This excerpt taken from the NDAQ DEF 14A filed Aug 22, 2005.
Summary of Terms of Series A Notes
The $205 million aggregate principal amount of the Series A Notes is due on October 22, 2012 and accrues interest at an annual rate of 3.75% and at an annual rate of 5.75% on amounts overdue and unpaid. Nasdaq may redeem the outstanding Series A Notes at any time after April 22, 2011 for a cash payment equal to the aggregate principal amount of the Series A Notes plus accrued and unpaid interest thereon, subject to the holders option to convert the Series A Notes into common stock after notice of redemption is given. In addition, Nasdaq will be required to redeem the Series A Notes if the Merger Agreement is terminated or if the Merger has not closed by April 22, 2006, but in no event may Nasdaq redeem the Series A Notes prior to October 24, 2005. The Series A Notes related to the Subject Shares also would be subject to redemption as discussed above in the event Holders do not approve the issuance of the Subject Shares. The Series A Notes are senior unsecured obligations of Nasdaq and rank pari passu in right of payment with all existing and any future senior unsecured indebtedness of Nasdaq and are senior in right of payment to any future subordinated indebtedness of Nasdaq. Under the Indenture, we are limited to an aggregate of $800.0 million in secured debt pursuant to a credit facility.
On April 22, 2005, to fund its purchase of the Series A Notes and Series A Warrants, Norway SPV borrowed $205.0 million pursuant to a secured credit agreement with certain lenders party thereto (the Credit Agreement. We received proceeds of $205.0 million from the sale of the Series A Notes and Series A Warrants less fees and expenses. Nasdaq maintains all of the proceeds in a deposit and/or securities account subject to a Blocked Account Control and Security Agreement, dated as of April 22, 2005, among Nasdaq, JPMorgan Chase Bank, N.A., as administrative agent, and JPMorgan Chase Bank N.A., as depositary, until completion of the Merger or the later of termination of (i) the Merger Agreement and (ii) October 22, 2005. Nasdaq entered into a guarantee agreement with Norway SPV and JPMorgan Chase Bank, N.A. as administrative agent (the Guarantee), pursuant to which we guaranteed the $205.0 million aggregate amount borrowed pursuant to the Credit Agreement. Nasdaq intends to use the funds from the sale of Series A Notes and Series A Warrants, once released from the deposit or securities account, to fund a portion of the consideration for the Merger.
The Series A Notes will be convertible on or after April 22, 2006 into common stock at a price of $14.50 per share, which would equal 14,137,931 shares of common stock. The purchase price represents approximately a 36% premium over the $10.65 closing price of our common stock on April 21, 2005, the date prior to issuance of the Series A Notes. We have the option to pay a combination of cash and common stock upon exercise. The Series A Notes may be convertible prior to April 22, 2006 in limited circumstances involving certain tender or exchange offers, mergers or similar transactions, provided that in no event may Series A Notes be converted
prior to October 24, 2005 or, if later, five business days after the special meeting. The number of shares of common stock into which the Series A Notes may be converted is subject to adjustment in certain circumstances, including where we:
We also may, but are not required to, increase the conversion rate if the Nasdaq Board determines that such increase is (i) advisable to avoid or diminish any income tax to holders of common stock or rights to purchase common stock in connection with a dividend or distribution of common stock or rights to common stock or similar event, or (ii) is otherwise in the best interests of Nasdaq. To the extent required by the standards applicable to companies listed on The Nasdaq National Market, Holders would have to approve the issuance of additional shares of common stock as a result of adjustments that equaled or exceeded the 20% Threshold prior to issuance or reduced the conversion price below the greater of book or market value as defined in Nasdaqs listing standards.
The Indenture is subject to customary events of default, including failure to make required payments, failure to comply with certain agreements or covenants, acceleration of certain other indebtedness, rendering of final judgments for the payment of certain money and events of bankruptcy and insolvency. Depending on the event of default, the outstanding principal amount of the Series A Notes may be accelerated with interest due thereon either automatically or through action of the trustee or a certain percentage of holders under the Indenture. In addition, we are required to repurchase the Series A Notes at 101% of the outstanding principal amount and accrued and unpaid interest in the event of certain fundamental changes to Nasdaq including: (i) acquisition of 50% or more of Nasdaqs common stock or voting power, (ii) merger, sale or transfer of all of our assets unless holders of our voting stock prior to the transaction have a majority of the voting power after the transaction, (iii) our continuing directors cease to constitute a majority of the board of directors of Nasdaq or the surviving entity, (iv) Holder approval of plan of liquidation or dissolution for Nasdaq, or (v) our common stock or the stock into which the Series A Notes are then convertible, is not listed on The Nasdaq Stock Market or a national securities exchange.
Nasdaq also committed to use its reasonable best efforts to obtain Holder approval of an amendment to the Certificate of Incorporation that would permit the H&F Entities and the SLP Subscribers (as defined below), as holders of the Series A Notes and/or Series B Notes (defined below), to vote on all matters submitted to Holders. See Proposal II.
Law Debenture Trust Company of New York serves as trustee under the Indenture. There are no material relationships between the trustee and Nasdaq or its affiliates other than the Indenture. Holders of at least 25% in aggregate of the Series A Notes and Series B Notes can require the trustee to take action in the event of any default under the Indenture. The trustee is entitled to be indemnified prior to taking action to enforce the rights of Holders.