This Fundamental Change Company Notice and Notice of Execution of Supplemental Indenture is given by the Company pursuant to the provisions of Sections 16.02 and. 15.06(a) of the Indenture. A Fundamental Change occurred on November 4, 2011, due to the merger on such date of Chiron Merger Sub, Inc., a Texas corporation, with and into the Company, with the Company continuing as the surviving entity (the “Merger”). Accordingly, pursuant to Section 16.02 of the Indenture, on or before November 30, 2011 (the “Fundamental Change Purchase Date”), each Noteholder shall, subject to certain conditions, have the right by giving notice as stated herein, to require the Company to purchase all of such Noteholder’s Notes, or any portion thereof that is a multiple of $1,000 principal amount, on the Fundamental Change Purchase Date, at a price equal to 100% of the principal amount thereof, together with accrued and unpaid interest to but excluding the Fundamental Change Purchase Date, which equals approximately $1,003.97 for each $1,000 in principal amount of Notes (the “Fundamental Change Purchase Price”). The Fundamental Change Purchase Price will be paid in cash.
Payment of the Fundamental Change Purchase Price will be made in cash by the Paying Agent on the Fundamental Change Purchase Date upon presentation and surrender of Notes at the address set forth below under “Manner of Purchase.” On the Fundamental Change Purchase Date, assuming the Paying Agent holds money sufficient to make payment on all the Notes or portions thereof that are to be repurchased as a result of the corresponding Fundamental Change, then (i) such Notes will cease to be outstanding, (ii) interest will cease to accrue on such Notes, and (iii) all other rights of the holders of such Notes will terminate (other than the right to receive the Fundamental Change Purchase Price and previously accrued but unpaid interest, including Additional Interest, if any, upon delivery of the Notes), whether or not book-entry transfer of the Notes has been made or the Notes have been delivered to the Trustee or Paying Agent.
Upon receipt by the Paying Agent of a notice delivered electronically or by other means in accordance with the Depositary’s customary procedures or a Fundamental Change Purchase Notice, a form of which is attached to the Notes, the holder of the Note in respect of which such notice is given will, unless such notice is validly withdrawn, thereafter be entitled to receive solely the Fundamental Change Purchase Price with respect to such Note. Any Notes as to which a Fundamental Change Purchase Notice has been given by the Noteholder may only be converted only if the applicable Fundamental Change Purchase Notice has been withdrawn by the Noteholder as described below under “Notice of Withdrawal.”
Holders who deliver their Notes and Fundamental Change Purchase Notice to the Paying Agent and do not withdraw such notice prior to the Withdrawal Date identified below will not be permitted to convert their Notes and will not receive the increase in the Conversion Rate “in connection with” a Make-Whole Fundamental Change, to which they may otherwise be entitled, as contemplated in Section 2.02 of the First Supplemental Indenture. See “Conversion Rights” below.
Neither the Company nor the Trustee and Paying Agent make any recommendation as to whether Noteholders should elect to require the Company to purchase their Notes.
MANNER OF PURCHASE
The repurchase of a Note pursuant to this notice will be made, at the option of the Noteholder, upon:
(i) delivery to the Paying Agent by the Noteholder of a written notice (or in the case of Global Securities, a notice delivered electronically or by other means in accordance with the Depositary’s customary procedures) of repurchase (a “Fundamental Change Purchase Notice”), a form of which is attached to the Notes, at any time prior to the close of business on the Expiration Date stating:
(A) if certificated, the certificate numbers of the Notes to be delivered for repurchase or if the Notes are not in certificated form, the Fundamental Change Purchase Notice must comply with the appropriate Depositary procedures;
(B) the portion of the principal amount of the Notes to be repurchased, which must be $1,000 or an integral multiple thereof; and
(C) that the Notes are to be repurchased by the Company pursuant to the applicable provisions of the Notes and the Indenture; and
(ii) delivery or book-entry transfer of such Notes to the Paying Agent at any time after delivery of the Fundamental Change Purchase Notice (together with all necessary endorsements and in compliance with any applicable Depositary requirements) at the offices of the Paying Agent, such delivery being a condition to receipt by the Noteholder of the Fundamental Change Purchase Price therefor; provided, however, that such Fundamental Change Purchase Price will be paid only if the Note so delivered to the Paying Agent conforms in all respects to the description thereof in the related Fundamental Change Purchase Notice, as determined by the Company.
NOTICE OF WITHDRAWAL
Notwithstanding anything to the contrary in this notice, a Fundamental Change Purchase Notice may be withdrawn by a Noteholder by means of a written notice of withdrawal delivered to the Corporate Trust Office of the Paying Agent in accordance with the procedures specified Section 16.03 of the Indenture at any time prior to the close of business on the Withdrawal Date, specifying:
(i) the principal amount of the Note with respect to which such notice of withdrawal is being submitted; and
(ii) if certificated, the certificate number, if any, of the Note in respect of which such notice of withdrawal is being submitted or if the notes are not in certificated form, the notice must comply with the appropriate procedures of the Depositary; and
(iii) the principal amount, if any, of such Note that remains subject to the original Fundamental Change Purchase Notice, which portion must be in principal amounts of $1,000 or an integral multiple of $1,000.
The Paying Agent will promptly notify the Company of the receipt by it of any Fundamental Change Purchase Notice or written notice of withdrawal thereof.
CONVERSION RIGHTS
Noteholders that do not elect to require the Company to purchase their Notes will maintain the right to convert their Notes into cash until 5:00 p.m. New York City time on November 29, 2011 upon the terms and subject to the conditions of the Indenture. Pursuant to the First Supplemental Indenture, dated as of November 4, 2011, entered into between the Company, KCI USA, Inc. and the Trustee in connection with the Merger (the “First Supplemental Indenture”), each holder of a Note has the right, upon conversion of such Note, to receive an amount of cash equal to $1,456.30 per $1,000 aggregate principal amount of Notes (the “Conversion Value”). This amount is based upon a Conversion Rate of 21.2598, which includes a Conversion Rate increase of 1.7834 corresponding to the Make Whole Conversion Rate Adjustment. The Conversion Value is fixed as of the date of the Merger and is not subject to further adjustment.
In order to receive the Conversion Value, such holder must, prior to 5:00 p.m. New York City time on November 30, 2011:
(i) in the case of a Global Note, comply with the procedures of the Depositary in effect at that time; and
(ii) in the case of a Note issued in certificated form:
(A) complete and manually sign the conversion notice on the back of the Note, or a facsimile thereof (a “Notice of Conversion”),
(B) deliver the Notice of Conversion, which shall be irrevocable, to the Conversion Agent at the office of the Conversion Agent and shall state in writing therein the principal amount of Notes to be converted,
(C) if required, furnish appropriate endorsements and transfer documents, and
(D) surrender such Notes, duly endorsed to the Company or in blank (and accompanied by appropriate endorsement and transfer documents), at the office of the Conversion Agent.
Any Notes as to which a Fundamental Change Purchase Notice has been given may be converted pursuant to the foregoing only if the applicable Fundamental Change Purchase Notice has been withdrawn in accordance with the terms of the Indenture, which are described above.
