Shares selected for such purpose by the Board of Directors or, if no such quotations are available, the fair market value of the Common Shares as determined by a New York Stock Exchange member firm regularly making a market m the Common Shares selected for such purpose by the Board of Directors As used herein the term “Trading Day’ with respect to the Common Shares means (x) if the Common Shares are listed or admitted for trading on the New York Stock Exchange or another national securities exchange, a day on which the New York Stock Exchange or such other national securities exchange is open for business, (y) if the Common Shares are quoted on the Nasdaq National Market, a day on which trades may be made on the Nasdaq National Market or (z) otherwise, any day other than a Saturday or Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

 

50

 

(f)            No adjustment in the conversion price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price. Any adjustments that by reason of this Section 13.05(f) are not required to be made, however, shall be carried forward and taken into account in any subsequent adjustment. Any adjustment required to be made in accordance with the provisions of this Article 13 shall be made not later than such time as may be required in order to preserve the tax free nature of a distribution to the holders of Common Shares. All calculations under this Article 13 shall be made to the nearest cent or to the nearest one-one hundredth of a share, as the case may be, with one-half cent and one-two hundredth of a share, respectively, being rounded upward. The Company shall be entitled to make such reductions in the conversion price, in addition to those required by this Section 13.05, as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights or warrants to purchase stock or securities or distribution of other assets (other than cash dividends) made by the Company to its shareholders shall not be taxable.

 

(g)           Whenever the conversion price is adjusted, the Company shall file with the Trustee, at the Corporate Trust Office of the Trustee, and with the office or agency maintained by the Company for the conversion of Securities of such Series pursuant to Section 3.02, an Officers’ Certificate, setting forth the conversion price after such adjustment and setting forth a brief statement of the facts requiring such adjustment, which certificate shall be conclusive evidence of the correctness of such adjustment. Neither the Trustee nor any conversion agent shall be under any duty or responsibility with respect to any such certificate or any facts or computations set forth therein, except to exhibit said certificate from time to time to any Holder of a Security of such Series desiring to inspect the same. The Company shall promptly cause a notice setting forth the adjusted conversion price to be mailed to the Holders of Securities of such Series, as their names and addresses appear upon the Security register.

 

(h)           In any case in which this Section 13.05 provides that an adjustment shall become effective immediately after a record date for an event, the Company may defer until the occurrence of such event (y) issuing to the Holder of any Security of such Series converted after such record date and before the occurrence of such event the additional Common Shares issuable upon such conversion by reason of the adjustment required by such event over and above the Common Shares issuable upon such conversion before giving effect to such adjustment and (z) paying to such holder any amount in cash in lieu of any fractional Common Shares pursuant to Section 13.06.

 

SECTION 13.06     No Fractional Shares to Be Issued. No fractional Common Shares shall be issued upon any conversion of Securities.  If more than one Security of any Series shall be surrendered for conversion at one time by the same Holder, the number of full Common Shares which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate principal amount of the Securities of such Series (or specified portions thereof to the extent permitted hereby) so surrendered. Instead of a fraction of a Common Share which would otherwise be issuable upon conversion of any Security or Securities (or specified portions thereon, the Company shall pay a cash adjustment (computed to the nearest cent, with one-half cent being rounded upward) in respect of such fraction of a share in an amount equal to the same fractional interest of the reported last sales price (as defined in Section 13.05(e)) of the Common Shares on the Trading Day (as defined in Section 13.05(e)) next preceding the day of conversion.

 

51

 

SECTION 13.07     Preservation of Conversion Rights upon Consolidation, Merger, Sale or Conveyance.  In case of any consolidation of the Company with, or merger of the Company into, any other corporation (other than a consolidation or merger in which the Company is the surviving corporation), or in the case of any sale or transfer of all or substantially all of the assets of the Company, the corporation formed by such consolidation or the corporation into which the Company shall have been merged or the corporation which shall have acquired such assets, as the case may be, shall execute and deliver to the Trustee a supplemental indenture in accordance with the provisions of Articles 8 and 9 as they relate to supplemental indentures, providing that the Holder of each Outstanding Security that was convertible into Common Shares shall have the right thereafter to convert such Security into the kind and amount of shares of stock and other securities and property, including cash, receivable upon such consolidation, merger, sale or transfer by a holder of the number of Common Shares into which such Securities might have been converted immediately prior to such consolidation, merger, sale or transfer. Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 13. Neither the Trustee nor any conversion agent shall have any liability or responsibility for determining the correctness of any provision contained in any such supplemental indenture relating either to the kind or amount of shares of stock or other securities or property receivable by Holders of the Securities upon the conversion of their Securities after any such consolidation, merger, sale or transfer, or to any adjustment to be made with respect thereto and, subject to the provisions of Section 313 of the Trust Indenture Act, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, an Officers’ Certificate with respect thereto and an Opinion of Counsel with respect to legal matters related thereto. If in the case of any such consolidation, merger, sale or transfer, the stock or other securities and property receivable by a Holder of the Securities includes stock or other securities and property of a corporation other than the successor or purchasing corporation, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary. The above provisions of this Section 13.07 shall similarly apply to successive consolidations, mergers, sales or transfers.

 

SECTION 13.08     Notice to Holders of the Securities of a Series Prior to Taking Certain Types of Action.  With respect to the Securities of any Series, in case:

 

(a)           the Company shall authorize the issuance to all holders of Common Shares of rights or warrants to subscribe for or purchase shares of its capital stock or of any other right;

 

(b)           the Company shall authorize the distribution to all holders of Common Shares of evidences of indebtedness or assets (except for cash dividends or distributions paid from retained earnings of the Company);

 

(c)           of any subdivision or combination of Common Shares or of any consolidation or merger to which the Company is a party and for which approval by the shareholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or

 

52

 

(d)           of the voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

the Company shall cause to be filed with the Trustee and at the office or agency maintained for the purpose of conversion of Securities of such Series pursuant to Section 3.02, and shall cause to be mailed to the Holders of Securities of such Series at their last addresses as they shall appear on the Security register, at least ten days prior to the applicable record date hereinafter specified, a notice stating (i) the date as of which the holders of Common Shares to be entitled to receive any such rights, warrants or distribution are to be determined, or (ii) the date on which any such subdivision, combination, consolidation, merger, sale, transfer, dissolution, liquidation, winding up or other action is expected to become effective, and the date as of which it is expected that holders of record of Common Shares shall be entitled to exchange their Common Shares for securities or other property, if any, deliverable upon such subdivision, combination, consolidation, merger, sale, transfer, dissolution, liquidation, winding up or other action. The failure to give the notice required by this Section 13.08 or any defect therein shall not affect the legality or validity of any distribution, right, warrant, subdivision, combination, consolidation, merger, sale, transfer, dissolution, liquidation, winding up or other action, or the vote upon any of the foregoing.

 

SECTION 13.09     Covenant to Reserve Shares for Issuance on Conversion of Securities.  The Company at all times will reserve and keep available out of each class of its authorized Common Shares, free from preemptive rights, solely for the purpose of issue upon conversion of Securities of any Series as herein provided, such number of Common Shares as shall then be issuable upon the conversion of all Outstanding Securities of such Series. The Company covenants that all Common Shares which shall be so issuable, when issued or delivered, shall be duly and validly issued Common Shares into which Securities of such Series are convertible, and shall be fully paid and nonassessable, free of all liens and charges and not subject to preemptive rights and that, upon conversion, the appropriate capital stock accounts of the Company will be duly credited.

 

SECTION 13.10     Compliance with Governmental Requirements.  If any Common Shares required to be reserved for purposes of conversion of Securities hereunder require registration or listing with or approval of any governmental authority under any Federal or State law, pursuant to the Securities Act or the Securities Exchange Act or any national or regional securities exchange on which the Common Shares are listed at the time of delivery of any Common Shares, the Company will use its best efforts to cause such shares to be duly registered, listed or approved, as the case may be, before such shares may be issued upon conversion.

 

SECTION 13.11     Payment of Taxes upon Certificates for Shares Issued upon Conversion.  The issuance of certificates for Common Shares upon the conversion of Securities shall be made without charge to the converting Holders for any tax (including documentary and stamp taxes) in respect of the issuance and delivery of such certificates, and such certificates shall be issued in the respective names of, or in such names as may be directed by, the Holders of the Securities converted. The Company, however, shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate in a name other than that of the Holder of the Security converted, and the Company shall not be required to issue or deliver such certificate unless or until the Person or Persons requesting the

 

53

 

issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

 

SECTION 13.12     Trustee’s Duties with Respect to Conversion Provisions.  The Trustee and any conversion agent shall have no duty to any Holder to determine whether any facts exist that may require any adjustment of the conversion rate, or with respect to the nature or extent of any such adjustment when made, or with respect to the method employed, in making the same. Neither the Trustee nor any conversion agent shall be accountable with respect to the registration under securities laws, listing, validity or value (or the kind or amount) of any Common Shares, or of any other securities or property, that at any time may be issued or delivered upon the conversion of any Security, and neither the Trustee nor any conversion agent makes any representation with respect thereto. Neither the Trustee nor any conversion agent shall be responsible for any failure of the Company to make any payment or to issue, transfer or deliver any Common Shares or stock certificates or other securities or property upon the surrender of any Security for the purpose of conversion. The Trustee and any conversion agent, subject to the provisions of Section 313 of the Trust Indenture Act, shall not be responsible for any failure of the Company to comply with any of the covenants contained in this Article 13.

 

SECTION 13.13     Conversion of Securities into Preferred Shares or Other Securities.  Notwithstanding anything to the contrary in this Article 13, the Company may issue Securities that are convertible into Preferred Shares or other securities of the Company, including Preferred Shares convertible into Common Shares, in which case all terms and conditions relating to the conversion of Securities into Preferred Shares or other securities, including any terms similar to those provided in Sections 13.01 through 13.12, shall be as provided in or pursuant to an appropriate resolution of the Board of Directors or in any indenture supplemental hereto or as otherwise contemplated by Section 2.03.

 

54

 

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

 

	
 
    	
FLUOR CORPORATION
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   D. Michael Steuert
    
	
 
    	
 
    	
Name:
    	
D. Michael Steuert
    
	
 
    	
 
    	
Title:
    	
Senior Vice President and 
    
	
 
    	
 
    	
 
    	
Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
WELLS FARGO BANK, NATIONAL 
    
	
 
    	
ASSOCIATION, as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Maddy Hall
    
	
 
    	
 
    	
Name:
    	
Maddy   Hall
    
	
 
    	
 
    	
Title:
    	
Vice   PresidentExhibit 10.1

 

 

EMPLOYMENT AGREEMENT

 

 

dated as of September 6, 2011,

 

 

between

 

 

COBALT INTERNATIONAL ENERGY, INC.,

(the Company)

 

and

 

 

Van P. Whitfield,

(Employee)

 

 

TABLE OF CONTENTS

 

 

	
 
    	
PAGE
    
	
 
    
	
ARTICLE 1
    
	
DEFINITIONS
    
	
 
    
	
Section 1.01 . Definitions
    	
1
    
	
 
    
	
ARTICLE 2
    
	
EFFECTIVENESS;   TERM OF AGREEMENT; TERMINATION OF SEVERANCE AGREEMENT;
   EXTENSION OF TERM OF AGREEMENT
    
	
 
    
	
Section 2.01 . Effectiveness; Term of Agreement; Termination of Severance   Agreement
    	
7
    
	
Section 2.02   . Extension of Term of Agreement
    	
8
    
	
 
    
	
ARTICLE 3
    
	
POSITIONS   AND DUTIES
    
	
 
    
	
Section 3.01 . Employment; Positions; Reporting Relationship
    	
8
    
	
Section 3.02 . Duties and Services
    	
8
    
	
Section 3.03 . Other Interests
    	
9
    
	
 
    
	
ARTICLE 4
    
	
CERTAIN   EMPLOYEE REPRESENTATIONS AND AGREEMENTS; EQUITY GRANT
    
	
 
    
	
Section 4.01 . Transfer Restrictions
    	
9
    
	
Section 4.02 . Life Insurance
    	
9
    
	
Section 4.03 . Equity Grant
    	
9
    
	
 
    
	
ARTICLE 5
    
	
CONFIDENTIAL   INFORMATION, INVENTIONS,
    
	
BUSINESS   OPPORTUNITIES AND GOODWILL
    
	
 
    
	
Section 5.01 . Confidential Information, Inventions, Business Opportunities   and Goodwill
    	
10
    
	
 
    
	
ARTICLE 6
    
	
COMPENSATION   AND BENEFITS
    
	
 
    
	
Section 6.01 . Base Salary
    	
10
    
	
Section 6.02 . Bonuses
    	
10
    
	
Section 6.03 . Other Benefits
    	
10
    
	
Section 6.04 . Expenses
    	
11
    
	
Section 6.05 . Vacation and Sick Leave
    	
11
    

 

 

	
Section 6.06 . Offices
    	
11
    
	
 
    
	
ARTICLE 7
    
	
TERMINATION   OF EMPLOYMENT AND NOTICE OF TERMINATION OF EMPLOYMENT
    
	
 
    
	
Section 7.01 . Termination of Employment
    	
11
    
	
Section 7.02 . Notice of Termination of Employment
    	
12
    
	
Section 7.03 . Deemed Resignations
    	
12
    
	
 
    
	
ARTICLE 8
    
	
SEVERANCE   BENEFITS
    
	
 
    
	
Section 8.01 . Death, Disability, Termination for Cause or Resignation Without   Good Reason
    	
12
    
	
Section 8.02 . Involuntary Termination
    	
13
    
	
Section 8.03 . Death, Disability or Involuntary Termination After Agreement   Termination Date
    	
14
    
	
 
    
	
ARTICLE 9
    
	
INTEREST   ON LATE PAYMENTS
    
	
 
    	
 
    
	
Section 9.01 . Interest on Late Payments
    	
15
    
	
 
    
	
ARTICLE 10
    
	
COMPETITION
    
	
 
    
	
Section 10.01 . Competition
    	
15
    
	
 
    
	
ARTICLE 11
    
	
NONDISCLOSURE   OF CONFIDENTIAL AND PROPRIETARY INFORMATION
    
	
 
    
	
Section 11.01 . Nondisclosure of Confidential and Proprietary Information
    	
17
    
	
 
    
	
ARTICLE 12
    
	
INVENTIONS
    
	
 
    
	
Section 12.01 . Inventions
    	
19
    
	
 
    
	
ARTICLE 13
    
	
INJUNCTIVE   RELIEF
    
	
 
    
	
Section 13.01 . Injunctive Relief
    	
19
    
	
 
    
	
ARTICLE 14
    
	
NON-DISPARAGEMENT
    
	
 
    
	
Section 14.01 . Non-Disparagement
    	
19
    

 

ii

 

	
ARTICLE 15
    
	
GENERAL
    
	
 
    
	
Section 15.01 . Survivorship
    	
20
    
	
Section 15.02 . Arbitration
    	
20
    
	
Section 15.03 . Payment Obligations Absolute
    	
21
    
	
Section 15.04 . Successors
    	
21
    
	
Section 15.05 . Severability
    	
21
    
	
Section 15.06 . Non-alienation
    	
21
    
	
Section 15.07 . Notices
    	
21
    
	
Section 15.08 . Controlling Law and Waiver of Jury Trial
    	
22
    
	
Section 15.09 . Release and Delayed Payment Restriction
    	
22
    
	
Section 15.10 . Full Settlement
    	
23
    
	
Section 15.11 . Unfunded Obligation
    	
23
    
	
Section 15.12 . No Right to Continued Employment
    	
23
    
	
Section 15.13 . Withholding of Taxes and Other Employee Deductions
    	
23
    
	
Section 15.14 . Number and Gender
    	
23
    
	
Section 15.15 . Entire Agreement
    	
23
    
	
 
    	
 
    
	
Annexes and   Exhibits
    	
 
    
	
 
    	
 
    
	
Annex I                                          Transfer Restrictions
    	
 
    
	
 
    	
 
    
	
Exhibit A                                   Form of Restricted Stock Award   Agreement
    	
 
    
	
Exhibit B                                     Form of Restricted Stock Award   Agreement
    	
 
    
	
Exhibit C                                     Form of Release
    	
 
    

 

iii

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (this “Agreement”) dated as of September 6, 2011, is made by and between COBALT INTERNATIONAL ENERGY, INC., a Delaware corporation (the “Company”), and Van P. Whitfield (“Employee”).

 

RECITALS

 

WHEREAS, the Company and Employee entered into a severance agreement dated as of October 23, 2009 (the “Severance Agreement”);

 

WHEREAS, the Company desires to promote Employee to Chief Operating Officer;

 

WHEREAS, the Board of Directors of the Company has approved the Company’s entering into this Agreement with Employee to encourage Employee’s continued service to Cobalt;

 

WHEREAS, the terms and conditions set forth in this Agreement are similar to the terms and conditions set forth in the Severance Agreement; and

 

WHEREAS, upon the execution of this Agreement, the Severance Agreement shall be terminated, and this Agreement shall become effective.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the Company and Employee agree as follows:

 

ARTICLE 1
 DEFINITIONS

 

Section 1.01.  Definitions.

 

“Accrued Obligations” shall mean Employee’s base salary through the Date of Termination of Employment not theretofore paid, any expenses owed to Employee under the Company’s expense reimbursement policy as in effect from time to time, any accrued vacation pay owed to Employee pursuant to the Company’s vacation policy as in effect from time to time, any earned but unpaid annual performance bonus with respect to a calendar year that has ended on or before the Date of Termination of Employment (it being understood that a bonus will not be considered to have been unearned merely because Employee has not remained employed through the payment date so long as Employee has remained employed through the end of the calendar year that has ended on or before the Date of Termination of Employment), any amount accrued and arising from 

 

 

Employee’s participation in, or benefits accrued under, any employee benefit plans, programs or arrangements maintained by the Company which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements, and such other or additional benefits as may be, or become, due to Employee under the applicable terms of applicable plans, programs, agreements, corporate governance documents and other arrangements of the Company and its subsidiaries.

 

“Affiliate” shall mean any entity that owns or controls, is owned or controlled by, or is under common control with, the Company.

 

“Agreement  Scheduled Termination Date” shall mean January 1, 2014; provided that, if the term of this Agreement is extended for one or more additional one-year periods pursuant to Section 2.02(a), “Agreement Scheduled Termination Date” shall mean December 31 of the last of such additional one-year periods.

 

“Agreement Termination Date” shall mean the Agreement Scheduled Termination Date; provided that if prior to the Agreement Scheduled Termination Date (i) the Company timely provides written notice to Employee pursuant to Section 2.02(b), the “Agreement Termination Date” shall mean the Extension Termination Date (as defined in Section 2.02(b)), or (ii) an individual commences serving as President of the Company, the “Agreement Scheduled Termination Date” shall mean the Transition Termination Date (as defined in Section 3.01); provided further that, if clauses (i) and (ii) both apply, “Agreement Termination Date” shall mean the earlier of the Extension Termination Date and the Transition Termination Date.

 

“Annual Bonus” shall have the meaning assigned to such term in Section 6.02.

 

“Annualized Base Salary” shall mean an amount equal to the greater of:

 

(i) Employee’s annualized base salary at the rate in effect on the date of his Involuntary Termination or termination by reason of death or Disability, as applicable;

 

(ii) Employee’s annualized base salary at the rate in effect 90 days prior to the date of his Involuntary Termination or termination by reason of death or Disability, as applicable; or

 

(iii) Employee’s annualized base salary at the rate in effect immediately prior to a Change in Control if, on the date upon which such Change in Control occurs or within two years thereafter, Employee’s employment shall be subject to an Involuntary Termination or be terminated by reason of death or Disability.

 

2

 

For the avoidance of doubt, for all purposes of this Agreement, base salary specifically does not include any (A) bonuses, (B) incentive compensation or (C) equity-based compensation.

 

“Base Salary” shall have assigned to such term in Section 6.01.

 

“Board” shall mean the Board of Directors of the Company.

 

“Cause” shall mean (i) the willful failure of Employee to substantially perform Employee’s duties as an employee of the Company (other than any such failure resulting from Employee’s physical or mental incapacity), (ii) Employee’s having engaged in willful misconduct, gross negligence or a breach of fiduciary duty that results in material and demonstrable harm to the Company or any of its Affiliates, (iii) Employee’s willful and material breach of this Agreement (as amended from time to time) that results in material and demonstrable harm to the Company or any of its Affiliates, (iv) Employee’s having been convicted of, or having entered a plea bargain or settlement admitting guilt or the imposition of unadjudicated probation for, any felony under the laws of the United States, any state or the District of Columbia, where such felony involves moral turpitude or where, as a result of such felony, the continued employment of Employee would have, or would reasonably be expected to have, a material adverse impact on the Company’s or any of its Affiliates’ reputations, (v) Employee’s having been the subject of any order, judicial or administrative, obtained or issued by the Securities and Exchange Commission, for any securities violation involving fraud including, for example, any such order consented to by Employee in which findings of facts or any legal conclusions establishing liability are neither admitted nor denied, (vi) Employee’s unlawful use (including being under the influence of) or possession of illegal drugs on the Company’s premises or while performing Employee’s duties and responsibilities as an employee of the Company, or (vii) Employee’s commission of an act of fraud, embezzlement, or misappropriation, in each case, against the Company or any of its Affiliates.  If the Company desires to terminate Employee’s employment for Cause in accordance herewith, it shall provide Employee with a Notice of Termination of Employment in accordance with Section 7.02 and allow Employee 30 days following the date of such notice to fully remedy, cure or rectify, if possible, the situation giving rise to the Company’s allegations of Cause.  For purposes of this definition, no act, or failure to act, on the part of Employee shall be considered “willful” unless it is done, or omitted to be done, by Employee in bad faith or without reasonable belief that Employee’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Employee Officer of the Company (other than Employee if he is serving in such capacity) or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by Employee in good faith and in the best interests of the Company.  The cessation of employment of Employee shall not be deemed to be for Cause unless and until there shall have 

 

3

 

been delivered to Employee a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board (excluding Employee, if Employee is a member of the Board) at a meeting of the Board at which at least a quorum is present (after reasonable notice is provided to Employee and Employee is given an opportunity, together with counsel for Employee, to be heard before the Board) finding that, in the good faith opinion of the Board, Employee is guilty of the conduct described in this definition, and specifying the particulars thereof in detail.

 

(a)           “Change in Control” means the occurrence of any one or more of the following events:

 

(i)        any “person” (as defined in Section 13(d) of the Securities Exchange Act of 1934 (the “Act”)),  other than an employee benefit plan or trust maintained by the Company, becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s outstanding securities entitled to vote generally in the election of directors (other than the private equity sponsors of the Company and their respective Affiliates);

 

(ii)       at any time during a period of 12  consecutive months, individuals who at the beginning of such period constituted the Board and any new member of the Board whose election or nomination for election was approved by a vote of at least  a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was so approved, cease for any reason to constitute a majority of members of the Board; or

 

(iii)      the consummation of (A) a merger or consolidation of the Company or any of its subsidiaries with any other corporation or entity, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity or, if applicable, the ultimate parent thereof) at least 50% of the combined voting power and total fair market value of the securities of the Company or such surviving entity or parent outstanding immediately after such merger or consolidation, or (B) any sale, lease, exchange or other transfer to any Person (other than an Affiliate (as defined in the Company Long Term Incentive Plan)) of assets of the Company and/or any of its subsidiaries, in one transaction or a series of related transactions, having an aggregate fair market value of more than 50% of the fair market value of the Company and its subsidiaries (the “Company Value”) immediately prior to such transaction(s), but only to the extent that, in connection with such transaction(s) or within a reasonable period thereafter, the 

 

4

 

Company’s stockholders receive distributions of cash and/or assets having a fair market value that is greater than 50% of the Company Value immediately prior to such transaction(s).

 

Notwithstanding the foregoing, in no event shall a Change in Control be deemed to have occurred with respect to Employee if Employee is part of a “group” within the meaning of Section 13(d)(3) of the Act that consummates the Change in Control transaction.  In addition, for purposes of the definition of Change in Control, a person engaged in business as an underwriter of securities shall not be deemed to be the beneficial owner of, or to beneficially own, any securities acquired through such person’s participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Date of Termination of Employment” shall mean (i) if Employee’s employment with the Company is terminated by his death, the date of Employee’s death, or (ii) if Employee’s employment with the Company is terminated for any reason whatsoever other than Employee’s death, the earlier of the date indicated in the Notice of Termination of Employment or the date specified by the Company pursuant to Section 7.02.

 

“Disability” shall mean, at any time the Company or any Affiliate sponsors a long-term disability plan that covers Employee and other Employee employees of the Company, “disability” as defined in such long-term disability plan for the purpose of determining a participant’s eligibility for benefits; provided, however, if the long-term disability plan contains multiple definitions of disability, then “Disability” shall refer to that definition of disability which, if Employee qualified for such disability benefits, would provide coverage for the longest period of time.  The determination of whether Employee has a Disability shall be made by the person or persons required to make final disability determinations under the long-term disability plan.  At any time the Company or any Affiliate does not sponsor such a long-term disability plan, Disability shall mean Employee’s inability to perform, with or without reasonable accommodation, the essential functions of his position with the Company for a total of three months during any six-month period as a result of incapacity due to mental or physical illness, as determined by a physician selected by the Company or its insurers and acceptable to Employee or Employee’s legal representative, such agreement as to acceptability not to be unreasonably withheld or delayed.  Any refusal by Employee to submit to a medical examination for the purpose of determining Disability shall be deemed to constitute conclusive evidence of Employee’s Disability.

 

“Effective Date” shall mean the date of this Agreement.

 

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“Good Reason” shall mean the occurrence of any of the following events: (i) a material diminution in Employee’s base salary, (ii) a material diminution in Employee’s authority, duties, responsibility or roles as set forth in Sections 3.01 and 3.02, (iii) a material breach of this Agreement by the Company or (iv) relocation of the geographic location of Employee’s principal place of employment by more than 75 miles from Houston, Texas.

 

Notwithstanding the preceding provisions of this definition or any other provision in this Agreement to the contrary, any assertion by Employee of a termination of employment for “Good Reason” shall not be effective unless all of the following conditions are satisfied: (A) the condition described in clauses (i) or (ii) of this definition giving rise to Employee’s termination of employment must have arisen without Employee’s consent; (B) Employee must provide written notice to the Company of such condition in accordance with Section 15.07 within 45 days of the initial existence of the condition; (C) the condition specified in such notice must remain uncorrected for 30 days after receipt of such notice by the Company; and (D) the date of Employee’s termination of employment must occur within 90 days after the initial existence of the condition specified in such notice.

 

“Inventions” shall have the meaning assigned to such term in Article 12.

 

“IPO” shall mean the underwritten public offering of shares of the Company’s common stock pursuant to Registration Statement No. 333-161734 on Form S-1 filed with the Securities and Exchange Commission.

 

“Involuntary Termination” shall mean any termination of Employee’s employment with the Company (i) by the Company without Cause or (ii) by Employee for Good Reason.  For the avoidance of doubt, the term “Involuntary Termination” does not include a termination of Employee’s employment with the Company for any other reason whatsoever, including, without limitation, (A) by the Company for Cause, (B) by Employee without Good Reason or (C) as a result of Employee’s death or Disability.

 

“Non-Compete Period” shall have the meaning assigned to such term in Section 10.01(b).

 

“Notice of Termination of Employment” shall have the meaning assigned to such term in Section 7.02.

 

“Partnership Agreement” shall mean the Fourth Amended and Restated Agreement of Limited Partnership of Cobalt International Energy, L.P., as amended.

 

“Pro Rata Bonus” shall mean an amount equal to the product of (i) the actual annual bonus Employee would have been entitled to receive, based on the Company’s actual performance through the end of the calendar year in which 

 

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Employee’s termination of employment with the Company occurred, determined as if he had continued his employment with the Company through the end of such calendar year and (ii) a fraction, the numerator of which is the number of days during the calendar year through the date of Employee’s termination of employment with the Company and the denominator of which is 365.

 

“Pro Rata Bonus Payment Date” shall mean, with respect to a Pro Rata Bonus for a particular calendar year, the date on which annual bonuses for such calendar year are generally paid to employees of the Company who have not terminated employment with the Company, but in no event earlier than January 1 of the year following such calendar year nor later than December 31 of the year following such calendar year.

 

“Restricted Stock” shall mean the 118,536 restricted shares of the Company’s common stock issued to Employee in connection with the IPO under the Company’s Long Term Incentive Plan and a Restricted Stock Award Agreement (Class C Restrictions).

 

“Safe Harbor Amount” shall mean 2.99 times Employee’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.

 

“Separation from Service” shall mean, with respect to Employee, the (i) cessation of all services performed by Employee for the Company or (ii) permanent decrease in the level of services performed by Employee for the Company (whether as an employee or as an independent contractor) to no more than 20 percent of the average level of services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Company, if Employee has been providing services to the Company for less than 36 months).

 

“Severance Amount” shall mean (i) if Employee incurs an Involuntary Termination prior to a Change in Control or on or after the second anniversary of the Change in Control (to the extent applicable), 100% of Annualized Base Salary and (ii) if Employee incurs an Involuntary Termination on the date of the Change in Control or prior to the second anniversary of the Change in Control, 100% of Annualized Base Salary.

 

ARTICLE 2
 EFFECTIVENESS; TERM OF AGREEMENT; TERMINATION OF SEVERANCE AGREEMENT; 
 EXTENSION OF TERM OF AGREEMENT

 

Section 2.01. Effectiveness; Term of Agreement; Termination of Severance Agreement.  This Agreement shall become effective upon the Effective Date.  Subject to an earlier termination of Employee’s employment with the Company pursuant to Article 7, this Agreement shall terminate and be of no further force or 

 

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effect on the Agreement Termination Date.  Upon the effectiveness of this Agreement, the Severance Agreement shall terminate and be of no further force or effect.

 

Section 2.02.  Extension of Term of Agreement.  (a) Upon written notice by either party that is accepted by the other party not later than the November 30 that immediately precedes the then-applicable Agreement Scheduled Termination Date, the term of this Agreement shall be extended to the December 31 that immediately follows such Agreement Scheduled Termination Date such that such December 31 shall be the new Agreement Scheduled Termination Date.

 

(b)           Employee agrees that, following the Company’s written request to Employee that is made not later than the October 1 that immediately precedes the then-applicable Agreement Scheduled Termination Date, Employee will continue to be employed under this Agreement until the earlier of (i) the date on which an individual other than Employee commences employment with the Company as its President or Chief Operating Officer and (ii) the December 31 that immediately follows such Agreement Scheduled Termination Date (such earlier date, the “Extension Termination Date”).  The Company agrees to use commercially reasonable efforts to employ an individual as its President or Chief Operating Officer commencing as soon as practicable following such Agreement Scheduled Termination Date.

 

ARTICLE 3
 POSITIONS AND DUTIES

 

Section 3.01.  Employment; Positions; Reporting Relationship.  Employee shall serve as Chief Operating Officer of the Company.  Employee shall report directly to the Chief Executive Officer of the Company; provided that, if during Employee’s employment hereunder an individual commences serving as President of the Company, then from such commencement date through the earliest of (i) the first anniversary thereof, (ii) the then-applicable Agreement Scheduled Termination Date or (iii) such earlier date as may be mutually agreed by the Company and Employee (such earliest date, the “Transition Termination Date”), Employee shall report to such individual rather than to the Chief Executive Officer of the Company.

 

Section 3.02.  Duties and Services.  Employee agrees to serve in the position(s) assigned pursuant to Section 3.01 and to perform diligently and to the best of Employee’s abilities the duties and services pertaining to such position(s), as well as such additional duties and services that Employee from time to time may be reasonably directed to perform by the Company. Employee’s employment shall also be subject to the policies maintained and established by the Company that are of general applicability to the Company’s Employees, as such policies may be amended from time to time.

 

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Section 3.03.  Other Interests.  Employee agrees, during the period of Employee’s employment by the Company, to devote substantially all of Employee’s business time, energy and best efforts to the business and affairs of the Company and its Affiliates.  Notwithstanding the foregoing, the parties acknowledge and agree that Employee may (a) engage in and manage Employee’s passive personal investments and (b) engage in charitable and civic activities; provided, however, that such activities shall be permitted so long as such activities do not conflict with the business and affairs of the Company or interfere with Employee’s performance of Employee’s duties hereunder.

 

ARTICLE 4
 CERTAIN EMPLOYEE REPRESENTATIONS AND AGREEMENTS; EQUITY GRANT

 

Section 4.01.  Transfer Restrictions.   Employee hereby represents to the Company that he has read and understands, and agrees to be bound by, the transfer restrictions set forth in Annex I to this Agreement.

 

Section 4.02.  Life Insurance.  This Agreement constitutes written notice to Employee that (a) the Company or an Affiliate may insure Employee’s life, (b) the Company or an Affiliate shall have the right to determine the amount of insurance and the type of policies, and (c) the Company or an Affiliate will be the beneficiaries of any proceeds payable under such policies upon the death of Employee.  Employee hereby irrevocably consents to being insured under the policies described in the preceding sentence and to the coverage under such policies continuing after the termination of this Agreement and/or Employee’s termination of employment with the Company and its Affiliates.  Employee agrees and acknowledges that Employee shall not have the right to designate the beneficiary or beneficiaries of the death benefit payable pursuant to such policies, and neither Employee nor any other person claiming through Employee shall have any interest in such policies.  Employee shall (i) furnish any and all information reasonably requested by the Company, any Affiliate or the insurer to facilitate the issuance of the life insurance policy or policies described in this paragraph or any adjustment to any such policy, and (ii) take such physical examinations as the Company, any Affiliate or the insurer deems necessary.  Employee shall incur no financial obligation by executing any required document pursuant to this Section 4.02, and shall have no interest in any such policy.

 

Section 4.03.  Equity Grant.  On the Effective Date, Employee will receive (i) 50,000 restricted shares of the Company’s common stock subject to the terms and conditions of the Company Long Term Incentive Plan and a Restricted Stock Award Agreement substantially in the form attached as Exhibit A to this Agreement and (ii) 50,000 restricted shares of the Company’s common stock subject to the terms and conditions of the Company Long Term Incentive Plan and a Restricted Stock Award Agreement substantially in the form attached as Exhibit B to this Agreement.

 

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ARTICLE 5
 CONFIDENTIAL INFORMATION, INVENTIONS,
 BUSINESS OPPORTUNITIES AND GOODWILL

 

Section 5.01.  Confidential Information, Inventions, Business Opportunities and Goodwill.  The Company shall (a) disclose to Employee, and place Employee in a position to have access to or develop, confidential or proprietary information and Inventions of the Company (or its Affiliates); (b) entrust Employee with business opportunities of the Company (or its Affiliates); and (c) place Employee in a position to develop business good will on behalf of the Company (or its Affiliates).

 

ARTICLE 6
 COMPENSATION AND BENEFITS

 

Section 6.01.  Base Salary.  During the term of this Agreement, Employee shall receive a minimum, annualized base salary of $660,000 (the “Base Salary”).  The Base Salary shall be reviewed periodically by the Board (or a committee thereof) and, in the sole discretion of the Board (or a committee thereof), the Base Salary may be increased (but not decreased) effective as of any date determined by the Board (or a committee thereof).  The Base Salary shall be paid in equal installments in accordance with the Company’s standard policy regarding payment of compensation to Employees but no less frequently than monthly.

 

Section 6.02.  Bonuses.  Employee shall be eligible to receive an annual, calendar-year bonus (payable in a single lump sum) based on criteria determined in the discretion of the Board (or a committee thereof) (the “Annual Bonus”), it being understood that (a) the target bonus at planned or targeted levels of performance shall equal 100% of the Base Salary and (b) the actual amount of each Annual Bonus shall be determined in the discretion of the Board (or a committee thereof).  The Company shall use commercially reasonable efforts to pay each Annual Bonus with respect to a calendar year on or before March 15 of the following calendar year (and in no event shall an Annual Bonus be paid after December 31 of the following calendar year).

 

Section 6.03.  Other Benefits.  During Employee’s employment hereunder, Employee shall be permitted to participate in all benefit plans and programs of the Company, including improvements or modifications of the same, which are now, or may hereafter be, available to other senior Employees of the Company.  The Company shall not, however, by reason of this Section 6.03, be obligated to institute, maintain, or refrain from changing, amending, or discontinuing, any such benefit plan or program, so long as such changes are similarly applicable to other senior employees generally.

 

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Section 6.04.  Expenses.  The Company shall reimburse Employee for all reasonable business expenses incurred by Employee in performing services hereunder, including all expenses of travel and living expenses while away from home on business or at the request of and in the service of the Company; provided, in each case, that such expenses are incurred and accounted for in accordance with the policies and procedures established by the Company.  Any such reimbursement of expenses shall be made by the Company upon or as soon as practicable following receipt of supporting documentation reasonably satisfactory to the Company (but in any event not later than the close of Employee’s taxable year following the taxable year in which the expense is incurred by Employee); provided, however, that, upon Employee’s termination of employment with the Company, in no event shall any additional reimbursement be made prior to the date that is six months after Employee’s termination of employment with the Company to the extent such payment delay is required under Section 409A(a)(2)(B)(i) of the Code.

 

Section 6.05.  Vacation and Sick Leave.  During Employee’s employment hereunder, Employee shall be entitled to (a) sick leave in accordance with the Company’s policies applicable to its senior Employees and (b) five weeks paid vacation each calendar year (none of which may be carried forward to a succeeding year except to the extent permitted under the Company’s vacation policy generally applicable to its salaried employees).  For the calendar year during which the Effective Date occurs, Employee’s sick leave and vacation entitlement for the portion of such year from and after the effective date of this Agreement shall be equal to the entitlements described in the preceding sentence but reduced by the amount of sick leave and vacation Employee used during the portion of such year preceding the Effective Date while employed by the Company.

 

Section 6.06.  Offices.  Subject to Articles 3 and 6, Employee agrees to serve without additional compensation, if elected or appointed thereto, as a director of the Company or any Affiliate and as a member of any committees of the board of directors of any such entities, and in one or more employee positions of any Affiliate.

 

ARTICLE 7
 TERMINATION OF EMPLOYMENT AND NOTICE OF TERMINATION OF EMPLOYMENT

 

Section 7.01.  Termination of Employment.  Employee’s employment with the Company may be terminated by the Company or Employee under the following circumstances: (a) Employee’s death; (b) Employee’s Disability; (c) termination by the Company for Cause; (d) termination by the Company without Cause; (e) resignation by Employee for Good Reason; or (f) resignation by Employee without Good Reason.  For all purposes of this Agreement, 

 

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Employee shall be considered to have terminated employment with the Company when Employee incurs a Separation from Service.

 

Section 7.02.  Notice of Termination of Employment.  Any termination of Employee’s employment by the Company or by Employee (other than termination by reason of Employee’s death) shall be communicated by a written notice to the other party hereto indicating the specific termination provision in the first sentence of Section 7.01 relied upon, setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provision so indicated, and specifying a Date of Termination of Employment which, if submitted by Employee, shall be at least 30 days following the date of such notice (a “Notice of Termination of Employment”); provided, however, that in the case of any Notice of Termination of Employment submitted by Employee, the Company may, in its sole discretion, advance the Date of Termination of Employment to any date following the Company’s receipt of the Notice of Termination of Employment (and, if the Date of Termination of Employment is so advanced, it shall not change the basis for Employee’s termination nor be construed or interpreted as a termination of Employee’s employment by the Company for any reason whatsoever).  A Notice of Termination of Employment submitted by the Company may provide for a Date of Termination of Employment on the date Employee receives the Notice of Termination of Employment, or any date thereafter elected by the Company in its sole discretion.  The failure by Employee or the Company to set forth in the Notice of Termination of Employment any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of Employee or the Company hereunder or preclude Employee or the Company from asserting such fact or circumstance in enforcing Employee’s or the Company’s rights hereunder.

 

Section 7.03.  Deemed Resignations.  Unless otherwise agreed to in writing by the Company and Employee prior to the termination of Employee’s employment, any termination of Employee’s employment shall constitute an automatic resignation of Employee:  (i) as an officer of the Company and each Affiliate; (ii) as a member of the Board (if applicable); (iii) from the board of directors or similar governing body of any Affiliate; and (iv) from the board of directors or similar governing body of any corporation, limited liability entity or other entity in which the Company or any Affiliate holds an equity interest and with respect to which board or similar governing body Employee serves as the Company’s or such Affiliate’s designee or other representative.

 

ARTICLE 8
 SEVERANCE BENEFITS

 

Section 8.01.  Death, Disability, Termination for Cause or Resignation Without Good Reason.  If Employee’s employment with the Company is 

 

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terminated by the Company for Cause or by Employee without Good Reason, or if such employment terminates by reason of Employee’s death or Disability, then, upon such termination, Employee (or Employee’s estate) shall be entitled to receive the Accrued Obligations (other than in the case of a termination by the Company for Cause, any bonus or incentive compensation that under the applicable plan requires Employee to be employed on the date of payment).  If Employee’s employment with the Company terminates by reason of death or Disability, then the Company shall also pay to Employee (or Employee’s estate or legal representatives, as applicable) on the Pro Rata Bonus Payment Date an amount in cash equal to the Pro Rata Bonus.

 

Section 8.02.  Involuntary Termination.  If Employee’s employment with the Company shall be subject to an Involuntary Termination, Employee shall be entitled to receive the Accrued Obligations and, subject to the provisions of Section 15.09, the Company will, as additional compensation for services rendered to the Company (including its Affiliates), pay to Employee the following amounts and take the following actions after the last day of Employee’s employment with the Company:

 

(a)           if the Involuntary Termination occurs prior to a Change in Control or on or after the second anniversary of the Change in Control, pay to Employee in equal monthly installments an amount in cash equal to the Severance Amount, the first installment to be paid on the date that is 60 days after the date of Employee’s termination of employment with the Company and subsequent installments to be paid on the first day of each of the next 11 calendar months thereafter or such lesser number of installments such that no installment is paid after March 1st of the year following the year in which Employee’s employment was terminated, with each installment equal to the Severance Amount divided by the total number of such installments to be paid;

 

(b)           if the Involuntary Termination occurs on the date of a Change in Control or before the second anniversary of the Change in Control, pay to Employee on the date that is 60 days after the date of Employee’s termination of employment with the Company a lump sum cash payment in an amount equal to the Severance Amount;

 

(c)           pay to Employee on the Pro Rata Bonus Payment Date an amount in cash equal to the Pro Rata Bonus; provided, however, that if this paragraph applies with respect to a Pro Rata Bonus that is intended to constitute performance-based compensation within the meaning of, and for purposes of, Section 162(m) of the Code, then this paragraph shall apply with respect to such Pro Rata Bonus only to the extent the applicable performance criteria have been satisfied as certified by a committee of the Board as required under Section 162(m) of the Code; and

 

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(d)           during the portion, if any, of the 18-month period following the date of Employee’s termination of employment with the Company that Employee elects to continue coverage for Employee and Employee’s eligible dependents under the Company’s group health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and/or Sections 601 through 608 of the Employee Retirement Income Security Act of 1974, as amended, the Company shall promptly reimburse Employee on a monthly basis for the difference, if any, between (i) the amount Employee pays to effect and continue such coverage and (ii) the amount charged to a similarly situated active employee of the Company for similar coverage.

 

Notwithstanding the foregoing, if Employee is entitled to receive severance payments under Section 8.02(a) or (b), as applicable, and under Section 8.02(c), the aggregate amount payable pursuant to Sections 8.02(a) or (b), as applicable, and Section 8.02(c) (the “Aggregate Severance Amount”) shall be reduced (but not below zero) by the fair market value, as of the Employee’s Date of Termination of Employment, of the Restricted Stock held by Employee that has then vested, or that may vest at any time after the Employee’s Date of Termination of Employment (the “Carried Amount”).  If the Carried Amount exceeds the Aggregate Severance Amount prior to the commencement of payment of any of the severance benefits described in Section 8.02(a) or (b), as applicable, and Section 8.02(c), then Executive shall not be entitled to receive any payments pursuant to 8.02(a) or (b), as applicable, or Section 8.02(c).  If the Carried Amount does not exceed the Aggregate Severance Amount prior to the commencement of payment of any of the severance benefits described in Sections 8.02(a) or (b), as applicable, and Section 8.02(c), then the reduction shall be effected as follows: first, the payment provided for in Section 8.02(c) shall be reduced by the Carried Amount if the Carried Amount or any portion thereof has been paid prior to the payment date provided for in Section 8.02(c), and if necessary, payments of the amounts provided for in Section 8.02(a) or (b), as applicable, shall be reduced pro rata by any additional Carried Amount.   If at any time after the commencement of payment of the severance benefits described in Section 8.02(a) or (b), as applicable, and Section 8.02(c), the Carried Amount not yet applied as a reduction in the severance benefits exceeds the remaining severance benefits to be paid, the Company shall cease to make any further payments in respect of either severance benefit, but no amount previously paid to Executive pursuant to Section 8.02(a) or (b), as applicable, and Section 8.02(c) shall be repaid to the Company.

 

Section 8.03.  Death, Disability or Involuntary Termination After Agreement Termination Date.  If, after the Agreement Termination Date but prior to the payment date of the Annual Bonus for the calendar year in which the Agreement Termination Date occurs, Employee’s employment with the Company terminates by reason of the Employee’s death or by reason of what would have otherwise qualified as Disability or Involuntary Termination under this Agreement if this Agreement was still in effect at the time of such termination of 

 

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employment, the Company shall pay to Employee (or Employee’s estate or legal representatives, as applicable), subject to the provisions of Section 15.09, on the Pro Rata Bonus Payment Date an amount in cash equal to the Pro Rata Bonus.

 

ARTICLE 9
 INTEREST ON LATE PAYMENTS

 

Section 9.01.  Interest on Late Payments.  If any payment provided for in Section 8.02(a), (b) or (c) or Section 8.03 is not made when due, then the Company shall pay to Employee interest on the amount payable from the date that such payment should have been made under such Section until such payment is made, which interest shall be calculated at 5% plus the prime rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at its principal office in New York, and shall change when and as any such change in such prime rate shall be announced by such bank.

 

ARTICLE 10
 COMPETITION

 

Section 10.01.  Competition.

 

(a)           Employee and the Company agree to the restrictive covenants of this Article 10:  (i) in consideration for the confidential information provided by the Company to Employee pursuant to Article 5 or otherwise during the course of his employment; (ii) as part of the consideration for the compensation and benefits to be paid to Employee by the Company; (iii) to protect the (A) trade secrets and confidential information of the Company disclosed or entrusted to Employee by the Company and (B) business goodwill of the Company or its subsidiaries developed through the efforts of Employee and/or the business opportunities disclosed or entrusted to Employee by the Company; and (iv) as an additional incentive for the Company to enter into this Agreement.

 

(b)           Subject to the exceptions set forth in the last sentence of this Section 10.01(b), Employee shall not at any time while employed by the Company and for a 1-year period following the Date of Termination of Employment (the “Non-Compete Period”), directly or indirectly engage in, have any equity interest in, be affiliated with, or manage or operate any person, firm, corporation, partnership, entity or business (whether as director, officer, employee, agent, representative, partner, member, security holder, consultant or otherwise) that engages in any business that competes with any Business (as defined below) of the Company in the states within the United States (or District of Columbia, if applicable) and in the geographic regions outside of the United States (i) in which the Company conducts operations or (ii) with respect to which the Company devotes more than de minimis resources in the furtherance of the Business; provided, however, that 

 

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Employee shall be permitted to acquire a passive stock interest in such a business if the stock acquired is publicly traded and is not more than two percent of the outstanding interest in such business.  Notwithstanding the foregoing or anything to the contrary in this Agreement, it shall not be a violation of this Article 10 for Employee to (A) provide services to any person or entity engaged in the Business if Employee is not involved, directly or indirectly, in the management, supervision or operations of the Business (including by reason of any individual reporting to Employee) and the gross revenues generated by the Business do not constitute more than 33% of the consolidated gross revenues of such person or entity and its affiliates and (B) provide services to or otherwise be affiliated with a venture capital or private equity firm that holds investments in entities engaged in the Business if Employee is not involved, directly or indirectly, in the identification, evaluation, recommendation, acquisition, management, operation, supervision or disposition of such investments, and the gross revenues generated by such Business do not constitute more than the 33% of the consolidated gross revenues of such firm and its affiliates.

 

(c)           During the Non-Compete Period, Employee shall not, directly or indirectly, recruit or otherwise solicit or induce any employee of the Company, except on behalf of the Company, (i) to terminate his employment with the Company, or (ii) to establish any relationship with Employee or any of his affiliates for any business purpose competitive with the Business of the Company, provided, however, that a general solicitation of the public for employment shall not constitute a solicitation hereunder so long as such general solicitation is not designed to target any employee of the Company.

 

(d)           Employee and the Company agree that the foregoing restrictions are reasonable under the circumstances, are necessary to protect the Company’s legitimate business interests and that any breach of such restrictions would cause irreparable injury to the Company.  Employee understands that the foregoing restrictions may limit Employee’s ability to engage in certain businesses anywhere in the United States and outside the United States during the Non-Compete Period but acknowledges that he will receive sufficiently high remuneration and other benefits from the Company to justify such restrictions.  Further, Employee acknowledges that his skills are such that he can be gainfully employed in non-competitive employment, and that the agreement not to compete will not prevent him from earning a living.  Nevertheless, in the event the terms of this Article 10 shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

 

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(e)           Employee hereby represents to the Company that he has read and understands, and agrees to be bound by, the terms of this Article 10.  Employee acknowledges that the geographic scope and duration of the covenants contained in this Article 10 are the result of arm’s-length bargaining and are fair and reasonable in light of (i) the nature and wide geographic scope of the Company’s operations of, and in, the Business, (ii) Employee’s level of control over and contact with the Company’s operations of, and in, the Business in all jurisdictions in which it is conducted, (iii) the geographic breadth in which the Company conducts the Business and (iv) the amount of consideration (including confidential information and trade secrets) that Employee is receiving from the Company.

 

(f)            As used in this Article 10, (i) the term “Company” shall include the Company and its subsidiaries and (ii) the term “Business” shall mean the exploration for, and the development and production of, oil and natural gas and the acquisition of leases and other real property in connection therewith, as such business may be expanded or altered by the Company during the period of Employee’s employment by the Company; provided, that any business or endeavor shall cease to be the “Business” if the Company is not or ceases to be engaged in such business or endeavor.

 

(g)           In consideration of the Company’s promises herein, during the Non-Compete Period, Employee promises to disclose to the Company any employment, consulting, or other service relationship that Employee enters into after the termination of Employee’s employment with the Company for any reason.  Such disclosure shall be made within seven business days after Employee enters into such employment, consulting or other service relationship.  Employee expressly consents to and authorizes the Company to disclose both the existence and terms of this Agreement to any future employer or recipient of Employee’s services and to take any steps the Company deems necessary to enforce this Agreement.

 

ARTICLE 11
 NONDISCLOSURE OF CONFIDENTIAL AND PROPRIETARY INFORMATION

 

Section 11.01.  Nondisclosure of Confidential and Proprietary Information.  (a)   Except in connection with the faithful performance of Employee’s duties for the Company or pursuant to Section 11.01(c) or (e), Employee shall, in perpetuity, maintain in confidence and shall not directly, indirectly or otherwise, (i) use, disseminate, disclose or publish, or use for his benefit or the benefit of any person, firm, corporation or other entity, any (A) confidential or proprietary information or trade secrets of or relating to the Company (including, without limitation, intellectual property in the form of patents, trademarks and copyrights and applications therefor, ideas, inventions, works, discoveries, improvements, information, documents, formulae, practices, processes, methods, developments, source code, modifications, technology, techniques, data, programs, other know-

 

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how or materials, in each case, that are confidential and/or proprietary and owned, developed or possessed by the Company, whether in tangible or intangible form) or (B) confidential or proprietary information with respect to the Company’s operations, processes, products, inventions, business practices, strategies, business plans, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, prospects and compensation paid to employees or other terms of employment or (ii) deliver to any person, firm, corporation or other entity any document, record, notebook, computer program or similar repository of or containing any such confidential or proprietary information or trade secrets.  The parties hereby stipulate and agree that as between them the foregoing matters are important, material and confidential proprietary information and trade secrets and materially affect the successful conduct of the businesses of the Company (and any successor or assignee of the Company).

 

(b)           Upon the termination of Employee’s employment with the Company for any reason, Employee will promptly deliver to the Company all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents and electronically stored information, in each case, that are confidential or proprietary to the Company, or any other confidential or proprietary documents (including electronically stored information) concerning the Company’s customers, business plans, strategies, products or processes.

 

(c)           Employee may respond to a lawful and valid subpoena or other legal process relating to the business of the Company or the performance of his duties on behalf of the Company but shall (i) give the Company prompt notice thereof, (ii) make available to the Company and its counsel the documents and other information sought that are not subject to a binding confidentiality agreement and (iii) assist such counsel at Company’s expense in resisting or otherwise responding to such process.

 

(d)           As used in this Article 11 and Article 12, the term “Company” shall include the Company and its subsidiaries.

 

(e)           Nothing in this Agreement shall prohibit Employee from (i) disclosing information and documents when required by law, subpoena, court order or legal process, (ii) disclosing information and documents to his immediate family members or, for the purpose of securing legal or tax advice, attorney or tax adviser (provided that the persons to whom such disclosures are made shall be informed of their obligation to maintain the strict confidentiality of any information provided to them), (iii) disclosing the post-employment restrictions in this Agreement in confidence to any potential new employer or person or entity to whom he may provide consulting services, or (iv) retaining, at any time, his personal correspondence and rolodex or address book and documents related to his own personal benefits, entitlements and obligations.

 

18

 

ARTICLE 12
 INVENTIONS

 

Section 12.01.  Inventions.  All rights to discoveries, inventions, improvements and innovations (including all data and records pertaining thereto) related to the business of the Company, whether or not patentable, copyrightable, registrable as a trademark, or reduced to writing, that Employee may discover, invent or originate during the period of his employment with the Company, either alone or with others and whether or not during working hours or by the use of the facilities of the Company (“Inventions”), shall be the exclusive property of the Company.  Employee shall promptly disclose all Inventions to the Company, shall execute at the request of the Company any assignments or other documents the Company may deem reasonably necessary to protect or perfect its rights therein, and shall assist the Company, upon reasonable request and at the Company’s expense, in obtaining, defending and enforcing the Company’s rights therein.  Employee hereby appoints the Company as his attorney-in-fact to execute on his behalf any assignments or other documents reasonably deemed necessary by the Company to protect or perfect its rights to any Inventions.

 

ARTICLE 13
 INJUNCTIVE RELIEF

 

Section 13.01.  Injunctive Relief.  It is recognized and acknowledged by Employee that a breach of the covenants contained in Articles 10, 11, 12 and 14 will cause irreparable damage to Company and its Affiliates and their goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate.  Accordingly, Employee agrees that in the event of a breach of any of the covenants contained in Articles 10, 11 ,12 and 14, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief.

 

ARTICLE 14
 NON-DISPARAGEMENT

 

Section 14.01.  Non-Disparagement.  During Employee’s employment with the Company and following termination of his employment with the Company for any reason, (a) Employee agrees not to disparage in any material respect the Company, its subsidiaries, any of their products or practices, or any of their directors, officers, agents, representatives, members, partners or stockholders, either orally or in writing, and (b) the Company agrees that it and its subsidiaries will (i) not make any formal statements that disparage in any material respect Employee and (ii) use commercially reasonable efforts to advise its directors and officers not to disparage in any material respect Employee.

 

19

 

ARTICLE 15
 GENERAL

 

Section 15.01.  Survivorship.  The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.

 

Section 15.02.  Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before an arbitrator in Houston, Texas in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect.  Judgment may be entered on the arbitration award in any court having jurisdiction; provided, however, that the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any violation or continuation of any violation of the provisions of Articles 10, 11, 12 or 14 of this Agreement and Employee hereby consents that such restraining order or injunction may be granted without requiring the Company to post a bond.  Only individuals who are on the AAA register of arbitrators shall be selected as an arbitrator.  Within 20 days of the conclusion of the arbitration hearing, the arbitrator(s) shall prepare written findings of fact and conclusions of law.  It is mutually agreed that the written decision of the arbitrator(s) shall be valid, binding, final and non-appealable; provided however, that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration.  The Company shall bear all administrative fees and expenses of the arbitration and each party shall bear its own counsel fees and expenses except as otherwise provided in this paragraph.  If Employee makes a claim against the Company relating to the performance of, or the rights and obligations of, the Company arising under, relating to or in connection with this Agreement (a “Covered Claim by the Employee”), the arbitrators shall award Employee his reasonable legal fees and expenses if Employee prevails on one material Covered Claim by the Employee (as determined by the arbitrator).  If a claim is made by the Company against Employee relating to the performance of, or the rights and obligations of, Employee arising under, relating to or in connection with this Agreement (a “Covered Claim by the Company”), the arbitrators shall award Employee his reasonable legal fees and expenses; provided that if such Covered Claim by the Company relates to Employee’s performance or obligations under Articles 10, 11, 12 or 14, the arbitrators shall award Employee his legal fees and expenses only if the Company does not prevail on any Covered Claim by the Company relating to any such Section (as determined by the arbitrator).  Any reimbursement of reasonable legal fees and expenses required under this Section 15.02 and any reimbursement of expenses included in the Accrued Obligations payable to Employee under Article 6 shall be made not later than the close of Employee’s taxable year following the taxable year in which Employee incurs the expense; provided, however, that, upon Employee’s termination of employment with the Company, in no event shall any additional reimbursement be made prior

 

20

 

to the date that is six months after the date of Employee’s termination of employment to the extent such payment delay is required under Section 409A(a)(2)(B)(i) of the Code.  In no event shall any reimbursement be made to Employee for such fees and expenses incurred after the date that is 10 years after the date of Employee’s termination of employment with the Company.

 

Section 15.03.  Payment Obligations Absolute.  The Company’s obligation to pay Employee the amounts and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company (including its subsidiaries) may have against him or anyone else.  All amounts payable by the Company shall be paid without notice or demand.  Employee shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations to make (or cause to be made) the payments and arrangements required to be made under this Agreement.

 

Section 15.04.  Successors.  This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, by merger or otherwise.  This Agreement shall also be binding upon and inure to the benefit of Employee and his estate.  If Employee shall die prior to full payment of amounts due pursuant to this Agreement, such amounts shall be payable pursuant to the terms of this Agreement to his estate.

 

Section 15.05.  Severability.  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 15.06.  Non-alienation.  Employee shall not have any right to pledge, hypothecate, anticipate or assign this Agreement or the rights hereunder, except by will or the laws of descent and distribution.

 

Section 15.07.  Notices.  Any notices or other communications provided for in this Agreement shall be sufficient if in writing.  In the case of Employee, such notices or communications shall be effectively delivered if hand-delivered to Employee at his principal place of employment or if sent by registered or certified mail to Employee at the last address he has filed with the Company.  In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail to the Company at its principal Employee offices.

 

21

 

Section 15.08.  Controlling Law and Waiver of Jury Trial.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas.  With respect to any claim or dispute related to or arising under this Agreement, Employee and the Company hereby consent to the exclusive jurisdiction, forum and venue of the state and federal courts located in Harris County, Texas.  Notwithstanding the foregoing, Section 4.01 and the transfer restrictions set forth in Annex I shall be governed by, and construed in accordance with, the laws of the State of Delaware.  Furthermore, with respect to any claim or dispute related to or arising under Section 4.01 and the transfer restrictions set forth in Annex I, Employee and the Company hereby consent to the exclusive jurisdiction, forum and venue of the Court of Chancery of the State of Delaware.  Each of the parties hereto hereby irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or related to this Agreement or the transactions contemplated hereby.

 

Section 15.09.  Release and Delayed Payment Restriction.

 

(a)        As a condition to the receipt of any benefit under Article 8 hereof (except in the case of the termination of Employee’s employment with the Company by reason of Employee’s death or Disability and except for the Accrued Obligations), Employee shall first execute a release in the form attached hereto as Exhibit C (with such changes therein as the Company may reasonably require to reflect changes in applicable law and the circumstances relating to the termination of Employee’s employment), releasing the Company and certain other persons and entities from certain claims and other liabilities.

 

(b)        The release described in Section 15.09(a) hereof must be effective and irrevocable within 55 days after the date of the termination of Employee’s employment with the Company.  Notwithstanding any provision in this Agreement to the contrary, if the payment of any amount or benefit under this Agreement would be subject to additional taxes and interest under Section 409A of the Code because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, then any such payment or benefit that Employee would otherwise be entitled to during the first six months following the date of Employee’s termination of employment shall be accumulated and paid or provided, as applicable, on the date that is six months after the date of Employee’s termination of employment (or if such date does not fall on a business day of the Company, the next following business day of the Company), or such earlier date upon which such amount can be paid or provided under Section 409A of the Code without being subject to such additional taxes and interest.  If this Section 15.09(b) becomes applicable such that the payment of any amount is delayed, any payments that are so delayed shall accrue interest on a non-compounded basis, from the date such payment would have been made had this Section 15.09(b) not applied to the actual date of payment, at the prime rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at its principal office in New York on the date of Employee’s termination 

 

22

 

of employment (or the first business day following such date if such termination does not occur on a business day) and shall be paid in a lump sum on the actual date of payment of the delayed payment amount.  Employee hereby agrees to be bound by the Company’s determination of its “specified employees” (as such term is defined in Section 409A of the Code) in accordance with any of the methods permitted under the regulations issued under Section 409A of the Code.

 

Section 15.10.  Full Settlement.  If Employee is entitled to and receives the benefits provided hereunder, performance of the obligations of the Company hereunder will constitute full settlement of all claims that Employee might otherwise assert against the Company on account of his termination of employment.

 

Section 15.11.  Unfunded Obligation.  The obligation to pay amounts under this Agreement is an unfunded obligation of the Company, and no such obligation shall create a trust or be deemed to be secured by any pledge or encumbrance on any property of the Company.

 

Section 15.12.  No Right to Continued Employment.  Employee and the Company recognize and agree that subject to the terms of this Agreement (including the notice provisions of Section 7.02), (i) the Company may terminate Employee’s employment at any time, for any reason or no reason at all and (ii) Employee may terminate his employment at any time, for any reason or no reason at all.

 

Section 15.13.  Withholding of Taxes and Other Employee Deductions.  The Company may withhold from any benefits and payments made pursuant to this Agreement (whether actually or constructively made to Employee or treated as included in Employee’s income under Section 409A of the Code) all federal, state, city, foreign and other applicable taxes and withholdings as may be required pursuant to any law or governmental regulation or ruling and all other customary deductions made with respect to the Company’s employees generally.

 

Section 15.14.  Number and Gender.  Wherever appropriate herein, words used in the singular shall include the plural and the plural shall include the singular.  The masculine gender where appearing herein shall be deemed to include the feminine gender.

 

Section 15.15.  Entire Agreement.  This Agreement, including the Annexes and Exhibits attached hereto, constitutes the entire agreement of the parties with regard to the subject matter hereof and supersedes any and all prior understandings, agreements or correspondence between the parties, including without limitation, the Severance Agreement.  Any modification of this Agreement will be effective only if it is in writing and signed by the party to be charged.

 

23

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year first written above.

 

	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Van P.   Whitfield
    
	
 
    	
 
    	
Name:
    	
Van P. Whitfield
    
	
 
    	
 
    	
Title:
    	
Chief Operating   Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
COBALT INTERNATIONAL   ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Joseph H.   Bryant
    
	
 
    	
 
    	
Name:
    	
Joseph H. Bryant
    
	
 
    	
 
    	
Title:
    	
Chairman and Chief   Executive Officer
    

 

24

 

ANNEX I

 

TRANSFER RESTRICTIONS

 

Employee agrees not to Transfer prior to the Termination Date the Specified Number of the shares of Company common stock issued to the Employee upon conversion of Class A and Class B Interests (as defined in the Partnership Agreement) in connection with the IPO.  Employee will have the discretion to determine, from time to time, which specific shares of Company common stock are subject to this limitation.

 

For purposes of this agreement, the following terms have the following meanings:

 

“Specified Number” means, as of any date, a number of shares equal to the sum of

 

(a) the product of 60% (or on or after a Change in Control, the lesser of 60% and the remainder set forth in (x) below) and the aggregate number of shares of Company common stock issued to Employee upon conversion of Class B Interests in connection with the IPO, plus

 

(b) the product of (x) one minus a fraction, the numerator of which is the aggregate number of shares of Company common stock owned by the Sponsors immediately after the closing of the IPO and sold by the Sponsors after the closing of the IPO and prior to such date (other than with respect to any shares of common stock sold by any Sponsor to any of its Affiliates), and the denominator of which is the aggregate number of shares of Company common stock owned by the Sponsors immediately after the closing of the IPO, and (y) the aggregate number of shares of Company common stock issued to Employee upon conversion of Class A Interests in connection with the IPO.

 

If, at any time prior to the Termination Date, the outstanding shares of Company common stock shall be changed into a different number of shares or a different class (including by reason of any reclassification, recapitalization, stock split (including reverse stock split) or combination, exchange or readjustment of shares, or any stock dividend or distribution paid in stock thereon with a record date during such period or any similar transaction), the calculation of the Specified Number shall be appropriately adjusted.

 

“Sponsors” shall have the meaning as set forth in the Company’s certificate of incorporation as of the closing of the IPO.

 

“Termination Date” means the earliest of (i) June 21, 2012, (ii) the date of termination of employment with the Company other than a

 

Annex I-1

 

termination by the Company for Cause, (iii) the first date on which a Change in Control occurs; provided that if prior to the date of such Change in Control, the Company or the acquiror requests in writing that Employee continue to provide services to the Company (or the successor or surviving entity) for a specified period not to exceed 12 months after the Change in Control, the Termination Date shall not expire on the date of the Change in Control but shall expire on the earliest of (x) the last day of the requested period, (y) the date provided in clause (i) or (z) the date, if any, of the termination of employment by the Company (or the successor or surviving entity) without Cause, by Employee for Good Reason or due to Employee’s death or Disability or (iv) the first date on which the Sponsors have sold a number of shares of Company common stock equal to the aggregate number owned by the Sponsors immediately after the closing of the IPO (other than with respect to any shares of common stock sold by any Sponsor to any of its Affiliates).

 

“Transfer” means (a) offer, sell, pledge, or hypothecate any legal or beneficial interest, including the grant of an option or other right or otherwise transfer or enter into an agreement to do so or (b) entry into any hedge, swap or any other agreement that transfers, in whole or in part, any of the economic consequences of ownership (whether such transaction is settled by delivery of cash, shares or otherwise).

 

All capitalized terms defined in the agreement to which this Annex is attached and used but not otherwise defined herein are used as therein defined.

 

Notwithstanding the foregoing, Employee may Transfer:

 

(i)                   any shares of Company common stock issued to Employee upon conversion of Class A and Class B Interests in connection with the IPO in excess of the Specified Number, so long as such shares are not shares of Restricted Stock.

 

(ii)                  any shares of Company common stock issued to Employee upon conversion of Class A and Class B Interests in connection with the IPO (including all or a portion of the Specified Number of such shares):

 

(a) by will or the laws of descent and distribution,

 

(b) by gift to a spouse, former spouse, lineal ancestor, lineal descendant, legally adopted child, sibling or lineal descendant or legally adopted child of a sibling of Employee or a trust or other entity for the primary benefit of Employee or any such persons if the transferee agrees in writing to be bound by the provisions of this agreement, or

 

Annex I-2

 

(c) to any institution qualified as tax-exempt under Section 501(c)(3) of the Internal Revenue Code of 1986 if the institution agrees in writing to be bound by the provisions of this agreement.

 

(iii)                 with the consent of the Compensation Committee of the Company’s board of directors (which consent will not be unreasonably withheld), a number of shares of Company common stock, in addition to the shares otherwise transferable pursuant to (i) above, necessary to pay income taxes arising from the vesting of any Restricted Shares issued to Employee upon conversion of Class B Interests in connection with the IPO.

 

(iv)                 if the Company’s board of directors (or a committee thereof) in its reasonable judgment makes a good faith determination that Employee has incurred an unforeseeable emergency resulting in severe financial hardship, then Employee may sell a number of shares of Company common stock reasonably necessary to satisfy the emergency need (which may include amounts necessary to pay Federal, state, local or foreign income and employment taxes reasonably anticipated to result from the sale), such number to be determined through the good faith consultation of the Company’s board of directors and Employee; provided that, in all cases, any such sale shall be made only from shares of Company common stock with respect to which Employee has a 100% vested and nonforfeitable interest.

 

Annex I-3

 

EXHIBIT A

 

COBALT INTERNATIONAL ENERGY, INC.

LONG TERM INCENTIVE PLAN

 

Restricted Stock Award Agreement

 

You have been granted restricted stock (this “Award”) on the following terms and subject to the provisions of Attachment A and the Cobalt Energy International, Inc. Long Term Incentive Plan (the “Plan”).  Unless defined in this Award agreement (including Attachment A, this “Agreement”), capitalized terms will have the meanings assigned to them in the Plan.  In the event of a conflict among the provisions of the Plan, this Agreement and any descriptive materials provided to you, the provisions of the Plan will prevail.

 

	
Participant
    	
 
    	
Van P. Whitfield
    
	
 
    	
 
    	
 
    
	
Number of   Shares Underlying Award
    	
 
    	
50,000 Shares (the   “Restricted Shares”)
    
	
 
    	
 
    	
 
    
	
Grant   Date
    	
 
    	
September 6,   2011, which date is the effective date of the Employment Agreement between   the Company and the Participant (the “Employment Agreement”).
    
	
 
    	
 
    	
 
    
	
Vesting
    	
 
    	
Subject to   Section 3 of Attachment A, the Restricted Shares shall fully vest on the   Scheduled Vesting Date if the Participant does not experience a Termination   of Service at any time prior to the Scheduled Vesting Date. “Scheduled Vesting Date” means the earlier of (i) the   Agreement Termination Date (as defined in the Employment Agreement) and   (ii) December 31, 2014.
    

 

1

 

Attachment A

 

Restricted Stock Award Agreement

Terms and Conditions

 

Grant to:  Van P. Whitfield

 

Section 1.  Grant of Restricted Stock Award.  Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants Restricted Stock to the Participant on the Grant Date on the terms set forth on the cover page of this Agreement, as more fully described in this Attachment A.  This Award is granted under the Plan, which is incorporated herein by this reference and made a part of this Agreement.

 

Section 2.  Issuance of Shares.

 

(a)           The Restricted Shares shall be evidenced by book-entry registration; provided, however, that the Committee may determine that the Restricted Shares shall be evidenced in such other manner as it deems appropriate, including the issuance of a stock certificate or certificates.  In the event that any stock certificate is issued in respect of the Restricted Shares, such certificate shall (i) be registered in the name of the Participant, (ii) bear an appropriate legend referring to the terms, conditions and restrictions applicable to the Restricted Shares and (iii) be held in custody by the Company.

 

(b)           Voting Rights.  The Participant shall have voting rights with respect to the Restricted Shares.

 

(c)           Dividends.  All cash and other dividends and distributions, if any, that are paid with respect to any Restricted Shares shall be withheld by the Company and paid to the Participant, without interest, only when, and if, the Restricted Shares become vested in accordance with this Agreement.

 

(d)           Transferability.  Unless and until the Restricted Shares become vested in accordance with this Agreement, the Restricted Shares shall not be assigned, sold, transferred or otherwise be subject to alienation by the Participant.

 

(e)           Section 83(b) Election.  If the Participant chooses, the Participant may make an election under Section 83(b) of the Code with respect to the Restricted Shares, which would cause the Participant currently to recognize income for U.S. federal income tax purposes in an amount equal to the excess (if any) of the fair market value of the Restricted Shares (determined as of the Grant Date) over the amount, if any, that the Participant paid for the Restricted Shares, which excess will be subject to U.S. federal income tax.  The form for making a Section 83(b) election is attached as Attachment B.  The Participant acknowledges that (i) the Participant is solely responsible for the decision

 

2

 

whether or not to make a Section 83(b) election, and the Company is not making any recommendation with respect thereto, (ii) it is his sole responsibility to timely file the Section 83(b) election within 30 days after the Grant Date, if the Participant decides to make such election, and (iii) if the Participant does not make a valid and timely Section 83(b) election, the Participant will be required to recognize ordinary income at the time of vesting on any future appreciation on the Restricted Shares.

 

(f)            Withholding Requirements.  The Company may withhold any tax (or other governmental obligation) that becomes due with respect to the Restricted Shares (or any dividend or distribution thereon), and the Participant shall make arrangements satisfactory to the Company to enable the Company to satisfy all such withholding requirements.  Notwithstanding the foregoing, the Committee may permit, in its sole discretion, the Participant to satisfy any such withholding requirement by transferring to the Company pursuant to such procedures as the Committee may require, effective as of the date on which a withholding obligation arises, a number of vested Shares owned and designated by the Participant having an aggregate fair market value as of such date that is equal to the minimum amount required to be withheld.  If the Committee permits the Participant to satisfy any such withholding requirement pursuant to the preceding sentence, the Company shall remit to the Internal Revenue Service and appropriate state and local revenue agencies, for the credit of the Participant, an amount of cash withholding equal to the fair market value of the Shares transferred to the Company as provided above.

 

Section 3.  Vesting of Restricted Shares.

 

(a)           Termination of Service.

 

(i)            Death or Disability.  In the event of the Participant’s Termination of Service at any time due to the Participant’s death or Disability, the Restricted Shares shall fully vest as of the date of such termination.

 

(ii)           Any Other Termination of Service.  In the event of the Participant’s Termination of Service at any time for any reason (other than due to the Participant’s death or Disability), the Restricted Shares shall be forfeited in their entirety as of the date of such termination without any payment to the Participant.

 

Notwithstanding the foregoing, in the event of the Participant’s Termination of Service other than by the Company for Cause, the Committee may, in its sole discretion, accelerate the vesting or waive any term or condition of this Agreement, subject to such terms and conditions as the Committee deems appropriate, with respect to all or a portion of the Restricted Shares.

 

3

 

(b)           Change in Control.  If a Change in Control occurs at any time, the Restricted Shares shall fully vest as of the date of such Change in Control; provided that if prior to the date of such Change in Control, the Company or the acquirer requests in writing that the Participant continue to provide services to the Company (or the successor or surviving entity) for a specified period not to exceed 12 months after such Change in Control, the Restricted Shares shall vest as of the earliest of (x) the last day of such requested period, (y) the Scheduled Vesting Date or (z) the date, if any, of the Participant’s Termination of Service by the Company (or the successor or surviving entity) without Cause, by the Participant for Good Reason or due to the Participant’s death or Disability (such earliest date, the “Change in Control Vesting Date”).  The Restricted Shares shall be forfeited in their entirety without any payment to the Participant upon his Termination of Service by the Company (or the successor or surviving entity) for Cause or by the Participant without Good Reason at any time prior to the Change in Control Vesting Date.

 

(c)           Committee’s Failure to Grant Specified Awards.  The Restricted Shares shall fully vest as of the third anniversary of the IPO if, during the period commencing on the Grant Date and ending on the third anniversary of the IPO, the Committee has not granted Awards under the Plan with terms substantially similar to the terms set forth in this Agreement (other than this Section 4(c)) with respect to 624,061 Shares in the aggregate.  For the avoidance of doubt, IPO Awards granted under the Plan shall not constitute Awards granted for purposes of this Section 4(c)).

 

(d)           Effect of Vesting.  Subject to the provisions of this Agreement, upon the vesting of Restricted Shares, the restrictions under this Award with respect to such Shares shall lapse, and subject to any applicable Lock Up Agreement or requirement to comply with non-competition covenants, such Shares shall be fully assignable, saleable and transferable by the Participant, and the Company shall deliver such Shares, along with any dividends and other distributions that were paid with respect to such Shares but withheld pending vesting, to the Participant.  Subject to any applicable Lock Up Agreement or requirement to comply with non-competition covenants, such Shares shall be delivered by transfer to the Depository Trust Company for the benefit of the Participant or by delivery of a stock certificate registered in the Participant’s name.

 

Section 4.  Miscellaneous Provisions.

 

(a)           Notices. All notices, requests and other communications under this Agreement shall be in writing and shall be delivered in person (by courier or otherwise), mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission, as follows:

 

if to the Company, to:

 

4

 

Cobalt International Energy, Inc.

Two Post Oak Central

1980 Post Oak Blvd., Suite 1200

Houston, TX 77056

Attention: General Counsel

Facsimile: 713-579-9184

 

if to the Participant, to the address that the Participant most recently provided to the Company,

 

or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto.  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a business day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed received on the next succeeding business day in the place of receipt.

 

(b)           Entire Agreement.  This Agreement, the Plan, and any other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein or therein, constitute the entire agreement and understanding between the parties in respect of the subject matter hereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, between the parties with respect to the subject matter hereof.

 

(c)           Amendment; Waiver.  No amendment or modification of any provision of this Agreement shall be effective unless signed in writing by or on behalf of the Company and the Participant, except that the Company may amend or modify the Agreement without the Participant’s consent in accordance with the provisions of the Plan or as otherwise set forth in this Agreement.  No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature.  Any amendment or modification of or to any provision of this Agreement, or any waiver of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.

 

(d)           Assignment.  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.

 

(e)           Successors and Assigns; No Third Party Beneficiaries.  This Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns.  Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their

 

5

 

respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

(f)            Counterparts.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

(g)           Participant Undertaking.  The Participant agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable to carry out or give effect to any of the obligations or restrictions imposed on either the Participant or the Restricted Shares pursuant to the provisions of this Agreement.

 

(h)           Plan.  The Participant acknowledges and understands that material definitions and provisions concerning the Restricted Shares and the Participant’s rights and obligations with respect thereto are set forth in the Plan.  The Participant has read carefully, and understands, the provisions of the Plan.

 

(i)            Governing Law.  The Agreement shall be governed by the laws of the State of Delaware, without application of the conflicts of law principles thereof.

 

(j)            Jurisdiction.  The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby (whether brought by any party or any of its affiliates or against any party or any of its affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on each party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 4(a) shall be deemed effective service of process on such party.

 

(k)           WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

6

 

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

 

 

	
 
    	
COBALT INTERNATIONAL   ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Joseph H. Bryant
    
	
 
    	
 
    	
Title:
    	
Chairman and Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Van P. Whitfield
    

 

7

 

Attachment B

 

SECTION 83(b) ELECTION

 

	
 
    	
This statement is   being made under Section 83(b) of the Internal Revenue Code,   pursuant to Treas. Reg. Section 1.83-2.
    
	
 
    	
 
    
	
(1)
    	
The taxpayer   performing the services is:
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Address:
    	
 
    	
 
    
	
 
    	
Social Security   Number:
    	
 
    	
 
    
	
 
    	
 
    
	
(2)
    	
The property with   respect to which the election is being made is ____________ shares (the “Restricted Shares”) of common stock, par value $.01 per   share, of Cobalt International   Energy, Inc. (the “Company”)
    
	
 
    	
 
    
	
(3)
    	
The Restricted   Shares were transferred on _______________________.
    
	
 
    	
 
    
	
(4)
    	
The taxable year   in which the election is being made is the calendar year ____________.
    
	
 
    	
 
    
	
(5)
    	
The Restricted Shares   are not transferable and are subject to a substantial risk of forfeiture   within the meaning of Section 83(c)(1) of the Internal Revenue Code   until and unless specified conditions are satisfied or a specified event   occurs, in each case as set forth in the Company’s Long Term Incentive Plan and the Restricted Stock   Award Agreement pursuant to which the Restricted Shares were issued.
    
	
 
    	
 
    
	
(6)
    	
The fair market   value of the Restricted Shares at the time of transfer (determined without   regard to any restriction other than a restriction which by its terms will   never lapse) is $ ______________ per share.
    
	
 
    	
 
    
	
(7)
    	
The amount paid by   the taxpayer for the Restricted Shares is $ ______________ per share.
    
	
 
    	
 
    
	
(8)
    	
A copy of this   statement has been furnished to the Company, for whom the taxpayer will be   performing services underlying the transfer of the Restricted Shares.
    
	
 
    	
 
    
	
(9)
    	
This statement is   executed on _______________________.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Spouse (if any)
    	
 
    	
Taxpayer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
This statement   must be filed with the Internal Revenue Service Center with which you filed   your last U.S. federal income tax return within 30 days after the grant date   of the Restricted Stock Award Agreement.    This filing should be made by registered or certified mail, return   receipt requested.  You are also   required to (i) deliver a copy of this statement to the Company and (ii) attach   a copy of this statement to your federal income tax return for the taxable   year that includes the grant date (and may also be required to 
    
								

 

8

 

	
 
    	
attach a copy of   this statement to your state income tax return for such year).  You should also retain a copy of this   statement for your records.
    

 

9

 

EXHIBIT B

 

COBALT INTERNATIONAL ENERGY, INC.

LONG TERM INCENTIVE PLAN 
 Restricted Stock Award Agreement

Class D Restrictions

 

You have been granted restricted stock (this “Award”) on the following terms and subject to the provisions of Attachment A and the Cobalt International Energy, Inc. Long Term Incentive Plan (the “Plan”).  Unless defined in this Award Agreement (including Attachment A, this “Agreement”), capitalized terms will have the meanings assigned to them in the Plan.  In the event of a conflict among the provisions of the Plan, this Agreement and any descriptive materials provided to you, the provisions of the Plan will prevail.

 

	
Participant
    	
 
    	
Van P. Whitfield
    
	
 
    	
 
    	
 
    
	
Number of   Shares Underlying Award
    	
 
    	
50,000 Shares (the   “Restricted Shares”)
    
	
 
    	
 
    	
 
    
	
Grant   Date
    	
 
    	
September 6,   2011, which date is the effective date of the Employment Agreement between   the Company and the Participant (the “Employment Agreement”).
    
	
 
    	
 
    	
 
    
	
Vesting
    	
 
    	
Subject to Section 3   of Attachment A, the Restricted Shares shall fully vest on December 21,   2014 (the “Scheduled Vesting Date”) if each   of the following conditions is satisfied:

 

·      the Participant does not experience a   Termination of Service at any time prior to the Service Vesting Date (as   defined below); and

 

·      the average of the volume weighted average   price of a Share for each trading day during the 90-day period ending on the   day before the Scheduled Vesting Date equals or exceeds $13.50 (the “Value Condition”).    The “volume weighted average price” of a Share shall be computed based   on composite trading between 9:30 a.m. and 4:00 p.m. New York City   time on the applicable date (i) as reported by The Bloomberg   Professional Service on the Company’s page under the “VWAP” field, at   4:00 p.m. on such date; or (ii) if the volume weighted average   price is not available from The Bloomberg Professional Service in such   manner, as reported from a different third party source to which the Company   has access on such
    

 

1

 

	
 
    	
 
    	
date or, if   the Company does not have access to such a third party source, the high and   low sale prices (regular way) of a Share on such date.

 

“Service Vesting Date” means the earlier of (i) the   Agreement Termination Date (as defined in the Employment Agreement) and (ii) the   Scheduled Vesting Date.
    

 

2

 

Attachment A

 

Restricted Stock Award Agreement

Terms and Conditions

 

Grant to:  Van P. Whitfield

 

Section 1.  Grant of Restricted Stock Award.  Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants Restricted Stock to the Participant on the Grant Date on the terms set forth on the cover page of this Agreement, as more fully described in this Attachment A.  This Award is granted under the Plan, which is incorporated herein by this reference and made a part of this Agreement.

 

Section 2.  Issuance of Shares.

 

(a)           The Restricted Shares shall be evidenced by book-entry registration; provided, however, that the Committee may determine that the Restricted Shares shall be evidenced in such other manner as it deems appropriate, including the issuance of a stock certificate or certificates.  In the event that any stock certificate is issued in respect of the Restricted Shares, such certificate shall (i) be registered in the name of the Participant, (ii) bear an appropriate legend referring to the terms, conditions and restrictions applicable to the Restricted Shares and (iii) be held in custody by the Company.

 

(b)           Voting Rights.  The Participant shall have voting rights with respect to the Restricted Shares.

 

(c)           Dividends.  All cash and other dividends and distributions, if any, that are paid with respect to any Restricted Shares shall be withheld by the Company and paid to the Participant, without interest, only when, and if, the Restricted Shares become vested in accordance with this Agreement.

 

(d)           Transferability.  Unless and until the Restricted Shares become vested in accordance with this Agreement, the Restricted Shares shall not be assigned, sold, transferred or otherwise be subject to alienation by the Participant.

 

(e)           Section 83(b) Election.  If the Participant chooses, the Participant may make an election under Section 83(b) of the Code with respect to the  Restricted Shares, which would cause the Participant currently to recognize income for U.S. federal income tax purposes in an amount equal to the excess (if any) of the fair market value of the Restricted Shares (determined as of the Grant Date) over the amount, if any, that the Participant paid for the Restricted Shares, which excess will be subject to U.S. federal income tax.  The form for making a Section 83(b) election is attached as Attachment B.  The Participant acknowledges that (i) the Participant is solely responsible for the decision

 

3

 

whether or not to make a Section 83(b) election, and the Company is not making any recommendation with respect thereto, (ii) it is his or her sole responsibility to timely file the Section 83(b) election within 30 days after the Grant Date, if the Participant decides to make such election, and (iii) if the Participant does not make a valid and timely Section 83(b) election, the Participant will be required to recognize ordinary income at the time of vesting on any future appreciation on the Restricted Shares.

 

(f)            Withholding Requirements.  The Company may withhold any tax (or other governmental obligation) that becomes due with respect to the Restricted Shares (or any dividend or distribution thereon), and the Participant shall make arrangements satisfactory to the Company to enable the Company to satisfy all such withholding requirements.  Notwithstanding the foregoing, the Committee may permit, in its sole discretion, the Participant to satisfy any such withholding requirement by transferring to the Company pursuant to such procedures as the Committee may require, effective as of the date on which a withholding obligation arises, a number of vested Shares owned and designated by the Participant having an aggregate fair market value as of such date that is equal to the minimum amount required to be withheld.  If the Committee permits the Participant to satisfy any such withholding requirement pursuant to the preceding sentence, the Company shall remit to the Internal Revenue Service and appropriate state and local revenue agencies, for the credit of the Participant, an amount of cash withholding equal to the fair market value of the Shares transferred to the Company as provided above.

 

Section 3.  Vesting of Restricted Shares.

 

(a)           Termination of Service.

 

(i)            Death or Disability.  In the event of the Participant’s Termination of Service at any time due to the Participant’s death or Disability, (x) the Service Condition shall be deemed to be satisfied as of the date of such termination and (y) if the Value Condition is satisfied as of the Scheduled Vesting Date, the Restricted Shares shall fully vest as of such date.

 

(ii)           Any Other Termination of Service.  In the event of the Participant’s Termination of Service at any time for any reason (other than due to the Participant’s death or Disability), the Restricted Shares shall be forfeited in their entirety as of the date of such termination without any payment to the Participant.

 

Notwithstanding the foregoing, in the event of the Participant’s Termination of Service other than by the Company for Cause, the Committee may, in its sole discretion, accelerate the vesting or waive any term or condition (including the Service Condition and/or Value Condition) of this Agreement,

 

4

 

subject to such terms and conditions as the Committee deems appropriate, with respect to all or a portion of the Restricted Shares.

 

(b)           Change in Control.  If a Change in Control occurs at any time and the Value Condition is satisfied as of the date of such Change in Control (as described below), the Restricted Shares shall fully vest as of the date of such Change in Control; provided that if prior to the date of such Change in Control, the Company or the acquirer requests in writing that the Participant continue to provide services to the Company (or the successor or surviving entity) for a specified period not to exceed 12 months after such Change in Control, the Restricted Shares shall vest as of the earliest of (x) the last day of such requested period, (y) the Scheduled Vesting Date or (z) the date, if any, of the Participant’s Termination of Service by the Company (or the successor or surviving entity) without Cause, by the Participant for Good Reason or due to the Participant’s death or Disability (such earliest date, the “Change in Control Vesting Date”).  The Restricted Shares shall be forfeited in their entirety without any payment to the Participant upon his or her Termination of Service by the Company (or the successor or surviving entity) for Cause or by the Participant without Good Reason at any time prior to the Change in Control Vesting Date.  If a Change in Control occurs at any time and the Value Condition is not satisfied as of the date of such Change in Control, the Restricted Shares shall be forfeited in their entirety as of the date of such Change in Control without any payment to the Participant.

 

If a Change in Control results from the occurrence of an event within the meaning of:

 

(i)            clause (i) or (iii) of the definition of “Change in Control,” the Value Condition shall be deemed to be satisfied as of the date of such Change in Control if the price or implied price per Share in such Change in Control equals or exceeds $13.50; or

 

(ii)           clause (ii) of the definition of “Change in Control,” the Value Condition shall be deemed to be satisfied if the average of the volume weighted average price of a Share for each trading day during the 90-day period ending on the day before such Change in Control equals or exceeds $13.50.

 

(c)           Committee’s Failure to Grant Specified Awards.  The Restricted Shares shall fully vest as of the third anniversary of the IPO if, during the period commencing on the Grant Date and ending on the third anniversary of the IPO, the Committee has not granted Awards under the Plan with terms substantially similar to the terms set forth in this Agreement (other than this Section 4(c)) with respect to 624,061 Shares in the aggregate.  For the avoidance of doubt, IPO Awards granted under the Plan shall not constitute Awards granted for purposes of this Section 4(c)).

 

5

 

(d)           Effect of Vesting.  Subject to the provisions of this Agreement, upon the vesting of Restricted Shares, the restrictions under this Award with respect to such Shares shall lapse, and subject to any applicable Lock Up Agreement or requirement to comply with non-competition covenants, such Shares shall be fully assignable, saleable and transferable by the Participant, and the Company shall deliver such Shares, along with any dividends and other distributions that were paid with respect to such Shares but withheld pending vesting, to the Participant.  Subject to any applicable Lock Up Agreement or requirement to comply with non-competition covenants, such Shares shall be delivered by transfer to the Depository Trust Company for the benefit of the Participant or by delivery of a stock certificate registered in the Participant’s name.

 

Section 4.  Miscellaneous Provisions.

 

(a)           Notices. All notices, requests and other communications under this Agreement shall be in writing and shall be delivered in person (by courier or otherwise), mailed by certified or registered mail, return receipt requested, or sent by facsimile transmission, as follows:

 

if to the Company, to:

 

Cobalt International Energy, Inc.

Two Post Oak Central

1980 Post Oak Blvd., Suite 1200

Houston, TX 77056

Attention: General Counsel

Facsimile: 713-579-9184

 

if to the Participant, to the address that the Participant most recently provided to the Company,

 

or to such other address or facsimile number as such party may hereafter specify for the purpose by notice to the other parties hereto.  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a business day in the place of receipt.  Otherwise, any such notice, request or communication shall be deemed received on the next succeeding business day in the place of receipt.

 

(b)           Entire Agreement.  This Agreement, the Plan, and any other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein or therein, constitute the entire agreement and understanding between the parties in respect of the subject matter hereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, between the parties with respect to the subject matter hereof.

 

6

 

(c)           Amendment; Waiver.  No amendment or modification of any provision of this Agreement shall be effective unless signed in writing by or on behalf of the Company and the Participant, except that the Company may amend or modify the Agreement without the Participant’s consent in accordance with the provisions of the Plan or as otherwise set forth in this Agreement.  No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature.  Any amendment or modification of or to any provision of this Agreement, or any waiver of any provision of this Agreement, shall be effective only in the specific instance and for the specific purpose for which made or given.

 

(d)           Assignment.  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.

 

(e)           Successors and Assigns; No Third Party Beneficiaries.  This Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns.  Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.

 

(f)            Counterparts.  This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

(g)           Participant Undertaking.  The Participant agrees to take whatever additional action and execute whatever additional documents the Company may deem necessary or advisable to carry out or give effect to any of the obligations or restrictions imposed on either the Participant or the Restricted Shares pursuant to the provisions of this Agreement.

 

(h)           Plan.  The Participant acknowledges and understands that material definitions and provisions concerning the Restricted Shares and the Participant’s rights and obligations with respect thereto are set forth in the Plan.  The Participant has read carefully, and understands, the provisions of the Plan.

 

(i)            Governing Law.  The Agreement shall be governed by the laws of the State of Delaware, without application of the conflicts of law principles thereof.

 

(j)            Jurisdiction.  The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby

 

7

 

(whether brought by any party or any of its affiliates or against any party or any of its affiliates) shall be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on each party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 4(a) shall be deemed effective service of process on such party.

 

(k)           WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

8

 

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

 

 

	
 
    	
COBALT INTERNATIONAL   ENERGY, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
Joseph H. Bryant
    
	
 
    	
 
    	
Title:
    	
Chairman and Chief   Executive Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Van P. Whitfield
    

 

9

 

Attachment B

 

SECTION 83(b) ELECTION

 

	
 
    	
This statement is   being made under Section 83(b) of the Internal Revenue Code,   pursuant to Treas. Reg. Section 1.83-2.
    
	
 
    	
 
    
	
(1)
    	
The taxpayer   performing the services is:
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Address:
    	
 
    	
 
    
	
 
    	
Social Security   Number:
    	
 
    	
 
    
	
 
    	
 
    
	
(2)
    	
The property with   respect to which the election is being made is ______________ shares (the “Restricted Shares”) of common stock, par value $.01 per   share, of Cobalt International   Energy, Inc. (the “Company”)
    
	
 
    	
 
    
	
(3)
    	
The Restricted   Shares were transferred on _______________________.
    
	
 
    	
 
    
	
(4)
    	
The taxable year   in which the election is being made is the calendar year _______________.
    
	
 
    	
 
    
	
(5)
    	
The Restricted   Shares are not transferable and are subject to a substantial risk of   forfeiture within the meaning of Section 83(c)(1) of the Internal   Revenue Code until and unless specified conditions are satisfied or a   specified event occurs, in each case as set forth in the Company’s Long Term Incentive Plan and the   Restricted Stock Award Agreement pursuant to which the Restricted Shares were   issued.
    
	
 
    	
 
    
	
(6)
    	
The fair market   value of the Restricted Shares at the time of transfer (determined without   regard to any restriction other than a restriction which by its terms will   never lapse) is $ ________________ per share.
    
	
 
    	
 
    
	
(7)
    	
The amount paid by   the taxpayer for the Restricted Shares is $ ________________ per share.
    
	
 
    	
 
    
	
(8)
    	
A copy of this statement   has been furnished to the Company, for whom the taxpayer will be performing   services underlying the transfer of the Restricted Shares.
    
	
 
    	
 
    
	
(9)
    	
This statement is   executed on _______________________.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Spouse (if any)
    	
 
    	
Taxpayer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
This statement   must be filed with the Internal Revenue Service Center with which you filed   your last U.S. federal income tax return within 30 days after the grant date   of the Restricted Stock Award Agreement.    This filing should be made by registered or certified mail, return   receipt requested.  You are also   required to (i) deliver a copy of this statement to the Company and (ii) attach   a copy of this statement to your federal income tax return for the taxable   year that includes the grant date (and may also be required to attach a copy   of this statement to your state income tax return for such year).  You should also retain a copy of this   statement for your records.
    
								

 

10

 

EXHIBIT C

 

FORM OF RELEASE

 

For and in consideration of certain payments and other benefits due to Van P. Whitfield (“Employee”) pursuant to the Employment Agreement (the “Employment Agreement”) dated as of September 6, 2011, between Cobalt International Energy, Inc., (the “Company”) and Employee, and for other good and valuable consideration, Employee hereby agrees, for Employee, Employee’s spouse and child or children (if any), Employee’s heirs, beneficiaries, devisees, executors, administrators, attorneys, personal representatives, successors and assigns, to forever release, discharge and covenant not to sue the Company and its divisions, affiliates, subsidiaries, parents, branches, predecessors, successors, assigns, and, with respect to such entities, their officers, directors, trustees, employees, agents, shareholders, administrators, general or limited partners, members, representatives, attorneys, insurers and fiduciaries, past, present and future (the “Released Parties”) from any and all claims of any kind arising out of, or related to, his employment with the Company, its affiliates or subsidiaries (collectively, with the Company, the “Affiliated Entities”) or Employee’s separation from employment with the Affiliated Entities, which Employee now has or may have against the Released Parties, whether known or unknown to Employee, by reason of facts which have occurred on or prior to the date that Employee has signed this Release.  Such released claims include, without limitation, any and all claims relating to the foregoing under federal, state or local laws pertaining to employment, including, without limitation, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000e et seq., the Fair Labor Standards Act, as amended, 29 U.S.C. Section 201 et seq., the Americans with Disabilities Act, as amended, 42 U.S.C. Section 12101 et seq. the Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981 et seq., the Rehabilitation Act of 1973, as amended, 29 U.S.C. Section 701 et seq., the Family and Medical Leave Act of 1992, 29 U.S.C. Section 2601 et seq., and any and all state or local laws regarding employment discrimination, the payment of wages and/or federal, state or local laws of any type or description regarding employment, including but not limited to any claims arising from or derivative of Employee’s employment with the Affiliated Entities, as well as any and all such claims under state contract or tort law.  By signing this Release, Employee is bound by it.  Anyone who succeeds to Employee’s rights and responsibilities, such as heirs or the executor of Employee’s estate, is also bound by this Release.  This Release also applies to any claims brought by any person or agency or class action under which Employee may have a right or benefit.  Notwithstanding this release of liability, nothing in this Release prevents Employee from filing any non-legally waivable claim (including a challenge to the validity of this Release) with the Equal Employment Opportunity Commission (the “EEOC”) or comparable state or local agency or participating in any investigation or proceeding conducted by the EEOC or comparable state or local agency; however, Employee understands and agrees that

 

Ex C-1

 

Employee is waiving any and all rights to recover any monetary or personal relief or recovery as a result of such EEOC or comparable state or local agency proceeding or subsequent legal actions.

 

Employee has read this Release carefully, acknowledges that Employee has been given at least [21] [45] days to consider all of its terms and has been and is hereby advised to consult with an attorney and any other advisors of Employee’s choice prior to executing this Release, and Employee fully understands that by signing below Employee is voluntarily giving up any right which Employee may have to sue or bring any other claims against the Released Parties, including any rights and claims under the Age Discrimination in Employment Act.  Employee also understands that Employee has a period of seven days after signing this Release within which to revoke his agreement, and that neither the Company nor any other person is obligated to make any payments or provide any other benefits to Employee pursuant to the Severance Agreement until eight days have passed since Employee’s signing of this Release without Employee’s signature having been revoked other than any accrued obligations or other benefits payable pursuant to the terms of the Company’s normal payroll practices or employee benefit plans.  Finally, Employee expressly represents that he has not been forced or pressured in any manner whatsoever to sign this Release, and Employee agrees to all of its terms voluntarily.

 

Notwithstanding anything else herein to the contrary, this Release shall not affect: (i) the Company’s obligations under any compensation or employee benefit plan, program or arrangement (including, without limitation, obligations to Employee under the Employment Agreement or any stock option, stock award or agreements or obligations under any pension, deferred compensation or retention plan) provided by the Affiliated Entities where Employee’s compensation or benefits are intended to continue or Employee is to be provided with compensation or benefits, in accordance with the express written terms of such plan, program or arrangement, beyond the date of Employee’s termination and (ii) rights to indemnification Employee may have under (A) applicable law, (B) any other agreement between Employee and a Released Party and (C) as an insured under any director’s and officer’s liability insurance policy now or previously in force.

 

Ex C-2

 

This Release is final and binding and may not be changed or modified except in a writing signed by both parties.

 

	
 
    	
 
    	
 
    
	
Date
    	
 
    	
Van P. Whitfield
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Cobalt International   Energy, Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

Ex C-3

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