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As filed with the Securities and Exchange Commission on December 23, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SPACEHAB, INCORPORATED
(Exact name of registrant as specified in its charter)
Washington
(State or other jurisdiction of 91-1273737
incorporation or organization) (I.R.S. Employer Identification No.)
1595 Spring Hill Road, Suite 360
Vienna, Virginia 22182
(703) 821-3000
(Address, including zip code, and telephone number, including area
code of registrant's principle executive offices)
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Margaret E. Grayson Copy to:
SPACEHAB, Incorporated Frank E. Morgan II, Esq.
1595 Spring Hill Road, Suite 360 Dewey Ballantine LLP
Vienna, Virginia 22182 1301 Avenue of the Americas
(703) 821-3000 New York, New York
(Name, address, including zip code, and telephone (212) 259-8000
number, including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITES AMOUNT TO BE OFFERING AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PRICE PER UNIT OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
8% Convertible Subordinated
Notes due 2007 $63,250,000 100% $ 63,250,000 $ 18,658.75
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Common Stock, no par value 4,642,202 (3)(4) $ 0 (2)
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Total registration fee -- -- $ 18,658.75
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(1) Estimated solely for purposes of calculating the registration fee. The
actual offering price may be determined from time to time by the Selling
Holders in connection with the offer for resale of the securities
registered hereby.
(2) Pursuant to Rule 457(i), there is no filing fee with respect to the shares
of Common Stock issuable upon conversion of the Notes because no
additional consideration will be received in connection with the exercise
of the conversion privilege.
(3) Represents shares issuable upon conversion of the Notes.
(4) Plus such additional indeterminate number of shares as may become issuable
upon conversion of the Notes being registered hereunder by means of
adjustment in the conversion price.
THE REGISTRANT HEREBY AMENDS THIS REGISTATION STATEMENT ON SUCH DATE OR
DATE AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 23, 1997
PROSPECTUS
SPACEHAB, INCORPORATED
$63,250,000 Principal Amount of 8% Convertible Subordinated Notes due 2007
4,642,202 Shares of Common Stock
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This Prospectus relates to the public offer and sale of $63,250,000
aggregate principal amount of 8% Convertible Subordinated Notes due 2007 (the
"Notes") of SPACEHAB, Incorporated, a Washington corporation (the "Company"),
issued to the initial purchasers of the Notes (the "Initial Purchasers") in a
private placement consummated in October 1997 (the "Debt Offering") and the sale
of 4,642,202 shares of Common Stock, no par value er share (the "Common Stock")
of the Company plus such additional indeterminate number of shares of Common
Stock, as may become issuable upon conversion of the Notes by means of
adjustment in the conversion price. The Notes and such shares of Common Stock
issued upon conversion of the Notes may be offered from time to time for the
accounts of holders of Notes named herein or in supplements to this Prospectus
(the "Selling Securityholders"). See "Plan of Distribution." Information
concerning the Selling Securityholders may change from time to time and will be
set forth in supplements to this Prospectus.
The Notes are convertible, at any time at or before maturity, unless
previously redeemed, into shares of Common Stock, at a conversion price of
$13.625 per share, subject to adjustment in certain events. The Common Stock of
the Company is traded on the Nasdaq's National Market under the symbol "SPAB."
On December 23, 1997, the closing price of the Common Stock as reported by
Nasdaq was $10.25 per share.
The Notes do not provide for a sinking fund. The Notes are not redeemable
by the Company prior to October 20, 2000. Thereafter, the Notes are redeemable
at the option of the Company, in whole or in part, at the redemption prices set
forth in this Prospectus, plus accrued interest. Upon a Change of Control (as
defined herein), each holder of Notes may elect to require the Company to
repurchase such holder's Notes at a purchase price equal to 100% of the
principal amount thereof, plus accrued interest through the date of repurchase.
See "Description of Notes --Certain Rights to Require Repurchase of Notes."
The Notes are general unsecured obligations of the Company and are
subordinate to all present and future Senior Indebtedness (as defined herein) of
the Company. The Indenture will not restrict the Company's ability to incur
Senior Indebtedness or the Company's subsidiary's ability to incur additional
indebtedness. See "Description of Notes -- Subordination."
The Notes have been designated for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market. For a
description of certain income tax consequences to holders of the Notes, see
"Certain United States Federal Income Tax Consequences." All of the Notes were
issued initially pursuant to an exemption from the registration requirements of
the Securities Act of 1933, as amended (the "Securities Act"), provided by
Section 4(2) thereof and to the Company's knowledge, were transferred to the
Selling Securityholders pursuant to Rule 144A or Regulation S under the
Securities Act. Notes resold pursuant to the Registration Statement (of which
this Prospectus is a part) will no longer be eligible for trading in the PORTAL
Market.
The Selling Securityholders, acting as principals for their own account,
directly, through agents designated from time to time, or through brokers,
dealers, agents or underwriters also to be designated, may sell all or a portion
of the Notes or shares of Common Stock which may be offered hereby by them from
time to time on terms to be determined at the time of sale. The aggregate
proceeds to the Selling Securityholders from the sale of Notes and Common Stock
will be the purchase price of such Notes or Common Stock less commissions, if
any. For information concerning indemnification agreements between the Company
and the Selling Securityholders, see "Plan of Distribution."
The Company will not receive any of the proceeds from the sales of the
Notes or the shares of Common Stock by the Selling Securityholders. The Selling
Securityholders may be deemed to be "underwriters" under the Securities Act. If
any broker-dealers are used by the Selling Securityholders, any commissions paid
to broker-dealers and, if broker-dealers purchase any Notes or shares of Common
Stock as principals, any profits received by such broker-dealers on the resale
of the Notes or shares of Common Stock may be deemed to be underwriting
discounts or commissions under the Securities Act. In addition, any profits
realized by the Selling Securityholders may be deemed to be underwriting
commissions.
See "Risk Factors" beginning at page 3 herein for certain information that
should be considered by prospective investors.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is December________, 1997
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files periodic reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information filed with
the Commission may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the regional offices of the Commission
located at Seven World Trade Center, New York, New York 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained from the Public Reference Section of the
Commission at prescribed rates by writing to the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates in this Prospectus by reference the
following documents heretofore filed with the Commission pursuant to the
Exchange Act: (i) the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997; (ii) the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 (filed November 6, 1997); and (iii) the
Company's Current Report on Form 8-K, dated October 21, 1997 (filed October 30,
1997). All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be part hereof from the respective dates of
the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed to constitute a part of
this Prospectus except as so modified or superseded.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference herein, other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents or herein. Requests for such copies should be
directed to Investor Relations, SPACEHAB, Incorporated, 1595 Spring Hill Road,
Suite 360, Vienna, Virginia 22182: Telephone (703) 821-3000.
THE COMPANY
SPACEHAB is the first company to commercially develop, own and operate
pressurized habitable modules ("SPACEHAB Modules") that provide space-based
laboratory research facilities and cargo services aboard the U.S. Space Shuttle
system (the "Space Shuttle"). In February 1997, SPACEHAB diversified its
business with the acquisition of Astrotech, the leading provider of commercial
satellite payload processing facilities and related services in the United
States. The Company's activities are now focused on both the human space flight
and satellite launch industries. Within each of these industries, SPACEHAB
targets two markets: microgravity and life sciences research and space support
services.
SPACEHAB currently owns and operates three pressurized flight-rated
modules which significantly enhance the capabilities of the Space Shuttle fleet.
Two of the three SPACEHAB Modules can be configured to fly separately either as
a single science module optimized for microgravity and life sciences research
and experiments (a "Science Single Module") or as a single logistics module
optimized to transport water, food, oxygen, equipment and other supplies (a
"Logistics Single Module," and collectively, the "Single Modules"). The third
module is dedicated to logistics transport and can only be flown in combination
with either of the Single Modules to form a double module (the "Logistics Double
Module"). The Company is currently developing and manufacturing a fourth module
dedicated to scientific research which is intended to be flown with either of
the Single Modules to form a double module dedicated to scientific research (the
"Science Double Module"). The Science Double Module is expected to be available
in late 1999. In addition to its modules, SPACEHAB also provides a full range of
pre-and
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post-flight experiment and payload processing services and in-flight operations
support to assist astronauts and researchers in space and on the ground in
connection with the performance of experiments and logistics services aboard
SPACEHAB Modules.
A Single Module, when installed in the cargo bay of the Space Shuttle,
more than doubles the working and living space available to astronauts for
research, experimentation, habitation and stowage. SPACEHAB provides excellent
flexibility in meeting customer requirements for both science and logistics
missions in that all versions of SPACEHAB Modules can accommodate a combination
of lockers, racks and soft storage arrangements to carry experiments and
supplies. In addition, SPACEHAB's efficient and innovative payload processing
procedures enable it to accommodate last-minute changes in customer requirements
as well as late-stage loading of SPACEHAB Modules into the Space Shuttle cargo
bay.
The Company's Astrotech subsidiary provides launch site preparation of
flight-ready satellites to major U.S. space launch companies and satellite
manufacturers, including The Boeing Company ("Boeing"), Lockheed Martin
Corporation ("Lockheed Martin") and Motorola Corporation ("Motorola"). Since
Astrotech began operations in 1984, all commercial satellites launched from the
primary U.S. launch site near the Kennedy Space Center have been processed using
Astrotech's facilities.
SPACEHAB was incorporated in the State of Washington on August 22, 1984.
The Company's principal executive offices are located at 1595 Spring Hill Road,
Suite 360, Vienna, Virginia 22182. Its telephone number is (703) 821-3000.
Prospective investors are cautioned that the statements included and
incorporated by reference in this Prospectus that are not descriptions of
historical facts may be forward-looking statements. Such statements reflect
management's current views, are based on many assumptions and are subject to
risks and uncertainties. Actual results could differ materially from those
currently anticipated due to a number of factors, including but not limited to
those described under the caption "Risk Factors."
RISK FACTORS
Prospective purchasers of the Notes or shares of Common Stock offered hereby
should consider carefully the following risk factors, in addition to the other
information set forth in this Prospectus, before purchasing any of the Notes or
shares of Common Stock.
Dependence on the Continued Operation of the Space Shuttle
SPACEHAB Modules have been specifically designed to enhance the
capabilities of the Space Shuttle and, therefore, the Company's business is
highly dependent on the availability of the Space Shuttle fleet. From January
1986 to September 1988, all missions aboard the Space Shuttle were suspended
pending the redesign of certain of its subcomponents which had caused the loss
of the Space Shuttle Challenger. In addition, the Space Shuttle fleet was
temporarily grounded in 1990 as a result of a hydrogen leak from its main engine
system and again during July through August 1995 to implement a design change to
prevent future hot-gas damage to the Space Shuttle's O-ring seal in the nozzle
of its solid-fuel boosters. No assurances can be made that the Space Shuttle
will not be grounded, that future missions of the Space Shuttle will not be
delayed, that NASA will launch the number of Space Shuttle missions currently
scheduled or that NASA will continue the use of the Space Shuttle. There are
four Space Shuttles in operation, of which three are currently capable of
docking with Mir. NASA has not budgeted for the construction of additional Space
Shuttles. Failure to have access to the Space Shuttle, either through technical
difficulties affecting the entire fleet or the loss of an individual Space
Shuttle, would have a material adverse effect on the Company's financial
condition and results of operations.
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Dependence on NASA as a Customer and for Microgravity Research Funding
Approximately 88% of the Company's fiscal year 1997 revenue was generated
from two NASA contracts. While the acquisition of Astrotech and the introduction
of new customers present additional revenue sources, the Company anticipates
that revenue from NASA will continue to account for a significant amount of the
Company's revenue over the next several years. There are no assurances, however,
that NASA will require the Company's module services in the future. Therefore,
the Company's failure to execute new contracts with NASA would have a material
adverse effect on the Company's financial condition and results of operations.
In addition, NASA presently offers, and has offered in the past, flight
opportunities aboard the Space Shuttle to researchers in exchange for their
contributions of experiment hardware and research support. Such researchers are
not required to pay Space Shuttle transportation charges, and therefore
NASA-sponsored microgravity programs have become the most economical means for
U.S. nongovernmental organizations to obtain access to a microgravity research
environment. In fiscal year 1997, SPACEHAB provided hardware, integration and
operations for microgravity experiments to NASDA and ESA aboard the Logistics
Double Module on the Space Shuttle mission flown in May 1997 (the "NASDA/ESA
Contract") and provided a locker to ESA during fiscal year 1993. There can be no
assurance that the Company will be able to enter into additional contracts with
other governments or private entities for the use of lockers aboard SPACEHAB
Modules.
Should authorized funding for NASA-sponsored microgravity programs be
reduced or eliminated, the demand for conducting experiments aboard the Space
Shuttle also could be reduced or eliminated. As SPACEHAB Modules are
specifically designed for use aboard the Space Shuttle, a decrease in or
elimination of the demand to conduct microgravity experiments aboard the Space
Shuttle would have a material adverse effect on the Company's financial
condition and results of operations.
Dependence on Congressional Appropriations
The Company's financial performance is substantially dependent on the
revenue generated from its contracts with NASA which, similar to contracts with
other agencies of the U.S. government, may be terminated by NASA at any time
"for convenience." Failure to receive sufficient funds from the U.S. Congress
("Congress") or a withdrawal by Congress of prior appropriations would permit
NASA to terminate its contracts with SPACEHAB "for convenience." Congress
usually appropriates funds for a given program on a fiscal year basis even
though contract performance may take more than one year. Therefore, no
assurances can be made that Congress will continue to fund NASA at levels which
will permit Space Shuttle missions to continue on their current schedules or
that Congress will appropriate the funds necessary for NASA to fulfill its
obligations under its contracts with the Company. Any substantial reduction in
congressional funding for Space Shuttle missions or annual appropriations to
NASA to fulfill, among other things, NASA's contracts with the Company or the
U.S. commitment to the International Space Station would have a material adverse
effect on the Company's financial condition and results of operations.
Dependence on International Participation in the Space Program
The Company's future financial performance is substantially dependent upon
the revenue generated by a contract to fly certain missions to Mir (the "Mir
Contract"). Recently, Mir has experienced a fire, a docking collision, computer
malfunctions and other problems that have led to concerns about its continuing
viability. In the event the Russian government is unable to operate or continue
to fund the operations of Mir during the term of the Mir Contract, or if NASA
were to decide not to continue to support Mir with any further Space Shuttle
flights for operational, budgetary, or other reasons, NASA could terminate the
Mir Contract, which would have a material adverse effect on the Company's
financial condition and results of operations.
The development and construction of the International Space Station are
being funded by a consortium of countries, including Japan, Russia, Canada and
certain European countries, in addition to the United States. Certain of these
projects are behind schedule and over budget, which is expected to negatively
affect the Company's revenue, net income and cash flows from operations for
fiscal year 1998. The failure of the governments of these countries to fund
their commitment to the International Space Station or the postponement or
abandonment of the
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International Space Station's development or construction could have a material
adverse effect on the Company's future financial performance.
Competition
The U.S. government, the governments of other countries, and private
companies participate in the highly competitive space industry often as both
suppliers and end-users of space services. The Company's long-term strategy for
growth is to provide research, logistics, infrastructure and payload processing
services to NASA and others during the International Space Station era. This
strategy could require the Company to compete with commercial companies such as
Boeing, Lockheed Martin and other large aerospace companies, many of which have
existing NASA support contracts, substantially greater financial resources and
manufacturing capabilities, more established and larger marketing and sales
organizations, and larger technical staffs than the Company.
The main competitor to the SPACEHAB Modules in the microgravity research
field is the NASA owned and operated Spacelab system ("Spacelab"). While the
Company believes that its SPACEHAB Modules offer significant advantages compared
to Spacelab, non-economic concerns could outweigh the justifications for using
SPACEHAB Modules on certain Space Shuttle missions.
Under a treaty between the United States and Italian governments
concluded in 1991, the Italian government agreed to provide two Mini-Pressurized
Logistics Modules ("MPLMs") to NASA for use in the construction and operation of
the International Space Station. The MPLMs will be capable of carrying
pressurized logistics and other payloads in the cargo bay of the Space Shuttle
to and from the International Space Station. The Company believes that the MPLMs
will be its most direct competitor for pressurized logistics resupply to the
International Space Station. Russia also operates Progress unmanned, expendable
logistics resupply vehicles, which the Russians presently plan to use to fulfill
part of the logistics requirements for their cosmonauts working on the
International Space Station. Japan and certain European countries are also
currently working on their own expendable, automated docking modules for
logistics resupply missions. Successful implementation of any of the foregoing
logistics programs could reduce demand for SPACEHAB Modules, which would have a
material adverse effect on the Company's future financial performance.
The primary contractor in the market for civil ground operations and
payload processing services is Boeing. In addition to performing as the
Company's subcontractor for processing payloads for SPACEHAB Modules, Boeing
also performs physical and analytical integration tasks on the Spacelab and
Space Shuttle payload processing programs under NASA's supervision. Prior to its
acquisition by Boeing, McDonnell Douglas Corporation ("McDonnell Douglas") was
the Company's payload processing subcontractor. It is not possible to predict
what changes, if any, in the Company's relationship with Boeing will result from
the acquisition of McDonnell Douglas by Boeing. In addition, there are several
other Space Shuttle payload processing contractors currently performing flight
and ground operations work for NASA, including Lockheed Martin, Teledyne, Inc.
("Teledyne") and United Space Alliance, all of which are larger and have greater
resources than SPACEHAB in Space Shuttle payload processing. In June 1997, the
Company and United Space Alliance signed an agreement to develop commercial
markets for Space Shuttle and future International Space Station utilization
support. Even though it has formed a cooperative relationship with United Space
Alliance, the Company believes that the privatization of Space Shuttle
operations will result in intense competitive pressure among contractors to
retain their current contracts and/or capture new Space Shuttle payload
processing work from other contractors. To the extent that these contractors are
able to retain or enlarge their roles in Space Shuttle payload processing
operations, the ability of SPACEHAB to successfully compete for a share in this
market could be impeded, which could have a material adverse effect on the
Company's future financial performance.
At present, Astrotech's competition in the United States is limited to the
California (Vandenberg) launch site, where a competing company called California
Commercial Spaceport, Inc. ("CCSI") is located. CCSI does not have payload
processing facilities in Florida, where the majority of U.S.
commercial satellite launches occur.
Risk of Fixed Price Contracts
The Mir Contract requires the Company to provide certain services to NASA
for a fixed price, regardless of the cost to the Company of providing such
services. The Company has subcontracted with Boeing on a cost-plus
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incentive fee basis to provide integration and operation services under the Mir
Contract. Under such subcontract, the Company is required to pay for Boeing's
actual allowable costs incurred in providing the services plus an incentive fee.
As the integration and operation expense related to each mission can vary, the
Company could experience cost overruns associated with fulfilling its
obligations under the Mir Contract. If the costs of providing the services to
NASA exceed the fixed price established under the Mir Contract, the Company's
financial condition and results of operations would be adversely affected.
Dependence on Relationships with Subcontractors
The Company depends significantly on other companies for the development
and manufacture of SPACEHAB Modules and the related services that are material
to the Company's business. Specifically, Boeing is the Company's principal
subcontractor and performs the integration and operations work required on each
SPACEHAB Module before its use aboard the Space Shuttle. Prior to its
acquisition by Boeing, McDonnell Douglas subcontracted with Alenia Spazio for
the construction of the structural shell for the Science Double Module. Failure
of these or other companies to comply with the terms of their agreements and
satisfy supply and development obligations would have a material adverse effect
on the Company's financial condition and results of operations.
Risk of Asset Write-Offs
The Company has in the past, and expects to continue in the future, to
fund development of certain projects prior to being awarded a contract for such
projects. No assurances can be made that any funds the Company may spend in the
future in connection with the development of new products will lead to the award
of a contract or that any such contract will be awarded on terms that are
economically favorable to the Company. In addition, the Company depreciates
space hardware, and intends to depreciate the Logistics Double Module hardware
and other future capital assets over a period that approximates the useful life
of the Space Shuttles, currently estimated to be 15 years. The Company's payload
processing facilities are depreciated using the straight-line method over their
estimated useful lives which range from 16 to 30 years. In the event the Company
is not awarded additional contracts for the use of the SPACEHAB Modules, future
products or services, or for payload processing services, the Company could be
required to write-off the remaining value of SPACEHAB Modules, other current or
future capital assets, and/or costs of prepaid services performed, which could
have a material adverse effect on the Company's financial condition and results
of operations.
Fluctuating Operating Results
The Company's results of operations may fluctuate significantly from
quarter to quarter as a result of the timing of Space Shuttle missions which
carry SPACEHAB Modules, the number and types of missions flown, the method of
revenue recognition under the Company's contracts and other factors. The Company
recognizes revenue under the Mir Contract upon the completion of each flight,
although costs for a mission can be incurred up to 18 months prior to launch.
Certain obligations under this contract, including contract-related engineering,
research and development and selling, general and administrative expenses, are
recorded in the periods in which they are incurred. The obligations associated
with each mission under the Mir Contract, including related integration
services, are deferred and expensed at the time revenue is recorded.
Accordingly, under this contract the Company may report routine operating losses
in quarters in which no Space Shuttle flights are completed. For new contract
awards for which the capability to successfully complete the contract can be
demonstrated at contract inception, revenue recognition under the
percentage-of-completion method is being reported based on costs incurred over
the period of the contract. The Company anticipates that this revenue
recognition policy will reduce significantly the quarterly fluctuations after
completion of the Mir Contract in fiscal year 1998. However, because the number
of Space Shuttle flights that use SPACEHAB Modules varies from quarter to
quarter, the Company expects that its quarterly results will continue to
fluctuate through at least 1998. Fluctuations in the Company's operating results
may significantly affect the market price of the Common Stock.
Although the Company achieved profitability in fiscal years 1993 through
1997, there can be no assurance that the Company will consistently be profitable
and, as such, the Company believes that period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be relied
upon as indications of future performance.
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Technological Risks
The Company's growth and future financial performance depend in part upon
its ability to anticipate technological advances and customer requirements.
There can be no assurance that the Company will be able to achieve the
technological advances that may be necessary for it to remain competitive.
Failure by the Company to anticipate or respond adequately to changes in
technology and NASA requirements, or delays in additional product development or
introduction, could have a material adverse effect on the Company's business and
financial performance.
Limited Insurance
Although the SPACEHAB Modules are insured at all times, the amount of
insurance carried by the Company to cover SPACEHAB Modules during launch and
flight of the Space Shuttle is significantly less than the replacement value of
a SPACEHAB Module. In the event of a loss, the procurement period for long
lead-time items required to construct a SPACEHAB Module could be as much as 16
months. Most of the Company's revenues for the foreseeable future are expected
to be generated from the provision of SPACEHAB Modules and related activities.
Although the Company owns multiple modules, any loss of or damage to a SPACEHAB
Module above its insured amount or the delay caused by the construction time for
a replacement SPACEHAB Module could have a material adverse effect on the
Company's financial condition and results of operations. The Company does not
maintain business interruption insurance. There can be no assurance that
appropriate and affordable insurance will be available to the Company as its
needs change and evolve in the future.
Dependence on Key Management and Employees
The Company is dependent on the personal efforts and abilities of its
senior management and its success will also depend on its ability to attract and
retain additional qualified employees. Failure to attract personnel sufficiently
qualified to execute the Company's strategy, or to retain existing key
personnel, could have a material adverse effect on the Company's business.
Increased Leverage
The level of the Company's and Astrotech's outstanding indebtedness will
have several important consequences for the Company's future operations,
including the following: (i) a substantial portion of the Company's cash flow
from operations will be dedicated to the payment of interest on, and principal
of, its indebtedness; (ii) the covenants contained in the credit facilities
impose certain restrictions on the Company that, among other things, require it
to meet certain financial ratios and limit the ability of the Company to incur
additional indebtedness; (iii) the Company's ability to obtain additional
financing in the future for capital expenditures, acquisitions, general
corporate purposes or other purposes may be impaired; and (iv) the Company's
ability to withstand competitive pressures, adverse economic conditions and
adverse changes in governmental regulations and to make acquisitions or
otherwise take advantage of significant business opportunities that may arise
could be negatively impacted. The Company's ability to meet its debt service
obligations and to reduce its total indebtedness will be subject to financial,
business and other factors affecting the operations of the Company, many of
which are beyond its control. If the Company is unable to generate sufficient
cash flow from operations in the future to service its debt, it may be required
to refinance all or a portion of such debt, including the Notes, or to obtain
additional financing. However, there can be no assurance that new financing will
be available on favorable terms, if at all.
Subordination
The Notes are general unsecured obligations of the Company, subordinated
in right of payment to all existing and future Senior Indebtedness and
effectively subordinated in right of payment to the prior payment in full of all
indebtedness of the Company's subsidiaries. Senior Indebtedness is defined in
the Indenture to include all indebtedness for money borrowed, other than
indebtedness that is expressly junior in right of payment to the Notes or ranks
pari passu in right of payment to the Notes. The Indenture does not limit the
amount of additional indebtedness, including Senior Indebtedness or indebtedness
of any subsidiary, which the Company or any subsidiary can create, incur, assume
or guarantee.
7
<PAGE> 9
Upon any distribution of assets of the Company pursuant to any insolvency,
bankruptcy, dissolution, winding up, liquidation or reorganization, the payment
of the principal of and interest on the Notes will be subordinated to the extent
provided in the Indenture to the prior payment in full of all Senior
Indebtedness. In addition, the Company may not repurchase any Notes in certain
circumstances involving a Change of Control if at such time the subordination
provision of the Indenture would prohibit the Company from making payments of
principal in respect of the Notes. The failure to repurchase the Notes when
required would result in an Event of Default (as defined herein) under the
Indenture and would constitute a default under the terms of other indebtedness
of the Company. See "Description of Notes."
Limitation on Repurchase of Notes Upon Change of Control
In the event of a Change in Control, each Holder of Notes will have the
right, at the Holder's option, to require the Company to repurchase all or any
part of such Holder's Notes. There can be no assurance the Company would have
sufficient financial resources or would be able to arrange financing to pay the
repurchase price. The Company's ability to repurchase the Notes in such event
may be limited by law, the Indenture and the terms of other agreements relating
to borrowing that constitute Senior Indebtedness, as such indebtedness or
agreements may be entered into, replaced, supplemented or amended at any time or
from time to time. The Company may be required to refinance Senior Indebtedness
in order to make any such payment. The Company may not have the financial
ability to repurchase the Notes in the event payment of Senior Indebtedness is
accelerated. The term "Change of Control" is limited to certain specified
transactions and may not include other events that might adversely affect the
financial condition of the Company or result in a downgrade of the credit rating
of the Notes, nor would the requirement that the Company offer to repurchase the
Notes upon a Change of Control necessarily afford holders of the Notes
protection in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving the Company. See "Description of
Notes--Certain Rights to Require Purchase of Notes."
Control by Management and Anti-takeover Considerations
The Company's executive officers and directors and their respective
affiliates may, as a practical matter, have sufficient voting power to elect a
majority of the board of directors of the Company (the "Board of Directors"),
exercise control over the business, policies and affairs of the Company, and, in
general, determine the outcome of any corporate transaction or other matters
submitted to the stockholders for approval, such as any amendment to the amended
and restated articles of incorporation of the Company (the "Articles of
Incorporation"), any merger, consolidation, sale of all or substantially all of
the Company's assets, or "going private" transactions, and prevent or cause a
change in control of the Company, all of which may adversely affect the market
price of the Common Stock. In addition, Boeing, Alenia Spazio and Mitsubishi are
stockholders of SPACEHAB that also provide various services to the Company.
Therefore, the interests of these stockholders with respect to business
decisions involving them may conflict with the interests of the Company.
Certain provisions of the Articles of Incorporation, the Company's amended
and restated bylaws (the "Bylaws") and the Washington Business Corporation Act
(the "Washington Business Act") may delay, discourage or prevent a change in
control of the Company. Such provisions may discourage bids for the Common Stock
at a premium over the market price of the Common Stock and may adversely affect
the market price and the voting and other rights of the holders of the Common
Stock. In addition, the Board of Directors has the authority without action by
the Company's shareholders to fix the rights, privileges and preferences of and
to issue shares of the Company's preferred stock, no par value per share (the
"Preferred Stock"), which may have the effect of delaying, deterring or
preventing a change in control of the Company. The Bylaws also impose various
procedural and other requirements that could make it more difficult for
shareholders to effect certain corporate actions. See "Description of Capital
Stock--Articles of Incorporation and Bylaws."
Absence of Dividends
The Company has never declared or paid any dividends on the Common Stock
and does not anticipate paying any cash dividends on the Common Stock in the
foreseeable future. In addition, the Revolving Credit Agreement and the Term
Loan Agreement restrict the ability of the Company to pay dividends.
8
<PAGE> 10
Shares Eligible for Future Sale
Sale of a substantial number of shares of the Company's Common Stock in
the public market could adversely affect the market price of the Common Stock.
Substantially all shares of Common Stock are eligible for sale subject, in
certain instances, to the resale limitations of Rule 144 promulgated under the
Securities Act. See "Plan of Distribution."
Absence of Public Market for the Notes
There is no existing public market for the Notes and there can be no
assurance as to the liquidity of any market that may develop for the Notes, the
ability of the holders to sell their Notes or the price at which holders of the
Notes may be able to sell their Notes. Future trading prices of the Notes will
depend on many factors, including, among other things, prevailing interest
rates, the Company's operating results, the price of the Common Stock and the
market for similar securities. The Notes have been designated for trading in the
PORTAL Market; however, the Company does not intend to apply for listing of the
Notes on any securities exchange. Notes resold pursuant to this Registration
Statement will no longer be eligible for trading in the PORTAL Market.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Notes or
the shares of Common Stock offered hereby.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
Three months
Year Ended September 30, Nine Months Year ended ended September 30,
------------------------ ended June 30, June 30, -------------------
1993 1994 1995 1996 (1) 1997 1996 1997
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1.07x 2.96x 10.30x 21.30x 10.07x -- (2) -- (2)
</TABLE>
(1) Effective October 1, 1995, the Company changed its fiscal year end
to June 30 beginning with fiscal year 1996.
(2) For the three-month periods ended September 30, 1997 and 1996, the
deficiency of earnings to cover fixed charges is $5,997,000 and
$7,074,000, respectively.
For purposes of computing the ratio of earnings to fixed charges,
"earnings" includes pre-tax income adjusted for fixed charges. "Fixed charges"
consists of interest (expensed and capitalized), amortization of debt issuance
costs and the estimated interest component of rental expense (deemed to be
one-third).
9
<PAGE> 11
CAPITALIZATION
The following table sets forth the actual cash and cash equivalents and
capitalization of the Company as of September 30, 1997 and as adjusted to give
effect to the Debt Offering and the application of the net proceeds therefrom.
This table should be read in conjunction with the Company's Consolidated
Financial Statements and notes thereto incorporated by reference herein.
<TABLE>
<CAPTION>
As of September
30, 1997
---------------------
As
Actual Adjusted
--------- ---------
(in thousands)
<S> <C> <C>
Cash and cash equivalents ................................. $ 18,469 $ 78,056
========= =========
Indebtedness:
Loan payable under credit agreement (1) ................. $ 1,500 $ 1,500
Notes payable to shareholder (2) ........................ 11,568 11,568
Term Loan Agreement ..................................... 14,199 14,119
8% Convertible Subordinated Notes due 2007 .............. -- 63,250
--------- ---------
Total Indebtedness ..................................... $ 27,187 $ 90,437
Stockholders' equity:
Common Stock, no par value, 30,000,000 shares authorized,
11,149,737 shares issued and outstanding (3) ............ 81,081 81,081
Additional paid-in capital .............................. 16 16
Retained earnings (deficit) ............................. (106) (106)
--------- ---------
Total stockholders' equity ............................. 80,991 80,991
--------- ---------
Total capitalization ................................. $ 108,178 $ 171,428
========= =========
</TABLE>
- ----------
(1) Represents payments due under the Amended and Restated Credit Agreement
due in installments of $500,000 on August 1, 1998, and $333,333 on each of
August 1, 1999, 2000 and 2001.
(2) As partial compensation to Alenia Spazio for the construction of the
Single Modules, the Company issued subordinated notes to Alenia Spazio
(the "Alenia Notes"). The Alenia Notes bear interest at 12% per annum. No
amount of principal or interest on the Alenia Notes is due until all
amounts under the Amended and Restated Credit Agreement are repaid, the
maturity of which is August 1, 2001.
(3) Excludes: (i) 1,927,455 shares of Common Stock issuable upon exercise of
options and warrants outstanding as of September 30, 1997 with a weighted
average exercise price of $9.42 per share; (ii) 200,000 shares of Common
Stock reserved for issuance under the Company's stock option plan for
Directors; and (iii) 4,642,202 additional shares of Common Stock reserved
for issuance upon conversion of the Notes.
10
<PAGE> 12
DESCRIPTION OF NOTES
The Notes were issued under an Indenture dated as of October 15, 1997 (the
"Indenture"), between the Company and First Union National Bank, as trustee (the
"Trustee"). The following is a summary of the material provisions of the
Indenture. This summary does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all the provisions of the
Indenture (including provisions made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended). Whenever particular Sections or
defined terms of the Indenture are referred to, such Sections or defined terms
are incorporated in their entirety herein by reference.
General
The Notes are unsecured, subordinated obligations of the Company, are
limited to an aggregate principal amount of $63,250,000, and will mature on
October 15, 2007. The Notes bear interest at the rate of 8% per annum from the
date of original issuance thereof, or from the most recent Interest Payment Date
on which interest has been paid or provided for, payable semi-annually on April
15 and October 15 of each year, commencing April 15, 1998, to each Person in
whose name a Note is registered (a "Holder") at the close of business on the
preceding April 1 or October 1 (whether or not a Business Day), as the case may
be.
Principal of and premium, if any, and interest on the Notes is payable,
and the transfer of the Notes is registrable, at the office or the agency
maintained by the Company in the City of New York or Richmond, Virginia. In
addition, payment of interest may, at the option of the Company, be made by
check mailed to the address of the person entitled thereto as it appears in the
note register or by wire transfer to Holders of at least $2,000,000 aggregate
principal amount of the Notes. Interest is computed on the basis of a 360-day
year of twelve 30-day months.
The Notes are issued only in fully registered form, without coupons, in
denominations of $1,000 and any multiple thereof. No service charge is made for
any registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
Book-Entry, Delivery and Form
The Notes sold were issued in the form of a single Global Note except as
described below. The Global Note was deposited with, or on behalf of, the
Depositary and registered in the name of the Depositary or its nominee. Except
as set forth below, the Global Note may be transferred, in whole and not in
part, only to the Depositary or another nominee of the Depositary. Investors may
hold their beneficial interests in the Global Note directly through the
Depositary if they have an account with the Depositary or indirectly through
organizations which have accounts with the Depositary.
Notes that were (i) originally issued to institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) that are not Qualified Institutional Buyers or (ii) issued as described
below under "--Certificated Notes" were issued in definitive form. Upon the
transfer of a Note in definitive form, such Note will, unless the Global Note
has previously been exchanged for Notes in definitive form, be exchanged for an
interest in the Global Note representing the principal amount of Notes being
transferred.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company and organized under the laws of the State of New
York, a member of the Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and "a clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. The
Depositary was created to hold securities of institutions that have accounts
with the Depositary ("participants") and to facilitate the clearance and
settlement of securities transactions among its participants in such securities
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (which may
include the Initial Purchasers), banks, trust companies, clearing corporations
and certain other organizations. Access to the Depositary's book-entry system is
11
<PAGE> 13
also available to others such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a participant,
whether directly or indirectly.
The Depositary has agreed to credit, on its book-entry registration and
transfer system, the principal amount of the Notes represented by such Global
Note to the accounts of participants. The accounts to be credited shall be
designated by the Initial Purchasers of such Notes. Ownership of beneficial
interests in the Global Note will be limited to participants or persons that may
hold interests through participants. Ownership of beneficial interests in the
Global Note will be shown on, and the transfer of those ownership interests will
be effected only through, records maintained by the Depositary (with respect to
participants' interests) and such participants (with respect to the owners of
beneficial interests in the Global Note other than participants). The laws of
some jurisdictions may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and laws
may impair the ability to transfer or pledge beneficial interests in the Global
Note.
So long as the Depositary, or its nominee, is the registered holder and
owner of the Global Note, the Depositary or such nominee, as the case may be,
will be considered the sole legal owner and holder of the related Notes for all
purposes of such Notes and the Indenture. Except as set forth below, owners of
beneficial interests in the Global Note will not be entitled to have the Notes
represented by the Global Note registered in their names, will not receive or be
entitled to receive physical delivery of certificated Notes in definitive form
and will not be considered to be the owners or holders of any Notes under the
Global Note. The Company understands that under existing industry practice, in
the event an owner of a beneficial interest in the Global Note desires to take
any action that the Depositary, as the holder of the Global Note, is entitled to
take, the Depositary would authorize the participants to take such action, and
that the participants would authorize beneficial owners owning through such
participants to take such action or would otherwise act upon the instructions of
beneficial owners owning through them.
Payment of principal of and premium, if any, and interest on Notes
represented by the Global Note registered in the name of and held by the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner and holder of the Global Note.
The Company expects that the Depositary or its nominee, upon receipt of
any payment of principal of or premium, if any, or interest on the Global Note,
will credit participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of the Global Note
as shown on the records of the Depositary or its nominee. The Company also
expects that payments by participants to owners of beneficial interests in the
Global Note held through such participants will be governed by standing
instructions and customary practices and will be the responsibility of such
participants. The Company will not have any responsibility or liability for any
aspect of the records relating to, or payments made on account of, beneficial
ownership interests in the Global Note for any Note or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests or for any other aspect of the relationship between the Depositary and
its participants or the relationship between such participants and the owners of
beneficial interests in the Global Note owning through such participants.
Unless and until it is exchanged in whole or in part for certificated
Notes in definitive form, the Global Note may not be transferred except as a
whole by the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary to another nominee of such Depositary.
Although the Depositary has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Note among participants of the
Depositary, it is under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither the
Trustee nor the Company will have any responsibility for the performance by the
Depositary or its participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
Certificated Notes
The Notes represented by the Global Note are exchangeable for certificated
Notes in definitive form of like tenor as such Notes in denominations of $1,000
and integral multiples thereof if (i) the Depositary notifies the Company that
it is unwilling or unable to continue as Depositary for the Global Note or if at
any time the Depositary
12
<PAGE> 14
ceases to be a clearing agency registered under the Exchange Act, (ii) the
Company in its discretion at any time determines not to have all of the Notes
represented by the Global Note or (iii) a default entitling the holders of the
Notes to accelerate the maturity thereof has occurred and is continuing. Any
Note that is exchangeable pursuant to the preceding sentence is exchangeable for
certificated Notes issuable in authorized denominations and registered in such
names as the Depositary shall direct. Subject to the foregoing, the Global Note
is not exchangeable, except for a Global Note of the same aggregate denomination
to be registered in the name of the Depositary or its nominee. In addition, such
certificates will bear the legend referred to under "Transfer Restrictions"
(unless the Company determines otherwise in accordance with applicable law)
subject, with respect to such Notes, to the provisions of such legend.
Conversion Rights
The Notes are convertible, in whole or in part, into Common Stock at the
option of the Holder at any time following the date of original issuance thereof
and prior to the close of business on the Business Day immediately preceding the
maturity date, unless previously redeemed, initially at the conversion price of
$13.625 per share. The right to convert the Notes called for redemption will
terminate at the close of business on the Business Day immediately preceding the
Redemption Date unless the Company defaults in making the payment due on the
Redemption Date. For information as to notices of redemption, see "--Optional
Redemption."
If the Company, by means of dividend or otherwise, declares or makes a
distribution in respect of its Common Stock referred to in clause (iv) or (v)
below, the Holder of each Note, upon the conversion thereof subsequent to the
close of business on the date fixed for the determination of stockholders
entitled to receive such distribution and prior to the effectiveness of the
conversion price adjustment in respect of such distribution pursuant to clause
(iv) or (v) below, will be entitled to receive for each share of Common Stock
into which such Note is converted, the portion of the evidences of indebtedness,
shares of capital stock, cash and other property so distributed applicable to
one share of Common Stock; provided, however, that the Company may, with respect
to all Holders so converting, in lieu of distributing any portion of such
distribution not consisting of cash or securities of the Company, pay such
Holder cash equal to the fair market value thereof. (Section 13.01)
The conversion price will be subject to adjustment upon the occurrence of
certain events, including: (i) the payment of dividends (and other
distributions) of Common Stock on any class of capital stock of the Company;
(ii) the issuance to all holders of Common Stock of rights, warrants or options
entitling them to subscribe for or purchase Common Stock at less than the
current market price (as defined) thereof; (iii) subdivisions and combinations
of Common Stock; (iv) distributions to all holders of Common Stock of evidences
of indebtedness of the Company, shares of capital stock, securities, cash or
property (excluding any rights, warrants or options referred to in clause (ii)
above and any dividend or distribution paid exclusively in cash and any dividend
or distribution referred to in clause (i) above); (v) distributions consisting
exclusively of cash to all holders of Common Stock in an aggregate amount that,
together with (A) other all-cash distributions made within the preceding 12
months and (B) any cash and the fair market value, as of the expiration of the
tender or exchange offer referred to below, of consideration payable in respect
of any tender or exchange offer by the Company or a Subsidiary for the Common
Stock concluded within the preceding 12 months, exceeds 12.5% of the Company's
aggregate market capitalization (such aggregate market capitalization being the
product of the current market price (as defined) of the Common Stock multiplied
by the number of shares of Common Stock then outstanding) on the date of such
distribution; and (vi) the successful completion of a tender or exchange offer
made by the Company or any Subsidiary for the Common Stock which involves an
aggregate consideration that, together with (X) any cash and the fair market
value of other consideration payable in respect of any tender or exchange offer
by the Company or a Subsidiary for the Common Stock concluded within the
preceding 12 months and (Y) the aggregate amount of any all-cash distributions
to all holders of the Company's Common Stock made within the preceding 12
months, exceeds 12.5% of the Company's aggregate market capitalization on the
expiration of such tender or exchange offer. No adjustment of the conversion
price will be required to be made until cumulative adjustments amount to 1% or
more of the conversion price as last adjusted. (Section 13.04)
In the event that the Company distributes rights or warrants (other than
those referred to in clause (ii) of the preceding paragraph) pro rata to holders
of Common Stock, so long as any such rights or warrants have not expired or been
redeemed by the Company, the Holder of any Note surrendered for conversion will
be entitled to receive upon such conversion, in addition to the shares of Common
Stock issuable upon such conversion (the "Conversion
13
<PAGE> 15
Shares"), a number of rights or warrants to be determined as follows: (i) if
such conversion occurs on or prior to the date for the distribution to the
holders of rights or warrants of separate certificates evidencing such rights or
warrants (the "Distribution Date"), the same number of rights or warrants to
which a holder of a number of shares of Common Stock equal to the number of
Conversion Shares is entitled to at the time of such conversion in accordance
with the terms and provisions of and applicable to the rights or warrants, and
(ii) if such conversion occurs after such Distribution Date, the same number of
rights or warrants to which a holder of the number of shares of Common Stock
into which such Note was convertible immediately prior to such Distribution Date
would have been entitled on such Distribution Date in accordance with the terms
and provisions of and applicable to the rights or warrants. The conversion price
of the Notes will not be subject to adjustment on account of any declaration,
distribution or exercise of such rights or warrants. (Section 13.04)
In the case of certain reclassifications, consolidations, mergers, sales
or transfers of assets or other transactions pursuant to which the Common Stock
is converted into the right to receive other securities, cash or other property,
each Note then outstanding would, without the consent of any Holders of Notes,
become convertible only into the kind and amount of securities, cash and other
property receivable upon the transaction by a holder of the number of shares of
Common Stock which would have been received by a Holder immediately prior to
such transaction if such Holder had converted its Note. (Section 13.11)
Fractional shares of Common Stock will not be issued upon conversion, but,
in lieu thereof, the Company will pay a cash adjustment based upon the market
price. (Section 13.03)
Except as described in this paragraph, no Holder of Notes will be
entitled, upon conversion thereof, to any actual payment or adjustment on
account of accrued and unpaid interest (although such accrued and unpaid
interest will be deemed paid by the appropriate portion of the Common Stock
received by the holders upon such conversion) or on account of dividends on
shares of Common Stock issued in connection therewith. Notes surrendered for
conversion during the period from the close of business on any Regular Record
Date to the opening of business on the corresponding Interest Payment Date
(except Notes called for redemption on a Redemption Date within such period
between and including such Regular Record Date and such Interest Payment Date)
must be accompanied by payment to the Company of an amount equal to the interest
payable on such Interest Payment Date on the principal amount converted.
(Section 13.02)
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
federal income tax purposes (e.g., distributions of evidences of indebtedness or
assets of the Company, but generally not stock dividends or rights to subscribe
to capital stock) and, pursuant to the conversion price adjustment provisions of
the Indenture, the conversion price of the Notes is reduced, such reduction may
be deemed to be the receipt of taxable income to Holders of Notes.
In addition, the Company may make such reductions in the conversion price
as the Board of Directors of the Company deems advisable to avoid or diminish
any income tax to holders of shares of Common Stock resulting from any dividend
or distribution of stock (or rights to acquire stock) or from any event treated
as such for income tax purposes or for any other reasons.
Optional Redemption
The Notes may be redeemed at the Company's option, in whole or from time
to time in part, on at least 20 and not more than 40 days' notice by mail to the
registered Holders thereof, at any time on or after October 20, 2000 through
October 14, 2001 at 105.3333% of the principal amount, and thereafter at the
Redemption Prices (expressed
14
<PAGE> 16
as percentages of principal amount), if redeemed during the twelve-month period
beginning on October 15 of the years set forth below:
<TABLE>
<CAPTION>
Year Percentage
- ---- ----------
<S> <C>
2001 104.4444%
2002 103.5556%
2003 102.6667%
2004 101.7778%
2005 100.8889%
</TABLE>
and thereafter at 100% of the principal amount thereof, in each case together
with accrued and unpaid interest to (but not including) the Redemption Date
(subject to the rights of Holders of record on any Regular Record Date to
receive interest due on any Interest Payment Date that is on or prior to such
Redemption Date). If less than all the Notes are to be redeemed, the Trustee
will select or cause to be selected the Notes by such method as it deems fair
and appropriate and which may provide for selection for redemption of portions
of the principal amount of any Note of a denomination larger than $1,000.
(Section 2.03 and Article XI)
No sinking fund is provided for the Notes.
Certain Rights to Require Purchase of Notes
In the event a Change in Control occurs, each Holder will have the right,
at the Holder's option, to require the Company to repurchase all or any part of
such Holder's Notes on the date fixed by the Company that is not less than 30
nor more than 45 days (the "Repurchase Date") after the date the Company gives
notice of the Change in Control, at a price (the "Repurchase Price") equal to
100% of the principal amount thereof, together with accrued and unpaid interest
through the Repurchase Date. On or prior to the Repurchase Date, the Company
shall deposit with a Paying Agent an amount of money sufficient to pay the
aggregate Repurchase Price of the Notes which is to be paid on the Repurchase
Date. (Section 14.01)
The Company may not purchase any Note pursuant to the preceding paragraph
at any time when the subordination provisions of the Indenture otherwise would
prohibit the Company from making payments of principal in respect of the Notes.
Failure by the Company to repurchase the Notes when required under the preceding
paragraph will constitute an Event of Default under the Indenture whether or not
such repurchase is permitted by the subordination provisions of the Indenture.
On or before the 15th day after the Company knows or reasonably should
know a Change in Control has occurred, the Company will be required to mail to
all Holders of record of the Notes a notice (the "Company Notice") of the
occurrence of such Change in Control, the date by which the repurchase right
must be exercised, the Repurchase Price for the Notes and the procedures which
the Holder must follow to exercise such right. To exercise the repurchase right,
the Holder of a Note will be required to deliver, on or before the 30th day
after the date of the Company Notice, written notice to the Company (or an agent
designated by the Company for such purpose) of the Holder's exercise of such
right, together with the certificates evidencing the Note or Notes with respect
to which the right is being exercised, duly endorsed for transfer. (Section
14.02)
The term "Beneficial Owner" shall be determined in accordance with Rules
13d-3 and 13d-5 promulgated by the Commission under the Exchange Act or any
successor provision thereto, except that a Person shall be deemed to have
"beneficial ownership" of all shares that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of time.
A "Change in Control" shall be deemed to have occurred at such time as (a)
any Person, or any Persons acting together in a manner which would constitute a
"group" (a "Group") for purposes of Section 13(d) of the Exchange Act, or any
successor provision thereto, together with any Affiliates thereof, (i) become
the Beneficial Owners, directly or indirectly, of capital stock of the Company,
entitling such Person or Persons and its or their Affiliates to exercise more
than 50% of the total voting power of all classes of the Company's capital stock
entitled to vote generally in the election of the Company's directors or (ii)
shall succeed in having sufficient of its or their nominees (who are not
supported by a majority of the then current Board of Directors of the Company)
elected to
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the Board of Directors of the Company such that such nominees, when added to any
existing directors remaining on the Board of Directors of the Company after such
election who are Affiliates of or acting in concert with such Persons, shall
constitute a majority of the Board of Directors of the Company, (b) the Company
shall be a party to any transaction pursuant to which the Common Stock is
converted into the right to receive other securities (other than common stock),
cash and/or property (or the Company, by dividend, tender or exchange offer or
otherwise, distributes other securities, cash and/or property to holders of
Common Stock) and the value of all such securities, cash and/or property
distributed in such transaction and any other transaction effected within the 12
months preceding consummation of such transaction (as determined in good faith
by the Board of Directors, whose determination shall be conclusive and described
in a Board Resolution) is more than 50% of the average of the daily Closing
Prices for the five consecutive Trading Days ending on the Trading Day
immediately preceding the date of such transaction (or, if earlier, the Trading
Day immediately preceding the "ex" date (as defined in paragraph (7) of Section
13.04 of the Indenture) for such transaction) or (c) the Company shall
consolidate with or merge into any other Person or sell, convey, transfer or
lease its properties and assets substantially as an entirety to any Person other
than a Subsidiary, or any other Person shall consolidate with or merge into the
Company (other than, in the case of this clause (c), pursuant to any
consolidation or merger where Persons who are stockholders of the Company
immediately prior thereto become the Beneficial Owners of shares of capital
stock of the surviving company entitling such Persons to exercise more than 50%
of the total voting power of all classes of such surviving company's capital
stock entitled to vote generally in the election of directors).
The effect of these provisions granting the Holders the right to require
the Company to purchase the Notes upon the occurrence of a Change in Control may
make it more difficult for any person or group to acquire control of the Company
or to effect a business combination with the Company. Moreover, under the
Indenture, the Company will not be permitted to pay principal of or interest on,
or otherwise acquire the Notes (including any repurchase at the election of the
Holders of Notes upon the occurrence of a Change in Control) if a payment
default on Senior Indebtedness has occurred and is continuing, or in the event
of the insolvency, bankruptcy, reorganization, dissolution or other winding up
of the Company where Senior Indebtedness is not paid in full. The Company's
ability to pay cash to Holders of Notes following the occurrence of a Change in
Control may be limited by the Company's then existing financial resources. There
can be no assurance that sufficient funds will be available when necessary to
make any required repurchases.
In the event a Change in Control occurs and the Holders exercise their
rights to require the Company to repurchase Notes, the Company intends to comply
with applicable tender offer rules under the Exchange Act, including Rules 13e-4
(other than Commission filing requirements if not then applicable) and 14e-1, as
then in effect, with respect to any such purchase.
Registration Rights
The Company has agreed pursuant to a registration rights agreement (the
"Registration Rights Agreement") with the Initial Purchasers, for the benefit of
the holders of the Notes and the Common Stock issuable upon the conversion
thereof, that the Company will, at its cost, (a) as promptly as practicable,
file a Registration Statement on Form S-3 (the "Shelf Registration Statement"),
of which this Prospectus forms a part, covering resales of the Notes and the
Common Stock issuable upon the conversion thereof pursuant to Rule 415 under the
Securities Act, (b) use its best efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act no later than 120
days after the first date of initial issuance of the Notes and (c) keep the
Shelf Registration Statement effective after its effective date for as long as
shall be required under Rule 144(k) under the Securities Act or any successor
rule or regulation thereto. The Company will, in the event a Shelf Registration
Statement is filed, among other things, provide to each holder for whom such
Shelf Registration Statement was filed copies of the prospectus which is a part
of the Shelf Registration Statement, notify each such holder when the Shelf
Registration Statement has become effective, and take certain other actions as
are required to permit unrestricted resales of the Notes and the Common Stock
issuable upon the conversion thereof by such holders to third parties, other
than through underwritten offerings. A Holder selling such securities pursuant
to the Shelf Registration Statement generally will be required to be named as a
selling security holder in the related prospectus and to deliver a prospectus to
Purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement which are applicable to such
Holder (including certain indemnification obligations).
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If (i) on or prior to the 90th day after the first date of original
issuance of the Notes, the Shelf Registration Statement has not been filed with
the Commission; (ii) on or prior to the 120th day after the first date of
original issuance of the Notes, the Shelf Registration Statement has not been
declared effective by the Commission; or (iii) after the Shelf Registration
Statement has been declared effective, such Shelf Registration Statement ceases
to be effective or usable (subject to certain exceptions) in connection with
resales of Notes and the Common Stock issuable upon the conversion thereof in
accordance with and during the periods specified in the Registration Rights
Agreement (each such event referred to in clauses (i) through (iii), a
"Registration Default"), additional interest will accrue on the Notes over and
above the rate set forth in the title of the Notes, from and including the date
on which any such Registration Default shall occur to but excluding the date on
which all Registration Defaults have been cured, at the rate of 0.5% per annum.
The Company will have no other liabilities for monetary damages with respect to
its registration obligations; provided, however, that in the event the Company
breaches, fails to comply with or violates certain provisions of the
Registration Rights Agreement, the holders shall be entitled to, and the Company
shall not oppose the granting of, equitable relief, including injunction and
specific performance.
The filing of the Registration Statement will trigger the rights of
certain of the Company's stockholders to have their shares registered for
resale. See "Risk Factors--Shares Eligible For Future Sale; Registration
Rights."
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is available upon request to the Company.
Consolidation, Merger and Sale of Assets
The Indenture provides that the Company, without the consent of the
Holders of any of the Outstanding Notes, may consolidate with or merge into any
other Person or convey, transfer or lease its properties substantially as an
entirety to, the Company; provided that (a) the successor, transferee or lessee
is organized under the laws of any United States jurisdiction; (b) the
successor, transferee or lessee, if other than the Company, expressly assumes
the Company's obligations under the Indenture and the Notes by means of a
supplemental indenture entered into with the Trustee; (c) after giving effect to
the transaction, no Event of Default and no event which, with notice or lapse of
time, or both, would constitute an Event of Default, shall have occurred and be
continuing; and (d) certain other conditions are met.
(Section 8.01)
Under any consolidation by the Company with, or merger by the Company
into, any other Person or any conveyance, transfer or lease of the properties
and assets of the Company substantially as an entirety as described in the
preceding paragraph, the successor resulting from such consolidation or into
which the Company is merged or the transferee or lessee to which such
conveyance, transfer or lease is made, will succeed to, and be substituted for,
and may exercise every right and power of, the Company under the Indenture, and
thereafter, except in the case of a lease, the predecessor (if still in
existence) will be released from its obligations and covenants under the
Indenture and the Notes. (Section 8.02)
Events of Default
An Event of Default is defined in the Indenture to be a (i) default in the
payment of any interest upon any of the Notes for 30 days or more after such
payment is due, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (ii) default in the payment of the principal of and
premium, if any, on any of the Notes when due, whether or not such payment is
prohibited by the subordination provisions of the Indenture; (iii) default in
the Company's obligation to provide notice of a Change in Control or default in
the payment of the repurchase price in respect of any Note on the repurchase
date therefor, whether or not such payment is prohibited by the subordination
provisions of the Indenture; (iv) default by the Company in the performance, or
breach, of any of its other covenants in the Indenture which will not have been
remedied by the end of a period of 60 days after written notice 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 Notes; (v) failure to pay when due the
principal of, or acceleration of, any indebtedness for money borrowed by the
Company or a Subsidiary in excess of $3.0 million, if such indebtedness is not
discharged, or such acceleration is not waived or annulled, by the end of a
period of 10 days after written notice to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal
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amount of the Outstanding Notes; and (vi) certain events of bankruptcy,
insolvency or reorganization of the Company or a Subsidiary. (Section 5.01)
The Indenture provides that if an Event of Default (other than of a type
referred to in clause (vi) of the preceding paragraph) shall have occurred and
is continuing, either the Trustee or the Holders of at least 25% in principal
amount of the Outstanding Notes may declare the principal amount of all Notes to
be immediately due and payable. Such declaration may be rescinded if certain
conditions are satisfied. If an Event of Default of the type referred to in
clause (vi) of the preceding paragraph shall have occurred, the principal amount
of the Outstanding Notes shall automatically become immediately due and payable.
(Section 5.02)
The Indenture also provides that the Holders of not less than a majority
in principal amount of the Outstanding Notes may direct the time, method and
place of conducting any proceedings for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided that such
direction is not in conflict with any rule of law or with the Indenture. The
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction. (Section 5.12)
The Indenture contains provisions entitling the Trustee, subject to the
duty of the Trustee during the continuance of an Event of Default to act with
the required standard of care, to be indemnified by the Holder before proceeding
to exercise any right or power under the Indenture at the request of the
Holders. (Section 6.03)
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless also the Holders of at least 25% in aggregate principal
amount of the Outstanding Notes shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as Trustee,
and the Trustee shall not have received from the Holders of a majority in
aggregate principal amount of the Outstanding Notes a direction inconsistent
with such request and shall have failed to institute such proceeding within 60
days. (Section 5.07) However, such limitations do not apply to a suit instituted
by a Holder of a Note for enforcement of payment of the principal of and
premium, if any, or interest on such Note on or after the respective due dates
expressed in such Note or of the right to convert such Note in accordance with
the Indenture. (Section 5.08)
The Indenture requires the Company to file annually with the Trustee a
certificate, executed by a designated officer of the Company, stating to the
best of his knowledge that the Company is not in default under certain covenants
under the Indenture or if he has knowledge that the Company is in such default,
specifying such default. (Section 10.04)
Modification and Waiver
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in principal amount
of the Outstanding Notes, to enter into one or more supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or modifying in any manner the rights of the Holders
of the Notes, except that no such modification or amendment may, without the
consent of the Holders of each of the Outstanding Notes affected thereby, among
other things, (i) change the Stated Maturity of the principal of or any
installment of interest on any Note; (ii) reduce the principal amount thereof or
any premium thereon or the rate of interest thereon; (iii) adversely affect the
right of any Holder to convert any Note as provided in the Indenture; (iv)
change the place of payment where, or the coin or currency in which, the
principal of any Note or any premium or interest thereon is payable; (v) impair
the right to institute suit for the enforcement of any such payment on or with
respect to any Note on or after the Stated Maturity (or, in the case of
redemption, on or after the Redemption Date); (vi) modify the subordination
provisions of the Indenture in a manner adverse to the Holders; (vii) modify the
redemption provisions of the Indenture in a manner adverse to the Holders;
(viii) modify the provisions of the Indenture relating to the Company's
requirement to offer to repurchase Notes upon a Change in Control in a manner
adverse to the Holders; (ix) reduce the percentage in principal amount of the
Outstanding Notes the consent of whose Holders is required for any such
modification or amendment of the Indenture or for any waiver of compliance with
certain provisions of, or of certain defaults under, the Indenture; or (x)
modify the foregoing requirements. (Section 9.02)
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The Holders of a majority in principal amount of the Outstanding Notes may
on behalf of the Holders of all Notes waive compliance by the Company with
certain restrictive provisions of the Indenture. (Section 10.08) The Holders of
a majority in principal amount of the Outstanding Notes may on behalf of the
Holders of all Notes waive any past default under the Indenture and its
consequences, except a default in the payment of the principal of or any premium
or interest on any Note or in respect of a provision which under the Indenture
cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected. (Section 5.13)
Subordination
The payment of the principal of and premium, if any, and interest on the
Notes will, to the extent set forth in the Indenture, be subordinated in right
of payment to the prior payment in full of all Senior Indebtedness. When there
is a payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, reorganization, assignment for the benefit of
creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of the Company, the holders of all Senior Indebtedness will first be
entitled to receive payment in full of all amounts due or to become due thereon,
or provision for such payment in money or money's worth, before the Holders of
the Notes will be entitled to receive any payment in respect of the principal of
or premium, if any, or interest on the Notes. (Section 12.02) No payments on
account of principal of, premium, if any, or interest on the Notes or on account
of the purchase or acquisition of Notes may be made if there has occurred and is
continuing a default in any payment with respect to Senior Indebtedness or if
any judicial proceeding is pending with respect to any such default. (Section
12.03)
By reason of such subordination, in the event of insolvency, creditors of
the Company who are not holders of Senior Indebtedness (including Holders of the
Notes) may recover less, ratably, than holders of Senior Indebtedness.
"Senior Indebtedness" is defined in the Indenture as the principal of and
premium, if any, and interest on all indebtedness of the Company for money
borrowed, other than the Notes, whether outstanding on the date of execution of
the Indenture or thereafter created, incurred, guaranteed or assumed, except
such indebtedness that by the terms of the instrument or instruments by which
such indebtedness was created or incurred expressly provides that it (i) is
junior in right of payment to the Notes or any other indebtedness of the Company
or (ii) ranks pari passu in right of payment to the Notes. The term
"indebtedness for money borrowed" when used with respect to the Company is
defined to mean (i) any obligation of, or any obligation guaranteed by, the
Company for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, (ii) all obligations of the
Company with respect to interest rate hedging arrangements to hedge interest
rates relating to Senior Indebtedness of the Company, (iii) any deferred payment
obligation of, or any such obligation guaranteed by, the Company for the payment
of the purchase price of property or assets evidenced by a note or similar
instrument, and (iv) any obligation of, or any such obligation guaranteed by,
the Company for the payment of rent or other amounts under a lease of property
or assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Company under generally accepted
accounting principles.
The Company and its subsidiary expect from time to time to incur
additional indebtedness. The Indenture does not limit or prohibit the incurrence
of additional Senior Indebtedness or additional indebtedness of the Company's
subsidiaries. See "Risk Factors--Subordination."
Defeasance
The Indenture provides that (A) if applicable, the Company will be
discharged from any and all obligations in respect of the Outstanding Notes
(except for certain obligations to register the transfer or exchange of Notes,
to replace stolen, lost or mutilated Notes, to provide for conversion of the
Notes, to maintain paying agents and hold moneys for payment in trust, to comply
with the Registration Rights Agreement, and to repurchase Notes in the event of
a Change in Control) or (B) if applicable, the Company may decide not to comply
with certain restrictive covenants, but not including the obligations to provide
for conversion of the Notes, to comply with the Registration Rights Agreement,
or repurchase Notes in the event of a Change in Control, and that such omission
will not be deemed to be an Event of Default under the Indenture and the Notes,
in the case of either clause (A) or (B), upon irrevocable deposit with the
Trustee, in trust, of money and/or U.S. Government Obligations that will provide
money in an amount sufficient in the written opinion of a nationally recognized
firm of independent public
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accountants to pay the principal of, premium, if any, and each installment of,
interest on the Outstanding Notes. With respect to clause (B), the obligations
under the Indenture other than with respect to such covenants and the Events of
Default other than the Event of Default relating to such covenants above will
remain in full force and effect. Such trust may only be established if, among
other things (i) with respect to clause (A), the Company has delivered to the
Trustee an Opinion of Counsel to the effect that the Company has received from,
or there has been published by, the Internal Revenue Service a ruling or there
has been a change in law, which in the opinion of counsel to the Company
provides that Holders of the Notes will not recognize gain or loss for federal
income tax purposes as a result of such deposit, defeasance and discharge and
will be subject to federal income tax on the same amount, in the same manner and
at the same times as would have been the case if such deposit, defeasance and
discharge had not occurred; or, with respect to clause (B), the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the Holders of
the Notes will not recognize gain or loss for federal income tax purposes as a
result of such deposit and defeasance and will be subject to federal income tax
on the same amount, in the same manner and at the same times as would have been
the case if such deposit and defeasance had not occurred; (ii) no Event of
Default (or event that with the passing of time or the giving of notice, or
both, would constitute an Event of Default) shall have occurred or be
continuing; (iii) the Company has delivered to the Trustee an Opinion of Counsel
to the effect that such deposit shall not cause the Trustee or the trust so
created to be subject to the Investment Company Act of 1940, as amended; and
(iv) certain other customary conditions precedent are satisfied. (Article XV)
Regarding the Trustee
First Union National Bank is the Trustee under the Indenture.
Governing Law
The Indenture and the Notes are governed by and construed in accordance
with the laws of the State of New York. (Section 1.12)
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DESCRIPTION OF CAPITAL STOCK
The following description summarizes certain provisions of the Articles of
Incorporation and Bylaws. Such summaries do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all of the
provisions of the Articles of Incorporation and the Bylaws of the Company.
General
The Articles of Incorporation provide for the authorization of 30,000,000
shares of Common Stock and 1,000,000 shares of serial Preferred Stock.
Common Stock
All of the issued and outstanding shares of Common Stock are fully paid
and nonassessable. Each holder of shares of Common Stock is entitled to one vote
per share on all matters to be voted on by stockholders generally, including the
election of directors. There are no cumulative voting rights. The holders of
Common Stock are entitled to dividends and other distributions as may be
declared from time to time by the Board of Directors out of funds legally
available therefor, if any.
Upon the liquidation, dissolution or winding up of the Company, the
holders of shares of Common Stock would be entitled to share ratably in the
distribution of all of the Company's assets remaining available for distribution
after satisfaction of all its liabilities and the payment of the liquidation
preference of any outstanding Preferred Stock as described below. The holders of
Common Stock have no preemptive or other subscription rights to purchase shares
of stock of the Company, nor are such holders entitled to the benefits of any
redemption or sinking fund provisions.
Preferred Stock
The Articles of Incorporation authorize the Board of Directors to create
and issue one or more series of Preferred Stock and determine the rights and
preferences of each series, to the extent permitted by the Articles of
Incorporation and applicable law. Among other rights, the Board of Directors may
determine, without the further vote or action by the Company's stockholders, (i)
the number of shares constituting the series and the distinctive designation of
the series; (ii) the dividend rate on the shares of the series, whether
dividends will be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of the
series; (iii) whether the series shall have voting rights, in addition to the
voting rights provided and by law and, if so, the terms of such voting rights;
(iv) whether the series shall have conversion privileges, and, if so, the terms
and conditions of such conversion, including provision for adjustment of the
conversion rate in such events as the Board of Directors shall determine; (v)
whether or not the shares of that series shall be redeemable or exchangeable,
and, if so, the terms and conditions of such redemption or exchange, as the case
may be, including the date or dates upon or after which they shall be redeemable
or exchangeable as the case may be, and the amount per share payable in case of
redemption, which amount may vary under different conditions and at different
redemption dates; (vi) whether the series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund and (vii) the rights of the shares of the series in
the event of voluntary or involuntary liquidation, dissolution or winding up of
the Company and the relative rights or priority, if any, of payment of shares of
the series. Except for any difference so provided by the Board of Directors, the
shares of all series of Preferred Stock will rank on a parity with respect to
the payment of dividends and to the distribution of assets upon liquidation.
Registration Rights
Poly Ventures, Limited Partnership ("Poly Ventures"), BEA Associates
("BEA"), Chase Manhattan Capital Corporation ("Chase"), and Mitsubishi
Corporation, Mitsubishi Heavy Industries, Ltd., Mitsubishi International
Corporation, MTBC Finance, Inc., Japan Airlines Company, Ltd., Shimizu
Corporation, Toyo Engineering Corporation, and certain other corporate
stockholders (collectively, the "Mitsubishi and Other Registration Rights
Holders" and, together with Poly Ventures, BEA and Chase, the "Institutional
Registration Rights Holders") have
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been granted by the Company demand and incidental registration rights in
connection with their prior acquisition of securities of the Company, subject to
certain conditions.
In general, Poly Ventures and BEA, or each of their permitted
transferees, have the right, on up to two occasions, to cause the Company to
register their holdings of Common Stock under the Securities Act (such right
being referred to as a "demand registration right"). Poly Ventures, BEA and
Chase, or each of their permitted transferees, are also entitled, if the Company
determines to file a registration statement covering any of its securities under
the Securities Act, other than a registration statement relating solely to
employee benefit plans or a Rule 145 transaction under the Securities Act, to
require the Company to use its best efforts to include a requested amount of
their shares of Common Stock in the Company's registered offering (such right
being referred to as an "incidental registration right"), subject to certain
marketing restrictions determined by the managing underwriter, if any. The
Mitsubishi and Other Registration Rights Holders, or each of their permitted
transferees, have the right during the period from the closing of the Company's
initial public offering through the ten-year anniversary thereof, to make two
demand registration requests to the Company and have the right to an unlimited
number of incidental registration requests during such period, subject to
conditions similar to those relating to registrations on behalf of Poly
Ventures, BEA and Chase. The incidental registration rights granted to Chase are
subordinate to those granted to Poly Ventures, BEA, and the Mitsubishi and Other
Registration Rights Holders.
The Company is required to bear all registration expenses (other than
underwriting discounts and commissions) and has agreed to indemnify the
Institutional Registration Rights Holders against, and provide contribution with
respect to, certain liabilities under the Securities Act in connection with
incidental and demand registrations.
The Company has also granted incidental registration rights to the holders
of Company warrants (the "Warrant Holders"). The Warrant Holders are entitled to
include their shares of Common Stock in the Company's registered offerings on an
unlimited number of occasions. A Warrant Holder's request for an incidental
registration will be limited on a pro rata basis if the managing underwriter of
the securities to be sold by the Company or by any person exercising demand
registration rights in connection with such registration determines that the
inclusion of the shares of Common Stock exercised by a Warrant Holder would have
an adverse effect on the Offering. The Warrant Holders are entitled to similar
indemnification and expense rights as the Institutional Registration Rights
Holders. The number of shares of Common Stock issuable upon exercise of the
warrants and the exercise price thereof are subject to adjustment upon specified
dilutive issuances by the Company.
Articles of Incorporation and Bylaws
The rights of the Company's shareholders are governed by the Washington
Business Act, the Articles of Incorporation and the Bylaws. Certain provisions
of the Articles of Incorporation and the Bylaws, which are summarized below, may
discourage or make more difficult a takeover attempt that a shareholder might
consider in its best interest. Sums provisions may also adversely affect the
prevailing market price for the Common Stock. See "Risk Factors--Control by
Management and Anti-Takeover Considerations."
Preferred Stock. The Board of Directors has the authority, without action
by the Company's shareholders, rights, privileges and preferences of and to
issue up to 1,000,000 shares of Preferred Stock. The issuance of such Preferred
Stock may have the effect of delaying, deferring or preventing a change in
control of the Company without further action by the stockholders and may
adversely affect the voting and other rights of the holders of the Common Stock,
including the loss of voting control to others. Following the closing of the
Offering, there will be no shares of Preferred Stock issued and outstanding and
the Company currently has no plans to issue any shares of Preferred Stock.
No Shareholder Action by Written Consent; Special Meetings. The Articles
of Incorporation and Bylaws prohibit shareholders from taking action by written
consent in lieu of an annual or special meeting. In addition, special meetings
of shareholders may only be called by the Chairman of the Board, the President,
or a majority of the Board of Directors. Special meetings may not be called by
shareholders.
Advance Notice Requirements for Shareholder Proposals. The Bylaws
establish advance notice procedures with regard to shareholder proposals. These
procedures provide that the notice of shareholder proposals must be
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received by the Company no later than (i) with respect to an annual meeting of
shareholders, 60 days prior to the anniversary date of the immediately preceding
annual meeting of shareholders and (ii) with respect to a special meeting of
shareholders, no later than the close of business on the tenth day following the
date on which notice of such meeting is first sent or given to shareholders.
Each shareholder proposal must set forth certain information as specified in the
Bylaws.
Anti-Takeover Effects of Washington Law
Washington law contains certain provisions that may have the effect of
delaying or discouraging a takeover of the Company. Chapter 23B.17 of the
Washington Business Act prohibits, subject to certain exceptions, a merger,
share exchange, sale of assets or liquidation of a corporation involving an
"Interested Shareholder" (defined generally as a person or affiliated group of
persons acting in concert or under common control that beneficially owns 20% or
more of the outstanding voting shares of the corporation) unless a majority of
disinterested directors determines that the price of the stock offered by the
interested shareholder is fair, a majority of disinterested directors approves
the transaction, or the holders of two-thirds of the votes of each voting group
entitled to vote separately on the transaction, excluding the votes of the
Interested Shareholder, approve the transaction. Chapter 23B.19 of the
Washington Business Act prohibits a corporation, with certain exceptions, from
engaging in certain "significant business transactions" with a person or group
of persons that beneficially owns 10% or more of the corporation's outstanding
voting securities for a period of five years after such an acquisition unless a
majority of the Company's directors approves, prior to the acquisition date,
either the significant business transaction or the purchase of shares made by
the acquiring person or group of persons acting in concert or under common
control on the acquisition date. The prohibited significant business
transactions include, among others, a merger with, disposition of assets to, or
issuance or redemption of stock to or from such person or groups of persons, or
allowing such person or group of persons to receive any disproportionate benefit
as a shareholder. These provisions may have the effect of delaying, deterring or
preventing a change in control of the Company.
Nasdaq National Market Listing
The Common Stock trades on the Nasdaq National Market under the trading
symbol "SPAB."
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock is the American
Stock Transfer and Trust Company.
SELLING SECURITYHOLDERS
The following table sets forth information concerning the aggregate
principal amount of Notes beneficially owned by each Selling Securityholder, as
of __________, 1997, and the number of shares of Common Stock issuable upon
conversion of Notes held thereby, which may be offered from time to time
pursuant to this Prospectus. Other than their ownership of the Company's Common
Stock, none of the Selling Securityholders has had any material relationship
with the Company within the past three years [other than _____________ which,
during such period has acted as an Initial Purchaser, financial advisor and
underwriter for the Company]. The table below has been prepared on the basis of
information furnished to the Company by DTC and/or by or on behalf of the
Selling
23
<PAGE> 25
Securityholders. Any or all of the Notes or shares of Common Stock listed
below may be offered for sale by the Selling Securityholders from time to
time.
<TABLE>
<CAPTION>
Underlying
Shares of
Principal Common Stock
Amount of or Additional Percentage of
Notes Shares of Common Stock
Beneficially Percentage of Common Stock Outstanding
Owned That May Notes That May Be After the
Name (1) Be Sold Outstanding Sold (2) Offering (3)
- --------------- -------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C>
Unnamed holders
of Notes or any
future transferees,
pledgees, donees or
successors of or
from any such
unnamed holders (4)
</TABLE>
(1) The Selling Securityholders and the amount of Notes held by them are set
forth herein as of _____, 1997 and will be updated as required.
(2) Assumes conversion of the full amount of Notes held by such holder at the
initial rate of $13.625 in principal amount of Notes per share of Common
Stock. The conversion rate and the number of shares of Common Stock
issuable upon conversion of the Notes is subject to adjustment under
certain circumstances. See "Description of Notes - Conversion Rights."
Accordingly, the number of shares of Common Stock issuable upon conversion
of the Notes may increase or decrease from time to time. Under the terms
of the Indenture, fractional shares will not be issued upon conversion of
the Notes; cash will be paid in lieu of fractional shares, if any.
(3) Based upon 11,146,237 shares of Common Stock outstanding as of September
30, 1997, treating as outstanding the total number of shares of Common
Stock shown as being issuable upon the assumed conversion by the named
Selling Securityholder of the full amount of such Selling Securityholder's
Notes but not assuming the conversion of the Notes of any other Selling
Securityholder.
(4) Assumes that the unnamed holders of the Notes or any future transferees,
pledgees, donees or successors of or from any such unnamed holder do not
beneficially own any Common Stock other than the Common Stock issuable
upon conversion of the Notes at the initial conversion rate. No such
unnamed holder may offer Notes pursuant to this prospectus until such
unnamed holder is included as a Selling Securityholder in a supplement to
this prospectus in accordance with the Registration Rights Agreement.
Because the Selling Securityholders may, pursuant to this prospectus,
offer all or some portion of the Notes and Common Stock they presently hold or,
with respect to the Common Stock, have the right to acquire upon conversion of
such Notes, no estimate can be given as to the amount of the Notes and Common
Stock that will be held by the Selling Securityholders upon termination of any
such sales. In addition, the Selling Securityholders identified above may have
sold, transferred or otherwise disposed of all or a portion of their Notes and
Common Stock since the date on which they provided the information regarding
their Notes and Common Stock, in transactions exempt from the registration
requirements of the Securities Act.
Only Selling Securityholders identified above who have complied with the
conditions to being included as Selling Securityholders and who beneficially own
the Notes and the Common Stock set forth opposite each such Selling
Securityholder's name in the foregoing table on the effective date of the
Registration Statement may sell such Notes and Common Stock pursuant to this
prospectus. The Company may from time to time, in accordance with the
Registration Rights Agreement, include additional Selling Securityholders in
supplements to this Prospectus.
24
<PAGE> 26
PLAN OF DISTRIBUTION
The Notes and the underlying shares of Common Stock are being registered
to permit public secondary trading of such securities by the holders thereof
from time to time after the date of this Prospectus. The Company and the Selling
Securityholders have agreed to indemnify each other against certain liabilities
arising under the Securities Act. The Company has agreed, among other things, to
bear all expenses (other than underwriting discounts, selling commissions and
fees and expenses of counsel and other advisors to holders of the Notes and the
shares of Common Stock) in connection with the registration and sale of the
securities covered by this Prospectus.
The Company will not receive any of the proceeds from the offering of the
Notes and the shares of Common Stock by the Selling Securityholders. The Company
has been advised by the Selling Securityholders that the Selling Securityholders
may sell all or a portion of the Notes and shares beneficially owned by them and
offered hereby from time to time on any exchange on which the securities are
listed, as applicable, on terms to be determined at the times of such sales. The
Selling Securityholders may also make private sales directly or through a broker
or brokers. Alternatively, any of the Selling Securityholders may from time to
time offer the Notes or shares of Common Stock which may be offered hereby and
beneficially owned by them through underwriters, dealers or agents, who may
receive compensation in the form of underwriting discounts, commissions or
concessions from the Selling Securityholders and the purchasers of the Notes or
shares of Common Stock for whom they may act as agent. Such underwriters,
dealers or agents may include the Initial Purchasers of the Notes, which may
perform investment banking or other services for or engage in other transactions
with the Company from time to time in the future.
The securities offered hereby may be sold from time to time in one or more
transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by the Selling Securityholders or by agreement between such
Selling Securityholders and underwriters or dealers who receive fees or
commissions in connection herewith.
The Company's outstanding Common Stock is listed for trading on the Nasdaq
National Market ("Nasdaq"), and application has been made to list the shares of
Common Stock issuable upon conversion of the Notes on Nasdaq. There is no
assurance as to the development or liquidity of any trading market that may
develop for the Notes.
In order to comply with the securities laws of certain states, if
applicable, the securities offered hereby will be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states the Notes and shares of Common Stock offered hereby may not be sold
unless they have been registered or qualified for sale in the applicable state
or an exemption from the registration or qualification requirement is available
and compliance with such requirement is effected.
The Selling Securityholders and any broker-dealers, agents or underwriters
that participate with the Selling Securityholders in the distribution of the
Notes or shares of Common Stock offered hereby may be deemed to be
"underwriters" within the meaning of the Securities Act, in which case any
commissions or discounts received by such broker-dealers, agents or underwriters
and any profit on the resale of the Notes or shares of Common Stock offered
hereby and purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the principal United States
federal income tax considerations relevant to Holders of the Notes. This
discussion is based on currently existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), existing and proposed Treasury
regulations promulgated thereunder and administrative and judicial
interpretations thereof, all as in effect or proposed on the date hereof and all
of which are subject to change, possibly with retroactive effect, or different
interpretations.
25
<PAGE> 27
This discussion does not deal with all aspects of United States federal
income taxation that may be important to holders of the Notes or shares of the
Common Stock received upon conversion thereof, and it does not include any
description of the tax laws of any state, local or foreign government. This
discussion does not address the tax consequences to subsequent beneficial owners
of the Notes, and is limited to beneficial owners who hold the Notes and the
shares of Common Stock received upon conversion thereof as capital assets within
the meaning of Section 1221 of the Code. Moreover, this discussion is for
general information only and does not purport to address all of the United
States federal income tax consequences that may be relevant to particular
purchasers (such as certain financial institutions, insurance companies,
tax-exempt entities, dealers in securities or persons who have hedged the risk
of owning a Note or a share of Common Stock) that may be subject to special
rules.
For the purpose of this discussion, a "United States Holder" refers to a
beneficial owner of a Note who or which is (i) a citizen or resident of the
United States for United States federal income tax purposes, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or of any political subdivision thereof or (iii) any other person
who is subject to United States federal income tax on a net income basis in
respect of the Notes. The term "Non-United States Holder" refers to any
beneficial owner of a Note who or which is not a United States Holder.
PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO
THE PARTICULAR FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE
ACQUISITION, OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE CONVERSION OF
THE NOTES INTO SHARES OF COMMON STOCK, AND THE EFFECT THAT THEIR PARTICULAR
CIRCUMSTANCES MAY HAVE ON SUCH TAX CONSEQUENCES.
Certain Federal Income Tax Considerations Applicable to United States Holders
Interest on Notes. Interest paid on the Notes will be taxable to a United
States Holder as ordinary interest income in accordance with such holder's
method of tax accounting.
Constructive Dividend. Certain corporate transactions, such as
distributions of assets to holders of Common Stock, may cause a deemed
distribution to the holders of the Notes if the conversion price or conversion
ratio of the Notes is adjusted to reflect such corporate transaction. Such
deemed distributions will be taxable as a dividend, return of capital, or
capital gain in accordance with the earnings and profits rules discussed under
"Dividends on Shares of Common Stock."
Sale or Exchange of Notes or Shares of Common Stock. In general, a United
States Holder of Notes will recognize gain or loss upon the sale, redemption,
retirement or other disposition of the Notes measured by the difference between
(i) the amount of cash and the fair market value of any property received
(except to the extent attributable to the payment of accrued interest) and (ii)
the United States Holder's tax basis in the Notes. A United States Holder's tax
basis in Notes generally will equal the cost of the Notes to the holder. In
general, each United States Holder of Common Stock into which the Notes have
been converted will recognize gain or loss upon the sale, exchange, redemption,
or other disposition of the Common Stock under rules similar to those applicable
to the Notes. Special rules may apply to redemption's of the Common Stock which
may result in the amount paid being treated as a dividend. Assuming the
requirements of Section 1221 are satisfied, the gain or loss on the disposition
of the Notes or shares of Common Stock will be capital gain or loss and will be
taxable at various preferential rates depending on the extent to which a United
States Holder's holding period for the Notes or shares of Common Stock exceeds
one year. (For the basis and holding period of shares of Common Stock, see
"--Conversion of Notes.")
Conversion of Notes. A United States Holder of Notes generally will not
recognize gain or loss on the conversion of the Notes solely into shares of
Common Stock. The United States Holder's tax basis in the shares of Common Stock
received upon conversion of the Notes will be equal to the holder's aggregate
basis in the Notes exchanged therefor (less any portion thereof allocable to
cash received in lieu of a fractional share). The holding period of the shares
of Common Stock received by the holder upon conversion of Notes will generally
include the period during which the holder held the Notes prior to the
conversion.
Cash received in lieu of a fractional share of Common Stock should be
treated as a payment in exchange for such fractional share rather than as a
dividend. Gain or loss recognized on the receipt of cash paid in lieu of such
26
<PAGE> 28
fractional shares generally will equal the difference between the amount of cash
received and the amount of tax basis allocable to the fractional shares.
Dividends on Shares of Common Stock. Distributions of shares on Common
Stock will constitute dividends for United States federal income tax purposes to
the extent of current or accumulated earnings and profits of the Company as
determined under United States federal income tax principles. Dividends paid to
holders that are United States corporations may qualify for the
dividends-received deduction.
To the extent, if any, that a United States Holder receives distributions
on shares of Common Stock that would otherwise constitute dividends for United
States federal income tax purposes but that exceed current and accumulated
earnings and profits of the Company, such distributions will be treated first as
a non-taxable return of capital reducing the holder's basis in the shares of
Common Stock. Any such distributions in excess of the holder's basis in the
shares of Common Stock will be treated as capital gain.
Certain Federal Income Tax Considerations Applicable to Non-United States
Holders
Interest on Notes. Generally, interest paid on the Notes to a Non-United
States Holder will not be subject to United States federal income tax if: (i)
such interest is not effectively connected with the conduct of a trade or
business within the United States by such Non-United States Holder; (ii) the
Non-United States Holder does not actually or constructively own 10% or more of
the total voting power of all classes of stock of the Company entitled to vote
and is not a controlled foreign corporation with respect to which the Company is
a "related person" within the meaning of the Code (for this purpose, the holder
of Notes would be deemed to own constructively the Common Stock into which it
could be converted); and (iii) the beneficial owner, under penalty of perjury,
certifies that the owner is not a United States person and provides the owner's
name and address. If certain requirements are satisfied, the certification
described in clause (iii) above may be provided by a securities clearing
organization, a bank, or other financial institution that holds customers'
securities in the ordinary course of its trade or business. Under United States
Treasury regulations, which generally are effective for payments made after
December 31, 1998, subject to certain transition rules, the certification
described in clause (iii) above may also be provided by a qualified intermediary
on behalf of one or more beneficial owners (or other intermediaries), provided
that such intermediary has entered into a withholding agreement with the
Internal Revenue Service and certain other conditions are met. A holder that is
not exempt from tax under these rules will be subject to United States federal
income tax withholding at a rate of 30% unless the interest is effectively
connected with the conduct of a United States trade or business, in which case
the interest will be subject to the United States federal income tax on net
income that applies to United States persons generally (and, with respect to
corporate holders and under certain circumstances, the branch profits tax).
Non-United States Holders should consult applicable income tax treaties, which
may provide different rules.
Sales or Exchange of Notes or Shares of Common Stock. A Non-United States
Holder generally will not be subject to United States federal income tax on gain
recognized upon the sale or other disposition of the Notes or shares of Common
Stock unless (i) the gain is effectively connected with the conduct of a trade
or business within the United States by the Non-United States holder, or (ii) in
the case of Non-United States Holder who is a nonresident alien individual and
holds the Common Stock as a capital asset, (a) such holder is present in the
United States for 183 or more days in the taxable year and certain other
circumstances are present or (b) such holder has a tax home in the United States
as defined in Section 911(d)(3). If the Company is a "United States real
property holding corporation," a Non-United States Holder may be subject to
federal income tax with respect to gain realized on the disposition of such
Notes or shares of Common Stock as if it were effectively connected with a
United States trade or business and the amount realized will be subject to
withholding at the rate of 10%. The amount withheld pursuant to these rules will
be creditable against such Non-United States Holder's United States federal
income tax liability and may entitle such Non-United States Holder to a refund
upon furnishing required information to the Internal Revenue Service. Non-United
States Holders should consult tax treaties, which may provide different rules.
Conversion of Notes. A Non-United States Holder generally will not be
subject to United States federal income tax on the conversion of a Note into
shares of Common Stock. To the extent a Non-United States Holder receives cash
in lieu of a fractional share on conversion, such cash may give rise to gain
that would be subject to the rules described above with respect to the sale or
exchange of a Note or Common Stock.
27
<PAGE> 29
Dividends on Shares of Common Stock. Generally, any distribution on shares
of Common Stock to a Non-United States Holder will be subject to United States
federal income tax withholding at a rate of 30% unless the dividend is
effectively connected with the conduct of a trade or business within the United
States by the Non-United States Holder, in which case the dividend will be
subject to the United States federal income tax on net income that applies to
United States persons generally (and, with respect to corporate holders and
under certain circumstances, the branch profits tax). Non-United States Holders
should consult any applicable income tax treaties, which may provide for a lower
rate of withholding or other rules different from those described above. A
Non-United States Holder (and in the case of Non-United States Holders that are
treated as partnerships or other fiscally transparent entities, partners,
shareholders or other beneficiaries of such Non-United States Holders) may be
required to satisfy certain certification requirements in order to claim a
reduction of or exemption from withholding under the foregoing rules.
Information Reporting and Backup Withholding
United States Holders. Information reporting and backup withholding may
apply to payments of interest or dividends on or the proceeds of the sale or
other disposition of the Notes or shares of Common Stock made by the Company
with respect to certain non-corporate United States Holders. Such United States
Holders generally will be subject to backup withholding at a rate of 31% unless
the recipient of such payment supplies a taxpayer identification number,
certified under penalties of perjury, as well as certain other information, or
otherwise establishes, in the manner prescribed by law, an exemption from backup
withholding. Any amount withheld under backup withholding is allowable as a
credit against the United States Holder's federal income tax, upon furnishing
the required information to the Internal Revenue Service.
Non-United States Holders. Generally, information reporting and backup
withholding of United States federal income tax at a rate of 31% may apply to
payments of principal, interest and premium (if any) to Non-United States
Holders if the payee fails to certify that the holder is a Non-United States
person or if the Company or its paying agent has actual knowledge that the payee
is a United States person. The 31% backup withholding tax generally will not
apply to dividends paid to foreign holders outside the United States that are
subject to 30% withholding as discussed above or that are subject to a tax
treaty that reduces such withholding.
The payment of the proceeds on the disposition of Notes or shares of
Common Stock to or through the United States office of a United States or
foreign broker will be subject to information reporting and backup withholding
unless the owner provides the certification described above or otherwise
establishes an exemption. The proceeds of the disposition by a Non-United States
Holder of Notes or shares of Common Stock to or through a foreign office of a
broker will not be subject to backup withholding. However, if such broker is a
United States person, a controlled foreign corporation for United States tax
purposes, or a foreign person 50% or more of whose gross income from all sources
for certain periods is from activities that are effectively connected with a
United States trade or business, information reporting will apply unless such
broker has documentary evidence in its files of the owner's foreign status and
has no actual knowledge to the contrary or unless the owner otherwise
establishes an exemption. Both backup withholding and information reporting will
apply to the proceeds from such dispositions if the broker has actual knowledge
that the payee is a United States Holder.
United States Treasury regulations, which generally are effective for
payments made after December 31, 1998, subject to certain transition rules,
alter the forgoing rules in certain respects. Among other things, such
regulations provide presumptions under which a Non-United States Holder is
subject to information reporting and backup withholding at the rate of 31%
unless the Company receives certification from the holder of non-U.S. status.
Depending on the circumstances, this certification will need to be provided (i)
directly by the Non-United States Holder, (ii) in the case of a Non-United
States Holder that is treated as a partnership or other fiscally transparent
entity, by the partners, shareholders or other beneficiaries of such entity, or
(iii) certain qualified financial institutions or other qualified entities on
behalf of the Non-United States Holder.
LEGAL MATTERS
The validity of the Notes and the underlying shares of Common Stock
offered hereby will be passed upon for the Company by Dewey Ballantine LLP, New
York, New York.
28
<PAGE> 30
EXPERTS
The consolidated financial statements of SPACEHAB, Incorporated as of June
30, 1997 and 1996, and for the year ended June 30, 1997, the nine-month period
ended June 30, 1996 and the year ended September 30, 1995, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
29
<PAGE> 31
- -------------------------------------- --------------------------------------
No dealer, salesperson or other person
has been authorized to give any
information or to make any
representation not contained in this
Prospectus and, if given or made, such
information or representation must not
be relied upon as having been
authorized by the Company or any
Initial Purchaser. This Prospectus SPACEHAB, INCORPORATED
does not constitute an offer to sell
or a solicitation of an offer to buy
any of the securities offered hereby
in any jurisdiction to any person to
whom it is unlawful to make such offer
in such jurisdiction. Neither the
delivery of this Prospectus nor any
sale made hereunder shall, under any
circumstances, create any implication
that the information herein is correct
as of any time subsequent to the date $63,250,000
hereof or that there has been no 8% Convertible Subordinated Notes
material change in the affairs of the Due 2007
Company since such date.
4,642,202 Shares of
---------- Common Stock
TABLE OF CONTENTS
Page
----
Available Information............ 2
Incorporation of Certain
Information by Reference....... 2
The Company...................... 2
Risk Factors..................... 3
Use of Proceeds.................. 9 PROSPECTUS
Ratio of Earnings to Fixed
Charges........................ 9
Capitalization................... 10
Description of Notes............. 11
Description of Capital Stock..... 21
Selling Securityholders.......... 23
Plan of Distribution............. 25
Certain United States Federal
Income Tax Considerations...... 25
Legal Matters.................... 28
Experts.......................... 29
- -------------------------------------- --------------------------------------
<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses Of Issuance And Distribution.
The following table sets forth the estimated expense payable by the
Registrant in connection with the sale and distribution of the Notes:
SEC Registration Fee $ 18,658.75
Accounting Fees 25,000.00
Fees and Expenses of Counsel 35,000.00
Miscellaneous 10,000.00
-----------
Total $ 88,658.75
Item 15. Indemnification Of Directors And Officers.
Liability Limitation. The Company's Articles of Incorporation and Bylaws
provide that a director or officer of the Company shall not be personally liable
to it or its stockholders for monetary damages to the fullest extent permitted
by the Washington Business Act. In accordance with the Washington Business Act,
the Articles of Incorporation do not eliminate or limit the liability of a
director or officer for acts or omissions that involve intentional misconduct by
a director or officer or a knowing violation of law by a director or officer for
voting or assenting to an unlawful distribution, or for any transaction from
which the director or officer will personally receive a benefit in money,
property, or services to which the director or officer is not legally entitled.
The Washington Business Act does not affect the availability of equitable
remedies such as an injunction or rescission based upon a director's or
officer's breach of his duty of care. Any amendment to these provisions of the
Washington Business Act will automatically be incorporated by reference into the
Articles of Incorporation, without any vote on the part of its stockholders,
unless otherwise required.
Indemnification Agreements. Separate indemnification agreements between
the Company and each of its directors provide that the Company will indemnify
the directors against certain liabilities (including settlements) and expenses
actually and reasonably incurred by them in connection with any threatened or
pending legal action, proceeding or investigation (other than actions brought by
or in the right of the Company) to which any of them is, or is threatened to be,
made a party by reason of their status as a director, officer or agent of the
Company, or serving at the request of the Company in any other capacity for or
on behalf of the Company; provided that (i) such director acted in good faith
and in a manner at least not opposed to the best interest of the Company, (ii)
with respect to any criminal proceedings had no reasonable cause to believe his
or her conduct was unlawful, (iii) such director is not finally adjudged to be
liable for negligence or misconduct in the performance of his or her duty to the
Company, unless the court views in light of the circumstances the director is
nevertheless entitled to indemnification, and (iv) the indemnification does not
relate to any liability arising under Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or the rules or regulations
promulgated thereunder. With respect to any action brought by or in the right of
the Company, directors may also be indemnified, to the extent not prohibited by
applicable laws or as determined by a court of competent jurisdiction, against
expenses actually and reasonably incurred by them in connection with such action
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the Company.
Item 16. Exhibits.
See the Exhibit Index at page E-l of this Registration Statement.
II-1
<PAGE> 33
Item 17. Undertakings.
(1) The undersigned Registrant hereby undertakes:
(a) To file, during the period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or event arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement;
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(2) The undersigned Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relay to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted for Directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expresses
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a Director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such Director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE> 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Vienna and Commonwealth of Virginia, as of the
twenty-third day of December, 1997.
SPACEHAB, INCORPORATED
By: /s/Shelly A. Harrison
---------------------
Shelley A. Harrison
Chairman of the Board and CEO
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Dr. Shelley A. Harrison and Margaret E. Grayson
his true and lawful attorneys-in-fact and agents, each acting alone, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement, including post-effective amendments, and to file the
same, with all exhibits thereto, and all documents in connection therewith,
including, without limitation, any registration statement for the same offering
that is to be effective upon filing pursuant to Rule 462(b) under the Securities
Act of 1933, with the Securities and Exchange Commission, granting unto
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, and hereby ratifies and confirms all that said
attorneys-in-fact and agents, each acting alone, or their substitute or
substitutes, may lawfully do or cause to be done.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on December 23, 1997.
Signature Title Date
--------- ----- ----
/s/ Shelly A. Harrison Chairman of the Board and December 23, 1997
---------------------- Chief Executive Officer
Shelley A. Harrison (Principal Executive Officer)
/s/ Margaret E. Grayson Vice President of Finance, December 23, 1997
----------------------- Treasurer and Assistant
Margaret E.Grayson Secretary (Principal
Financial and Accounting
Officer)
/s/ Hironori Aihara Director December 23, 1997
-------------------
Hironori Aihara
II-3
<PAGE> 35
- ------------------------------------------------------------------------------
/s/ Robert A. Citron Director December 23, 1997
--------------------
Robert A. Citron
/s/ Edward E. David Director December 23, 1997
-------------------
Edward E. David, Jr.
/s/ Shi H. Huang Director December 23, 1997
----------------
Shi H. Huang
/s/ Chester M. Lee Director December 23, 1997
------------------
Chester M. Lee
/s/ Gordon S. Macklin Director December 23, 1997
---------------------
Gordon S. Macklin
/s/ Brad M. Meslin Director December 23, 1997
------------------
Brad M. Meslin
/s/ Udo Pollvogt Director December 23, 1997
----------------
Udo Pollvogt
/s/ Alvin L. Reeser Director December 23, 1997
-------------------
Alvin L. Reeser
/s/ James R. Thompson Director December 23, 1997
---------------------
James R. Thompson
/s/ Giuseppe Veriglio Director December 23, 1997
---------------------
Giuseppe Veriglio
II-4
<PAGE> 36
EXHIBIT INDEX
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Exhibit Description of Documents
- --------------------------------------------------------------------------------
*3.1 Amended and Restated Articles of Incorporation of SPACEHAB,
Incorporated (the "Registrant").
- --------------------------------------------------------------------------------
*3.2 Amended and Restated Bylaws of the Registrant.
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*4.1 Indenture, dated October 15, 1997.
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*4.2 Registration Rights Agreement, dated October 15, 1997, by and
among the Company and Credit Suisse First Boston Corporation,
CIBC Wood Gundy Securities Corp. and Oppenheimer & Co. Inc.
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*5.1 Opinion of Dewey Ballantine LLP with respect to validity.
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*12.1 Statements with respect to the computation of ratios.
- --------------------------------------------------------------------------------
*23.1 Consent of Dewey Ballantine LLP is included in its opinion
filed as Exhibit 5.1 hereto.
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*23.2 Consent of KPMG Peat Marwick LLP
- --------------------------------------------------------------------------------
*24.1 Powers of Attorney, included on signature page
- --------------------------------------------------------------------------------
*25.1 Statement of Eligibility of the Trustee on Form T-1
- --------------------------------------------------------------------------------
* Filed herewith.
E-1
<PAGE> 1
Exhibit 3.1
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
SPACEHAB, INCORPORATED
The undersigned, a Corporation organized and existing under and by virtue
of the Washington Business Corporation Act of the State of Washington, as
amended (the "WBCA"), DOES HEREBY CERTIFY as follows:
1. The Articles of Incorporation of SPACEHAB, Incorporated (the
"Corporation") were filed in the Office of the Secretary of State of the State
of Washington on August 22, 1984. The original name under which the Corporation
was incorporated was "The Space Travel Company, Inc."
2. On September 7, 1995 and November 8, 1995, the Corporation's Board of
Directors and shareholders, respectively, in the manner prescribed by Sections
23B.10.030, 23B.10.040, 23B.10.060, and 23B.10.070 of the WBCA, duly approved
and adopted these Amended and Restated Articles of Incorporation (the
"Articles").
3. On November 8, the Corporation's shareholders approved a 2.4 to 1
reverse stock split of the Corporation securities (the "Reverse Stock Split").
4. The text of the Articles shall, upon filing with the Secretary of State
of Washington, read as follows:
* * *
First: The name of the Corporation is SPACEHAB, Incorporated.
Second: The address of the Corporation's registered office in the State of
Washington is 520 Pike Street, Seattle, Washington 98101. The name of the
registered agent at such address is C T Corporation System.
Third: The nature of the business or purpose to be conducted or promoted
by the Corporation is to engage in any lawful business, trade or activity which
Corporations may be conducted by Corporations organized under the WBCA and to
engage in any and all such activities as are incidental or conducive to the
attainment of the foregoing purpose or purposes.
Fourth: Subject to subsection 4.3.3(a)(ii) of this ARTICLE FOURTH, the
total number of shares of capital stock which the Corporation shall have
authority to issue is 35,230,000 shares (on a post-Reverse Stock Split basis),
consisting of 30,000,000 shares of common stock, no par value per share (the
"Common Stock"), 1,000,000 shares
<PAGE> 2
of preferred stock, no par value per share (the "Preferred Stock"), and
4,230,000 shares of convertible preferred stock, no par value per share (the
"Convertible Preferred Stock").
4.1 Common Stock. A statement of the designations, powers, preferences,
rights, qualifications, limitations and restriction in respect to the shares of
Common Stock is as follows:
(a) Dividends. The Board of Directors of the Corporation may cause
dividends to be paid to the holders of shares of Common Stock out of funds
legally available for the payment of dividends by declaring an amount per share
as a dividend. When and as dividends are declared, whether payable in cash, in
property or in shares of stock or other securities of the Corporation, the
holders of Common Stock shall be entitled to share ratably according to the
number of shares of Common Stock held by them, in such dividends.
(b) Liquidation Rights. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of Common Stock shall be entitled to share ratably, according to the
number of shares of Common Stock held by them, in all remaining assets of the
Corporation available for distribution to its shareholders.
(c) Voting Rights. Except as otherwise provided in these Articles or
by applicable law, the holders of Common Stock shall be entitled to vote on each
matter on which the shareholders of the Corporation shall be entitled to vote,
and each holder of Common Stock shall be entitled to one vote for each share of
such stock held by him.
4.2 Preferred Stock. The Board of Directors is authorized, subject to
limitation prescribed by law and the provisions of this ARTICLE FOURTH, to
provide for the issuance of the shares of Preferred Stock in series, and by
filing an article of amendment pursuant to Section 23B.06.020 of the WBCA, to
establish from time to time the number of shares to be included in each such
class or series within a class, and to fix the designation, powers, preferences
and rights of the shares of each such class or series within a class and the
qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting the series and the distinctive
designation of the series;
(b) The dividend rate (or the method of calculation of dividends) on
the shares of the series, whether dividends will be cumulative, and if so, from
which date or dates, and the relative rights of priority, if any, of payment of
dividends on shares of the series;
(c) Whether the series shall have voting rights, in addition to the
voting rights provided by law, and if so, the terms of such voting rights;
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<PAGE> 3
(d) Whether the series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable or
exchangeable, and, if so, the terms and conditions of such redemption or
exchange, as the case may be, including the date or dates upon or after which
they shall be redeemable or exchangeable, as the case may be, and the amount per
share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether the series shall have a sinking fund for the redemption
or purchase of shares of that series, and if so, the terms and amount of such
sinking fund;
(g) The rights of the shares of the series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation and the
relative rights or priority, if any, of payment of shares of the series; and
(h) Any other relative rights, preferences and limitations of that
series.
Except for any difference so provided by the Board of Directors, the
shares of Preferred Stock will rank on parity with respect to the payment of
dividends and to the distribution of assets upon liquidation.
Shares of any series of Preferred Stock which have been redeemed (whether
through the operation of a sinking fund or otherwise) or which, if convertible
or exchangeable, have been converted into or exchanged for shares of stock of
any other class or classes shall have the status of authorized and unissued
shares of Preferred Stock and may be reissued as shares of the same or any other
series of Preferred Stock.
4.3 Convertible Preferred Stock. The rights, preferences, privileges
and limitations granted to and imposed on the Convertible Preferred Stock are as
set forth below in this Section 4.3. Unless specified otherwise, all
cross-references in this Section 4.3 are to other paragraphs contained herein.
After the completion of a Preferred Event of Conversion (as hereinafter
defined), the terms and provisions of this Section 4.3 shall terminate and have
no further force or effect.
4.3.1 Dividend Rights. Holders of then outstanding Convertible
Preferred Stock shall be entitled to receive such dividends as may be lawfully
declared in the discretion of the Board of Directors. In any event, no dividend
or other distribution shall be paid at any time on the Convertible Preferred
Stock or on Common Stock which would violate the provisions of Section
23A.08.420 of the WBCA.
4.3.2 Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up
of this Corporation, whether voluntary or involuntary, the holders of then
outstanding shares of Convertible Preferred Stock shall be entitled to receive
$1.00 per share. In addition,
3
<PAGE> 4
holders of then outstanding Convertible Preferred Stock shall be entitled to
receive an amount equal to declared but unpaid dividends, if any, on each such
share. If, upon the occurrence of such event, the assets and funds shall be
insufficient to permit the payment to the holders of the Convertible Preferred
Stock, of their full preferential amounts, then the entire assets and funds of
this Corporation legally available for distribution shall be distributed ratably
among the holders of the Convertible Preferred Stock in the same proportions as
the full preferential amount each such holder would otherwise be entitled to
receive bears to the total of the full preferential amounts that would otherwise
be payable to all holders of the Convertible Preferred Stock.
(b) Upon the completion of the distributions required by
paragraph (a) of this subsection 4.3.2, any assets and funds that remain in this
Corporation shall be distributed among the holders of the then outstanding
shares of Common Stock of this Corporation ratably on the basis of the number of
shares of Common Stock held by each such holder.
(c) A consolidation or merger of this Corporation with or into
any other Corporation or other entity or person, or sale, conveyance or
disposition of all or substantially all of the assets of this Corporation or the
effectuation by this Corporation of a transaction (including a merger, plan of
exchange or other reorganization) or series of related transactions in which
more than fifty percent (50%) of the voting power of this Corporation is
disposed of, shall be considered to be a liquidation, dissolution or winding up
within the meaning of this subsection 4.3.2, but shall be subject to the
additional provisions of subsection 4.3.4 below.
4.3.3 Conversion. The holders of outstanding shares of Convertible
Preferred Stock shall have conversion rights as follows (the "Preferred
Conversion Rights").
(a) Right to Convert.
(i) Each share of Convertible Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of this Corporation or any transfer agent
for such share, into such number of nonassessable shares of Common Stock on a
share for share basis. The initial Preferred Conversion Price shall be $1.00;
provided, however, that the Preferred Conversion Price shall be subject to
adjustment as set forth in paragraph (c) of this subsection 4.3.3.
(ii) Upon the earliest of (a) such time as not less than
sixty-seven percent (67%) of the shares of Convertible Preferred Stock
originally issued by this Corporation within six months after the authorization
of the Convertible Preferred Stock by the shareholders of this Corporation shall
have been converted into shares of Common Stock or (b) the effective date of a
registration statement (the "Registration Statement") used in connection with a
public offering by this Corporation registered with the Securities and Exchange
Commission of this Corporation's equity securities, each share of Convertible
Preferred Stock shall, unless the Board of Directors otherwise determines,
automatically be converted (the "Conversion") into such number of shares of
Common Stock determined by dividing the original Preferred Conversion Price by
the Preferred
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<PAGE> 5
Conversion Price at the time in effect for such share. No fractional shares of
Common Stock shall be issued upon the Conversion, but instead such fractional
shares, which would have been usable but for the prohibition in this subsection,
shall evidence the right to receive cash equal to the number of fractional
shares multiplied by the initial public offering price for each share of Common
Stock set forth in the final prospectus related to the Registration Statement
(the "Fractional Share Payment"). On the date of the Conversion or as soon as
practicable thereafter, each holder of Convertible Preferred Stock shall
surrender its shares to the Secretary of the Company in exchange for (i) the
number of shares of Common Stock as determined in accordance herewith and (ii)
the-Fractional Share Payment, if applicable to such holder, payable by check. No
holder shall receive any interest on the Fractional Share Payment. After the
completion of the Conversion, each share of Convertible Preferred Stock shall be
extinguished, cease to exist, and shall no longer be issuable by the
Corporation.
Each of the foregoing events in this subsection 4.3.3(a)(ii) is hereafter
referred to as a "Preferred Event of Conversion."
As soon as practicable after the occurrence of a Preferred Event of
Conversion, this Corporation will send a notice and transmittal form to each
holder of an outstanding certificate which immediately prior to the occurrence
of the Preferred Event of Conversion evidenced shares of Convertible Preferred
Stock, advising such holder of the occurrence of the Preferred Event of
Conversion and the procedure for surrendering to this Corporation such
certificates for exchange into one or more certificates evidencing Common Stock.
Until so surrendered, each outstanding certificate which, prior to the
occurrence of the Preferred Event of Conversion, represented Convertible
Preferred Stock will be deemed to evidence the right to receive the number of
full shares of Common Stock to which the holders of shares of Convertible
Preferred Stock are entitled. The person in whose name the certificate or
certificates for Common Stock are to be issued shall be deemed to have become a
shareholder of record on the date of occurrence of a Preferred Event of
Conversion, unless the transfer books of this Corporation are closed on that
date, in which event he or she shall be deemed to have become a shareholder of
record on the next succeeding date on which the transfer books are open, but the
Preferred Conversion Price shall be that in effect immediately prior to the
occurrence of a Preferred Event of Conversion. Until such outstanding
certificates formerly representing Convertible Preferred Stock are so
surrendered, no cash or stock dividend or other distribution payable to holders
of record of Common Stock as of any date subsequent to the date of occurrence of
a Preferred Event of Conversion, shall be paid to the holder of such outstanding
certificates in respect thereof.
(b) Mechanics of Conversion. Except in the case of automatic
conversion pursuant to subparagraph (a)(ii) of this subsection 4.3.3, before any
holder of shares of Convertible Preferred Stock shall be entitled to convert the
same into shares of Common Stock, he or she shall surrender the certificate or
certificates therefor, duly endorsed, at the office of this Corporation or of
any transfer agent for such shares, and shall give written notice by mail,
postage prepaid, to this Corporation at its principal corporate office, of the
election to convert the same and shall state therein the name or names in which
the certificate or certificates for shares of Common Stock are to be
5
<PAGE> 6
issued. This Corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of shares of Convertible Preferred Stock a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the certificate or certificates representing the shares of
Convertible Preferred Stock to be converted, and the person or persons entitled
to receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of such date.
(c) Preferred Conversion Price Adjustment. After the date of
issuance of the Convertible Preferred Stock, the Preferred Conversion Price
shall be subject to adjustment as follows:
(i) In the event this Corporation should at any time or
from time to time after October 27, 1987 fix a record date for the effectuation
of a split (or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or other securities or
rights convertible into, or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock without payment of any
consideration by such holder for the additional shares of Common Stock issuable
upon conversion or exercise thereof), then, as of such record date (or the date
of such dividend distribution, split or subdivision if no record date is fixed),
the Preferred Conversion Price shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of each such share shall
be increased in proportion to such increase in outstanding shares.
(ii) If the number of shares of Common Stock outstanding
at any time after October 27, 1987 is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Preferred Conversion Price shall be appropriately increased so
that the number of shares of Common Stock issuable on conversion of each such
share shall be decreased in proportion to such decrease in outstanding shares.
(d) Other Distributions. In the event this Corporation shall
declare a distribution payable in securities of other persons (as defined in
Section 2(2) of the Securities Act of 1933, as amended, or any successor
statute), evidence of indebtedness issued by this Corporation or other person,
assets (excluding cash dividends) or options or rights not referred to in
subparagraph (i) of paragraph (c) of this subsection 4.3.3, then, in each case
for the purpose of this paragraph (d), the holders of the Convertible Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock of this
Corporation into which their shares of Convertible Preferred Stock are
convertible as of the record date fixed for the determination of the holders of
Common Stock of this Corporation entitled to receive such distribution.
6
<PAGE> 7
(e) Recapitalizations. If at any time or from time to time
there shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for in subsections
4.3.2(c) and 4.3.4), provision shall be made so that the holders of the
Convertible Preferred Stock shall thereafter be entitled to receive, upon
conversion of their respective Convertible Preferred Stock, such shares or other
securities or property of this Corporation or otherwise, to which a holder of
Common Stock deliverable upon conversion would have been entitled on such
recapitalization. In any such case, appropriate adjustment shall be made in the
application of the provisions of this subsection 4.3.3 with respect to the
rights of the holders of the Convertible Preferred Stock after the
recapitalization to the end that the provisions of this subsection 4.3.3
(including adjustment of the Preferred Conversion Price then in effect and the
number of shares purchasable upon conversion of shares of Convertible Preferred
Stock) shall be applicable after the event in as nearly equivalent a manner as
may be practicable.
(f) No Impairment. This Corporation will not, by amendment of
its Articles of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issuance or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by this
Corporation, but will at all time in good faith assist in the carrying out of
all the provisions of this subsection 4.3.3 and in the taking of all such action
as may be reasonably necessary or appropriate in order to protect the Preferred
Conversion Rights of the holders of the Convertible Preferred Stock against
impairment.
(g) Adjustment of Preferred Conversion Price. Upon the
occurrence of each adjustment or readjustment of the Preferred Conversion Price
pursuant to this subsection 4.3.3, this Corporation, at its expense, shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of shares of Convertible Preferred
Stock a statement signed by an officer of this Corporation setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. This Corporation shall, upon the written
request at any time of any holder of shares of Convertible Preferred Stock,
furnish or cause to be furnished to such holder a like statement setting forth
(A) such adjustment or readjustment, (B) the Preferred Conversion Price at the
time in effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time, would be received upon the conversion
of a share of Convertible Preferred Stock.
(h) Notices of Record Date. In the event of any taking by this
Corporation of a record of its shareholders for the purpose of determining
shareholders who are entitled to receive payment of any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of any class or any other securities or property,
or to receive any other right, this Corporation shall mail to each holder of
shares of Convertible Preferred Stock, at least twenty (20) days prior to the
date specified therein, a notice specifying the date of which any such
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<PAGE> 8
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
(i) Reservation of Shares Issuable Upon Conversion. This
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the purpose of effecting the
conversion of the shares of Convertible Preferred Stock, such number of its
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding shares of Convertible Preferred Stock; and if at
any time the number of authorized but unissued and unreserved shares of Common
Stock shall not be sufficient to effect the conversion of all then outstanding
shares of Convertible Preferred Stock, this Corporation will take such corporate
action as may, in the opinion of its counsel, be necessary to increase its
authorized but unissued and unreserved shares of Common Stock to such number of
shares as shall be sufficient for such purposes.
(j) Notices. Any notices required by the provisions of this
subsection 4.3.3 to be given to the holders of shares of Convertible Preferred
Stock shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, registered or certified, and addressed to each holder of record
at his or her address appearing on the stock transfer books of this Corporation.
4.3.4 Merger Consolidation and Sale of Assets.
(a) Any securities to be delivered to the holders of
Convertible Preferred Stock, and Common Stock pursuant to any transaction
referred to in subsection 4.3.2(c) shall be valued as follows:
(i) Securities not subject to investment letter or other
similar restrictions on free marketability:
(A) If traded on a securities exchange, the value
shall be deemed to be the average of the closing
prices of the securities on such exchange over
the 30-day period ending three (3) days prior to
the closing of such transaction;
(B) If actively traded over-the-counter, the
value shall be deemed to be the average of the
closing bid prices over the 30-day period ending
three (3) days prior to the closing of such
transaction; and
(C) If there is no active public market, the
value shall be the fair market value thereof, as
determined in good faith by the Board of
Directors of this Corporation.
(ii) the method of valuation of securities subject to investment letter or other
restrictions on free marketability shall be to make an appropriate discount from
the market value determined as above in (i)(A), (B) or (C) to reflect the
approximate fair
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<PAGE> 9
market value thereof, as determined in good faith by the Board of Directors of
this Corporation.
(b) In the event the requirements of subsection 4.3.2(c) are
not complied with, this Corporation shall forthwith either:
(i) cause the closing of such transaction to be postponed until such time as the
requirements of such subsection have been complied with, or
(ii) cancel such transaction, in which event the rights, preferences and
privileges of the holders of the Convertible Preferred Stock shall revert to and
be the same as such rights, preferences and privileges existing immediately
prior to the date of the first notice referred to in subsection 4.3.5(c) hereof.
(c) This Corporation shall give each holder of record of
Convertible Preferred Stock written notice of any impending transaction referred
to in subsection 4.3.2(c) not later than twenty (20) days prior to the
shareholders' meeting called to approve such transaction and shall also notify
such holders in writing of the final approval of such transaction. The first of
such notices shall describe the material terms and conditions of the impending
transaction and the provisions of this subsection 4.3.5, and this Corporation
shall thereafter give such holders prompt notice of any material changes in such
terms and conditions. The transaction shall in no event take place sooner than
twenty (20) days after this Corporation has given the first notice provided for
herein or sooner than ten (10) days after this Corporation has given notice of
any material changes provided for herein; provided, however, that such periods
may be shortened upon the written consent of the holders of a majority of the
shares of Convertible Preferred Stock then outstanding.
(d) The provisions of this subsection 4.3.5 are in addition to
the protective provisions of subsection 4.3.7 hereof.
4.3.5 Voting Rights. Except as herein provided, the holder of each
outstanding share of Convertible Preferred Stock shall have the right to one
vote for each share of Common Stock into which each such share of Convertible
Preferred Stock could then be converted, and with respect to such vote, such
holder shall have full voting rights and powers on a par with the holders of
shares of Common Stock, and shall be entitled, notwithstanding any provision
hereof, to notice of any shareholders' meeting in accordance with the By-laws of
this Corporation, and shall be entitled to vote, together with holders of shares
of Common Stock, with respect to any question upon which holders of shares of
Common Stock have the right to vote.
4.3.6 Protective Provisions. So long as any shares of Convertible
Preferred Stock are outstanding, this Corporation shall not without first
obtaining the approval (by vote or written consent, as provided by law) of the
holders of sixty-seven percent (67%) of the then outstanding shares of
Convertible Preferred Stock:
(a) sell, lease, exchange, convey or otherwise dispose of or
encumber all or substantially all of this Corporation's assets, or merge into or
consolidate with any
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<PAGE> 10
other Corporation (other than a wholly owned subsidiary of this Corporation), if
at least a majority of the voting power of this Corporation or entity to which a
sale of assets is made, or the surviving Corporation, as the case may be, is not
owned by persons who were holders of capital stock or securities convertible
into capital stock of this Corporation immediately prior to such merger,
consolidation or sale;
(b) alter or change the rights, preferences, privileges or
limitations of the shares of Convertible Preferred Stock; or
(c) authorize, create or enter into any agreement providing
for the issuance of shares of any class or series having any preference or
priority as to dividends or distribution of assets (on liquidation or otherwise)
on a parity with or senior to any such preference or priority of the shares of
Convertible Preferred Stock, or authorize or create shares of any class, or any
bonds, debentures, notes or other obligations or securities convertible into,
exchangeable for, or having optional rights to purchase, any shares of this
Corporation having any such preference or priority.
4.3.7 Status of Converted. In the event any shares of Convertible
Preferred Stock shall be converted pursuant to subsection 4.3.3 or 4.3.4 hereof,
the shares so converted or redeemed shall be returned to the category of
authorized but unissued Convertible Preferred Stock.
4.3.8 Amendments and Waivers. Any term of this Section 4.3 may be
amended and the observance of any term of this Section 4.3 may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of this Corporation and the vote
or written consent, as provided by law, of the holders of at least sixty-seven
percent (67%) of all shares of Convertible Preferred Stock then outstanding. Any
amendment or waiver so effected shall be binding upon this Corporation and any
holder of Convertible Preferred Stock.
Fifth: At all meetings of shareholders, each shareholder shall be entitled
to vote, in person or by proxy, each share of voting stock owned by such
shareholder of record on the record date for the meeting. At each meeting of the
shareholders, except where otherwise provided by these Articles, the By-laws of
the Corporation, or required by law, the holders of at least one-third of the
issued and outstanding shares of stock of the Corporation entitled to vote at
such meeting, present in person or represented by proxy, shall constitute a
quorum for the transaction of business. When a quorum is present or represented
at any meeting, the affirmative vote of the holders of a majority of the stock
having voting power present in person or represented by proxy shall decide any
question, matter or proposal brought before such meeting unless the question is
one upon which, by express provision of law, these Articles, the By-laws or,
with respect to a class or series of Preferred Stock, the terms of the
resolution or resolutions adopted by the Board of Directors pursuant to ARTICLE
FOURTH applicable thereto, a different vote is required, in which case such
express provision shall govern and control the decision of such question. Any
shareholder who is in attendance at a meeting of shareholders either in person
or represented by proxy, but who abstains from the vote on any matter, shall not
be deemed present or represented at such meeting for purposes of the preceding
sentence
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<PAGE> 11
with respect to such vote, but shall be deemed present or represented at such
meeting for all other purposes.
Sixth:
6.1 Location for Shareholder Meetings; Keeping of Books and Records.
Meetings of shareholders may be held within or outside the State of Washington
as the By-laws may provide. The books of the Corporation may be kept (subject to
any provision contained in the WBCA) outside the State of Washington at such
place or places as may be designated from time to time by the Board of Directors
or in the By-laws of the Corporation.
6.2 Shareholder Action. Any action required or permitted to be taken by
the shareholders must be effected at a duly called annual or special meeting of
such shareholders, and may not be effected by a consent in writing by any such
shareholders.
6.3 Special Shareholders Meetings. Except as otherwise required by law,
special meetings of the Corporation's shareholders may be called only by (i) the
Board of Directors pursuant to a resolution approved by the affirmative vote of
a majority of the directors then in office, (ii) the Chairman of the Board, if
one is elected, or (iii) the President. Only those matters set forth in the
notice of the special meeting may be considered or acted upon at such special
meeting, unless otherwise provided by law. Notwithstanding the foregoing,
whenever holders of one or more classes or series of Preferred Stock shall have
the right, voting separately as a class or series, to elect directors, such
holders may call, pursuant to the terms of the resolution or resolutions adopted
by the Board of Directors pursuant to ARTICLE FOURTH hereto, special meetings of
holders of such Preferred Stock.
Seventh:
7.1 Number of Directors. The number of directors of the Corporation shall
be fixed from time to time by the vote of a majority of the entire Board of
Directors, except as may be provided by the resolution or resolutions adopted by
the directors of the Corporation in respect of Preferred Stock adopted pursuant
to ARTICLE FOURTH hereto, but such number shall in no case be less than one (1)
nor more than fifteen (15). Any such determination made by the Board of
Directors shall continue in effect unless and until changed by the Board of
Directors, but no such changes shall affect the term of any directors then in
office.
7.2 Term of Office: Quorum; Vacancies. A director shall hold office until
the annual meeting for the year in which his or her term expires and until his
or her successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. Subject
to the By-laws, a majority of the entire Board of Directors shall constitute a
quorum for the transaction of business. Any vacancies and newly created
directorships resulting from an increase in the number of directors shall be
filled by a majority of the Board of Directors then in office, even if less than
a quorum, and shall hold office until the next shareholder's meeting at which
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directors are elected and his successor is elected and qualified or until his
earlier death, resignation, retirement, disqualification or removal from office.
7.3 Removal. Any director may be removed only for cause upon the
affirmative vote of the holders of a majority of the votes which could be cast
by the holders of all outstanding shares of capital stock entitled to vote for
the election of directors, voting together as a class, given at a duly called
annual or special meeting of shareholders for which notice, stating the purpose,
or purposes, of the meeting is the removal of the director, is given.
7.4 No Written Ballot. Election of directors need not be by written
ballot, unless the By-laws of the Corporation provide otherwise.
7.5 Preferred Stock Directors. Notwithstanding the foregoing, whenever the
holders of one or more classes or series of Preferred Stock shall have the
right, voting separately as a class or series, to elect directors, the election,
term of office, filling of vacancies, removal and other features of such
directorships shall be governed by the terms of the resolution or resolutions
adopted by the Board of Directors pursuant to ARTICLE FOURTH applicable thereto,
and each director so elected shall not be subject to the provisions of this
ARTICLE SEVENTH unless otherwise provided therein.
Eighth: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its shareholders or
any class thereof, as the case may be, it is further provided:
(1) The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
(2) The directors shall have the power to make, alter, amend,
change, add to or repeal the By-laws of the Corporation.
(3) In addition to the powers and authority hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of the WBCA,
these Articles, and the By-laws.
Ninth:
9.1 Limits on Director Liability. Directors of the Corporation shal1 have
no personal liability to the Corporation or its shareholders for monetary
damages for breach of conduct as a director; provided that nothing contained in
this ARTICLE NINTH shall eliminate or limit the liability of a director for acts
or omissions that involve intentional misconduct by a director or a knowing
violation of law by a director, for voting or assenting to an unlawful
distribution, or for any transaction from which the director will personally
receive a benefit in money, property, or services to which the director is not
legally entitled. This does not affect the availability of equitable remedies
such as an injunction or rescission based upon a director's breach of his duty
of care. If the WBCA is
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amended to authorize corporate action further eliminating or limiting the
personal liability of directors, then by virtue of this ARTICLE NINTH the
liability of a Director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the WBCA, as so amended.
9.2 Indemnification.
(a) Third Party Actions. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party (including, without
limitation as a witness) to any threatened, pending, or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative and
whether formal or informal, including all appeals (other than an action, suit or
proceeding by or in the right of the Corporation) by reason of the fact that he
is or was a director or officer of the Corporation (and the Corporation, in the
discretion of the Board, may so indemnify a person by reason of the fact that he
is or was an employee or agent of the Corporation or is or was serving at the
request of the Corporation in any other capacity for or on behalf of the
Corporation), against reasonable expenses (including counsel fees), judgments,
decrees, fines, penalties and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if, in the
case of conduct in his official capacity with the Corporation, he acted in good
faith and in the Corporation's best interests, and in all other cases, he acted
in good faith and was at least not opposed to the Company's best interests, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful, except that no indemnification shall be made
in respect to any claim, issue or matter as to which Indemnitee shall have been
finally adjudged to be liable for (i) negligence or misconduct in the
performance of his duty to the Corporation unless and only to the extent that
the court in which such action or suit was brought, or any other court of
competent jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as such
court shall deem proper, or (ii) violating any of the terms or provisions of
Section 16 of the Securities Exchange Act of 1934, as amended, or any of the
rules or regulations promulgated thereunder. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon a plea of no
lo contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith or in a manner which he reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful. Notwithstanding the foregoing, the Corporation
shall be required to indemnify an officer or director in connection with an
action, suit or proceeding initiated by such person only if such action, suit or
proceeding was authorized by the Board or a committee thereof. No indemnity
shall be provided by the Corporation for expenses that have been paid directly
by an insurance carrier under a policy of directors' and officers' liability
insurance maintained by the Company.
(b) Actions by or in the Right of the Company. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action or suit, including all appeals,
by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or
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was a director or officer of the Corporation (and the Corporation, in the
discretion of the Board, may so indemnify a person by reason of the fact that he
is or was an employee or agent of the Corporation or is or was serving at the
request of the Corporation in any other capacity for or on behalf of the
Corporation), against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if, in the case of conduct in his official capacity with the
Corporation, he acted in good faith and in the Corporation's best interests, and
in all other cases, he acted in good faith and was at least not opposed to the
Company's best interests, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been finally adjudged to be liable for (i)
negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that the court in which such action or suit was
brought, or any other court of competent jurisdiction, shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper or (ii) violating
any of the terms or provisions of Section 16 of the Securities Exchange Act of
1934, as amended, or any of the rules or regulations promulgated thereunder.
Notwithstanding the foregoing, the Corporation shall be required to indemnify an
officer or director in connection with an action, suit or proceeding initiated
by such person only if such action, suit or proceeding was authorized by the
Board or a committee thereof. No indemnity shall be provided by the Corporation
for expenses that have been paid directly by an insurance carrier under a policy
of directors' and officers' liability insurance maintained by the Company.
(c) Indemnify if Successful. To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of this Section 2, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
(d) Standard of Conduct. Except in a situation governed by
subsection (c) of this Section 2, any indemnification under subsections (a) and
(b) of this Section 2 (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this Section 2. Such determination shall be made (1)
by the Board by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
shareholders, but shares owned by or voted under the control of directors who
are parties to the proceeding may not be voted on determination. The
determination required by clauses (1) and (2) of this subsection (d) may in
either event be made by the written consent of the majority required by each
clause.
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(e) Advancement of Expenses. Expenses (including attorneys' fees) of
each officer and directory hereunder indemnified actually and reasonably
incurred in defending any civil, criminal, administrative or investigative
action, suit or proceeding or threat thereof shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of (i) an undertaking by or on behalf of such person to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in the Article and (ii) a written affirmation of
director's good faith belief that he has performed his duty to the company, upon
request by the Corporation and if required under applicable law. Such expenses
(including counsel fees) incurred by employees and agents may be so paid upon
the receipt of the aforesaid undertaking and such terms and conditions, if any,
as the Board deems appropriate.
(f) Nonexclusivity. The indemnification and advancement of expenses
provided by, or granted pursuant to, this ARTICLE NINTH shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any law, by-law, agreement, vote
of shareholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding such
office.
(g) Procedures Exclusive. Pursuant to Section 23B.08.560(1) or any
successor provision of the WBCA, the procedures for indemnification and
advancement of expenses set forth in this Article are in lieu of the procedures
required by Sections 23B.08.510 through 23B.08.550 or any successor provisions
of the WBCA.
(h) Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another Corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of the WBCA.
(i) Definitions.
(1) For purposes of this ARTICLE NINTH, references to "the
Corporation" shall include, in addition to the resulting Corporation, any
constituent Corporation (including any constituent of a constituent) absorbed in
a consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and employees
or agents, so that any person who is or was a director, officer, employee or
agent of such constituent Corporation, or is or was serving at the request of
such constituent Corporation as a director, officer, employee or agent of
another Corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this ARTICLE NINTH with
respect to the resulting or surviving Corporation as he would have with respect
to such constituent Corporation if its separate existence had continued.
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(2) References to "other capacities" shall include serving as a
trustee or agent for any employee benefit plan; references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this ARTICLE NINTH.
(3) The indemnification and advancement of expenses provided by, or
granted pursuant to, this ARTICLE NINTH shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(4) The right to indemnification conferred by this ARTICLE NINTH
shall be deemed to be a contract between the Corporation and each person
referred to herein until amended or repealed, but no amendment to or repeal of
these provisions shall apply to or have any effect on the right to
indemnification of any person with respect to any liability or alleged liability
of such person for or with respect to any act or omission of such person
occurring prior to such amendment or repeal.
(5) A person shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, or, with respect to any criminal action or proceeding, to have
had no reasonable cause to believe his conduct was unlawful, if his action is
based on the records or books of account of the Corporation or another
enterprise, or on information supplied to him by the officers of the Corporation
or another enterprise in the course of their duties, or on the advice of legal
counsel for the Corporation or another enterprise or on information or records
given or reports made to the Corporation or another enterprise by an independent
certified public accountant or by an appraiser or other expert selected with
reasonable care by the Corporation or another enterprise. The term "another
enterprise" as used herein shall mean any other Corporation or any partnership,
joint venture, trust, employee benefit plan or other enterprise of which such
person is or was serving at the request of the Corporation as a director or
executive officer. The provisions of this subsection shall not be deemed to be
exclusive or to limit in any way the circumstances in which a person may be
deemed to have met the applicable standard of conduct set forth in Section 2(a)
or Section 2(b) of this ARTICLE NINTH, as the case may be.
(j) Additional Indemnification. The Corporation may, by action of
its Board of Directors, provide indemnification to such of the directors,
officers, employees and agents of the Corporation to such extent and to such
effect as the Board of Directors shall determine to be appropriate and
authorized by Washington Law.
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(k) Effect of Amendments. Neither the amendment, change, alteration
nor repeal of this ARTICLE NINTH, nor the adoption of any provision of these
Articles, the By-laws of the Corporation, nor, to the fullest extent permitted
by Washington Law, any modification of law, shall eliminate or reduce the effect
of this ARTICLE NINTH or the rights or any protections afforded under this
ARTICLE NINTH in respect of any acts or omissions occurring prior to such
amendment, repeal, adoption or modification.
Tenth: The Corporation reserves the right to repeal, alter or amend these
Articles in the manner now or hereafter prescribed by statute. No repeal,
alteration or amendment of these Articles shall be made unless the same is first
approved by the Board of Directors of the Corporation pursuant to a resolution
adopted by the directors then in office in accordance with the By-laws and
applicable law and thereafter approved by the shareholders.
Eleventh: No preemptive rights shall exist with respect to shares of stock
or securities convertible into shares of stock of this Corporation.
Twelfth: The right to cumulate votes in the election of directors shall
not exist with respect to shares of stock of this Corporation.
Thirteenth: These Articles shall constitute a restatement of, and shall
supersede the Articles of Incorporation and its corresponding Articles of
Amendment of the Corporation, effective prior to the date hereof.
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IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated
Articles of Incorporation to be signed by its President and Chief Executive
Officer and attested to by its Secretary.
SPACEHAB, INCORPORATED
Dated: 12-11-, 1995
By: /s/ Richard P. Hora
-------------------------------------
Name: Richard P. Hora
Title: President and Chief Executive
Officer
ATTEST:
By: /s/ Nelda Wilbanks
-----------------------------
Name: Nelda Wilbanks
Title: Secretary
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CONSENT TO SERVE AS REGISTERED AGENT
I, C T CORPORATION SYSTEM, hereby consent to serve as Registered Agent in the
State of Washington, for the following:
SPACEHAB, INCORPORATED
--------------------------------------------------
(Corporation or Limited Partnership)
I understand that as agent, it will be my responsibility to receive
service of process; to forward all mail; and to immediately notify the Office of
the Secretary of State in the event of my resignation, or of any changes in the
Registered Office address.
12-11-95
- -------------- --------------------------------------------
(Date) JOHN P. STOUT, Assistant Secretary
<PAGE> 1
Exhibit 3.2
BY-LAWS
of
SPACEHAB, INCORPORATED
PREAMBLE
These By-laws are subject to, and governed by, the Washington
Business Corporation Act (the "WBCA") of the State of Washington and the Amended
and Restated Articles of Incorporation of SPACEHAB, Incorporated, a Washington
corporation (the "Corporation") then in effect (the "Articles"). In the event of
a direct conflict between the provisions of these By-laws and (i) the mandatory
provisions of the WBCA or the provisions of the Articles, such provisions of the
WBCA or the Articles, as the case may be, will be controlling or (ii) a
permissive provision of the WBCA, such provision of the WBCA shall be
controlling unless otherwise decided by the Corporation's Board of Directors
(the "Board").
ARTICLE I
Offices
SECTION 1. Registered Office. The registered office of SPACEHAB,
Incorporated in the State of Washington shall be at 520 Pike Street, Seattle,
Washington 98101, and the registered agent in charge thereof shall be The
Corporation Trust Company.
SECTION 2. Other Offices. The Corporation may also have an office or
offices at any other place or places within or outside the State of Washington
ARTICLE II
Meetings of Shareholders
SECTION 1. Annual Meetings. The annual meeting of the shareholders
for the election of directors, and for the transaction of such other business as
may properly come before the meeting, shall be held at such place, date and hour
as shall be fixed by the Board, within or without the State of Washington, and
designated in the notice or waiver of notice thereof.
SECTION 2. Special Meetings. Except as otherwise required by law,
special meetings of the shareholders may be called only in accordance with the
provisions of the Articles.
<PAGE> 2
SECTION 3. Notice of Meetings. Except as otherwise required by law
or by the Articles or these By-laws, notice of each annual or special meeting of
the shareholders shall be given to each shareholder of record entitled to vote
at such meeting and, if and to the extent required by law, to each shareholder
of the Corporation, not less than ten (10) nor more than sixty (60) days before
the day on which the meeting is to be held, except that notice of a meeting to
act on an amendment to the Articles of Incorporation, a plan of merger or share
exchange, a proposed sale, lease, exchange or other disposition of all or
substantially all of the assets of the Corporation other than in the usual or
regular course of business, or the dissolution of the Corporation shall be given
no fewer than twenty (20) days nor more than sixty (60) days before the meeting
date. Written notice may be transmitted by mail (postage prepaid), private
carrier, or personal delivery; telegraph or teletype; cable or other telephonic
transmission to the shareholder at his address as it appears in the records of
the Corporation. If these forms of written notice are impracticable in the view
of the Board, the Chairman of the Board, the President or the Secretary, written
notice may be transmitted by an advertisement in a newspaper of general
circulation in the area where published. If mailed, such notice shall be deemed
effective when deposited in the United States mail, first-class postage prepaid,
properly addressed to the shareholder at his address as it appears in the
Corporation's records. Notice dispatched by telegraph, teletype, or facsimile
equipment shall be deemed effective when dispatched to the shareholder's
address, telephone number or other number appearing on the records of the
Corporation. Any notice given by publication as herein provided shall be deemed
effective five (5) days after first publication. Every such notice shall state
the place, the date and hour of the meeting, and, in case of a special meeting,
the purpose or purposes for which the meeting is called. Except as otherwise
required by law, notice of any meeting of shareholders shall not be required to
be given to any shareholder who shall attend such meeting in person or by proxy,
or who shall, in person or by attorney thereunto authorized, waive such notice
in writing to be delivered to the Corporation (for inclusion in the minutes or
the corporate records), either before or after such meeting. Except as otherwise
provided in these By-laws, neither the business to be transacted at, nor the
purpose of, any meeting of the shareholders need be specified in any such notice
or waiver of notice. Notice of any adjourned meeting of shareholders shall not
be required to be given, except when expressly required by law.
SECTION 4. Quorum. At each meeting of the shareholders, except where
otherwise provided by the Articles or these By-laws, the holders of at least
one-third of the issued and outstanding shares of stock of the Corporation
entitled to vote at such meeting, present in person or represented by proxy,
shall constitute a quorum for the transaction of business, except as otherwise
required by law, these By-laws or the Articles. In the absence of a quorum a
majority in interest of the shareholders present in person or represented by
proxy and entitled to vote, or, in the absence of all the shareholders entitled
to vote, any officer entitled to preside at, or act as secretary of, such
meeting, shall have the power to adjourn the meeting to another time and/or
place, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At any such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting as originally called. If the adjournment is for
more than one hundred and twenty (120) days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting. Once a share is represented for any purpose at a meeting other than
solely to object to holding the meeting or transacting business thereat, it is
deemed present for quorum purposes
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for the remainder of the meeting and any adjournment thereof (unless a new
record date is or must be set for the adjourned meeting) notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
SECTION 5. Organization. At each meeting of the shareholders, one of
the following shall act as chairman of the meeting and preside thereat, in the
following order of precedence:
(a) the Chairman;
(b) the President;
(c) any Vice-President;
(d) any officer of the Corporation designated by the Board to act as
chairman of such meeting and to preside thereat; or
(e) a shareholder of record who shall be chosen chairman of such
meeting by a majority in voting interest of the shareholders present in
person or by proxy and entitled to vote thereat.
The Secretary or, if he shall be presiding over such meeting in
accordance with the provisions of this Section 5 or if he shall be absent from
such meeting, the person (who shall be an Assistant Secretary, if an Assistant
Secretary has been appointed and is present) whom the chairman of such meeting
shall appoint, shall act as secretary of such meeting and keep the minutes
thereof.
SECTION 6. Order of Business. The order of business at each meeting
of the shareholders shall be determined by the chairman of such meeting, but
such order of business may be changed by a majority in voting interest of those
present in person or by proxy at such meeting and entitled to vote thereat.
SECTION 7. Voting. Except as may otherwise be required by law or
these By-laws, shareholders shall have the voting rights specified in the
Articles.
SECTION 8. Informal Action by Shareholders. Any action required or
permitted to be taken by the shareholders must be effected at a duly called
annual or special meeting of such shareholders and may not be effected by a
consent in writing by any such shareholders.
SECTION 9. Voting Procedures and Inspections of Elections.
(a) The Corporation shall, in advance of any meeting of
shareholders, appoint one or more inspectors to act at the meeting and
make a written report thereof. The Corporation may designate one or more
persons as alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at a meeting of shareholders,
the person presiding at the meeting shall appoint one or more inspectors
to act at the meeting. Each inspector, before entering upon the discharge
of his duties, shall
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<PAGE> 4
take and sign an oath faithfully to execute the duties of inspector with
strict impartiality and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the shares
represented at a meeting and the validity of proxies and ballots, (iii)
count all votes and ballots, (iv) determine and retain for a reasonable
period a record of the disposition of any challenges made to any
determination by the inspectors, and (v) certify their determination of
the number of shares represented at the meeting, and their count of all
votes and ballots. The inspectors may appoint or retain other persons or
entities to assist the inspectors in the performance of the duties of the
inspectors.
(c) The date and time of the opening and the closing of the polls
for each matter upon which the shareholders will vote at a meeting shall
be announced at the meeting. No ballot, proxies or votes, nor any
revocations thereof or changes thereto, shall be accepted by the
inspectors after the closing of the polls unless a state court in
Washington, upon application by a shareholder, shall determine otherwise.
(d) In determining the validity and counting of proxies and ballots,
the inspectors shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, ballots and the regular books and
records of the Corporation, except that the inspectors may consider other
reliable information for the limited purpose of reconciling proxies and
ballots submitted by or on behalf of banks, brokers, their nominees or
similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the shareholder
holds of record. If the inspectors consider other reliable information for
the limited purpose permitted in this Section 9, the inspectors at the
time they make their certification pursuant to subsection (b)(v) of this
Section 9 shall specify the precise information considered by them
including the person or persons from whom they obtained the information,
when the information was obtained, the means by which the information was
obtained and the basis for the inspectors' belief that such information is
accurate and reliable.
SECTION 10. Advance Notification of Proposals at Shareholders'
Meetings. If a shareholder desires to submit a proposal for consideration at an
annual or special shareholders' meeting, or to nominate persons for election as
directors at any shareholders' meeting duly called for the election of
directors, written notice of such shareholders' intent to make such a proposal
or nomination must be given and received by the Secretary of the Corporation at
the principal executive offices of the Corporation either by personal delivery
or by United States mail not later than (i) with respect to an annual meeting of
shareholders, 60 days prior to the anniversary date of the immediately preceding
annual meeting, and (ii) with respect to a special meeting of shareholders, the
close of business on the tenth day following the date on which notice of such
meeting is first sent or given to shareholders. Each notice shall describe the
proposal or nomination in sufficient detail for the proposal or nomination to be
summarized on the agenda for the meeting and shall set forth: (i) the name and
address, as it appears on the books of the Corporation, of the shareholder who
intends to make the proposal or nomination; (ii) a representation that the
shareholder is a holder of record of stock of the Corporation entitled to vote
at such meeting and intends to appear in person or by proxy at the
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meeting to present such proposal or nomination; and (iii) the class and number
of shares of the Corporation which are beneficially owned by the shareholder. In
addition, in the case of a shareholder proposal, the notice shall set forth the
reasons for conducting such proposed business at the meeting and any material
interest of the shareholder in such business. In the case of a nomination of any
person for election as a director, the notice shall set forth: (i) the name and
address of any person to be nominated; (ii) a description of all arrangements or
understandings between the shareholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the shareholder; (iii) such other information
regarding such nominee proposed by such shareholder as would be required to be
included in a proxy statement filed pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended; and (iv) the consent of each
nominee to serve as a director of the Corporation if so elected. The presiding
officer of the annual or special meeting shall, if the facts warrant, refuse to
acknowledge a proposal or nomination not made in compliance with the foregoing
procedure, and any such proposal or nomination not properly brought before the
meeting shall not be considered.
SECTION 11. Advisory Shareholder Votes. In order for the
shareholders to adopt or approve any precatory proposal submitted to them for
the purpose of requesting the Board to take certain actions, a majority of the
outstanding stock of the Corporation entitled to vote thereon must be voted in
favor of the proposal in accordance with Section 7 of this Article II.
SECTION 12. List of Shareholders. It shall be the duty of the
Secretary or other officer of the Corporation who shall have charge of its stock
ledger to prepare and make, at least 10 days before every meeting of the
shareholders, a complete list of the shareholders entitled to vote thereat,
arranged in alphabetical order, and showing the address of each shareholder and
the number of shares registered in the name of each shareholder. Such list shall
be open to the examination of any shareholder, shareholder's agent, or
shareholder's attorney, for any purpose germane to any such meeting, during
ordinary business hours, for a period of at least 10 days prior to such meeting,
either at a place within the city where such meeting is to be held, which place
shall be specified in the notice of the meeting or, if not so specified, at the
place where the meeting is to be held. Such list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder, shareholder's agent or shareholder's attorney
during the meeting or adjournment.
ARTICLE III
Board of Directors
SECTION 1. General Powers. The business, property and affairs of the
Corporation shall be managed by or under the direction of the Board, which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by law or by the Articles directed or required to be exercised
or done by the shareholders.
SECTION 2. Number and Term of Office. The number of directors shall
be fixed in accordance with the Articles. Directors need not be shareholders.
Each director shall hold office until his successor is elected and qualified, or
until his earlier death, resignation, retirement, disqualification or removal in
the manner hereinafter provided. The number of
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directors may be changed from time to time by amendment to these By-laws or
Articles, but no decrease in the number of directors shall have the effect of
shortening the term of any incumbent director.
SECTION 3. Election of Directors. At each meeting of the
shareholders for the election of directors at which a quorum is present, the
persons receiving the greatest number of votes, up to the number of directors to
be elected, of the shareholders present in person or by proxy and entitled to
vote thereon, shall be the directors; provided that for purposes of such vote no
shareholder shall be allowed to cumulate his votes.
SECTION 4. Resignation and Vacancies. Any director may resign at any
time by giving written notice to the Board, the Chairman, the President or the
Secretary. Such resignation shall take effect at the time specified therein or,
if the time be not specified, upon delivery thereof; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Except as otherwise require by law, vacancies on the Board and newly
created directorships will be filled in accordance with the Articles.
SECTION 5. Meetings.
(a) Regular Meetings. As soon as practicable after each annual
election of directors, the Board shall meet for the purpose of
organization and the transaction of other business, unless it shall have
transacted all such business by written consent pursuant to Section 6 of
this Article III.
(b) Special Meetings. Other meetings of the Board shall be held at
such times and places as the Board, the Chairman, the President or any two
directors shall from time to time determine.
(c) Notice of Meetings. Notice shall be given to each director for
each regular and special meeting, including the time, place and purpose of
such meeting. Notice of each such meeting shall be mailed to each
director, addressed to him at his residence or usual place of business, at
least two days before the date on which such meeting is to be held, or
shall be sent to him at such place by telegraph, cable, wireless or other
form of recorded communication, or be delivered personally or by telephone
not later than the day before the day on which such meeting is to be held,
but notice need not be given to any director who shall attend such
meeting. A written waiver of notice, signed by the person entitled thereto
and delivered to the Corporation, whether before or after the time of the
meeting stated therein, shall be deemed equivalent to notice.
(d) Place of Meetings. The Board may hold its meetings at such place
or places within or outside the State of Washington as the Board may from
time to time determine, or as shall be designated in the respective
notices or waivers of notice thereof.
(e) Quorum and Manner of Acting. A majority of the total number of
directors then in office shall be present in person at any meeting of the
Board in order to constitute a quorum for the transaction of business at
such meeting, and the vote of a
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majority of those directors present at any such meeting at which a quorum
is present shall be necessary for the passage of any resolution or act of
the Board, except as otherwise expressly required by law, the Articles or
these By-laws. In the absence of a quorum for any such meeting, a majority
of the directors present thereat may adjourn such meeting from time to
time a quorum shall be present and no further notice thereof need be
given. A director who is in attendance at a meeting of the Board but who
abstains from the vote on any matter by announcing his abstention to the
person acting as secretary of the meeting for inclusion in the minutes and
not voting on such matter shall not be deemed present at such meeting for
purposes of the preceding sentence with respect to such vote, but shall be
deemed present at such meeting for all other purposes.
(f) Organization. At each meeting of the Board, one of the following
shall act as chairman of the meeting and preside thereat, in the following
order of precedence:
(1) the Chairman;
(2) the President (if a director); or
(3) a person designated by the Board.
The Secretary or, in the case of his absence, any person (who shall
be an Assistant Secretary, if an Assistant Secretary has been
appointed and is present) whom the chairman of the meeting shall
appoint shall act as secretary of such meeting and keep the minutes
thereof.
SECTION 6. Directors' Consent in Lieu of Meeting. Unless otherwise
restricted by the Articles or these By-laws, any action required or permitted to
be taken at any meeting of the Board or of any committee thereof may be taken
without a meeting, without prior notice and without a vote, if one or more
written consents, setting forth the action so taken, are signed by all the
members of the Board or committee, either before or after the action taken, and
such consent is filed with the minutes of proceedings of the Board or committee.
Action taken by written consent of Directors without a meeting is effective when
the last Director signs the consent, unless the consent specifies a later
effective date.
SECTION 7. Action by Means of Conference Telephone or Similar
Communications Equipment. Any one or more members of the Board or any committee
thereof, may participate in a meeting of such Board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting by such means shall constitute presence in person at such meeting.
SECTION 8. Committees. The Board, by resolution adopted by the
greater of a majority of the Directors then in office when the action is taken
or the number of directors required to take action in accordance with WBCA and
these By-laws, may designate one or more committees, each such committee to
consist of two or more directors. The Board, by resolution adopted by the same
vote required herein, also may designate one or more additional directors as
alternate members of any such committee to replace any absent or disqualified
member of any meeting of the committee, and at any time may change the
membership of any committee or
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amend or rescind the resolution designating the committee. Each committee shall
keep a record of proceedings and report the same to the Board to such extent and
in such form as the Board may require. Unless otherwise provided in the
resolution designating a committee, a majority of all of the members of any such
committee may select its Chairman, fix its rules or procedure, fix the time and
place of its meetings and specify what notice of meetings, if any, shall be
given. Each committee shall have and may exercise all of the authority of the
Board to the extent provided in the resolution of the Board creating the
committee and any subsequent resolutions pertaining thereto and adopted in like
manner, except, that no such committee shall have the authority to: (1)
authorize or approve a distribution except according to a general formula or
method prescribed by the Board, (2) approve or propose to shareholders actions
or proposals required by the WBCA to be approved by shareholders, (3) fill
vacancies on the Board or any committee thereof, (4) adopt, amend or repeal
By-laws, (5) amend the Articles of Incorporation pursuant to RCW 23B.10.020, (6)
approve a plan of merger, (7) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except that the
Board may authorize a committee or a senior executive officer of the Corporation
to do so within limits specifically prescribed by the Board, or (8) engage in
any act or activity otherwise prohibited by Section 23B.08.250 of the WBCA.
SECTION 9. Compensation. The Board of Directors shall have the
authority to fix the compensation of directors, which may include their
expenses, if any, of attendance at each meeting of the Board of Directors or of
a committee.
SECTION 10. Preferred Stock Directors. Notwithstanding the
foregoing, whenever the holders of one or more classes or series of Preferred
Stock shall have the right, voting separately as a class or series, to elect
directors, the election, term of office, filling of vacancies, removal and other
features of such directorships shall be governed by the terms of the resolution
or resolutions adopted by the Board of Directors pursuant to ARTICLE FOURTH of
the Articles applicable thereto, and each director so elected shall not be
subject to the provisions of this ARTICLE III unless otherwise provided therein.
ARTICLE IV
Officers
SECTION 1. Executive Officers. The executive officers of the
Corporation shall be a Chairman, a President, Vice-Presidents, a Secretary and a
Treasurer, and may include such other officers as the Board may appoint pursuant
to Section 3 of this Article IV. Any two or more offices may be held by the same
person.
SECTION 2. Authority and Duties. All officers, as between themselves
and the Corporation, shall have such authority and perform such duties in the
management of the Corporation as may be provided in these By-laws or, to the
extent so provided, by the Board.
SECTION 3. Other Officers. The Corporation may have such other
officers, agents and employees as the Board may deem necessary, including one or
more Assistant Secretaries, one or more Assistant Treasurers and one or more
Vice-Presidents, each of whom shall hold office for such period, have such
authority, and perform such duties as the Board, the
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Chairman, or the President may from time to time determine. The Board may
delegate to any principal officer the power to appoint and define the authority
and duties of, or remove, any such officers, agents or employees.
SECTION 4. Term of Office, Resignation and Removal. All executive
officers shall be elected or appointed by the Board and shall hold office for
such term as may be prescribed by the Board. Each executive officer shall hold
office until his successor has been elected or appointed and qualified or until
his earlier death or resignation or removal in the manner hereinafter provided.
The Board may require any executive officer to give security for the faithful
performance of his duties.
Any officer may resign at any time by delivering notice to the
Board, the Chairman, the President or the Secretary. Such resignation shall take
effect at the time specified therein or, if the time be not specified, at the
time notice is given. Except as aforesaid, the acceptance of such resignation
shall not be necessary to make it effective.
All officers and agents elected or appointed by the Board shall be
subject to removal at any time by the Board with or without cause, subject to
any agreements to the contrary.
SECTION 5. Vacancies. If the office of Chairman, President,
Secretary or Treasurer becomes vacant for any reason, the Board shall fill such
vacancy, and if any other office becomes vacant, the Board may fill such
vacancy. Except as otherwise provided in these By-laws, any officer so appointed
or elected by the Board shall serve only until such time as the unexpired term
of his predecessor shall have expired and until his successor shall have been
duly elected and qualified, unless reelected or reappointed by the Board.
SECTION 6. The Chairman. The Chairman of the Board shall perform
such duties as shall be assigned to him by the Board from time to time and shall
preside over meetings of the Board and shareholders unless another officer is
appointed or designated by the Board as Chairman of such meeting.
SECTION 7. The President. The President shall be the chief executive
officer and, in the event that the office of Chairman is or becomes vacant, the
chief executive officer of the Corporation. The President shall have general
charge and supervision of the operation of the business and affairs of the
Corporation. The President may sign certificates for shares of the Corporation,
deeds, mortgages, bonds, contracts, or other instruments, except when the
signing and execution thereof have been expressly delegated by the Board or by
these By-laws to some other officer or agent of the corporation or are required
by law to be otherwise signed or executed by some other officer or in some other
manner. He shall from time to time make such reports of the affairs of the
Corporation as the Board may require and shall perform such other duties as may
from time to time be assigned to him by the Board or the Chairman.
SECTION 8. Vice President. In the event of the death of the
President or his or her inability to act, the Vice President, if any (or if
there is more than one Vice President, the Vice President who was designed by
the Board as the successor to the President, or if no Vice President is so
designated, the Vice President first elected to such office) shall perform the
duties
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of the President, except as may be limited by resolution of the Board, with all
the powers of and subject to all the restrictions upon the President. Any Vice
President may sign, with the Secretary or Assistant Secretary, certificates for
shares of the corporation. Vice Presidents shall have, to the extent authorized
by the President or the Board, the same powers as the President to sign deeds,
mortgages, bonds, contracts, or other instruments. Vice Presidents shall perform
such other duties as from time to time may be assigned to them by the President
or by the Board.
SECTION 9. The Secretary. The Secretary shall, to the extent
practicable, attend all meetings of the Board and all meetings of the
shareholders and shall record the minutes of all proceedings in a book to be
kept for that purpose. He may give, or cause to be given, notice of all meetings
of the shareholders and of the Board, and shall perform such other duties as may
be prescribed by the Board, the Chairman or the President, under whose
supervision he shall act. He shall keep in safe custody the seal of the
Corporation and affix the same to any duly authorized instrument requiring it
and, when so affixed, it may be attested by his signature or by the signature of
the Treasurer or, if appointed, an Assistant Secretary or an Assistant
Treasurer. The Board may give general authority to any other officer to affix
the seal of the Corporation and to attest such affixing of the seal. He shall
keep in safe custody the certificate books and shareholder records, including
registers of the post office address of each shareholder and director, and such
other books and records as the Board may direct, and shall perform all other
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the Board, the Chairman or the President.
SECTION 10. The Treasurer. The Treasurer shall have the care and
custody of the corporate funds and other valuable effects, including securities,
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation, and shall deposit all moneys and other valuable
effects in the name and to the credit of the Corporation in such depositories as
may be designated by the Board. The Treasurer shall disburse the funds of the
Corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the Chairman, President and directors, at the
regular meetings of the Board, or whenever they may require it, an account of
all his transactions as Treasurer and of the financial condition of the
Corporation, shall perform all other duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the Board,
the Chairman or the President.
ARTICLE V
Contracts, Checks, Drafts, Bank Accounts, Etc.
SECTION 1. Execution of Documents. The Board shall designate, by
either specific or general resolution, the officers, employees and agents of the
Corporation who shall have the power to execute and deliver deeds, contracts,
mortgages, bonds, debentures, checks, drafts and other orders for the payment of
money and other documents for and in the name of the Corporation, and may
authorize such officers, employees and agents to delegate such power (including
authority to redelegate) by written instrument to other officers, employees or
agents of the Corporation; and, unless so designated or expressly authorized by
these By-laws, no officer, employee or agent shall have any power or authority
to bind the Corporation by any contract or engagement, to pledge its credit or
to render it liable pecuniarily for any purpose or to any amount.
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SECTION 2. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
or otherwise as the Board or Treasurer, or any other officer to whom power in
this respect shall have been given by the Board, shall select.
SECTION 3. Proxies in Respect of Stock or Other Securities of Other
Corporations. The Board shall designate the officers of the Corporation who
shall have authority from time to time to appoint an agent or agents of the
Corporation to exercise in the name and on behalf of the Corporation the powers
and rights which the Corporation may have as the holder of stock or other
securities in any other corporation, and to vote or consent in respect of such
stock or securities. Such designated officers may instruct the person or persons
so appointed as to the manner of exercising such powers and rights, and such
designated officers may execute or cause to be executed in the name and on
behalf of the Corporation and under its corporate seal or otherwise, such
written proxies, powers of attorney or other instruments as they may deem
necessary or proper in order that the Corporation may exercise its said powers
and rights.
ARTICLE VI
Shares and Their Transfer: Fixing Record Date
SECTION 1. Certificates for Shares. Every owner of stock of the
Corporation shall be entitled to have a certificate certifying the number and
class of shares owned by him in the Corporation, which shall be in such form as
shall be prescribed by the Board. The Board may provide by resolution or
resolutions that some or all of any or all classes or series of the
Corporation's stock shall be uncertificated shares. Each certificate for shares
shall be numbered and issued in consecutive order. Certificates of stock in the
Corporation, if any, shall be signed, either manually or in facsimile by two of
the following officers in the name of the Corporation: the Chairman, or the
President, or any Vice President and by the Treasurer (or an Assistant
Treasurer, if appointed) or the Secretary (or an Assistant Secretary, if
appointed). Where a certificate is countersigned by a transfer agent, other than
the Corporation or an employee of the Corporation, or by a registrar, the
signatures of the Chairman or the President or a Vice President and the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
may be facsimiles. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, the certificate may be issued by the Corporation with the
same effect as if such officer, transfer agent or registrar were such officer,
transfer agent or registrar at the date of its issue. All certificates shall
include written notice of any restrictions which may be imposed on the
transferability of shares.
SECTION 2. Shares without Certificates. The Board may authorize the
issue of some or all of the shares of any or all of its classes or series
without certificates. Within a reasonable time after the issue or transfer of
shares without certificates, the Corporation shall send the shareholder a
written statement of the information required by law on the certificates. The
written statement shall include written notice of any restrictions which may be
imposed on the transferability of such shares.
SECTION 3. Transfer of Stock. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by
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proper evidence of succession, assignment or authority to transfer, it shall be
the duty of the Corporation to issue a new certificate of stock or
uncertificated shares in place of any certificate therefor issued by the
Corporation to the person entitled thereto, cancel the old certificate and
record the transaction in its stock transfer books.
SECTION 4. Addresses of Shareholders. Each shareholder shall
designate to the Secretary an address at which notices of meetings and all other
corporate notices may be served or mailed to him, and, if any shareholder shall
fail to designate such address, corporate notices may be served upon him by mail
directed to him at his post office address, if any, as the same appears on the
share record books of the Corporation or at his last known post office address.
SECTION 5. Replacement. In case of the loss, destruction, mutilation
or theft of a certificate for any stock of the Corporation, a new certificate of
stock or uncertificated shares in place of any certificate therefor issued by
the Corporation may be issued upon satisfactory proof of such loss, destruction,
mutilation or theft and upon such terms as the Board of Directors may prescribe.
The Board of Directors may in its discretion require the owner of the lost,
destroyed, mutilated or stolen certificate, or his legal representative, to give
the Corporation a bond, in such sum and in such form and with such surety or
sureties as it may direct, to indemnify the Corporation against any claim that
may be made against it with respect to the certificate alleged to have been
lost, destroyed, mutilated or stolen.
SECTION 6. Regulations. The Board may make such rules and
regulations as it may deem expedient, not inconsistent with these By-laws,
concerning the issue, transfer and registration of certificates for stock of
Corporation.
SECTION 7. Fixing Date for Determination of Shareholders of Record.
The Board may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board, in
order that the Corporation may determine which shareholders are entitled to (i)
notice of or to vote at any meeting of shareholders or any adjournment thereof,
(ii) receive payment of any dividend, or (iii) notice for any other purpose.
Such record date shall be not more than seventy (70) days, in the case of a
meeting of shareholders not less than ten (10) days prior to the date on which
the particular action requiring such action determination is to be taken. If no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting, the record date shall be the day immediately preceding
the date on which notice of the meeting is first given to shareholders. Such a
determination shall apply to any adjournment of the meeting unless the Board
fixes a new record date, which it shall do if the meeting is adjourned to a date
more than 120 days after the date fixed for the original meeting. If no record
date is set for the determination of shareholders entitled to receive payment of
any stock dividend or distribution (other than one involving a purchase,
redemption, or other acquisition of the Corporation's shares) the record date
shall be the date the Board authorizes the stock dividend or distribution.
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ARTICLE VII
Seal
The corporate seal shall be in such form as may be approved from
time to time by the Board. The seal may be used by causing it or a facsimile
thereof, to be impressed or affixed or in any other manner reproduced.
ARTICLE VIII
Fiscal Year
The fiscal year of the Corporation shall be fixed by resolution of
the Board.
ARTICLE IX
Indemnification and Insurance
SECTION 1. Indemnification.
(a) Third Party Actions. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party (including,
without limitation as a witness) to any threatened, pending, or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal, including all appeals (other
than an action, suit or proceeding by or in the right of the Corporation)
by reason of the fact that he is or was a director or officer of the
Corporation (and the Corporation, in the discretion of the Board, may so
indemnify a person by reason of the fact that he is or was an employee or
agent of the Corporation or is or was serving at the request of the
Corporation in any other capacity for or on behalf of the Corporation),
against reasonable expenses (including counsel fees), judgments, decrees,
fines , penalties and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if, in
the case of conduct in his official capacity with the Corporation, he
acted in good faith and in the Corporation's best interests, and in all
other cases, he acted in good faith and was at least not opposed to the
Company's best interests, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful,
except that no indemnification shall be made in respect to any claim,
issue or matter as to which Indemnitee shall have been finally adjudged to
be liable for (i) negligence or misconduct in the performance of his duty
to the Corporation unless and only to the extent that the court in which
such action or suit was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses as such court shall deem proper, or (ii) violating any of the
terms or provisions of Section 16 of the Securities Exchange Act of 1934,
as amended, or any of the rules or regulations promulgated thereunder. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith or in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause
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to believe that his conduct was unlawful. Notwithstanding the foregoing,
the Corporation shall be required to indemnify an officer or director in
connection with an action, suit or proceeding initiated by such person
only if such action, suit or proceeding was authorized by the Board or a
committee thereof. No indemnity shall be provided by the Corporation for
expenses that have been paid directly by an insurance carrier under a
policy of directors' and officers' liability insurance maintained by the
Company.
(b) Actions By or in the Right of the Company. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending, or completed action or suit, including
all appeals, by or in the right of the Corporation to procure a judgment
in its favor by reason of the fact that he is or was a director or officer
of the Corporation (and the Corporation, in the discretion of the Board,
may so indemnify a person by reason of the fact that he is or was an
employee or agent of the Corporation or is or was serving at the request
of the Corporation in any other capacity for or on behalf of the
Corporation), against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if, in the case of conduct in his official capacity
with the Corporation, he acted in good faith and in the Corporation's best
interests, and in all other cases, he acted in good faith and was at least
not opposed to the Company's best interests, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have
been finally adjudged to be liable for (i) negligence or misconduct in the
performance of his duty to the Corporation unless and only to the extent
that the court in which such action or suit was brought, or any other
court of competent jurisdiction, shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity
for such expenses as such court shall deem proper or (ii) violating any of
the terms or provisions of Section 16 of the Securities Exchange Act of
1934, as amended, or any of the rules or regulations promulgated
thereunder. Notwithstanding the foregoing, the Corporation shall be
required to indemnify an officer or director in connection with an action,
suit or proceeding initiated by such person only if such action, suit or
proceeding was authorized by the Board or a committee thereof. No
indemnity shall be provided by the Corporation for expenses that have been
paid directly by an insurance carrier under a policy of directors' and
officers' liability insurance maintained by the Company.
(c) Indemnify if Successful. To the extent that a director, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of this Section 1, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Standard of Conduct. Except in a situation governed by
subsection (c) of this Section 1, any indemnification under subsections
(a) and (b) of this Section 1 (unless ordered by a court) shall be made by
the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or
agent
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is proper in the circumstances because he has met the applicable standard
of conduct set forth in subsections (a) and (b) of this Section 1. Such
determination shall be made (1) by the Board by a majority vote of a
quorum consisting of directors who were not parties to such action, suit
or proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the shareholders, but shares
owned by or voted under the control of directors who are parties to the
proceeding may not be voted on determination. The determination required
by clauses (1) and (2) of this subsection (d) may in either event be made
by the written consent of the majority required by each clause.
(e) Advancement of Expenses. Expenses (including attorneys' fees) of
each officer and directory hereunder indemnified actually and reasonably
incurred in defending any civil, criminal, administrative or investigative
action, suit or proceeding or threat thereof shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of (i) an undertaking by or on behalf of such
person to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified by the Corporation as authorized in the
Article and (ii) a written affirmation of director's good faith belief
that he has performed his duty to the Company, upon request by the
Corporation and if required under applicable law. Such expenses (including
counsel fees) incurred by employees and agents may be so paid upon the
receipt of the aforesaid understanding and such terms and conditions, if
any, as the Board deems appropriate.
(f) Nonexclusivity. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article IX shall not be deemed
be exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any law, by-law, agreement,
vote of shareholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office.
(g) Procedures Exclusive. Pursuant to Section 23B.08.560(1) or any
successor provision of the WBCA, the procedures for indemnification and
advancement of expenses this Article are in lieu of the procedures
required by Sections 23B.08.510 through 23B.08.550 or any successor
provisions of the WBCA.
SECTION 2. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under the provisions of the WBCA.
SECTION 3. Definitions.
(a) For purposes of this Article IX, references to "the Corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and
15
<PAGE> 16
authority to indemnify its directors, officers, and employees or agents,
so that any person who is or was a director, officer, employee or agent of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article IX with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
(b) References to "other capacities" shall include serving as a
trustee or agent for any employee benefit plan; references to "other
enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or
agent of the Corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee
benefit plan, its participants, or beneficiaries; and a person who acted
in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this Article IX.
(c) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article IX shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(d) The right to indemnification conferred by this Article IX shall
be deemed to be a contract between the Corporation and each person
referred to herein until amended or repealed, but no amendment to or
repeal of these provisions shall apply to or have any effect on the right
to indemnification of any person with respect to any liability or alleged
liability of such person for or with respect to any act or omission of
such person occurring prior to such amendment or repeal.
(e) A person shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was
unlawful, if his action is based on the records or books of account of the
Corporation or another enterprise, or on information supplied to him by
the officers of the Corporation or another enterprise in the course of
their duties, or on the advice of legal counsel for the Corporation or
another enterprise or on information or records given or reports made to
the Corporation or another enterprise by an independent certified public
accountant or by an appraiser or other expert selected with reasonable
care by the Corporation or another enterprise. The term "another
enterprise" as used herein shall mean any other corporation or any
partnership, joint venture, trust, employee benefit plan or other
enterprise of which such person is or was serving at the request of the
Corporation as a director or executive officer. The provisions of this
subsection shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person
16
<PAGE> 17
may be deemed to have met the applicable standard of conduct set forth in
Section l(a) or Section 1(b) of this Article IX, as the case may be.
ARTICLE X
Amendment
These By-laws may be altered, amended or repealed or new By-laws may
be adopted by the Board, subject to the provisions of these By-laws and the
Articles. The fact that the power to amend, alter, repeal or adopt the By-laws
has been conferred upon the Board shall not divest the shareholders of the same
powers.
17
<PAGE> 1
Exhibit 4.1
================================================================================
INDENTURE
SPACEHAB, INCORPORATED
to
First Union National Bank, Trustee
8% Convertible Subordinated Notes due 2007
Dated as of October 15, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. DEFINITIONS...................................................1
Act..........................................................................2
Additional Interest..........................................................2
Affiliate....................................................................2
Agent Member.................................................................2
Applicable Procedures........................................................2
Authenticating Agent.........................................................2
Board of Directors...........................................................2
Board Resolution.............................................................2
Business Day.................................................................2
Change in Control............................................................2
Closing Price................................................................2
Commencement Date............................................................3
Commission...................................................................3
Common Stock.................................................................3
Company......................................................................3
Company Request or Company Order.............................................3
Corporate Trust Office.......................................................3
Corporation..................................................................3
Defaulted Interest...........................................................4
Definitive Security..........................................................4
Depositary...................................................................4
Distribution Date............................................................4
Dollar or U.S.$..............................................................4
DTC..........................................................................4
Event of Default.............................................................4
Excess Shares................................................................4
Exchange Act.................................................................4
Expiration Date..............................................................4
Expiration Time..............................................................4
Global Security..............................................................4
Holder.......................................................................4
Indenture....................................................................4
Initial Purchasers...........................................................4
Institutional Accredited Investor............................................5
Interest Payment Date........................................................5
Issue Date...................................................................5
Maturity.....................................................................5
Non-Recourse Obligation......................................................5
Notice of Default............................................................5
Officers' Certificate........................................................5
Opinion of Counsel...........................................................5
Outstanding..................................................................5
Paying Agent.................................................................6
Person.......................................................................6
Predecessor Security.........................................................6
Purchased Shares.............................................................7
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Qualified Institutional Buyer................................................7
Redemption Date..............................................................7
Redemption Price.............................................................7
Reference Date...............................................................7
Registration Default.........................................................7
Registration Rights Agreement................................................7
Regular Record Date..........................................................7
Regulation S.................................................................7
Repurchase Date..............................................................7
Repurchase Price.............................................................7
Responsible Officer..........................................................7
Restricted Global Security...................................................7
Restricted Security..........................................................7
Rule 144A....................................................................7
Rule 144A Information........................................................7
Securities...................................................................8
Securities Act...............................................................8
Security Register and Security Registrar.....................................8
Senior Indebtedness..........................................................8
Shelf Registration Statement.................................................8
Special Record Date..........................................................8
Stated Maturity..............................................................8
Subsidiary...................................................................8
Surrendered Securities.......................................................9
Trading Day..................................................................9
Transfer Restricted Securities...............................................9
Trust Indenture Act..........................................................9
Trustee......................................................................9
United States................................................................9
U.S. Government Obligation...................................................9
Vice President...............................................................9
SECTION 1.02. COMPLIANCE CERTIFICATES AND OPINIONS..........................9
SECTION 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.......................10
SECTION 1.04. ACTS OF HOLDERS; RECORD DATES................................10
SECTION 1.05. NOTICES, ETC., TO TRUSTEE AND COMPANY........................12
SECTION 1.06. NOTICE TO HOLDERS; WAIVER....................................13
SECTION 1.07. CONFLICT WITH TRUST INDENTURE ACT............................13
SECTION 1.08. EFFECT OF HEADINGS AND TABLE OF CONTENTS.....................13
SECTION 1.09. SUCCESSORS AND ASSIGNS.......................................13
SECTION 1.10. SEVERABILITY CLAUSE..........................................13
SECTION 1.11. BENEFITS OF INDENTURE........................................14
SECTION 1.12. GOVERNING LAW................................................14
SECTION 1.13. LEGAL HOLIDAYS...............................................14
ARTICLE II
SECURITY FORMS
SECTION 2.01. FORMS GENERALLY..............................................14
SECTION 2.02. FORM OF FACE OF SECURITY.....................................15
SECTION 2.03. FORM OF REVERSE OF SECURITY..................................19
SECTION 2.04. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION..............24
SECTION 2.05. FORM OF CONVERSION NOTICE....................................24
SECTION 2.06. FORM OF CERTIFICATION........................................25
ii
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ARTICLE III
THE SECURITIES
SECTION 3.01. TITLE AND TERMS; ISSUABLE IN SERIES..........................26
SECTION 3.02. DENOMINATIONS................................................27
SECTION 3.03. EXECUTION, AUTHENTICATION, DELIVERY AND DATING...............27
SECTION 3.04. GLOBAL AND NON-GLOBAL SECURITIES.............................28
SECTION 3.05. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE..........30
SECTION 3.06. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.............34
SECTION 3.07. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED...............34
SECTION 3.08. PERSONS DEEMED OWNERS........................................36
SECTION 3.09. CANCELLATION.................................................36
SECTION 3.10. COMPUTATION OF INTEREST......................................36
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. SATISFACTION AND DISCHARGE OF INDENTURE......................36
SECTION 4.02. APPLICATION OF TRUST MONEY...................................38
ARTICLE V
REMEDIES
SECTION 5.01. EVENTS OF DEFAULT............................................38
SECTION 5.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT...........40
SECTION 5.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE ....................................................41
SECTION 5.04. TRUSTEE MAY FILE PROOFS OF CLAIM.............................41
SECTION 5.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES..42
SECTION 5.06. APPLICATION OF MONEY COLLECTED...............................42
SECTION 5.07. LIMITATION ON SUITS..........................................43
SECTION 5.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST AND TO CONVERT ........................43
SECTION 5.09. RESTORATION OF RIGHTS AND REMEDIES...........................43
SECTION 5.10. RIGHTS AND REMEDIES CUMULATIVE...............................44
SECTION 5.11. DELAY OR OMISSION NOT WAIVER.................................44
SECTION 5.12. CONTROL BY HOLDERS...........................................44
SECTION 5.13. WAIVER OF PAST DEFAULTS......................................44
SECTION 5.14. UNDERTAKING FOR COSTS........................................45
SECTION 5.15. WAIVER OF USURY, STAY OR EXTENSION LAWS......................45
ARTICLE VI
THE TRUSTEE
SECTION 6.01. CERTAIN DUTIES AND RESPONSIBILITIES..........................45
SECTION 6.02. NOTICE OF DEFAULTS...........................................46
SECTION 6.03. CERTAIN RIGHTS OF TRUSTEE....................................46
SECTION 6.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.......47
SECTION 6.05. MAY HOLD SECURITIES..........................................48
SECTION 6.06. MONEY HELD IN TRUST..........................................48
SECTION 6.07. COMPENSATION AND REIMBURSEMENT...............................48
SECTION 6.08. DISQUALIFICATION: CONFLICTING INTERESTS.....................49
SECTION 6.09. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY......................49
SECTION 6.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR............49
SECTION 6.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.......................50
SECTION 6.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS..51
iii
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SECTION 6.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY............51
SECTION 6.14. APPOINTMENT OF AUTHENTICATING AGENT..........................51
SECTION 6.15. APPOINTMENT OF CO-TRUSTEE....................................53
ARTICLE VII
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS....53
SECTION 7.02. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.......54
SECTION 7.03. REPORTS BY TRUSTEE...........................................54
SECTION 7.04. REPORTS BY COMPANY...........................................54
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.01. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.........55
SECTION 8.02. SUCCESSOR SUBSTITUTED........................................55
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS...........56
SECTION 9.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS..............56
SECTION 9.03. EXECUTION OF SUPPLEMENTAL INDENTURES.........................57
SECTION 9.04. EFFECT OF SUPPLEMENTAL INDENTURES............................58
SECTION 9.05. CONFORMITY WITH TRUST INDENTURE ACT..........................58
SECTION 9.06. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES...........58
ARTICLE X
COVENANTS
SECTION 10.01. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST...................58
SECTION 10.02. MAINTENANCE OF OFFICE OR AGENCY..............................58
SECTION 10.03. MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST..............59
SECTION 10.04. STATEMENT BY OFFICERS AS TO DEFAULT..........................60
SECTION 10.05. EXISTENCE....................................................60
SECTION 10.06. MAINTENANCE OF PROPERTIES....................................60
SECTION 10.07. PAYMENT OF TAXES AND OTHER CLAIMS............................61
SECTION 10.08. WAIVER OF CERTAIN COVENANTS..................................61
SECTION 10.09. DELIVERY OF CERTAIN INFORMATION..............................61
SECTION 10.10. RESALE OF CERTAIN SECURITIES; REPORTING ISSUER...............61
SECTION 10.11. REGISTRATION RIGHTS..........................................62
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.01. RIGHT OF REDEMPTION..........................................63
SECTION 11.02. APPLICABILITY OF ARTICLE.....................................63
SECTION 11.03. ELECTION TO REDEEM; NOTICE TO TRUSTEE........................63
SECTION 11.04. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED............64
SECTION 11.05. NOTICE OF REDEMPTION.........................................64
SECTION 11.06. DEPOSIT OF REDEMPTION PRICE..................................65
SECTION 11.07. SECURITIES PAYABLE ON REDEMPTION DATE........................65
SECTION 11.08. SECURITIES REDEEMED IN PART..................................65
SECTION 11.09. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION................66
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ARTICLE XII
SUBORDINATION OF SECURITIES
SECTION 12.01. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS................67
SECTION 12.02. PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC...............67
SECTION 12.03. NO PAYMENT WHEN SENIOR INDEBTEDNESS IN DEFAULT...............68
SECTION 12.04. PAYMENT PERMITTED IF NO DEFAULT..............................68
SECTION 12.05. SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS......69
SECTION 12.06. PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS..................69
SECTION 12.07. TRUSTEE TO EFFECTUATE SUBORDINATION..........................69
SECTION 12.08. NO WAIVER OF SUBORDINATION PROVISIONS........................69
SECTION 12.09. NOTICE TO TRUSTEE............................................70
SECTION 12.10. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING
AGENT ......................................................71
SECTION 12.11. TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS.....71
SECTION 12.12. RIGHTS OF TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS;
PRESERVATION OF TRUSTEE'S RIGHTS ...........................71
SECTION 12.13. ARTICLE APPLICABLE TO PAYING AGENTS..........................71
SECTION 12.14. CERTAIN CONVERSIONS DEEMED PAYMENT...........................71
ARTICLE XIII
CONVERSION OF SECURITIES
SECTION 13.01. CONVERSION PRIVILEGE AND CONVERSION PRICE....................72
SECTION 13.02. EXERCISE OF CONVERSION PRIVILEGE.............................73
SECTION 13.03. FRACTIONS OF SHARES..........................................74
SECTION 13.04. ADJUSTMENT OF CONVERSION PRICE...............................74
SECTION 13.05. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE....................80
SECTION 13.06. NOTICE OF CERTAIN CORPORATE ACTION...........................80
SECTION 13.07. COMPANY TO RESERVE COMMON STOCK..............................81
SECTION 13.08. TAXES ON CONVERSIONS.........................................81
SECTION 13.09. COVENANT AS TO COMMON STOCK..................................81
SECTION 13.10. CANCELLATION OF CONVERTED SECURITIES.........................81
SECTION 13.11. PROVISIONS IN CASE OF RECLASSIFICATION, CONSOLIDATION,
MERGER OR SALE OF ASSETS ...................................81
ARTICLE XIV
RIGHT TO REQUIRE REPURCHASE
SECTION 14.01. RIGHT TO REQUIRE REPURCHASE..................................82
SECTION 14.02. NOTICE, METHOD OF EXERCISING REPURCHASE RIGHT................82
SECTION 14.03. DEPOSIT OF REPURCHASE PRICE..................................83
SECTION 14.04. SECURITIES NOT REPURCHASED ON REPURCHASE DATE................83
SECTION 14.05. SECURITIES REPURCHASED IN PART...............................83
SECTION 14.06. CERTAIN DEFINITIONS..........................................84
ARTICLE XV
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 15.01. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.85
SECTION 15.02. DEFEASANCE AND DISCHARGE.....................................85
SECTION 15.03. COVENANT DEFEASANCE..........................................85
SECTION 15.04. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE..............86
SECTION 15.05. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS...............88
SECTION 15.06. REINSTATEMENT................................................88
v
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ARTICLE XVI
IMMUNITY
SECTION 16.01. PERSONAL IMMUNITY OF INCORPORATORS, SHAREHOLDERS,
DIRECTORS AND OFFICERS .....................................89
vi
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INDENTURE, dated as of October 15, 1997, between SPACEHAB,
INCORPORATED, a corporation duly organized and existing under the laws of the
State of Washington (herein called the "Company"), having its principal office
at 1595 Spring Hill Road, Suite 360, Vienna, Virginia 22182, and First Union
National Bank, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its 8% Convertible Subordinated Notes
due 2007 (herein called the "Securities"), to be issued as in this Indenture
provided.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series thereof,
as follows:
ARTICLE I
Definitions and Other Provisions of General Application
SECTION 1.01 Definitions. For all purposes of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:
1. the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
2. all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
3. all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation;
4. unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or Section, as the case may be, of
this Indenture; and
<PAGE> 9
5. the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms used in Article XIV have the meanings specified
therein.
"Act", when used with respect to any Holder, has the meaning
specified in Section 1.04.
"Additional Interest" has the meaning specified in Section 10.11.
"Affiliate" of any specified Person means any other Person who
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Agent Member" means any member of, or participant in, the
Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 6.14 to act on behalf of the Trustee to authenticate
Securities.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means a day on which banking institutions are open
for business and carrying out transactions in Dollars at the relevant place of
payment.
"Change in Control" has the meaning specified in Section 14.06.
"Closing Price" on any Trading Day with respect to the per share
price of Common Stock means the last reported sales price regular way or, in
case no such reported sale takes place on such Trading Day, the average of the
reported closing bid and asked prices regular way, in either case on the New
York Stock Exchange or, if the Common Stock is not listed or admitted to trading
on the New York Stock Exchange, on the principal national securities exchange on
which the Common Stock is listed or
2
<PAGE> 10
admitted to trading, or, if not listed or admitted to trading on any national
securities exchange, on The Nasdaq Stock Market, Inc. ("Nasdaq") or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or Nasdaq, the average of the closing bid and asked prices in the
over-the-counter market as furnished by any New York Stock Exchange member firm
that is selected from time to time by the Company for that purpose and is
reasonably acceptable to the Trustee.
"Commencement Date" has the meaning specified in Section 13.04.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or, if at any time
after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company. However, subject
to the provisions of Section 13.11, shares issuable on conversion of Securities
shall include only shares of the class designated as Common Stock of the Company
at the date of this instrument or shares of any class or classes resulting from
any reclassification or reclassifications thereof and which have no preference
in respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee
in the city at which at any particular time its corporate trust business shall
be administered. As of the date hereof, the Corporate Trust Office of the
Trustee is located at 901 East Cary Street, Second Floor, Richmond, Virginia
23219.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
3
<PAGE> 11
"Defaulted Interest" has the meaning specified in Section 3.07.
"Definitive Security" means a certificated Security in the form set
forth in Sections 2.02 and 2.03, bearing the restricted securities legend set
forth in Section 2.02, and held by an Institutional Accredited Investor in
accordance with Section 2.01.
"Depositary" means, with respect to the Securities issued in whole
or in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities as contemplated by Section 2.01 (or any successor securities
clearing agency so registered) .
"Distribution Date" has the meaning specified in Section 13.04.
"Dollar" or "U.S.$" means a Dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Event of Default" has the meaning specified in Section 5.01.
"Excess Shares" has the meaning specified in Section 2.03.
"Exchange Act" means the Securities Exchange Act of 1934 as it may
be amended from time to time, and any successor act thereto, and the rules and
regulations of the Commission promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.04.
"Expiration Time" has the meaning specified in Section 13.04.
"Global Security" means a Security that is registered in the
Security Register in the name of a Depositary or a nominee thereof.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means Credit Suisse First Boston Corporation,
CIBC Wood Gundy Securities Corp. and Oppenheimer & Co., Inc.
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<PAGE> 12
"Institutional Accredited Investor" means an institutional
"accredited investor" as described in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Securities.
"Issue Date" means the date of first issuance of the Securities
under this Indenture.
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, call for redemption, exercise of the repurchase
right or otherwise.
"Non-Recourse Obligation" means indebtedness or other obligation or
that portion of indebtedness or other obligation incurred by a Subsidiary (the
"Non-Recourse Subsidiary") with respect to the acquisition of assets not
previously owned by the Company or any Subsidiary or the financing of a project
involving the development or expansion of properties of the Company or any
Subsidiary (i) as to which neither the Company nor any of its Subsidiaries
(other than the Non-Recourse Subsidiary) (a) provides credit support (including
any undertaking, agreement or instrument that would constitute indebtedness),
(b) is directly or indirectly liable (as a guarantor or otherwise), or (c)
constitutes the lender; and (ii) no default with respect to which would permit
(upon notice, lapse of time or both) any holder of any other indebtedness of the
Company or any of its Subsidiaries to declare a default under such other
indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any Subsidiary other than the assets that were acquired with the
proceeds of such transaction or the project financed with the proceeds of such
transaction (and the proceeds thereof).
"Notice of Default" means a written notice of the kind specified in
Section 5.01(3) or 5.01(4).
"Officers' Certificate" means a certificate signed by any of the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by any of the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary, of the Company, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 10.04 shall
be the principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
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<PAGE> 13
(i) Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any Paying
Agent (other than the Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying Agent) for the Holders
of such Securities; provided that, if such Securities are to be redeemed, notice
of such redemption shall have been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee shall have been made;
(iii) Securities which have been paid pursuant to Section 3.06 or in
exchange for or in lieu of which other Securities have been authenticated and
delivered pursuant to this Indenture, other than any such Securities in respect
of which there shall have been presented to the Trustee proof satisfactory to it
that such Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company; and
(iv) Securities which have been defeased pursuant to Section 15.02;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given, made or taken any
request, demand, authorization, direction, notice, consent, waiver or other
action hereunder as of any date, Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which 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
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 3.06 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen
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<PAGE> 14
Security shall be deemed to evidence the same debt as the mutilated, destroyed,
lost or stolen Security.
"Purchased Shares" has the meaning specified in Section 13.04.
"Qualified Institutional Buyer" means a "qualified institutional
buyer" as defined in Rule 144A.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed as set forth in the
Securities.
"Reference Date" has the meaning specified in Section 13.04.
"Registration Default" has the meaning specified in Section 10. 11.
"Registration Rights Agreement" has the meaning specified in Section
10.11.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1 or October 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Repurchase Date" has the meaning specified in Section 14.01.
"Repurchase Price" has the meaning specified in Section 14.01.
"Responsible Officer", when used with respect to the Trustee, means
the President or any Vice President, Assistant Vice President or Trust Officer
of the Trustee to whom any matter has been referred because of such officer's
knowledge and familiarity with the particular subject.
"Restricted Global Security" has the meaning specified in Section
2.01.
"Restricted Security" means a Security required to bear the
restricted securities legend set forth in Section 2.02.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Rule 144A Information" has the meaning specified in Section 10.09.
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<PAGE> 15
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture and "Security" means one of such Securities.
"Securities Act" means the Securities Act of 1933 as it may be
amended from time to time, and any successor act thereto, and the rules and
regulations of the Commission promulgated thereunder.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.05.
"Senior Indebtedness" means the principal of and premium, if any,
and interest on all indebtedness of the Company for money borrowed, other than
the Securities, whether outstanding on the date of execution of the Indenture or
thereafter created, incurred, guaranteed or assumed, except such indebtedness
that by the terms of the instrument or instruments by which such indebtedness
was created or incurred expressly provides that it (i) is junior in right of
payment to the Securities or any other indebtedness of the Company for borrowed
money or (ii) ranks pari passu in right of payment to the Securities. The term
"indebtedness for money borrowed" when used with respect to the Company is
defined to mean (i) any obligation of, or any obligation guaranteed by, the
Company for the repayment of borrowed money, whether or not evidenced by bonds,
debentures, notes or other written instruments, (ii) all obligations of the
Company with respect to interest rate hedging agreements to hedge interest rates
relating to Senior Indebtedness of the Company, (iii) any deferred payment
obligation of, or any such obligation guaranteed by, the Company for the payment
of the purchase price of property or assets evidenced by a note or similar
instrument, and (iv) any obligation of, or any such obligation guaranteed by,
the Company for the payment of rent or other amounts under a lease of property
or assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Company under generally accepted
accounting principles.
"Shelf Registration Statement" has the meaning specified in Section
10.11.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 3.07.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
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<PAGE> 16
"Surrendered Securities" has the meaning specified in Section 2.06.
"Trading Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day on which securities are not traded on the applicable
securities exchange or in the applicable securities market.
"Transfer Restricted Securities" has the meaning specified in the
Registration Rights Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed and the rules and
regulations thereunder; provided, however, that in the event the Trust Indenture
Act of 1939 or such rules and regulations are amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 and such rules and regulations as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"United States" means the United States of America (including the
States thereof and the District of Columbia), its territories, its possessions
and other areas subject to its jurisdiction.
"U.S. Government Obligation" has the meaning specified in Section
15.04.
"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 "vice president".
SECTION 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) 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;
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<PAGE> 17
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate 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, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.04. Acts of Holders; Record Dates. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing; and, except
as herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee and, where it is
hereby expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.01)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate
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<PAGE> 18
of a notary public or other officer authorized by law to take acknowledgments of
deeds, certifying that the individual signing such instrument or writing
acknowledged to him the execution thereof. Where such execution is by a signer
acting in a capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other manner which the
Trustee deems sufficient.
The ownership of Securities shall be proved by the Security
Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given or taken by Holders
of Securities; provided that the Company may not set a record date for, and the
provisions of this paragraph shall not apply with respect to, the giving or
making of any notice, declaration, request or direction referred to in the next
paragraph. If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders
after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Securities on such record date;
and provided, further, that for the purpose of determining whether Holders of
the requisite principal amount of such Securities have taken such action, no
Security shall be deemed to have been Outstanding on such record date unless it
is also Outstanding on the date such action is to become effective. Nothing in
this paragraph shall prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and with
no action by any Person be cancelled and of no effect), nor shall anything in
this paragraph be construed to render ineffective any action taken by Holders of
the requisite principal amount of Outstanding Securities on the date such action
is taken. Promptly after any record date is set pursuant to this paragraph, the
Company, at its own expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Trustee in writing and to each Holder of Securities in the manner set forth in
Section 1.06.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 5.02, (iii) any request to institute proceedings referred
to in Section 5.07(2) or (iv) any
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direction referred to in Section 5.12. If any record date is set pursuant to
this paragraph, the Holders of Outstanding Securities on such record date, and
no other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such record date;
provided that no such action shall be effective hereunder unless taken on or
prior to the applicable Expiration Date by Holders of the requisite principal
amount of Outstanding Securities on such record date; and provided, further,
that for the purpose of determining whether Holders of the requisite principal
amount of such Securities have taken such action, no Security shall be deemed to
have been Outstanding on such record date unless it is also Outstanding on the
date such action is to become effective. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
(whereupon the record date previously set shall automatically and without any
action by any Person be cancelled and of no effect), nor shall anything in this
paragraph be construed to render ineffective any action taken by Holders of the
requisite principal amount of Outstanding Securities on the date such action is
taken. Promptly after any record date is set pursuant to this paragraph, the
Trustee, at the Company's expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration Date to be given to the
Company in writing and to each Holder of Securities in the manner set forth in
Section 1.06.
With respect to any record date set pursuant to this Section, the
party hereto that sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities in the manner set forth in Section 1.06, on or
before the existing Expiration Date. Notwithstanding the foregoing, no
Expiration Date shall be later than the 180th day after the applicable record
date and, if an Expiration Date is not designated with respect to any record
date set pursuant to this Section, the party hereto that set such record date
shall be deemed to have designated the 180th day after such record date as the
Expiration Date with respect thereto.
Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents, each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.05. Notices, Etc., to Trustee and Company. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficiently given if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Department, or at any other address previously furnished in writing to the
Company by the Trustee, or
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<PAGE> 20
(2) the Company by the Trustee or by any Holder shall be
sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company, addressed
to it at the address of its principal office specified in the first
paragraph of this instrument or at any other address previously furnished
in writing to the Trustee by the Company.
SECTION 1.06. Notice to Holders; Waiver. 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,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the
giving of such notice. 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. 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 case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.07. Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with a provision of the Trust Indenture
Act which is required under such Act to be a part of and govern this Indenture,
the latter provision shall control. If any provision of this Indenture modifies
or excludes any provision of the Trust Indenture Act which may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture so
modified or to be excluded, as the ease may be. To the extent a Security
conflicts with a provision in the Indenture, the Indenture governs.
SECTION 1.08. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns. All covenants and agreements
in this Indenture by the Company shall bind its successors and assigns, whether
so expressed or not.
SECTION 1.10. Severability Clause. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
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SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in
the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, the holders of Senior
Indebtedness and the Holders of Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 1.12. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW
YORK.
SECTION 1.13. Legal Holidays. In any case where any Interest Payment
Date, Redemption Date, Repurchase Date or Stated Maturity of any Security or the
last date on which a Holder has the right to convert his Securities shall not be
a Business Day then (notwithstanding any other provision of this Indenture or of
the Securities) payment of interest or principal (and premium, if any) or
conversion of the Securities 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 Interest Payment Date, Redemption Date, Repurchase Date or at the Stated
Maturity, or on such last day for conversion, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption
Date, Repurchase Date or Stated Maturity, as the case may be.
ARTICLE II
Security Forms
SECTION 2.01. Forms Generally. The Securities, the conversion notice
and the Trustee's certificates of authentication shall be in substantially the
forms set forth in this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by this
Indenture, and may have such letters, numbers or other marks of indemnification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or Depositary therefor or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities.
In certain cases described elsewhere herein, the legends set forth
in the first four paragraphs of Section 2.02 may be omitted from Securities
issued hereunder.
Upon their original issuance, Securities offered and sold in
reliance on Rule 144A or in reliance on Regulation S, in each case as provided
in the Purchase Agreement, shall be issued in the form of a single Global
Security in definitive, fully registered form without interest coupons,
substantially in the form of Security set forth in Sections 2.02 and 2.03, with
such applicable legends as are provided for in Section 2.02,
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<PAGE> 22
except as otherwise permitted herein. Such Global Security shall be registered
in the name of DTC, as Depositary, or its nominee, duly executed by the Company
and authenticated by the Trustee as hereinafter provided, and deposited with the
Trustee, as custodian for DTC, for credit by DTC to the respective accounts of
beneficial owners of the Securities represented thereby (or such other accounts
as they may direct). Such Global Security, together with its Successor
Securities which are Global Securities, are collectively herein called the
"Restricted Global Security".
Except as provided in this Section 2.01 or Section 3.05, owners of
beneficial interests in Global Securities will not be entitled to receive
physical delivery of certificated Securities. Purchasers of Securities who are
Institutional Accredited Investors and are not Qualified Institutional Buyers
and did not purchase Securities sold in reliance on Regulation S will receive
Definitive Securities. Upon transfer of such Definitive Securities to a
Qualified Institutional Buyer or in reliance on Regulation S, such Definitive
Securities will, unless the Restricted Global Security has previously been
exchanged, be exchanged for an interest in the Restricted Global Security
pursuant to the provisions of Section 3.05.
Neither the Company nor the Trustee shall have any responsibility
for any defect in the CUSIP or ISIN number that appears on any Security, check,
advice of payment or redemption or repurchase notice, and any such document may
contain a statement to the effect that CUSIP or ISIN numbers have been assigned
by an independent service for convenience of reference and that neither the
Company nor the Trustee shall be liable for any inaccuracy in such numbers.
SECTION 2.02. Form of Face of Security.
[INCLUDE IF SECURITY IS A RESTRICTED SECURITY OR A DEFINITIVE
SECURITY OTHER THAN A RESTRICTED GLOBAL SECURITY:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY AND THE COMMON STOCK
ISSUABLE UPON THE CONVERSION THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR IN A TRANSACTION EXEMPT FROM,
OR NOT SUBJECT TO, THE SECURITIES ACT. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY, AND THE COMMON STOCK ISSUABLE UPON
THE CONVERSION THEREOF, MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY
THAT (A) THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION THEREOF
MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I) INSIDE THE
UNITED
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<PAGE> 23
STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY AND ANY SHARES OF COMMON
STOCK ISSUABLE UPON THE CONVERSION THEREOF OF THE RESALE RESTRICTIONS REFERRED
TO IN (A) ABOVE.]
[INCLUDE IF SECURITY IS A RESTRICTED GLOBAL SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY (OR ITS
PREDECESSOR) WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND SUCH SECURITIES AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION
THEREOF MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR IN A TRANSACTION EXEMPT FROM, OR NOT SUBJECT TO, THE SECURITIES
ACT. EACH PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES IS HEREBY
NOTIFIED THAT THE SELLER OF SUCH BENEFICIAL INTEREST MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.
EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES
EVIDENCED BY THIS GLOBAL SECURITY INCLUDING ANY PARTICIPANT IN THE DEPOSITARY
HOLDING THE GLOBAL SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE
RECORDS OF SUCH DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH SUCH
PARTICIPANT) AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) ANY BENEFICIAL
INTEREST IN THE SECURITIES AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION
THEREOF MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (I)
INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE UNITED
STATES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
16
<PAGE> 24
SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE
BENEFICIAL OWNER WILL, AND EACH SUBSEQUENT BENEFICIAL OWNER OF THIS SECURITY OR
ANY SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF IS REQUIRED TO,
NOTIFY ANY PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES AND ANY SHARES
OF COMMON STOCK ISSUABLE UPON CONVERSION THEREOF FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.]
[INCLUDE IF SECURITY IS A GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR
SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE
THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[INCLUDE IF SECURITY IS A DEFINITIVE SECURITY TO BE HELD BY AN
INSTITUTIONAL ACCREDITED INVESTOR:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.]
17
<PAGE> 25
SPACEHAB, Incorporated
8% Convertible Subordinated Notes due 2007
No. _______ U.S.$________
[IF RESTRICTED GLOBAL SECURITY - CUSIP No. 846243 AA 1]
[IF DEFINITIVE SECURITY - CUSIP No. 846243 AB 9]
SPACEHAB, Incorporated, a corporation duly organized and existing
under the laws of the State Washington (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to _______________________________, or
registered assigns, the principal sum of ______________________________ United
States Dollars (U.S.$__________________) on October 15, 2007, and to pay
interest thereon from October 21, 1997, or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually on
April 15 and October 15 in each year, commencing April 15, 1998, at the rate of
8% per annum, until the principal hereof is paid or made available for payment.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest, which shall be the April 1 or October 1 (whether or not a Business
Day), as the case may be, next preceding such Interest Payment Date. Any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
Payment of the principal of, premium, if any, and interest
(including payment of any Additional Interest) on this Security will be made at
the Corporate Trust Office, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts by a U.S. Dollar check drawn on an account maintained with a bank
in the Borough of Manhattan, The City of New York or Richmond, Virginia;
provided, however, that upon written application by the Holder to the Security
Registrar setting forth wire instructions not later than 15 days prior to the
relevant payment date (in the case of payment of principal) or not later than
the relevant Record Date (in the case of payment of interest), such Holder may
receive payment by wire transfer of Dollars to a U.S. Dollar account (such
transfers to be made only to Holders of an aggregate principal amount in excess
of U.S.$2,000,000) maintained by the payee with a bank in the United States or
in Europe and designated by the payee to the Security Registrar.
18
<PAGE> 26
Reference is hereby made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
SPACEHAB, INCORPORATED
By:
-------------------------------------
Name:
Title:
Attest:
- --------------------------------
Name:
Title:
SECTION 2.03. Form of Reverse of Security. This Security is one of a
duly authorized issue of Securities of the Company designated as its 8%
Convertible Subordinated Notes due 2007 (herein called the "Securities"),
limited in aggregate principal amount to U.S.$55,000,000 (subject to increase as
provided in the Indenture herein defined up to an additional U.S.$8,250,000
aggregate principal amount), issued and to be issued under an Indenture, dated
as of October 15, 1997 (herein called the "Indenture"), between the Company and
First Union National Bank, as Trustee for the Holders of Securities issued under
said Indenture (herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee, the holders of Senior Indebtedness and the Holders of the Securities
and of the terms upon which the Securities are, and are to be, authenticated and
delivered.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time on or before
the close of business on the Business Day immediately preceding October 15,
2007, or in case this Security or a portion hereof is called for redemption,
then in respect of this Security or such portion hereof until and including, but
(unless the Company defaults in making the payment due upon redemption or
repurchase) not after, the close of business on the Business Day immediately
preceding the Redemption Date or Repurchase Date, as the
19
<PAGE> 27
case may be, to convert this Security (or any portion of the principal amount
hereof which is U.S.$1,000 or an integral multiple thereof), at the principal
amount hereof, or of such portion, into fully paid and non-assessable shares of
Common Stock of the Company at a conversion price equal to U.S.$13.625 aggregate
principal amount of Securities for each share of Common Stock (or at the current
adjusted conversion price if an adjustment has been made as provided in Article
XIII of the Indenture) by surrender of this Security, duly endorsed or assigned
to the Company or in blank, to the Company at its office or agency in the
Borough of Manhattan, The City of New York or Richmond, Virginia, accompanied by
the conversion notice hereon executed by the Holder hereof evidencing such
Holder's election to convert this Security, or if less than the entire principal
amount hereof is to be converted, the portion hereof to be converted, and, in
case such surrender shall be made during the period from the close of business
on any Regular Record Date to the opening of business on the corresponding
Interest Payment Date (unless this Security or the portion hereof being
converted has been called for redemption on a Redemption Date within such period
between and including such Regular Record Date and such Interest Payment Date),
also accompanied by payment in funds acceptable to the Company of an amount
equal to the interest payable on such Interest Payment Date on the principal
amount of this Security then being converted. Subject to the aforesaid
requirement for payment of interest and, in the case of a conversion after the
close of business on any Regular Record Date and on or before the corresponding
Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record at such Regular Record Date to receive an
installment of interest (even if the Security has been called for redemption on
a Redemption Date within such period), no payment or adjustment is to be made on
conversion for interest accrued hereon or for dividends on the Common Stock
issued on conversion. No fractions of shares or scrip representing fractions of
shares will be issued on conversion, but instead of any fractional interest the
Company shall pay a cash adjustment or round up to the next higher whole share
as provided in Article XIII of the Indenture. The conversion price is subject to
adjustment as provided in Article XIII of the Indenture. In addition, the
Indenture provides that in case of certain reclassifications, consolidations,
mergers, sales or transfers of assets or other transactions pursuant to which
the Common Stock is converted into the right to receive other securities, cash
or other property, the Indenture shall be amended, without the consent of any
Holders of Securities, so that this Security, if then outstanding, will be
convertible thereafter, during the period this Security shall be convertible as
specified above, only into the kind and amount of securities, cash and other
property receivable upon the transaction by a holder of the number of shares of
Common Stock into which this Security might have been converted immediately
prior to such transaction (assuming such holder of Common Stock failed to
exercise any rights of election and received per share the kind and amount
received per share by a plurality of non-electing shares).
The Company will furnish to any Holder, upon request and without
charge, copies of the Certificate of Incorporation and By-laws of the Company
then in effect. Any such request may be addressed to the Company or to the
Security Registrar.
The Securities are subject to redemption at the option of the
Company upon not less than 20 days' or more than 40 days' notice by mail, at any
time on or after
20
<PAGE> 28
October 20, 2000 through October 14, 2001 at 105.3333% of the principal amount,
and thereafter, as a whole or from time to time in part, at the following
Redemption Prices (expressed as percentages of the principal amount), if
redeemed during the 12-month period beginning on October 15 of the years
indicated,
Redemption
Year Price
---- ----------
2001............. 104.4444%
2002............. 103.5556%
2003............. 102.6667%
2004............. 101.7778%
2005............. 100.8889%
; and thereafter at a Redemption Price equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to (but not
including) the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.
In certain circumstances involving a Change in Control, each Holder
shall have the right to require the Company to redeem all or part of its
Securities at a repurchase price equal to 100% of the principal amount thereof,
together with accrued and unpaid interest through the Repurchase Date.
The Securities do not have the benefit of any sinking fund.
In the event of redemption, conversion or repurchase of this
Security in part only, a new Security or Securities for the unredeemed,
unconverted or unrepurchased portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
Subject to certain limitations in the Indenture, at any time when
the Company is not subject to Section 13 or 15(d) of the United States
Securities Exchange Act of 1934, as amended, upon the request of a Holder or the
holder of shares of Common Stock issued upon conversion thereof, the Company
will promptly furnish or cause to be furnished Rule 144A Information (as defined
below) to such Holder or such holder of shares of Common Stock issued upon
conversion, or to a prospective purchaser of any such security designated by any
such Holder or holder of shares of Common Stock, as the case may be, to the
extent required to permit compliance by such Holder or holder of shares of
Common Stock with Rule 144A under the United States Securities Act of 1933, as
amended (the "Securities Act"), in connection with the resale of any such
security. "Rule 144A Information" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto).
21
<PAGE> 29
If this Security is a Transfer Restricted Security, then the Holder
of this Security [IF THIS SECURITY IS A GLOBAL SECURITY, THEN INSERT-including
any Person that has a beneficial interest in this Security)] and the Common
Stock issuable upon conversion thereof is entitled to the benefits of a
Registration Rights Agreement, dated as of October 15, 1997 (the "Registration
Rights Agreement") executed by the Company. If a Registration Default occurs (as
defined in the Registration Rights Agreement and in the Indenture), Additional
Interest will accrue on this Security from and including the day following such
Registration Default to but excluding the day on which such Registration Default
has been cured. Additional Interest will be paid semi-annually in arrears, with
the first semi-annual payment due on the first Interest Payment Date in respect
of the Securities following the date on which such Additional Interest begins to
accrue, and will accrue at a rate per annum equal to an additional one-half of
one percent (0.50%) of the principal amount of the Securities.
Whenever in this Security there is a reference, in any context, to
the payment of the principal of, premium, if any, or interest on, or in respect
of, any Security, such mention shall be deemed to include mention of the payment
of Additional Interest payable as described in the preceding paragraph to the
extent that, in such context, Additional Interest is, was or would be payable in
respect of such Security and express mention of the payment of Additional
Interest (if applicable) in any provisions of this Security shall not be
construed as excluding Additional Interest in those provisions of this Security
where such express mention is not made.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes.
If an Event of Default shall occur and be continuing, the principal
of all the Securities may be declared due and payable in the manner and with the
effect provided in Article V of the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the consent of the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of a
majority in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon the
registration of transfer
22
<PAGE> 30
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, premium,
if any, and interest on (including Additional Interest) this Security at the
times, place and rate, and in the coin or currency, herein prescribed or to
convert this Security as provided in the Indenture.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
Corporate Trust Office duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities are issuable only in registered form without coupons
in denominations of U.S.$l,000 (or, in the case of Definitive Securities sold to
Institutional Accredited Investors, minimum denominations of U.S.$250,000) and
any integral multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, Securities are exchangeable for a like
aggregate principal amount of Securities of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not payment of or on this Security is
overdue, and neither the Company, the Trustee nor any such agent shall be
affected by notice to the contrary.
Interest on this Security shall be computed on the basis of a
360-day year of twelve 30-day months.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
23
<PAGE> 31
SECTION 2.04. Form of Trustee's Certificate of Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
Dated: ______________________, as Trustee
By:
--------------------------------
Authorized Signatory
SECTION 2.05. Form of Conversion Notice.
CONVERSION NOTICE
To: SPACEHAB, Incorporated
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or the portion hereof (which is U.S.$1,000
or an integral multiple thereof) below designated, at any time following the
date of original issuance thereof, into shares of Common Stock in accordance
with the terms of the Indenture referred to in this Security, and directs that
the shares issuable and deliverable upon conversion, together with any check in
payment for a fractional share and any Security representing any unconverted
principal amount hereof, be issued and delivered to the registered owner hereof
unless a different name has been provided below. If shares or any portion of
this Security not converted are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith a certificate in proper form
certifying that the applicable restrictions on transfer have been complied with.
Any amount required to be paid by the undersigned on account of interest
accompanies this Security.
The Applicant hereby agrees that, promptly after request of the
Company, he or it will furnish such proof in support of this certification as
the Company or the Security Registrar for the Common Stock may, from time to
time, request.
24
<PAGE> 32
Dated:
--------------------------------
Signature*
If shares or Securities are to be Principal amount to be converted
registered in the name of a Person (if less than all):
other than the Holder, please $___________,000
print such Person's name and
address:*
- ------------------------------------ -----------------------------------
Name Social Security or
- ------------------------------------ Taxpayer Identification Number
Street Address
- ------------------------------------
City, State and Zip Code
* Signature(s) must be guaranteed by an eligible guarantor institution (banks,
stock brokers, savings and loan associations and credit unions with membership
in an approved signature guarantee medallion program) pursuant to Securities and
Exchange Commission Rule 17Ad-l5 if shares of Common Stock are to be delivered,
or unconverted Securities are to be issued, other than to and in the name of the
registered owner.
SECTION 2.06. Form of Certification. Whenever any certification is
required to be given to evidence compliance with certain restrictions relating
to transfers of Restricted Securities contemplated by Section 3.05(b)(iv),
Section 3.05(c) or Section 13.02, such certification shall be provided
substantially in the form of the following certificate, with only such changes
as shall be approved by the Company and the Initial Purchasers,
TRANSFER CERTIFICATE
The undersigned Holder hereby certifies with respect to U.S.$______
principal amount of the above-captioned securities presented or surrendered on
the date hereof (the "Surrendered Securities") for registration of transfer, or
for exchange or conversion where the securities issuable upon such exchange or
conversion are to be registered in a name other than that of the undersigned
Holder (each such transaction being a "transfer"), that such transfer complies
with the restrictive legend set forth on the face of the Surrendered Securities
for the reason checked below:
____________ The transfer of the Surrendered Securities complies with Rule
144 under the U.S. Securities Act of 1933, as amended (the
"Securities Act"); or
25
<PAGE> 33
____________ The transfer of the Surrendered Securities complies with Rule
144A under the Securities Act; or
____________ The transfer of the Surrendered Securities complies with Rule
904 of Regulation S under the Securities Act; or
____________ The transfer of the Surrendered Securities is pursuant to an
effective registration statement under the Securities Act, the
prospectus delivery requirements under the Securities Act have
been satisfied with respect to such transfer, the undersigned
Holder is named as a "Selling Securityholder" in the
prospectus relating to such registration statement, or in
amendments or supplements thereto, and the aggregate principal
amount of Surrendered Securities transferred are all or a
portion of the securities listed in such prospectus opposite
the undersigned's name.
Dated: _____________*
* To be dated the date of surrender.
----------------------------------
Signature
(If the registered owner is a
corporation, partnership or
fiduciary, the title of the
Person signing on behalf of such
registered owner must be
stated.)
ARTICLE III
The Securities
SECTION 3.01. Title and Terms; Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is limited to (a) U.S.$55,000,000 plus (b) such aggregate
principal amount (which may not exceed U.S.$7,500,000 principal amount) of
Securities as may be purchased by the Initial Purchasers on the Second Closing
Date pursuant to the Purchase Agreement, dated October 15, 1997, between the
Company and the Initial Purchasers, 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 Sections 3.04, 3.05, 3.06, 9.06,
11.08, 13.02 or 14.05 and except for Securities which, pursuant to Section 3.03,
are deemed never to have been authenticated and delivered hereunder.
The Stated Maturity of the Securities shall be October 15, 2007, and
they shall bear interest at the rate of 8% per annum, payable semi-annually on
April 15 and October 15, commencing April 15, 1998, until the principal thereof
is paid or made available for payment.
26
<PAGE> 34
Payment of the principal of, premium, if any, and interest
(including payment of any Additional Interest) on this Security will be made at
the Corporate Trust Office, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts by a U.S. Dollar check drawn on an account maintained with a bank
in the Borough of Manhattan, The City of New York or Richmond, Virginia;
provided, however, that upon written application by the Holder to the Security
Registrar setting forth wire instructions not later than 15 days prior to the
relevant payment date (in the case of payment of principal) or not later than
the relevant Record Date (in the case of payment of interest), such Holder may
receive payment by wire transfer of Dollars to a U.S. Dollar account (such
transfers to be made only to Holders of an aggregate principal amount in excess
of U.S.$2,000,000) maintained by the payee with a bank in the United States or
in Europe and designated by the payee to the Security Registrar.
The Securities shall be redeemable by the Company as provided in
Article XI.
The Securities shall be subordinated in right of payment to the
prior payment in full of Senior Indebtedness as provided in Article XII.
The Securities shall be convertible as provided in Article XIII.
The Securities shall be subject to purchase by the Company at the
option of the Holder as provided in Article XIV.
SECTION 3.02. Denominations. The Securities shall be issuable only
in registered form without coupons and only in denominations of U.S.$1,000 and
any integral multiple thereof.
SECTION 3.03. Execution, Authentication, Delivery and Dating. The
Securities shall be executed on behalf of the Company by any of its Chairman of
the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon and attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such 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 Company Order for
the authentication and delivery of such Securities; and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Securities as in this Indenture provided and not otherwise.
27
<PAGE> 35
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 3.04. Global and Non-Global Securities.
(a) Global Securities.
(i) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes, of this Indenture.
(ii) Notwithstanding any other provision in this Indenture, no
Global Security may be exchanged in whole or in part for Securities registered,
and no transfer of a Global Security in whole or in part may be registered, in
the name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (A) such Depositary (1) has notified the Company that it
is unwilling or unable to continue as Depositary for such Global Security or (2)
has ceased to be a clearing agency registered as such under the Exchange Act or
announces an intention permanently to cease business or does in fact do so, (B)
there shall have occurred and be continuing an Event of Default with respect to
such Global Security, or (C) the Company in its discretion at any time
determines not to have all the Securities represented by a Global Security. Any
Global Security exchanged pursuant to clause (i) above shall be so exchanged in
whole and not in part and any Global Security exchanged pursuant to clause (ii)
or (iii) above may be exchanged in whole or from time to time in part as
directed by the Depositary. Any Security issued in exchange for a Global
Security or any portion thereof shall be a Global Security; provided that any
such Security so issued that is registered in the name of a Person other than
the Depositary or a nominee thereof shall not be a Global Security.
(iii) If any Global Security is to be exchanged for other Securities
or canceled in whole, it shall be surrendered by or on behalf of the Depositary
or its nominee to the Trustee, as Security Registrar, for exchange or
cancellation as provided in this Article Three. If any Global Security is to be
exchanged for other Securities or cancelled in part, or if another Security is
to be exchanged in whole or in part for a beneficial interest in any Global
Security, in each case, as provided in Section 3.05, then either (i) such Global
Security shall be so surrendered for exchange or cancellation as provided in
this Article III or (ii) the principal amount thereof shall be reduced or
increased by an amount equal to the portion thereof to be so exchanged or
cancelled, or equal to the principal amount of such other Security to be so
exchanged for a beneficial interest therein, as the case may be, by means of an
appropriate adjustment made on the
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records of the Trustee, as Security Registrar, whereupon the Trustee, in
accordance with the Applicable Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Security, the Trustee shall,
subject to Section 3.05(c) and as otherwise provided in this Article III,
authenticate and deliver any Securities issuable in exchange for such Global
Security (or any portion thereof) to or upon the order of, and registered in
such names as may be directed by, the Depositary or its authorized
representative. Upon the request of the Trustee in connection with the
occurrence of any of the events specified in the preceding paragraph, the
Company shall promptly make available to the Trustee a reasonable supply of
Securities that are not in the form of Global Securities. The Trustee shall be
entitled to rely upon any order, direction or request of the Depositary or its
authorized representative which is given or made pursuant to this Article III if
such order, direction or request is given or made in accordance with the
Applicable Procedures.
(iv) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article III or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Security,
unless such Security is registered in the name of a Person other than the
Depositary for such Global Security or a nominee thereof, in which case such
Security shall be authenticated and delivered in definitive, fully registered
form, without interest coupons.
(v) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under the
Indenture and the Securities, and owners of beneficial interests in a Global
Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members and
such owners of beneficial interests in a Global Security will not be considered
the owners or holders thereof. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or such nominee, as the case may be,
or impair, as between the Depositary, its Agent Members and any other person on
whose behalf an Agent Member may act, the operation of customary practices of
such Persons governing the exercise of the rights of a holder of any Security.
(b) Non-Global Securities.
(i) Securities issued pursuant to Regulation D under the Securities
Act shall be initially issued as Securities in definitive, fully registered
form, without interest coupons, shall initially be registered in such names and
be in such authorized denominations as the Initial Purchasers shall designate
and shall bear the legends required hereunder. The Company will make available
to the Trustee a reasonable supply of Securities in definitive form.
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<PAGE> 37
(ii) Pending the preparation of definitive Securities, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
10.02, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 3.05. Registration; Registration of Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 10.02 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers and exchanges thereof. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers and exchanges thereof as herein provided. Upon
surrender for registration of transfer or exchange of any Security at an office
or agency of the Company designated pursuant to Section 10.02 for such purpose,
accompanied by a written instrument of transfer or exchange in the form provided
by the Company, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees, one or
more new Securities of the same series, of any authorized denominations and of a
like aggregate principal amount.
(b) Notwithstanding any other provisions of this Indenture or the
Securities, transfers and exchanges of Securities and beneficial interests in a
Global Security of the kinds specified in this Section 3.05(b) shall be made
only in accordance with this Section 3.05(b).
(i) Transfer of Global Security. Other than as set forth in Section
3.04(a), a Global Security may not be transferred, in whole or in part, to any
Person other than the Depositary or a nominee thereof, and no such transfer to
any such other Person may be registered; provided that this Section 3.05(b)(i)
shall not prohibit any transfer of a Security that is issued in exchange for a
Global Security but is not itself a Global Security. No transfer of a Security
to any Person shall be effective under this Indenture or the Securities unless
and until such Security has been registered in the name of such Person. Nothing
in this Section 3.05(b)(i) shall prohibit or render ineffective any transfer
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<PAGE> 38
of a beneficial interest in a Global Security effected in accordance with the
other provisions of this Section 3.05(b).
(ii) Transfer of Beneficial Interests in thc Global Security.
Transfer of beneficial interests in the Global Security shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor, if applicable.
(iii) Other Exchanges. In the event that a Global Security or any
portion thereof is exchanged for Securities other than Global Securities, such
other Securities may in turn be exchanged (on transfer or otherwise) for
Securities that are not Global Securities or for beneficial interests in a
Global Security (if any is then outstanding) only in accordance with such
procedures, which shall be substantially consistent with the provisions of
Section 3.05(b) (including the certification requirements set forth on the
reverse of the Security intended to insure that transfers of beneficial
interests in a Global Security comply with Rule 144A, Regulation S or Rule 144
under the Securities Act, as the case may be) and any Applicable Procedures, as
may be from time to time adopted by the Company and the Trustee.
(iv) Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented to the Security Registrar with a request:
(A) to register the transfer of such Definitive Securities; or
(B) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations, the Security Registrar shall register the transfer or
make the exchange as requested if its reasonable requirements for
such transaction are met; provided, however, that the Definitive
Securities surrendered for transfer or exchange:
(x) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Company and the Security Registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing; and
(y) are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act,
pursuant to Section 3.05(b)(v), or pursuant to clause (1), (2)
or (3) below, and are accompanied by the following additional
information and documents, as applicable:
(1) if such Definitive Securities are being
delivered to the Security Registrar by a Holder for
registration in the name of such Holder, without
transfer, a certification from such Holder to that
effect (in the form set forth in Section 2.06); or
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(2) if such Definitive Securities are being
transferred to the Company, a certification to that
effect (in the form set forth in Section 2.06); or
(3) if such Definitive Securities are being
transferred pursuant to an exemption from registration
in accordance with Rule 144, (i) a certification to that
effect (in the form set forth in Section 2.06) and (ii)
if the Company or Security Registrar so requests, an
opinion of counsel or other evidence reasonably
satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in
Section 2.02.
(v) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(A) certification in the form set forth on the reverse of the
Security (1) that such Definitive Security is being transferred to a
Qualified Institutional Buyer in accordance with Rule 144A or (2)
outside the United States in an offshore transaction within the
meaning of Regulation S and in compliance with Rule 904 under the
Securities Act; and
(B) written instructions directing the Trustee to make, or to
direct the Securities Registrar to make, an adjustment on its books
and records with respect to such Global Security to reflect an
increase in the aggregate principal amount of the Securities
represented by the Global Security, such instructions to contain
information regarding the Depositary account to be credited with
such increase,
then the Trustee shall cancel such Definitive Security and cause, or
direct the Securities Registrar to cause, in accordance with the standing
instructions and procedures existing between the Depository and the
Securities Registrar, the aggregate principal amount of Securities
represented by the Global Security to be increased by the aggregate
principal amount of the Definitive Security to be exchanged and shall
credit or cause to be credited to the account of the Person specified in
such instructions a beneficial interest in the Global Security equal to
the principal amount of the Definitive Security so cancelled. If no Global
Securities are then outstanding, the Company shall issue and the Trustee
shall authenticate, upon written order of the Company in the form of an
Officers' Certificate, a new Global Security in the appropriate principal
amount.
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(c) Subject to the succeeding paragraph, every Security shall be
subject to the restrictions on transfer provided in the legends required by
Section 2.02 to be applied to such Security. Whenever any Security is presented
or surrendered for registration of transfer or for exchange for a Security
registered in a name other than that of the Holder, such Security must be
accompanied by a certificate in substantially the form set forth in Section
2.06, dated the date of such surrender and signed by the Holder of such
Security, as to compliance with such restrictions on transfer. The Security
Registrar shall not be required to accept for such registration of transfer or
exchange any Security not so accompanied by a properly completed certificate.
(d) The restrictions imposed by the legend set forth in the first or
fourth paragraph, as the case may be, of Section 2.02 upon the transferability
of any Security shall cease and terminate when such Security has been sold
pursuant to an effective registration statement under the Securities Act,
transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto), or after the second anniversary of the original
issuance date of the Security (or such earlier date after which the Security may
be freely transferred without registration under the Securities Act or without
being subject to transfer restrictions pursuant to the Securities Act, as may be
provided in Rule 144(k) under the Securities Act (or any successor provision
thereto) or otherwise). Any Security as to which such restrictions on transfer
shall have expired in accordance with their terms or shall have terminated may,
upon surrender of such Security for exchange to the Security Registrar in
accordance with the provisions of this Section 3.05 (accompanied, in the event
that such restrictions on transfer have terminated by reason of a transfer in
compliance with Rule 144 or any successor provision, by an opinion of counsel
having substantial experience in practice under the Securities Act and otherwise
reasonably acceptable to the Company, addressed to the Company and in form
acceptable to the Company, to the effect that the transfer of such Security has
been made in compliance with Rule 144 or such successor provision), be exchanged
for a new Security, of like tenor and aggregate principal amount, which shall
not bear the restrictive legend set forth in the first paragraph of Section
2.02. The Company shall inform the Trustee of the effective date of any
registration statement registering the Securities under the Securities Act. The
Trustee shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the aforementioned opinion of counsel or notice of
an effective registration statement.
(e) As used in the preceding two paragraphs of this Section 3.05,
the term "transfer" encompasses any sale, pledge, transfer, hypothecation or
other disposition of any Security.
(f) No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
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 3.04, 9.06, 11.08, 13.02 or 14.05 not
involving any transfer.
(g) The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days
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before the day of the mailing of a notice of redemption of Securities selected
for redemption under Section 11.04 and ending at the close of business on the
day of such mailing, or (ii) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities. If
any mutilated Security is surrendered to the Trustee, the Company shall execute
and the Trustee shall authenticate and deliver in exchange therefor a new
Security of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security.
Upon the issuance, authentication and delivery by the Trustee of any
new Security under this Section, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Security, authenticated and delivered by the Trustee
pursuant to this Section in lieu of any destroyed, lost or stolen Security shall
constitute an original 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 this Indenture equally
and proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.07. Payment of Interest; Interest Rights Preserved.
Interest on any Security which 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 payment of such interest.
If the Company shall be required by law to deduct any taxes from any
sum of interest payable hereunder to a Holder, (i) the Company shall make such
deductions
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<PAGE> 42
and shall pay the full amount deducted to the relevant taxing authority in
accordance with applicable law and (ii) the amount of such deduction shall be
treated for purposes hereof as a payment of interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the 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 and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money 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 money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this Clause (1) provided. Thereupon, the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly 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
therefor to be mailed, first-class postage prepaid, to each Holder at his
address as it appears in the Security Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Securities (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause
(2), such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any
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other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the corresponding Interest Payment Date, interest
on such Security whose Stated Maturity is on such Interest Payment Date shall be
deemed to continue to accrue and shall be payable on such Interest Payment Date
notwithstanding such conversion and notwithstanding that such Security may have
been called for redemption on a Redemption Date within such period, and such
interest (whether or not punctually paid or duly provided for) 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 such Regular Record Date. Except as
otherwise expressly provided in the immediately preceding sentence, in the case
of any Security which is converted, interest whose Stated Maturity is after the
date of conversion of such Security shall not be payable (although such accrued
and unpaid interest will be deemed paid by the appropriate portion of the Common
Stock received by the holders upon such conversion).
SECTION 3.08. Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of, premium, if any, and (subject to Section 3.07) interest on such
Security and for all other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.
SECTION 3.09. Cancellation. All Securities surrendered for payment,
redemption, repurchase, registration of transfer or exchange or conversion
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. The Company may at any time
deliver to the Trustee for cancellation any Securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities held by the Trustee shall be
disposed of as directed by a Company Order.
SECTION 3.10. Computation of Interest. Interest on the Securities of
each series shall be computed on the basis of a 360-day year of twelve 30-day
months.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of Indenture. This
Indenture shall upon Company request cease to be of further effect (except as to
any surviving rights of conversion, registration of transfer or exchange of
Securities herein
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<PAGE> 44
expressly provided for), and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen
and which have been replaced or paid as provided in Section 3.06 and
(ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust,
as provided in Section 10.03) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited irrevocably with the
Trustee as trust funds in trust for the benefit of Holders of
Outstanding Securities in an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of
such deposit (in the case of Securities which have become due
and payable) or to the Stated Maturity or Redemption Date, as
the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with; and
(4) no Event of Default which, with notice or lapse of time, or
both, would become an Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit.
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<PAGE> 45
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.07, the obligations of
the Trustee to any Authenticating Agent under Section 6.14 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 4.02 and the last
paragraph of Section 10.03 shall survive.
SECTION 4.02. Application of Trust Money. Subject to the provisions
of the last paragraph of Section 10.03, all money deposited with the Trustee
pursuant to Section 4.01 shall be held in trust and applied by it, in accordance
with the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee. All moneys deposited with the Trustee
pursuant to Section 4.01 (and held by it or any Paying Agent) for the payment of
Securities subsequently converted shall be returned to the Company upon Company
Request.
ARTICLE V
Remedies
SECTION 5.01. Events of Default. "Event of Default", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
XII or 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):
(1) default in the payment of any interest (including Additional
Interest) upon any Security when it becomes due and payable, and
continuance of such default for a period of 30 days (whether or not such
payment is prohibited by the provisions of Article XII); or
(2) default in the payment of the principal of (or premium, if any,
on) any Security at its Maturity (whether or not such payment is
prohibited by the provisions of Article XII); or
(3) failure by the Company to provide the notice of a Change of
Control in accordance with Section 14.02 or notice of a Change of Control
or default in the payment of the Repurchase Price in respect of any Note
on the Repurchase Date therefor (whether or not such payment is prohibited
by the provisions of Article XII); or
(4) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or
warranty a default in whose performance or whose breach is elsewhere in
this Section specifically dealt with), and continuance of such default or
breach for a period of 60 days after there
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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 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; or
(5) a default under any bonds, debentures, notes or other evidences
of indebtedness for money borrowed by the Company or a Subsidiary or under
any mortgages, indentures or instruments under which there may be issued
or by which there may be secured or evidenced any indebtedness for money
borrowed by the Company or a Subsidiary, whether such indebtedness now
exists or shall hereafter be created, other than under a Non-Recourse
Obligation, which indebtedness, individually or in the aggregate, has a
principal amount outstanding in excess of U.S.$3,000,000, which default
shall constitute a failure to pay any portion of the principal of such
indebtedness when due and payable after the expiration of any applicable
grace or cure period with respect thereto or shall have resulted in such
indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise have become due and payable, without such
indebtedness having been discharged, or such acceleration having been
rescinded or annulled, within a period of 10 days after there shall have
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 a written notice specifying
such default and requiring the Company to cause such indebtedness to be
discharged or cause such acceleration to be rescinded or annulled and
stating that such notice is a "Notice of Default" hereunder; or
(6) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company or a Subsidiary 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 adjudging the Company or a subsidiary bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or a subsidiary under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or a Subsidiary or
of any substantial part of their respective properties, or ordering the
winding up or liquidation of the affairs of the Company or a Subsidiary,
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 60
consecutive days; or
(7) the commencement by the Company or a Subsidiary 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
either the Company or a Subsidiary to the entry of a decree or order for
relief in respect of the Company or a Subsidiary in an involuntary case or
proceeding under any applicable Federal or
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State bankruptcy, insolvency, reorganization or other similar law or to
the commencement of any bankruptcy or insolvency case or proceeding
against either the Company or a Subsidiary, or the filing by either the
Company or a Subsidiary of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or the
consent by either the Company or a Subsidiary to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or a Subsidiary or of any substantial part of
their respective properties, or the making by either the Company or a
Subsidiary of an assignment for the benefit of creditors, or the admission
by either the Company or a Subsidiary in writing of an inability to pay
the debts of either the Company or a Subsidiary generally as they become
due, or the taking of corporate action by the Company or a Subsidiary in
furtherance of any such action.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. If
an Event of Default (other than an Event of Default specified in Section
5.01(1), 5.01(2), 5.01(6) or 5.01(7)) occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 2S% in principal amount of
the Outstanding Securities may declare the principal of all the Securities to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal and
any accrued interest (including Additional Interest) thereon shall become
immediately due and payable. If an Event of Default specified in Section 5.01(6)
or 5.01(7) occurs, the principal of, and accrued interest (including Additional
Interest) on, all the Securities shall automatically, and without any
declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter in this Article V provided, the Holders of a
majority in principal amount of the Outstanding Securities, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest (including Additional Interest) on
all Securities,
(B) the principal of (and premium, if any, on) any Securities
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the
Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Securities,
and
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(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement
by Trustee. If
(1) default is made in the payment of any interest on any Security
when such interest becomes due and payable and such default continues for
a period of 30 days, or
(2) default is made in the payment of the principal of (or premium,
if any, on) any Security at the Maturity thereof,
the Trustee is authorized to recover judgment in its own name and as trustee of
an express trust against the Company for the whole amount then due and payable
on such Securities for principal (and premium, if any) and interest, and, to the
extent that payment of such interest shall be legally enforceable, interest on
any overdue principal (and premium, if any) and on any overdue interest, at the
rate borne by the Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 5.04. Trustee May File Proofs of Claim. In case of any
judicial proceeding relative to the Company (or any otherobligor upon the
Securities), its property or its creditors, the Trustee shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(1) to file and prove a claim for the whole amount of principal and
interest owing and unpaid in respect of the Securities 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 the reasonable
compensation, expenses,
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disbursements and advances of the Trustee, its agents and counsel) and of
the Holders allowed in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 6.07.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of or organization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.
SECTION 5.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 5.06. Application of Money Collected. Any money collected by
the Trustee pursuant to this Article V shallbe applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of
such money on account of principal (or premium, if any) or interest, upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: to the payment of all amounts due the Trustee under Section
6.07;
SECOND: subject to Article XII to the payment of the amounts then
due and unpaid for first, interest (including Additional Interest) on,
and, second, for principal of (and premium, if any, on) the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Securities for interest and
principal (and premium, if any) respectively; and
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THIRD: the balance, if any, to the Person or Persons entitled
thereto, as their interest may appear or as a court of competent
jurisdiction shall direct.
SECTION 5.07. Limitation on Suits. No Holder of any Security shall
have any right to institute any, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the fights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 5.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest and to Convert. Notwithstanding any other provision in this
Indenture, the Holder of any Security shall have the right, which is absolute
and unconditional, to receive payment of the principal of (and premium, if any)
and (subject to Section 3.07) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption or
repurchase, on the Redemption Date or Repurchase Date, as the case may be) and
to convert such Security in accordance with Article XIII and to institute suit
for the enforcement of any such payment and right to convert, and such rights
shall not be impaired without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the Trustee or
any Holder has instituted any proceeding to enforceany right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case,
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subject to any determination in such proceeding, the Company, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or paymentof mutilated, destroyed, lost
or stolen Securities in the last paragraph of Section 3.06, no right or remedy
herein conferred upon or reserved to the Trustee or to the Holders is intended
to be exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, 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, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver. No delay or omission of
the Trustee or of any Holder of any Securitiesto exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article V or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12. Control by Holders. The Holders of a majority in
principal amount of the Outstanding Securitiesshall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee; provided
that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 5.13. Waiver of Past Defaults. The Holders of not less than
a majority in principal amount of the Outstanding Securities may on behalf of
the Holders of all the Securities waive any past default hereunder and its
consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security, or
(2) in respect of a covenant or provision hereof which under Article
IX cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this
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Indenture; but no such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, a court may require any
party litigant in such suit to file an undertaking to pay the costs of such
suit, and may assess costs against any such party litigant, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
provided, that this Section 5.14 shall not be deemed to authorize any court to
require such an undertaking or to make such an assessment in any suit instituted
by the Company or in any suit for the enforcement of the right to convert any
Security in accordance with Article XIII.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any usury, stay or extension law wherever enacted, now
or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE VI
The Trustee
SECTION 6.01. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) 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 certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture; but
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 be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
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(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the
Outstanding Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any
of its rights or powers.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee (as Trustee, Paying Agent, Authenticating
Agent or Security Registrar) shall be subject to the provisions of this Section.
SECTION 6.02. Notice of Defaults. Within 90 days after the
occurrence of any default hereunder, the Trusteeshall give the Holders, in the
manner provided in Section 1.06, notice of any default hereunder actually known
to a Responsible Officer of the Trustee; provided, however, that in the case of
any default of the character specified in Section 5.01(3), no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. The
Trustee shall not be deemed to have notice of a default unless (i) the Trustee
has received written notice thereof from the Company or any Holder or (ii) a
Responsible Officer of the Trustee shall have actual knowledge thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
SECTION 6.03. Certain Rights of Trustee. Subject to the provisions
of Section 6.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
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(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may require and, in the
absence of bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written 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;
(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 reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney; and
(g) 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.
SECTION 6.04. Not Responsible for Recitals or Issuance of
Securities. The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
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SECTION 6.05. May Hold Securities. The Trustee, any Authenticating
Agent, any Paying Agent, any Security Registrar or any other agent of the
Company, in its individual or any other capacity, may become the owner or
pledgee of Securities and, subject to Section 6.08 and Section 6.13, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such
other agent.
SECTION 6.06. Money Held in Trust. Money held by the Trustee in
trust hereunder need not be segregatedfrom other funds except to the extent
required by law. The Trustee shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed with the Company.
SECTION 6.07. Compensation and Reimbursement. The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
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);
(2) except as otherwise expressly provided herein, to 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 the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without negligence, willful misconduct
or bad faith on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Trustee shall notify
the Company of any claim asserted against it for which it may seek indemnity.
(4) All indemnifications and releases from liability granted
hereunder to the Trustee shall extend to its officers, directors, employees,
agents, successors and assigns.
(5) When the Trustee incurs expenses or renders services after the
occurrence of any Event of Default specified in Section 5.01, the expenses and
the compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency or similar laws.
(6) The obligations of the Company under this Section shall survive
the satisfaction and discharge of this Indenture.
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SECTION 6.08. Disqualification: Conflicting Interests. If the
Trustee has or shall acquire a conflicting interest within the meaning of the
Trust Indenture Act, the Trustee shall either eliminate such interest or resign,
to the extent and in the manner provided by, and subject to the provisions of,
the Trust Indenture Act and this Indenture.
SECTION 6.09. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder which shall be a corporationorganized and
doing business under the laws of the United States, authorized under such laws
to exercise corporate trust powers, which shall have (or, in the case of a
corporation included in a bank holding company system, the related bank holding
company shall have) a combined capital and surplus of at least U.S.$50,000,000,
subject to supervision or examination by federal or state authority, in good
standing and having an established place of business or agency in the Borough of
Manhattan, The City of New York or, Richmond, Virginia. If such corporation or
related bank holding company publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation or related bank holding company shall be deemed to
be its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 6.10. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of asuccessor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 6.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.11 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
a majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.08 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
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(2) the Trustee shall cease to be eligible under Section 6.09 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment in accordance
with the applicable requirements of Section 6.11, become the successor Trustee
and to that extent supersede the successor Trustee appointed by the Company. If
no successor Trustee shall have been so appointed by the Company or the Holders
and accepted appointment in the manner required by Section 6.11, any Holder who
has been a bona fide Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 1.06. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute, acknowledgeand deliver to
the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all
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instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article.
Without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 6.13. Preferential Collection of Claims Against Company. If
and when the Trustee shall be or become a creditor of the Company (or any other
obligor upon the Securities), the Trustee shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent. The Trustee may
appoint an Authenticating Agent or Agents which shall be authorized to act on
behalf of the Trustee to authenticate Securities issued upon original issue and
upon exchange, registration of transfer, partial conversion, partial redemption,
or partial repurchase or pursuant to Section 3.06, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States, authorized under such laws to act as Authenticating Agent, which shall
have (or, in the case of a corporation included in a bank holding company
system, the related bank holding company shall have) a combined capital and
surplus of not less than U.S.$50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then, for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
or related bank holding company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time an Authenticating Agent shall
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cease to be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders as their
names and addresses appear in the Security Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provisions of
this Section.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 6.07.
If an appointment is made pursuant to this Section, the Securities
may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities described in the within-mentioned
Indenture.
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----------------------------------------
As Trustee
By
-------------------------------------
As Authenticating Agent
By
-------------------------------------
Authorized Signatory
SECTION 6.15. Appointment of Co-Trustee. Subject to the
qualifications set forth in Section 6.09, the Trustee may appoint an additional
institution as a separate trustee or co-trustee. If the Trustee appoints an
additional institution as a separate trustee or co-trustee, each and every
remedy, power, fight, claim, deed, cause of action, immunity, estate, duty,
obligation, title, interest and lien expressed or intended by this Indenture to
be exercised by, vested in and conveyed by the Trustee with respect thereto
shall be exercisable by, vested in and conveyed to such separate trustee or
co-trustee, but only to the extent necessary to enable such separate trustee or
co-trustee to exercise such powers, rights and remedies, and every covenant and
obligation necessary for the exercise thereby by such separate trustee or
co-trustee shall run to and be enforceable by either of them. Should any
instrument in writing from the Company be required by the separate trustee or
co-trustee so appointed by the Trustee for more fully vesting in and confirming
to them such properties, rights, powers, trusts, duties and obligations, any and
all such instruments in writing shall, on request, be executed, acknowledged and
delivered by the Company. If any separate trustee or co-trustee, or a successor
to either, shall become incapable of acting or not qualified to act, resign or
be removed, all the estate, properties, rights, powers, trusts, duties and
obligations of such separate trustee or co-trustee, so far as permitted by law,
shall vest in and be exercised by the Trustee until the appointment of a
successor to such separate trustee or co-trustee. The appointment of any
separate trustee or co-trustee shall be subject to written approval of the
Company so long as no Event of Default has occurred and is continuing under this
Indenture.
ARTICLE VII
Holders' Lists and Reports by Trustee and Company
SECTION 7.01. Company to Furnish Trustee Names and Addresses of
Holders. The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular Report
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Regular Record Date, and
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(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 7.02. Preservation of Information; Communications to
Holders. (a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.01 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.01 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) 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 either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 7.03. Reports by Trustee. (a) The Trustee shall transmit to
Holders such reports concerning the Trustee and its actions under this Indenture
as may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission, if applicable, and with
the Company. The Company will notify the Trustee when the Securities are listed
on any stock exchange.
SECTION 7.04. Reports by Company. (a) The Company shall file with
the Trustee and the Commission, if applicable, and transmit to Holders, such
information, documents and other reports, and such summaries thereof, as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant to such Act; provided that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act shall be filed with the Trustee within 15 days after the
same is so required to be filed with the Commission. Notwithstanding anything to
the contrary contained herein, the Trustee shall have no duty to review such
documents for the purpose of determining compliance with this Indenture.
(b) The Company shall provide the Trustee with at least 30 days'
prior notice of any change in location of its principal executive offices or
other principal place of business.
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ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 8.01. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or,
directly or indirectly, convey, transfer, sell, lease or otherwise dispose of
all or substantially all of its properties and assets to any Person, and the
Company shall not permit any Person to consolidate with or merge into the
Company or convey, transfer, sell, lease or otherwise dispose of all or
substantially all of its properties and assets to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and
assets of the Company substantially as an entirety shall be a corporation,
partnership or trust, shall be organized and validly existing under the
laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of (and premium, if
any) and interest (including Additional Interest) on all the Securities
and the performance or observance of every covenant of this Indenture on
the part of the Company to be performed or observed and shall have
provided for conversion rights in accordance with Article XIII;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have happened and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction have
been complied with.
SECTION 8.02. Successor Substituted. Upon any consolidation of the
Company with, or merger of the Company into, any other Person or any conveyance,
transfer or lease of the properties and assets of the Company substantially as
an entirety in accordance with Section 8.01, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and thereafter, except in the case of a lease, the
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predecessor Person shall be released from its obligations and covenants under
this Indenture and the Securities.
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
(2) to add to the covenants of the Company for the equal and ratable
benefit of the Holders, or to surrender any right or power herein
conferred upon the Company; or
(3) to secure the Company's obligations in respect of the
Securities; or
(4) to make provision with respect to the conversion rights of
Holders pursuant to the requirements of Article XIII; or
(5) to make any changes or modifications to this Indenture necessary
in connection with the registration of any Transfer Restricted Securities
under the Securities Act as contemplated by Section 10.11, provided that
such action pursuant to this clause (5) shall not adversely affect the
interests of the Holders of Securities; or
(6) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, to
correct or supplement any provision herein which limits, qualifies or
conflicts with a provision of the Trust Indenture Act which is required
under such Act to be a part of and govern this Indenture, in any case to
the extent necessary to qualify this Indenture under the Trust Indenture
Act, or to make any other provisions with respect to matters or questions
arising under this Indenture which shall not be inconsistent with the
provisions of this Indenture; provided that such action pursuant to this
clause (6) shall not adversely affect the interests or legal rights of the
Holders in any material respect.
SECTION 9.02. Supplemental Indentures With Consent of Holders. With
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Securities, by the Act of said Holders delivered to the Company
and the Trustee, the Company, when authorized by a Board Resolution, and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any
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provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the place of payment where, or the coin or
currency in which, any Security or any premium or interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Stated Maturity thereof (or, in the case of
redemption or repurchase, on or after the Redemption Date or Repurchase
Date, as the case may be), or adversely affect the right to convert any
Security as provided in Article XIII (except as permitted by Section
9.01(4)), or modify the provisions of this Indenture with respect to the
subordination of the Securities in a manner adverse to the Holders, or
modify the redemption provisions in a manner adverse to the Holders, or
modify the provisions relating to the Company's requirement to offer to
repurchase Notes upon a Change in Control in a manner adverse to the
Holders, or
(2) modify any of the provisions of this Section 9.02, Section 5.13
or Section 10.08, except to increase any such percentage or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Security
affected thereby, or
(3) modify the obligation of the Company to maintain an office or
agency in the Borough of Manhattan, The City of New York or Richmond,
Virginia pursuant to Section 10.02, or
(4) modify any of the provisions of Section 10.09 or Section 10.10,
or
(5) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture.
It shall not be necessary for any Act of Holders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
accepting the additional trusts created by, any supplemental indenture permitted
by this Article IX or the modifications thereby of the trusts created by this
Indenture, the Trustee shall be entitled to receive, and (subject to Section
6.01 and Section 6.03) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture,
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complies with its terms and will, upon the execution and delivery thereof, be
valid and binding upon the Company in accordance with its terms. The Trustee
may, but 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.
SECTION 9.04. Effect of Supplemental Indentures. Upon the execution
of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 9.05. Conformity with Trust Indenture Act. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act.
SECTION 9.06. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Securities
so modified as to conform, in the judgment of the Trustee and the Company, to
any such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities.
ARTICLE X
Covenants
SECTION 10.01. Payment of Principal, Premium and Interest. The
Company will duly and punctually pay the principal of (and premium, if any) and
interest on the Securities in accordance with the terms of the Securities and
this Indenture.
SECTION 10.02. Maintenance of Office or Agency. The Company will
maintain in the Borough of Manhattan, The City of New York or Richmond, Virginia
an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer or
exchange, where Securities may be surrendered for conversion and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee or the office or agency of the Trustee in
the Borough of Manhattan, The City of New York, and the Company hereby appoints
the Trustee as its agent to receive all such presentations, surrenders, notices
and demands.
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The Company may also from time to time designate one or more other
offices or agencies (in or outside the Borough of Manhattan, The City of New
York or Richmond, Virginia) where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain offices or agencies
in the Borough of Manhattan, The City of New York or Richmond, Virginia for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
SECTION 10.03. Money for Security Payments to Be Held in Trust. If
the Company shall at any time act as its own Paying Agent, it will, on or before
each due date of the principal of (and premium, if any) or interest (together
with any Additional Interest in respect thereof) on any of the Securities,
segregate and hold in trust for the benefit of the Persons entitled thereto a
sum sufficient to pay the principal (and premium, if any) or interest (together
with any Additional Interest in respect thereof) so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of (and premium, if any) or interest
(together with any Additional Interest in respect thereof) on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held in trust for the benefit of the Persons entitled to such principal,
premium, if any, or interest, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section 10.03,
that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal, premium, if any, or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company
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Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of (and premium,
if any) or interest (together with any Additional Interest in respect thereof)
on any Security and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured. general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 10.04. Statement by Officers as to Default. The Company will
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, stating whether
or not to the best knowledge of the signers thereof the Company is in default in
the performance and observance of any of the terms, provisions and conditions of
this Indenture (without regard to any period of grace or requirement of notice
provided hereunder) and, if the Company shall be in default, specifying all such
defaults and the nature and status thereof of which they may have knowledge.
SECTION 10.05. Existence. Subject to Article VIII, the Company will
do or cause to be done all things necessary to preserve and keep in full force
and effect its existence, rights (charter and statutory) and franchises;
provided, however, that the Company shall not be required to preserve any such
right or franchise if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 10.06. Maintenance of Properties. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that
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nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties, or disposing of any of them,
if such discontinuance or disposition is, in the judgment of the Company,
desirable in the conduct of its business or the business of any Subsidiary and
not disadvantageous in any material respect to the Holders.
SECTION 10.07. Payment of Taxes and Other Claims. The Company will
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (1) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (2) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any Subsidiary; provided, however, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
SECTION 10.08. Waiver of Certain Covenants. The Company may omit in
any particular instance to comply with any covenant or condition set forth in
Sections 10.05 to 10.07, inclusive, if before the time for such compliance the
Holders of at least a majority in principal amount of the Outstanding Securities
shall, by Act of such Holders, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.
SECTION 10.09. Delivery of Certain Information. At any time when the
Company is not subject to Section 13 or l5(d) of the Exchange Act, upon the
request of a Holder or the holder of shares of Common Stock issued upon
conversion thereof, the Company will promptly furnish or cause to be furnished
Rule 144A Information (as defined below) to such Holder or such holder of shares
of Common Stock issued upon conversion of Securities, or to a prospective
purchaser of any such security designated by any such Holder or holder, as the
case may be, to the extent required to permit compliance by such Holder or
holder with Rule 144A under the Securities Act in connection with the resale of
any such security. "Rule 144A Information" shall be such information as is
specified pursuant to Rule 144A(d)(4) under the Securities Act.
SECTION 10.10. Resale of Certain Securities; Reporting Issuer.
During the period beginning on the last date of original issuance of the
Securities and ending on the date that is two years from such date, the Company
will not, and will use its best efforts not to permit any of its "affiliates"
(as defined under Rule 144 under the Securities Act or any successor provision
thereto) to, resell (x) any Securities which constitute "restricted securities"
under Rule 144 or (y) any securities into which the Securities have been
converted under this Indenture which constitute "restricted securities" under
Rule 144, that in either case have been reacquired by any of them. The Trustee
shall have no responsibility in respect of the Company's performance of its
agreement in the preceding sentence.
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SECTION 10.11. Registration Rights. The Company agrees that the
Holders (and any Person that has a beneficial interest in a Security) from time
to time of Transfer Restricted Securities are entitled to the benefits of a
Registration Rights Agreement, dated as of October 15, 1997 (the "Registration
Rights Agreement"), executed by the Company. Pursuant to the Registration Rights
Agreement, the Company has agreed for the benefit of the Holders from time to
time of Transfer Restricted Securities, at the Company's expense, (i) to file
within 90 days after the first date of original issuance of the Securities, a
shelf registration statement (the "Shelf Registration Statement") with the
Commission with respect to resales of the Transfer Restricted Securities, (ii)
to use its best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission as soon as practicable, and (iii) to use
its best efforts to maintain such Shelf Registration Statement continuously
effective under the Securities Act for a period of two years from the last date
of original issuance of the Securities or, if earlier, (A) until there are no
outstanding Transfer Restricted Securities or (B) until all outstanding Transfer
Restricted Securities held by persons that are not affiliates of the Company may
be resold without registration under the Securities Act pursuant to Rule 144(k)
under the Securities Act or any successor provision thereof.
Additional interest (the "Additional Interest") with respect to the
Securities shall be assessed as follows if any of the following events occur
(each such event in clauses (i) through (iii) below being herein called a
"Registration Default"):
(i) if on or prior to the 90th day after the first date of original
issuance of the Securities the Shelf Registration Statement has not been
filed with the Commission;
(ii) if on or prior to the 120th day after the first date of
original issuance of the Securities the Shelf Registration Statement has
not been declared effective by the Commission; or
(iii) if after the Shelf Registration Statement is declared
effective (A) the Shelf Registration Statement thereafter ceases to be
effective; or (B) the Shelf Registration Statement or the related
prospectus ceases to be usable (in each case except as permitted in
paragraph (b) below) in connection with resales of Transfer Restricted
Securities in accordance with and during the periods specified herein
because either (1) any event occurs as a result of which the related
prospectus forming part of such Shelf Registration Statement would include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, or (2) it shall be necessary to
amend such Shelf Registration Statement or supplement the related
prospectus, to comply with the Securities Act or the Exchange Act or the
respective rules thereunder.
Additional Interest shall accrue on the Securities over and above
the interest set forth in the title of the Securities from and including the
date on which any such Registration Default shall occur, to but excluding the
date on which all such Registration Defaults have been cured, at a rate of 0.50%
per annum.
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(b) A Registration Default shall be deemed not to have occurred and
be continuing in relation to the Shelf Registration Statement or the related
prospectus if (i) such Registration Default has occurred solely as a result of
(x) the filing of a post-effective amendment to the Shelf Registration Statement
to incorporate annual audited financial information with respect to the Company
where such post-effective amendment is not yet effective and needs to be
declared effective to permit Holders to use the related prospectus or (y) other
material events with respect to the Company that would need to be described in
the Shelf Registration Statement or the related prospectus and (ii) in the case
of clause (y), the Company proceeds promptly and in good faith to amend or
supplement the Shelf Registration Statement and related prospectus to describe
such events; provided, however, that in any case if such Registration Default
occurs for a continuous period in excess of 30 days, Additional Interest shall
be payable in accordance with the above paragraph from the day such Registration
Default occurs until such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to clause
(a)(i), (a)(ii) or (a)(iii) of this Section 10.11 will be payable in cash on the
regular Interest Payment Dates. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Securities, multiplied by a fraction, the numerator of
which is the number of days such Additional Interest rate was applicable during
such period (determined on the basis of a 360-day year comprised of twelve
30-day months), and the denominator of which is 360.
Whenever in this Indenture there is mentioned, in any context, the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security, such mention shall be deemed to include mention of the payment of
Additional Interest provided for in this Section to the extent that, in such
context, Additional Interest are, were or would be payable in respect thereof
pursuant to the provisions of this Section and express mention of the payment of
Additional Interest (if applicable) in any provisions hereof shall not be
construed as excluding Additional Interest in those provisions hereof where such
express mention is not made.
ARTICLE XI
Redemption of Securities
SECTION 11.01. Right of Redemption. The Securities may be redeemed
at the election of the Company, as a whole or from time to time in part, at any
time on or after October 20, 2000, at the Redemption Prices specified in the
form of Security hereinbefore set forth, together with accrued interest to the
Redemption Date.
SECTION 11.02. Applicability of Article. Redemption of Securities at
the election of the Company or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article XI.
SECTION 11.03. Election to Redeem; Notice to Trustee. The election
of the Company to redeem any Securities pursuant to Section 11.01 shall be
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evidenced by a Board Resolution. In case of any redemption at the election of
the Company, the Company shall, at least 40 days prior to the Redemption Date
fixed by the Company (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee of such Redemption Date and of the principal amount
of Securities to be redeemed.
SECTION 11.04. Selection by Trustee of Securities to Be Redeemed. If
less than all the Securities are to be redeemed, the particular Securities to be
redeemed shall be selected not less than 20 days or more than 40 days prior to
the Redemption Date by the Trustee, from the Outstanding Securities not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate in the circumstances and which may provide for the selection for
redemption of portions (equal to U.S.$1,000 or any integral multiple thereof) of
the principal amount of Securities of a denomination larger than U.S.$1,000.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed shall be treated
by the Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 11.05. Notice of Redemption. Notice of redemption shall be
given by first-class mail, postage prepaid, mailed not less than 20 nor more
than 40 days prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities are to be redeemed,
the identification (and, in the case of partial redemption of any
Securities, the principal amounts) of the particular Securities to be
redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date,
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(5) the conversion price, the date on which the right to convert the
Securities to be redeemed will terminate and the place or places where
such Securities may be surrendered for conversion, and
(6) the place or places where such Securities are to be surrendered
for payment of the Redemption Price. Notice of redemption of Securities to
be redeemed at the election of the Company shall be given by the Company
or, at the Company's request, by the Trustee in the name and at the
expense of the Company, and shall be irrevocable.
SECTION 11.06. Deposit of Redemption Price. On or prior to any
Redemption Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.03) an amount of money sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be an Interest
Payment Date) accrued interest on, all the Securities which are to be redeemed
on that date other than any Securities called for redemption on that date which
have been converted prior to the date of such deposit.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 3.07) be paid to the Company upon
Company Request or, if then held by the Company, shall be released from such
trust.
SECTION 11.07. Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear or accrue any interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to (but not including) the Redemption Date; provided, however, that installments
of interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.07.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear and accrue interest from the Redemption Date at the rate borne
by the Security.
SECTION 11.08. Securities Redeemed in Part. Any Security which is to
be redeemed only in part shall be surrendered at an office or agency of the
Company designated for that purpose pursuant to Section 10.02 (with, if the
Company or the
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Trustee so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney-in-fact duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security without service charge, a new Security or Securities, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal
amount of the Security so surrendered.
SECTION 11.09. Conversion Arrangement on Call for Redemption. In
connection with any redemption of Securities, the Company may arrange for the
purchase and conversion of any Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Securities by paying to
the Trustee in trust for the Holders, on or before the Redemption Date, an
amount not less than the applicable Redemption Price, together with interest
accrued to the Redemption Date, of such Securities. Notwithstanding anything to
the contrary contained in this Article XI, the obligation of the Company to pay
the Redemption Price of such Securities, together with interest accrued to, but
excluding, the date fixed for redemption, 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, a copy of which will be filed with the Trustee prior
to the Redemption Date, any Securities not duly surrendered for conversion by
the holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such holders and
(notwithstanding anything to the contrary contained in Article XIII) surrendered
by such purchasers for conversion, all as of immediately prior to the close of
business on the Redemption Date (and the right to convert any such Securities
shall be deemed to have been extended through such time), subject to payment of
the above amount as aforesaid. At the direction of the Company, the Trustee
shall hold and dispose of any such amount paid to it in the same manner as it
would monies deposited with it by the Company for the redemption of Securities.
Without the Trustee'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 as set forth in this Indenture, and the Company
agrees to indemnify the Trustee from, and hold it harmless against, any loss,
liability or expense arising out of or in connection with any such arrangement
for the purchase and conversion of any Securities between the Company and such
purchasers to which the Trustee has not consented in writing, including the
costs and expenses incurred by the Trustee in the defense of any claim or
liability arising out of or in connection with the exercise or performance of
any of its powers, duties, responsibilities or obligations under this Indenture.
Nothing in the preceding sentence shall be deemed to limit the rights and
protections afforded to the Trustee in Article VI hereof, including, but not
limited to, the right to indemnification pursuant to Section 6.07.
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ARTICLE XII
Subordination of Securities
SECTION 12.01. Securities Subordinate to Senior Indebtedness. The
Company covenants and agrees, and each Holder of a Security, by his acceptance
thereof, likewise covenants and agrees, that, to the extent and in the manner
hereinafter set forth in this Article XII, the indebtedness represented by the
Securities and the payment of the principal of (and premium, if any) and
interest on each and all of the Securities and all obligations of the Company
under this Indenture are hereby expressly made subordinate and subject in right
of payment to the prior payment in full of all Senior Indebtedness.
SECTION 12.02. Payment over of Proceeds upon Dissolution, Etc. In
the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as such, or
to its assets, or (b) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshalling of assets and liabilities of the Company, then and in any
such event the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Indebtedness, or provision shall be made for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, before the Holders of the Securities are entitled to receive any
payment on account of principal of (or premium, if any) or interest on the
Securities, and to that end the holders of Senior Indebtedness shall be entitled
to receive, for application to the payment thereof, any payment or distribution
of any kind or character, whether in cash, property or securities, which may be
payable or deliverable in respect of the Securities in any such case,
proceeding, dissolution, liquidation or other winding up or event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company prohibited by the foregoing
paragraph of any kind or character, whether in cash, property or securities,
before all Senior Indebtedness is paid in full or payment thereof provided for,
and if such fact shall, at or prior to the time of such payment or distribution,
have been made actually known to a Responsible Officer of the Trustee or, as the
case may be, such Holder, then and in such event such payment or distribution
shall be paid over or delivered forthwith to the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee, agent or other Person making
payment or distribution of assets of the Company for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
For purposes of this Article XII only, the words "cash, property or
securities" shall not be deemed to include shares of capital stock of the
Company as reorganized or readjusted, or securities of the Company or say other
corporation provided
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for by a plan of reorganization or readjustment which in either case are
subordinated in right of payment to all Senior Indebtedness which may at the
time be outstanding to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article XII. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the conveyance
or transfer of its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article VIII shall not be
deemed a dissolution, winding up, liquidation, reorganization, assignment for
the benefit of creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section 12.02 if the Person formed by such
consolidation or into which the Company is merged or which acquires by
conveyance or transfer such properties and assets substantially as an entirety,
as the case may be, shall, as a part of such consolidation, merger, conveyance
or transfer, comply with the conditions set forth in Article VIII.
SECTION 12.03. No Payment When Senior Indebtedness in Default. (a)
In the event and during the continuation of any default in the payment of
principal of (or premium, if any) or interest on any Senior Indebtedness beyond
any applicable grace period with respect thereto (unless and until such payment
default shall have been cured or waived in writing by the holders of such Senior
Indebtedness), or (b) in the event any judicial proceeding shall be pending with
respect to any such default, then no payment shall be made by the Company on
account of principal of (or premium, if any) or interest on the Securities or on
account of the purchase or other acquisition of Securities (including pursuant
to Articles XI and XIII).
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section 12.03, and if such fact shall, at or prior
to the time of such payment, have been made actually known to a Responsible
Officer of the Trustee or, as the case may be, such Holder, then and in such
event such payment shall be paid over and delivered forthwith to the Company.
The provisions of this Section 12.03 shall not apply to any payment
with respect to which Section 12.02 would be applicable.
SECTION 12.04. Payment Permitted If No Default. Nothing contained in
this Article XII or elsewhere in this Indenture or in any of the Securities
shall prevent (a) the Company, at any time except during the pendency of any
case, proceeding, dissolution, liquidation or other winding up, assignment for
the benefit of creditors or other marshalling of assets and liabilities of the
Company referred to in Section 12.02 or under the conditions described in
Section 12.03, from making payments at any time of principal of (and premium, if
any) or interest on the Securities, or (b) the application by the Trustee of any
money deposited with it hereunder to the payment of or on account of the
principal of (and premium, if any) or interest on the Securities or the
retention of such payment by the Holders, if, at the time of such application by
the Trustee, a Responsible Officer of the Trustee did not have actual knowledge
that such payment would have been prohibited by the provisions of this Article
XII.
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SECTION 12.05. Subrogation to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all Senior Indebtedness, and
until the Securities are paid in full, the Holders of the Securities shall be
subrogated (equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to indebtedness of the
Company to substantially the same extent as the Securities are subordinated and
is entitled to like rights of subrogation) to the rights of the holders of such
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness to the extent that payments and
distributions otherwise payable to Holders of Securities have been applied to
the payment of Senior Indebtedness as provided by this Article XII. For purposes
of such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled, except for the provisions of this
Article XII, and no payments over pursuant to the provisions of this Article XII
to the holders of Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
SECTION 12.06. Provisions Solely to Define Relative Rights. The
provisions of this Article XII are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities on the one hand
and the holders of Senior Indebtedness on the other hand. Nothing contained in
this Article XII or elsewhere in this Indenture or in the Securities is intended
to or shall (a) impair, as among the Company, its creditors other than holders
of Senior Indebtedness and the Holders of the Securities, the obligation of the
Company, which is absolute and unconditional (and which, subject to the rights
under this Article XII of the holders of Senior Indebtedness, is intended to
rank equally with all other general obligations of the Company), to pay to the
Holders of the Securities the principal of (and premium, if any) and interest on
the Securities as and when the same shall become due and payable in accordance
with their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than the holders of
Senior Indebtedness; or (c) prevent the Trustee or the Holder of any Security
from exercising all remedies otherwise permitted by applicable law upon default
under this Indenture, subject to the rights, if any, under this Article XII of
the holders of Senior Indebtedness to receive cash, property and securities
otherwise payable or deliverable to the Trustee or such Holder.
SECTION 12.07. Trustee to Effectuate Subordination. Each holder of a
Security by his acceptance thereof authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XII and appoints the Trustee his
attorney-in-fact for any and all such purposes.
SECTION 12.08. No Waiver of Subordination Provisions. No right of
any present or future holder of any Senior Indebtedness to enforce subordination
as herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any non-compliance by the Company
with the terms, provisions
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and covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
XII or the obligations hereunder of the Holders of the Securities to the holders
of Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for the collection
of Senior Indebtedness; (iv) exercise or refrain from exercising any rights
against the Company and any other Person; (v) apply any and all sums received
from time to time to the Senior Indebtedness.
SECTION 12.09. Notice to Trustee. The Company shall give prompt
written notice to the Trustee of any fact known to the Company which would
prohibit the making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article XII or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder of Senior
Indebtedness or from any trustee therefor; and, prior to the receipt of any such
written notice, the Trustee, subject to the provisions of Section 6.01, shall be
entitled in all respects to assume that no such facts exist; provided, however,
that if the Trustee shall not have received the notice provided for in this
Section 12.09 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (and premium, if any) or interest on
any Security), then, anything herein contained to the contrary notwithstanding,
the Trustee shall have full power and authority to receive such money and to
apply the same to the purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by it within two
Business Days prior to such date.
Subject to the provisions of Section 6.01, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee
therefor) to establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee therefor). In the event that the Trustee determines
in good faith that further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article XII, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of
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such Person under this Article XII, and if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
SECTION 12.10. Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets of the Company
referred to in this Article XII, the Trustee, subject to the provisions of
Section 6.01, and the Holders of the Securities shall be entitled to rely upon
any order or decree entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation, reorganization, dissolution,
winding up or similar case or proceeding is pending, or a certificate of the
trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for
the benefit of creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of Securities, for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
XII.
SECTION 12.11. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or to the Company or to any other Person cash, property or securities to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
XII or otherwise.
SECTION 12.12. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article XII with respect to any
Senior Indebtedness which may at any time be held by it, to the same extent as
any other holder of Senior Indebtedness, and nothing in this Indenture shall
deprive the Trustee of any of its rights as such holder.
Nothing in this Article XII shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.07.
SECTION 12.13. Article Applicable to Paying Agents. In case at any
time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term "Trustee" as used in this Article
XII shall in such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as fully for all
intents and purposes as if such Paying Agent were named in this Article XII in
addition to or in place of the Trustee; provided, however, that Section 12.12
shall not apply to the Company or any Affiliate of the Company if it or such
Affiliate acts as Paying Agent.
SECTION 12.14. Certain Conversions Deemed Payment. For the purposes
of this Article XII only, (1) the issuance and delivery of junior securities
upon conversion of Securities in accordance with Article XIII shall not be
deemed to constitute
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a payment or distribution on account of the principal of or premium or interest
on Securities or on account of the purchase or other acquisition of Securities,
and (2) the payment, issuance or delivery of cash, property or securities (other
than junior securities) upon conversion of a Security shall be deemed to
constitute payment on account of the principal of such Security. For the
purposes of this Section 12.14, the term "junior securities" means (a) shares of
any stock of any class of the Company and (b) securities of the Company which
are subordinated in right of payment to the prior payment in full of all Senior
Indebtedness which may be outstanding at the time of issuance or delivery of
such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article XII.
Nothing contained in this Article XII or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Indebtedness and the Holders of the Securities, the
right, which is absolute and unconditional, of the Holder of any Security to
convert such Security in accordance with Article XIII.
ARTICLE XIII
Conversion of Securities
SECTION 13.01. Conversion Privilege and Conversion Price. Subject to
and upon compliance with the provisions of this Article XIII, at the option of
the Holder thereof, any Security or any portion of the principal amount thereof
which is U.S.$1,000 or an integral multiple of U.S.$1,000 may be converted at
the principal amount thereof, or of such portion thereof, into fully paid and
nonassessable shares of Common Stock of the Company at any time following the
latest date of original issuance of Securities at the conversion price,
determined as hereinafter provided, in effect at the time of conversion. Such
conversion right shall expire at the close of business on the Business Day
immediately preceding October 15, 2007, subject, in the case of conversion of
any Global Security, to any Applicable Procedures. In case a Security or portion
thereof is called for redemption at the election of the Company or the Holder
thereof exercised his right to require the Company to repurchase the Security,
such conversion right in respect of the Security or portion so called shall
expire at the close of business, New York or Virginia time, on the Business Day
immediately preceding the corresponding Redemption Date or Repurchase Date, as
the case may be, unless the Company defaults in making the payment due upon
redemption or repurchase, as the case may be (in each case subject as aforesaid
to any Applicable Procedures with respect to any Global Security).
The price at which shares of Common Stock shall be delivered upon
conversion (herein called the "conversion price") shall be initially U.S.$13.625
per share of Common Stock. The conversion price shall be adjusted in certain
instances as provided in Section 13.04.
In case the Company shall, by dividend or otherwise, declare or make
a distribution on its Common Stock referred to in paragraph (4) or (5) of
Section 13.04 (including, without limitation, dividends or distributions
referred to in the last sentence of paragraph (4) of Section 13.04), the Holder
of each Security, upon the conversion thereof
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pursuant to this Article XIII subsequent to the close of business on the date
fixed for the determination of shareholders entitled to receive such
distribution and prior to the effectiveness of the conversion price adjustment
in respect of such distribution pursuant to paragraph (4) or (5) of Section
13.04, shall also be entitled to receive for each share of Common Stock into
which such Security is converted, the portion of the evidences of indebtedness,
shares of capital stock, securities, cash and other property so distributed
applicable to one share of Common Stock, provided, however, that, at the
election of the Company (whose election shall be evidenced by a Board
Resolution) with respect to all Holders so converting, the Company may, in lieu
of distributing to such Holder any portion of such distribution not consisting
of cash or securities of the Company, pay such Holder an amount in cash equal to
the fair market value thereof (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution). If any conversion of a Security described in the immediately
preceding sentence occurs prior to the payment date for a distribution to
holders of Common Stock which the Holder of the Security so converted is
entitled to receive in accordance with the immediately preceding sentence, the
Company may elect (such election to be evidenced by a Board Resolution) to
distribute to such Holder a due bill for the evidences of indebtedness, shares
of capital stock, securities, cash or assets to which such Holder is so
entitled, provided that such due bill (i) meets any applicable requirements of
the principal national securities exchange or other market on which the Common
Stock is then traded and (ii) requires payment or delivery of such evidences of
indebtedness, shares of capital stock, securities, cash or assets no later than
the date of payment or delivery thereof to holders of Common Stock receiving
such distribution.
SECTION 13.02. Exercise of Conversion Privilege. In order to
exercise the conversion privilege, the Holder of any Security to be converted
shall surrender such Security, duly endorsed or assigned to the Company or in
blank, at any office or agency maintained by the Company pursuant to Section
10.02, accompanied by (a) written notice (as set forth in Section 2.05 herein)
to the Company at such office or agency that the Holder elects to convert such
Security or, if less than the entire principal amount thereof is to be
converted, the portion thereof to be converted and (b) if shares or any portion
of such Security not to be converted are to be issued in the name of a Person
other than the Holder thereof, and the restrictions on transfer of such Security
set forth in the first paragraph of Section 2.02 remain in effect, a
certification of the Holder as to compliance with such restrictions (as set
forth in Section 2.06).
If the restrictions on transfer of a Security set forth in the first
paragraph of Section 2.02 remain in effect, all shares of Common Stock delivered
upon conversion thereof shall bear a restrictive legend substantially in the
form of such paragraph.
Except as described in the last paragraph of Section 3.07, no Holder
of Securities will be entitled upon conversion thereof to any payment or
adjustment on account of accrued and unpaid interest thereon (although such
accrued and unpaid interest will be deemed paid by the appropriate portion of
the Common Stock received by the holders upon such conversion) or on account of
dividends on the shares of Common Stock issued in connection therewith.
Securities surrendered for conversion during the period from the close of
business on any Regular Record Date to the opening of business
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on the corresponding Interest Payment Date (except Securities called for
redemption on a Redemption Date within such period between and including such
Regular Record Date and such Interest Payment Date) must be accompanied by
payment to the Company in New York Clearing House Funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount converted.
Securities shall be deemed to have been converted immediately prior
to the close of business on the day of surrender of such Securities for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Securities as Holders shall cease, and the Person
or Persons entitled to receive the Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such Common Stock
at such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share as provided
in Section 13.03.
In the case of any Security which is converted in part only, upon
such conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in aggregate principal amount equal to
the unconverted portion of the principal amount of such Security. Any
requirements for notice, surrender or delivery of Securities pursuant to this
Article XIII shall, with respect to any Global Security, be subject to any
Applicable Procedures.
SECTION 13.03. Fractions of Shares. No fractional shares of Common
Stock shall be issued upon conversion of Securities. If more than one Security
shall be surrendered for conversion at one time by the same Holder, the number
of full shares which shall be issuable upon conversion thereof shall be computed
on the basis of the aggregate principal amount of the Securities (or specified
portions thereof) so surrendered. Instead of any fractional share of Common
Stock which would otherwise be issuable upon conversion of any Security or
Securities (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the same fraction
of the Closing Price per share of the Common Stock at the close of business on
the day of conversion (or, if such day is not a Trading Day, on the Trading Day
immediately preceding such day) or, alternatively, the Company shall round up to
the next higher whole share.
SECTION 13.04. Adjustment of Conversion Price. (1) In case the
Company shall pay or make a dividend or other distribution on its Common Stock
exclusively in Common Stock or shall pay or make a dividend or other
distribution on any other class of capital stock of the Company which dividend
or distribution includes Common Stock, the conversion price in effect at the
opening of business on the day next following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such conversion price by a fraction
of which the numerator shall be the number of shares of Common Stock
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outstanding at the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution, such
reduction to become effective immediately after the opening of business on the
day next following the date fixed for such determination. For the purposes of
this paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
shares issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. The Company shall not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company.
(2) In case the Company shall pay or make a dividend or other
distribution on its Common Stock consisting exclusively of, or shall otherwise
issue to all holders of its Common Stock, rights, warrants or options entitling
the holders thereof to subscribe for or purchase shares of Common Stock at a
price per share less than the current market price per share (determined as
provided in paragraph (7) of this Section 13.04) of the Common Stock on the date
fixed for the determination of shareholders entitled to receive such rights,
warrants or options, the conversion price in effect at the opening of business
on the day following the date fixed for such determination shall be reduced by
multiplying such conversion price by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
current market price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
shall not issue any rights, warrants or options in respect of shares of Common
Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the conversion price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and, conversely,
in case outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the conversion price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
(4) Subject to the last sentence of this paragraph (4), in case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness, shares of any class of capital stock,
securities, cash or
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property (excluding any rights, warrants or options referred to in paragraph (2)
of this Section 13.04, any dividend or distribution paid exclusively in cash and
any dividend or distribution referred to in paragraph (1) of this Section
13.04), the conversion price shall be reduced so that the same shall equal the
price determined by multiplying the conversion price in effect immediately prior
to the effectiveness of the conversion price reduction contemplated by this
paragraph (4) by a fraction of which the numerator shall be the current market
price per share (determined as provided in paragraph (7) of this Section) of the
Common Stock on the date of such effectiveness less the fair market value (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution and shall, in the case of
securities being distributed for which prior thereto there is an actual or when
issued trading market, be no less than the value determined by reference to the
average of the closing prices in such market over the period specified in the
succeeding sentence), on the date of such effectiveness, of the portion of the
evidences of indebtedness, shares of capital stock, securities, cash and
property so distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of the Common Stock,
such reduction to become effective immediately prior to the opening of business
on the day next following the later of (a) the date fixed for the payment of
such distribution and (b) the date 20 days after the notice relating to such
distribution is given pursuant to Section 13.06(a) (such later date of (a) and
(b) being referred to as the "Reference Date"). If the Board of Directors
determines the fair market value of any distribution for purposes of this
paragraph (4) by reference to the actual or when issued trading market for any
securities comprising such distribution, it must in doing so consider the prices
in such market over the same period used in computing the current market price
per share pursuant to paragraph (7) of this Section. For purposes of this
paragraph (4), any dividend or distribution that includes shares of Common Stock
or rights, warrants or options to subscribe for or purchase shares of Common
Stock shall be deemed instead to be (a) a dividend or distribution of the
evidences of indebtedness, cash, property, shares of capital stock or securities
other than such shares of Common Stock or such rights, warrants or options
(making any conversion price reduction required by this paragraph (4))
immediately followed by (b) a dividend or distribution of such shares of Common
Stock or such rights, warrants or options (making any further conversion price
reduction required by paragraph (1) or (2) of this Section 13.04, except (i) the
Reference Date of such dividend or distribution as defined in this paragraph (4)
shall be substituted as "the date fixed for the determination of shareholders
entitled to receive such dividend or other distributions", "the date fixed for
the determination of shareholders entitled to receive such rights, warrants or
options" and "the date fixed for such determination" within the meaning of
paragraphs (1) and (2) of this Section 13.04 and (ii) any shares of Common Stock
included in such dividend or distribution shall not be deemed "soutstanding at
the close of business on the date fixed for such determination" within the
meaning of paragraph (1) of this Section 13.04).
(5) In case the Company shall, by dividend or otherwise, make a
distribution to all holders of its Common Stock exclusively in cash in an
aggregate amount that, together with (i) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no conversion price
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adjustment pursuant to this paragraph (5) has been made and (ii) the aggregate
of any cash plus the fair market value (as determined in good faith by the Board
of Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of the tender or exchange offer referred to
below, of consideration payable in respect of any tender or exchange offer by
the Company or a Subsidiary for all or any portion of the Common Stock concluded
within the 12 months preceding the date of payment of such distribution and in
respect of which no conversion price adjustment pursuant to paragraph (6) of
this Section 13.04 has been made, exceeds 12.5% of the product of the current
market price per share (determined as provided in paragraph (7) of this Section
13.04) of the Common Stock on the date fixed for shareholders entitled to
receive such distribution times the number of shares of Common Stock outstanding
on such date, the conversion price shall be reduced so that the same shall equal
the price determined by multiplying the conversion price in effect immediately
prior to the effectiveness of the conversion price reduction contemplated by
this paragraph (5) by a fraction of which the numerator shall be the current
market price per share (determined as provided in paragraph (7) of this Section
13.04) of the Common Stock on the due of such effectiveness less the amount of
cash so distributed applicable to one share of Common Stock and the denominator
shall be such current market price per share of the Common Stock, such reduction
to become effective immediately prior to the opening of business on the later of
(a) the day following the date fixed for the payment of such distribution and
(b) the date 20 days after the notice relating to such distribution is given
pursuant to Section 13.06(a).
(6) In case a successful tender or exchange offer made by the
Company or any Subsidiary for all or any portion of the Common Stock shall
involve an aggregate consideration having a fair market value (as determined in
good faith by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it may be amended) that, together with (i) the aggregate of the cash plus the
fair market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution), as of
the expiration of the other tender or exchange offer referred to below, of
consideration payable in respect of any other tender or exchange offer by the
Company or a Subsidiary for all or any portion of the Common Stock concluded
within the preceding 12 months and in respect of which no conversion price
adjustment pursuant to this paragraph (6) has been made and (ii) the aggregate
amount of any distributions to all holders of the Common Stock made exclusively
in cash within the preceding 12 months and in respect of which no conversion
price adjustment pursuant to paragraph (5) of this Section 13.04 has been made,
exceeds 12.5% of the product of the current market price per share (determined
as provided in paragraph (7) of this Section 13.04) of the Common Stock on the
Expiration Time times the number of shares of Common Stock outstanding
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(including any tendered shares) on the Expiration Time, the conversion price
shall be reduced (but not increased) so that the same shall equal the price
determined by multiplying the conversion price in effect immediately prior to
the Expiration Time by a fraction of which the numerator shall be (i) the
product of the current market price per share (determined as provided in
paragraph (7) of this Section 13.04) of the Common Stock at the Expiration Time
times the number of shares of Common Stock outstanding (including any tendered
or exchanged shares) at the Expiration Time minus (ii) the fair market value
(determined as aforesaid) of the aggregate consideration payable to shareholders
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and the denominator shall
be the product of (i) such current market price per share at the Expiration Time
times (ii) such number of outstanding shares at the Expiration Time less the
number of Purchased Shares, such reduction to become effective immediately prior
to the opening of business on the day following the Expiration Time.
(7) For the purpose of any computation under this paragraph and
paragraphs (2), (4) and (5) of this Section 13.04, the current market price per
share of Common Stock on any date in question shall be deemed to be the average
of the daily Closing Prices for the 5 consecutive Trading Days selected by the
Company commencing not more than 20 Trading Days before, and ending not later
than, the date in question; provided, however, that (i) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the conversion price
pursuant to paragraph (1), (2), (3), (4), (5) or (6) above ("Other Event")
occurs on or after the 20th Trading Day prior to the date in question and prior
to the "ex" date for the issuance or distribution requiring such computation
(the "Current Event"), the Closing Price for each Trading Day prior to the "ex"
date for such Other Event shall be adjusted by multiplying such Closing Price by
the same fraction by which the conversion price is so required to be adjusted as
a result of such Other Event, (ii) if the "ex" date for any Other Event occurs
after the "ex" date for the Current Event and on or prior to the date in
question, the Closing Price for each Trading Day on and after the "ex" date for
such Other Event shall be adjusted by multiplying such Closing Price by the
reciprocal of the fraction by which the conversion price is so required to be
adjusted as a result of such Other Event, (iii) if the "ex" date for any Other
Event occurs on the "ex" date for the Current Event, one of those events shall
be deemed for purposes of clauses (i) and (ii) of this proviso to have an "ex"
date occurring prior to the "ex" date for the other event, and (iv) if the "ex"
date for the Current Event is on or prior to the date in question, after taking
into account any adjustment required pursuant to clause (ii) of this proviso,
the Closing Price for each Trading Day on or after such "ex" date shall be
adjusted by adding thereto the amount of any cash and the fair market value on
the date in question (as determined in good faith by the Board of Directors in a
manner consistent with any determination of such value for purposes of paragraph
(4) or (5) of this Section 13.04, whose determination shall be conclusive and
described in a Board Resolution) of the portion of the rights, warrants,
options, evidences of indebtedness, shares of capital stock, securities, cash or
property being distributed applicable to one share of Common Stock. For the
purpose of any computation under paragraph (6) of this Section 13.04, the
current market price per share of Common Stock on any date in question shall be
deemed to be the average of the daily Closing Prices for the 5 consecutive
Trading Days selected by the Company commencing on or after the latest (the
"Commencement Date") of (i) the date 20 Trading Days before the date in
question, (ii) the date of commencement of the tender or exchange offer
requiring such computation and (iii) the date of the last amendment, if any, of
such tender or exchange offer involving a change in the maximum number of
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shares for which tenders are sought or a change in the consideration offered,
and ending not later than the date of the Expiration Time of such tender or
exchange offer (or, if such Expiration Time occurs before the close of trading
on a Trading Day, not later than the Trading Day immediately preceding the date
of such Expiration Time); provided, however, that if the "ex" date for any Other
Event (other than the tender or exchange offer requiring such computation)
occurs on or after the Commencement Date and on or prior to the date of the
Expiration Time for the tender or exchange offer requiring such computation, the
Closing Price for each Trading Day prior to the "ex" date for such Other Event
shall be adjusted by multiplying such Closing Price by the same fraction by
which the conversion price is so required to be adjusted as a result of such
other event. For purposes of this paragraph, the term "ex" date, (i) when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way on the relevant exchange or in the relevant
market from which the Closing Price was obtained without the right to receive
such issuance or distribution, (ii) when used with respect to any subdivision or
combination of shares of Common Stock, means the first date on which the Common
Stock trades regular way on such exchange or in such market after the time at
which such subdivision or combination becomes effective, and (iii) when used
with respect to any tender or exchange offer means the first date on which the
Common Stock trades regular way on such exchange or in such market after the
Expiration Time of such tender or exchange offer.
(8) The Company may make such reductions in the conversion price, in
addition to those required by paragraphs (1), (2), (3), (4), (5) and (6) of this
Section, as it considers to be advisable in order that any event treated for
Federal income tax purposes as a dividend of stock or stock rights shall not be
taxable to the recipients.
(9) No adjustment in the conversion price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
conversion price; provided, however, that any adjustments which by reason of
this paragraph (9) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
(10) In the event that the Company distributes rights or warrants
(other than those referred to in paragraph (2) above) pro rata to holders of
Common Stock, so long as any such rights or warrants have not expired or been
redeemed by the Company, the Company shall make proper provision so that the
Holder of any Security surrendered for conversion will be entitled to receive
upon such conversion, in addition to the Conversion Shares, a number of rights
and warrants to be determined as follows: (i) if such conversion occurs on or
prior to the date for the distribution to the holders of rights or warrants of
separate certificates evidencing such rights or warrants (the "Distribution
Date"), the same number of rights or warrants to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and provisions of and
applicable to the rights or warrants, and (ii) if such conversion occurs after
such Distribution Date, the same number of rights or warrants to which a holder
of the number of shares of Common Stock into which the principal amount of such
Security so converted was convertible immediately prior to such Distribution
Date would have been entitled on such
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Distribution Date in accordance with the terms and provisions of and applicable
to the rights or warrants.
SECTION 13.05. Notice of Adjustments of Conversion Price. Whenever
the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price in
accordance with Section 13.04 and shall prepare a certificate signed by the
Treasurer of the Company setting forth the adjusted conversion price and showing
in reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed (with a copy to the Trustee) at each office
or agency maintained for the purpose of conversion of Securities pursuant to
Section 10.02; and
(b) a notice stating that the conversion price has been adjusted and
setting forth the adjusted conversion price shall forthwith be required, and as
soon as practicable after it is required, such notice shall be mailed by the
Company to all Holders at their last addresses as they shall appear in the
Security Register.
SECTION 13.06. Notice of Certain Corporate Action. In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require a conversion price
adjustment pursuant to paragraph (5) of Section 13.04; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, warrants or options to subscribe for or purchase any
shares of capital stock of any class or of any other rights (excluding employee
stock options); or
(c) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding shares of Common
Stock), or of any consolidation or merger to which the Company is a party and
for which approval of any shareholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any Subsidiary of the Company shall commence a
tender or exchange offer for all or a portion of the Company's outstanding
shares of Common Stock (or shall amend any such tender or exchange offer);
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 10.02, and shall
cause to be mailed to all Holders at their last addresses as they shall appear
in the Security Register, at least 20 days (or 10 days in any case specified in
clause (a) or (b) above) prior to the applicable record, effective or expiration
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution
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or granting of rights, warrants or options, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, warrants or options are to be determined,
or (y) the date on which such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification.
consolidation, merger, safe, transfer, dissolution, liquidation or winding up,
or (z) the date on which such tender offer commenced, the date on which such
tender offer is scheduled to expire unless extended, the consideration offered
and the other material terms thereof (or the material terms of any amendment
thereto).
SECTION 13.07. Company to Reserve Common Stock. The Company shall at
all times reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock, solely for the purpose of effecting the
conversion of Securities, the whole number of shares of Common Stock then
issuable upon the conversion in full of all outstanding Securities.
SECTION 13.08. Taxes on Conversions. The Company will pay any and
all taxes that may be payable in respect of the issue or delivery of shares of
Common Stock on conversion of Securities pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be converted, and
no such issue or delivery shall be made unless and until the Person requesting
such issue has paid to the Company the amount of any such tax, or has
established to the satisfaction of the Company that such tax has been paid.
SECTION 13.09. Covenant as to Common Stock. The Company covenants
that all shares of Common Stock which may be issued upon conversion of
Securities will upon issue be newly issued (and not treasury shares) and be duly
authorized, validly issued, fully paid and nonassessable and, except as provided
in Section 13.08, the Company will pay all taxes, liens and charges with respect
to the issue thereof.
SECTION 13.10. Cancellation of Converted Securities. All Securities
delivered for conversion shall be delivered to the Trustee to be cancelled by or
at the direction of the Trustee, which shall dispose of the same as provided in
Section 3.09.
SECTION 13.11. Provisions in Case of Reclassification,
Consolidation, Merger or Sale of Assets. In the event that the Company shall be
a party to any transaction (including without limitation any (i)
recapitalization or reclassification of the Common Stock (other than a change in
par value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination of the Common Stock), (ii) any
consolidation of the Company with, or merger of the Company into, any other
person, any merger of another person into the Company (other than a merger which
does not result in a reclassification, conversion, exchange or
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cancellation of outstanding shares of Common Stock of the Company), (iii) any
sale or transfer of all or substantially all of the assets of the Company, or
(iv) any other transaction) pursuant to which the Common Stock is converted into
the right to receive other securities, cash or other property, then lawful
provision shall be made as part of the terms of such transaction whereby the
Holder of each Security then outstanding shall have the right thereafter to
convert such Security only into (subject to funds being legally available for
such purpose under applicable law at the time of such conversion) the kind and
amount of securities, cash and other properly receivable upon such transaction
by a holder of the number of shares of Common Stock into which such Security
might have been converted immediately prior to such transaction. The Company or
the person formed by such consolidation or resulting from such merger or which
acquired such assets or which acquired the Company's shares, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture establishing
such rights. Such supplemental indenture shall provide for adjustments which,
for events subsequent to the effective date of such supplemental indenture,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article. The above provisions of this Section 13.11 shall similarly
apply to successive transactions of the foregoing type.
ARTICLE XIV
Right to Require Repurchase
SECTION 14.01. Right to Require Repurchase. In the event that there
shall occur a Change in Control (as defined in Section 14.06), then each Holder
shall have the right, at such Holder's option, to require the Company, subject
to the provisions of Section 12.03, to purchase all or any designated part of
such Holder's Securities on the date (the "Repurchase Date") fixed by the
Company that is not less than 30 days nor more than 45 days after the date the
Company gives notice of the Change in Control as contemplated in Section
14.02(a) at a price (the "Repurchase Price") equal to 100% of the principal
amount thereof, together with accrued and unpaid interest through the Repurchase
Date. Such right to require the repurchase of Securities shall not continue
after a discharge of the Company from its obligations with respect to the
Securities in accordance with Article IV or defeasance in accordance with
Section 15.01. Any requirements for notice, surrender or delivery of Securities
pursuant to this Article XIV shall, with respect to any Global Security, be
subject to any Applicable Procedures.
SECTION 14.02. Notice, Method of Exercising Repurchase Right. (a) On
or before the 15th day after the Company knows or reasonably should know a
Change in Control has occurred, the Company, or at the written request of the
Company, the Trustee (in the name and at the expense of the Company), shall give
notice of the occurrence of the Change in Control and of the repurchase right
set forth herein arising as a result thereof by first-class mail, postage
prepaid, or by telefacsimile with written acknowledgement of transmittal to each
Holder of the Securities at such Holder's address appearing in the Security
Register. The Company shall also deliver a copy of such notice of a repurchase
right to the Trustee.
Each notice of a repurchase right shall state:
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(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
(3) the Repurchase Price, and
(4) the instructions a Holder must follow to exercise its repurchase
right.
No failure of the Company to give the foregoing notice shall limit
any Holder's right to exercise a repurchase right. The Trustee shall have no
affirmative obligation to determine if there shall have occurred a Change in
Control.
(b) To exercise a repurchase right, a Holder shall deliver to the
Company (or an agent designated by the Company for such purpose in the notice
referred to in (a) above) and to the Trustee on or before the 30th day after the
date of transmittal of the notice referred to in (a) above (i) written notice of
the Holder's exercise of such right, which notice shall set forth the name of
the Holder, the principal amount of the Security or Securities (or portion of a
Security) to be repurchased, and a statement that an election to exercise the
repurchase right is being made thereby, and (ii) the Security or Securities with
respect to which the repurchase right is being exercised, duly endorsed for
transfer to the Company. Such written notice shall be irrevocable. If the
Repurchase Date falls between any Regular Record Date and the corresponding
succeeding Interest Payment Date, Securities to be repurchased must be
accompanied by payment from the Holder of an amount equal to the interest
thereon which the registered Holder thereof is to receive on such Interest
Payment Date.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall on the Repurchase Date pay or cause to
be paid in cash to the Holder thereof the Repurchase Price of the Security or
Securities as to which the repurchase right had been exercised.
SECTION 14.03. Deposit of Repurchase Price. On or prior to the
Repurchase Date, the Company shall deposit with the Trustee or with a Paying
Agent (or, if the Company is acting as its own Paying Agent, segregate and hold
in trust as provided in Section 10.03) an amount of money sufficient to pay the
Repurchase Price of the Securities which are to be repaid on the Repurchase
Date.
SECTION 14.04. Securities Not Repurchased on Repurchase Date. If any
Security surrendered for repurchase shall not be so paid on the Repurchase Date,
the principal of such Security shall, until paid, bear interest from the
Repurchase Date at a rate borne by such Security.
SECTION 14.05. Securities Repurchased in Part. Any Security which is
to be repurchased only in part shall be surrendered at any office or agency of
the Company designated for that purpose pursuant to Section 10.02 (with, if the
Company or the Trustee so requires, due endorsement by, or written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his
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attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unrepurchased portion of the principal of the Security so surrendered.
SECTION 14.06. Certain Definitions. For purposes of this Article:
The term "Beneficial Owner" shall be determined in accordance with Rules 13d-3
and 13d-5 promulgated by the Commission under the Exchange Act, or any successor
provision thereto, except that a Person shall be deemed to have "beneficial
ownership" of all shares that such Person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time.
A "Change in Control" shall be deemed to have occurred at such time
as (a) any Person, or any Persons acting together in a manner which would
constitute a "group" (a "Group") for purposes of Section 13(d) of the Exchange
Act, or any successor provision thereto, together with any Affiliates thereof,
(i) become the Beneficial Owners, directly or indirectly, of capital stock of
the Company, entitling such Person or Persons and its or their Affiliates to
exercise more than 50% of the total voting power of all classes of the Company's
capital stock entitled to vote generally in the election of directors or (ii)
shall succeed in having sufficient of its or their nominees (who are not
supported by a majority of the then current Board of Directors of the Company)
elected to the Board of Directors of the Company such that such nominees, when
added to any existing directors remaining on the Board of Directors of the
Company after such election who are Affiliates of or acting in concert with any
such Persons, shall constitute a majority of the Board of Directors of the
Company, (b) the Company shall be a party to any transaction pursuant to which
the Common Stock is converted into the right to receive other securities (other
than common stock), cash and/or property (or the Company, by dividend, tender or
exchange offer or otherwise, distributes other securities, cash and/or property
to holders of Common Stock) and the value of all such securities, cash and/or
property distributed in such transaction and any other transaction effected
within the 12 months preceding consummation of such transaction (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) is more than 50% of the average of the
daily Closing Prices for the five consecutive Trading Days ending on the Trading
Day immediately preceding the date of such transaction (or, if earlier, the
Trading Day immediately preceding the "ex" date (as defined in paragraph (7) of
Section 13.04) for such transaction) or (c) the Company shall consolidate with
or merge into any other Person or sell, convey, transfer or lease its properties
and assets substantially as an entirety to any Person other than a Subsidiary,
or any other Person shall consolidate with or merge into the Company (other
than, in the case of this clause (c), pursuant to any consolidation or merger
where Persons who are shareholders of the Company immediately prior thereto
become the Beneficial Owners of shares of capital stock of the surviving company
entitling such Persons to exercise more than 50% of the total voting power of
all classes of such surviving company's capital stock entitled to vote generally
in the election of directors).
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ARTICLE XV
Defeasance and Covenant Defeasance
SECTION 15.01. Company's Option to Effect Defeasance or Covenant
Defeasance. The Company may at its option by Board Resolution, at any time,
elect to have either Section 15.02 or Section 15.03 applied to the Outstanding
Securities upon compliance with the conditions set forth below in this Article
XV.
SECTION 15.02. Defeasance and Discharge. Upon the Company's exercise
of the option provided in Section 15.01 applicable to this Section, the Company
shall be deemed to have been discharged from their obligations with respect to
the Outstanding Securities (other than those specified below), the Holders and
any holders of Senior Indebtedness, and the provisions of Article XII hereof
shall cease to be effective, on the date the conditions set forth below are
satisfied (hereinafter, "defeasance"). For this purpose, such defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the Outstanding Securities, the Company shall be
deemed to have satisfied all their other obligations under such Securities and
this Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (A) the rights of Holders of such Securities to
receive, solely from the trust fund described in Section 15.04 and as more fully
set forth in such Section, payments in respect of the principal of, premium, if
any and interest on such Securities when such payments are due, (B) the
Company's obligations with respect to such Securities under Sections 3.04, 3.05,
3.06, 10.02, 10.03, 10.11, Article XIII and Article XIV, (C) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (D) this Article XV.
Subject to compliance with this Article XV, the Company may exercise its option
under this Section 15.02 notwithstanding the prior exercise of its option under
Section 15.03.
SECTION 15.03. Covenant Defeasance. Upon the Company's exercise of
the option provided in Section 15.01 applicable to this Section, (i) the Company
shall be released from its obligations under Section 10.06 and Section 10.07,
(ii) the occurrence of an event specified in Section 5.01(3) (with respect to
either of Section 10.06 or Section 10.07) and 5.01(4) shall not be deemed to be
an Event of Default and (iii) the provisions of Article XII hereof shall cease
to be effective on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant
defeasance means that the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or Article, whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or Article or by reason of any reference in
any such Section or Article to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
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<PAGE> 93
SECTION 15.04. Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 15.02 or
Section 15.03 to the then Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 6.09 who shall agree to comply with the provisions of this
Article XV applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before
the due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, in the written 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 (or other qualifying trustee) to pay
and discharge, the principal of, premium, if any, and each installment of
interest on the Securities on the Stated Maturity of such principal or
installment of interest in accordance with the terms of this Indenture and
of such Securities. For this purpose, "U.S. Government Obligations" means
securities that are (x) direct obligations of the United States of America
for the payment of which its full faith and credit is pledged or (y)
obligations of a Person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation
by the United States of America, which, in either case, are not callable
or redeemable at the option of the issuer thereof, and shall also include
a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any
such U.S. Government Obligation or a specific payment of principal of or
interest on any such U.S. Government Obligation held by such custodian for
the account of the holder of such depository receipt, provided that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or interest
on the U.S. Government Obligation evidenced by such depository receipt.
(2) In the case of an election under Section 15.02, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (x)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of this Indenture
there has been a change in the applicable Federal income tax law, in
either case to the effect that, and based thereon such opinion shall
confirm that, the Holders of the Outstanding Securities will not recognize
gain or loss for Federal income tax purposes as a result of such deposit,
defeasance and discharge and will be subject to Federal income tax on the
same amount, in the same manner and at the same times as would have been
the case if such deposit, defeasance and discharge had not occurred.
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(3) In the case of an election under Section 15.03, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities will not recognize gain or
loss for Federal income tax purposes as a result of such deposit and
covenant defeasance and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as would have been the
case if such deposit and covenant defeasance had not occurred.
(4) The Company shall have delivered to the Trustee an Officer's
Certificate to the effect that the Securities, if then listed on any
securities exchange, will not be delisted as a result of such deposit.
(5) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 6.08 and for
purposes of the Trust Indenture Act with respect to any securities of the
Company.
(6) At the time of such deposit: (A) no default in the payment of
all or a portion of principal of (or premium, if any) or interest on or
other obligations in respect of any Senior Indebtedness shall have
occurred and be continuing, and no event of default with respect to any
Senior Indebtedness shall have occurred and be continuing and shall have
insulted in such Senior Indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable and (B) no other event with respect to any Senior Indebtedness
shall have occurred and be continuing permitting (after notice or the
lapse of time, or both) the holders of such Senior Indebtedness (or a
trustee on behalf of the holders thereof) to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise
have become due and payable, or, in the case of either Clause (A) or
Clause (B) above, each such default or event of default shall have been
cured or waived or shall have ceased to exist.
(7) No Event of Default or event which with notice or lapse of time
or both would become an Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as subsections 5.01(6)
and (7) are concerned, at any time during the period ending on the 121st
day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period).
(8) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any other agreement
or instrument to which the Company is a party or by which it is bound.
(9) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
15.02 or the covenant defeasance under Section 15.03 (as the case may be)
have been complied with.
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<PAGE> 95
(10) Such defeasance or covenant defeasance shall not result in the
trust arising from such deposit constituting an investment company as
defined in the Investment Company Act of 1940, as amended, or such trust
shall be qualified under such act or exempt from regulation thereunder.
SECTION 15.05. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions. Subject to the provisions of the
last paragraph of Section 10.03, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee - collectively, for purposes of this Section 15.05, the "Trustee")
pursuant to Section 15.04 in respect of the Securities shall be held in trust
and applied by the Trustee, in accordance with the provisions of such Securities
and this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal, premium, if any, and interest. Money so held in
trust shall not be subject to the provisions of Article XII.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 15.04 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article XV to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section l5.04 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 an equivalent defeasance or covenant
defeasance.
SECTION 15.06. Reinstatement. If the Trustee or the Paying Agent is
unable to apply any money in accordance with Section 15.02 or 15.03 by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, then the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article XV until
such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 15.02 or 15.03; provided, however, that if the Company
makes any payment of principal of, premium, if any, or interest on any Security
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money held by the Trustee or the Paying Agent.
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<PAGE> 96
ARTICLE XVI
Immunity
SECTION 16.01. Personal Immunity of Incorporators, Shareholders,
Directors and Officers. No recourse for the payment of the principal of or
interest on the Securities, and no recourse under or upon any obligation,
covenant or agreement contained in this Indenture or in any indenture
supplemental hereto, or in the Securities, or because of any indebtedness
evidenced thereby, shall be had against any incorporator, or against any past,
present or future shareholder, officer or director, as such, of the Company or
any successor corporation, either directly or through the Company or any
successor corporation, 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. Each and every Holder of the
Securities, by receiving and holding the same, agrees to the provisions of this
Section 16.01 and waives and releases any and all such recourse, claim and
liability.
----------------------------
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
89
<PAGE> 97
SPACEHAB, INCORPORATED
By
------------------------------------------
Name: Margaret E. Grayson
Title: Vice President of Finance (CFO),
Treasurer & Assistant Secretary
Attest:
by
--------------------------------
Name:
<PAGE> 98
COMMONWEALTH OF VIRGINIA )
) ss.:
COUNTY OF FAIRFAX )
On the _____ day of October, 1997, before me personally came
Margaret E. Grayson, to me known, who, being by me duly sworn, did depose and
say that she is Vice President of Finance (CFO), Treasurer and Assistant
Secretary of SPACEHAB, Incorporated, one of the corporations described in and
which executed the foregoing instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that she signed her name thereto by like authority.
--------------------------------
Notary Public
<PAGE> 99
FIRST UNION NATIONAL BANK
By
--------------------------------------
Name: Dante M. Monakil
Title: Vice President
Attest:
by
-----------------------------
Name:
<PAGE> 100
COMMONWEALTH OF VIRGINIA )
) ss.:
COUNTY OF RICHMOND )
On the 21st day of October, 1997, before me personally came Dante M.
Monakil, to me known, who, being by me duly sworn, did depose and say that he is
a Vice President of First Union National Bank, one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
-----------------------------------
Notary Public
<PAGE> 1
Exhibit 4.2
EXECUTION COPY
$55,000,000
SPACEHAB, INCORPORATED
8% Convertible Subordinated Notes due 2007
REGISTRATION RIGHTS AGREEMENT
October 15, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
CIBC WOOD GUNDY SECURITIES CORP.
OPPENHEIMER & CO., INC.
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, New York 10010-3629
Ladies and Gentlemen:
SPACEHAB, Incorporated, a Washington corporation (the "Company"),
proposes to issue and sell to Credit Suisse First Boston Corporation, CIBC Wood
Gundy Securities Corp. and Oppenheimer & Co., Inc. (collectively, the "Initial
Purchasers"), upon the terms set forth in a purchase agreement of even date
herewith (the "Purchase Agreement"), $55,000,000 aggregate principal amount of
its 8% Convertible Subordinated Notes due 2007 (the "Notes"). The Notes will be
issued pursuant to an Indenture, to be dated as of October 15, 1997 (the
"Indenture") among the Company and First Union National Bank (the "Trustee").
Under the terms of the Indenture, the Notes are convertible, in whole or in
part, into shares of common stock, no par value, of the Company (the "Conversion
Shares" and, together with the Notes, the "Securities") at the option of the
holders thereof at any time following the date of original issuance thereof at
the conversion price set forth in the Confidential Offering Circular dated
October 15, 1997. As an inducement to the Initial Purchasers, the Company agrees
with the Initial Purchasers, for the benefit of the holders of the Notes
(including, without limitation, the Initial Purchasers) and Conversion Shares
(collectively, the "Holders"), as follows:
1. Resale Shelf Registration. The Company shall, at its cost, as
promptly as practicable (but in no event more than 90 days after the Initial
Closing, as defined under the Purchase Agreement) file with the Commission and
thereafter shall use
<PAGE> 2
its best efforts to cause to be declared effective a registration statement (the
"Resale Shelf Registration Statement") on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act") relating to the offer
and sale of the Transfer Restricted Securities (as defined in Section 5 hereof)
by the Holders thereof from time to time in accordance with the methods of
distribution set forth in the Resale Shelf Registration Statement and Rule 415
under the Securities Act (hereinafter, the "Resale Shelf Registration");
provided, however, that no Holder (other than an Initial Purchaser) shall be
entitled to have the Securities held by it covered by such Resale Shelf
Registration Statement unless such Holder agrees in writing to be bound by all
the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its best efforts to keep the Resale Shelf
Registration Statement continuously effective in order to permit the prospectus
included therein to be lawfully delivered by the Holders of the relevant
Securities, for a period of two years (or for such longer period if extended
pursuant to Section 2(h) below) from the date of its effectiveness or such
shorter period that will terminate when all the Securities covered by the Resale
Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no
longer restricted securities (as defined in Rule 144(k) under the Securities
Act, or any successor rule thereof) (in any such case, such period being called
the "Shelf Registration Period"). The Company shall be deemed not to have used
its best efforts to keep the Resale Shelf Registration Statement effective
during the required period if it voluntarily takes any action that would result
in Holders of Securities covered thereby not being able to offer and sell such
Securities during that period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Resale Shelf Registration Statement and
the related prospectus and any amendment or supplement thereto, as of the
effective date of the Resale Shelf Registration Statement, amendment or
supplement, (i) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission and (ii) not to contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
2. Registration Procedures. In connection with the Resale Shelf
Registration contemplated by Section 1 hereof, the following provisions apply:
(a) The Company shall (i) furnish to each Initial Purchaser, prior
to the filing thereof with the Commission, a copy of the Resale Shelf
Registration Statement and each amendment thereof and each Supplement, if any,
to the prospectus included therein and, in the event that an Initial Purchaser
(with respect to any portion of an unsold allotment from the original offering)
is participating in the Resale Shelf Registration, the Company shall use its
best efforts to reflect in each such document, when so filed with the
Commission, such comments as such Initial Purchaser reasonably may propose and
2
<PAGE> 3
(ii) include the names of the Holders, who propose to sell Securities pursuant
to the Resale Shelf Registration Statement, as selling security holders.
(b) The Company shall give written notice to the Initial Purchasers
and the Holders of the Securities (which notice pursuant to clauses (ii)-(v)
hereof shall be accompanied by an instruction to suspend the use of the
prospectus until the requisite changes have been made):
(i) when the Resale Shelf Registration Statement or any
amendment thereto has been filed with the Commission and when the Resale Shelf
Registration Statement or any post-effective amendment thereto has become
effective;
(ii) of any request by the Commission for amendments or
supplements to the Resale Shelf Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Resale Shelf Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Resale Shelf Registration Statement or the prospectus in
order that the Resale Shelf Registration Statement or the prospectus does not
contain an untrue statement of a material fact nor omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the prospectus, in light of the circumstances under which they were
made) not misleading.
(c) The Company shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Resale Shelf Registration Statement.
(d) The Company shall furnish to each Holder of Securities included
within the coverage of the Resale Shelf Registration, without charge, at least
one copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits thereto (including those, if any, incorporated
by reference).
(e) The Company shall, during the Resale Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of the Resale
Shelf Registration, without charge, as many copies of the prospectus (including
each preliminary prospectus) included in the Resale Shelf Registration Statement
and any amendment or supplement thereto as such person may reasonably request.
The Company
3
<PAGE> 4
consents, subject to the provisions of this Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders
of the Securities in connection with the offering and sale of the Securities
covered by the prospectus, or any amendment or supplement thereto, included in
the Resale Shelf Registration Statement.
(f) Prior to any public offering of the Securities, pursuant to any
Resale Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Holders of the Securities included therein and their
respective counsel in connection with the registration or qualification of the
Securities for offer and sale under the securities or "blue sky" laws of such
states of the United States as any Holder of the Securities reasonably requests
in writing and do any and all other acts or things necessary or advisable to
enable the offer and sale in such jurisdictions of the Securities covered by
such Resale Shelf Registration Statement; provided, however, that the Company
shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take any action which
would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of the Securities
to facilitate the timely preparation and delivery of certificates representing
the Securities to be sold pursuant to any Resale Shelf Registration Statement
free of any restrictive legends and in such denominations and registered in such
names as the Holders may request a reasonable period of time prior to sales of
the Securities pursuant to such Resale Shelf Registration Statement.
(h) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 2(b) above during the period for which the Company is
required to maintain an effective Resale Shelf Registration Statement, the
Company shall promptly prepare and file a post-effective amendment to the Resale
Shelf Registration Statement or a supplement to the related prospectus and any
other required document so that, as thereafter delivered to Holders of the
Securities or purchasers of Securities, the prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If the Company
notifies the Initial Purchasers and the Holders in accordance with paragraphs
(ii) through (v) of Section 2(b) above to suspend the use of the prospectus
until the requisite changes to the prospectus have been made, then the Initial
Purchasers and the Holders shall suspend use of such prospectus, and the period
of effectiveness of the Resale Shelf Registration Statement provided for in
Section l(b) above shall be extended by the number of days from and including
the date of the giving of such notice to and including the date when the Initial
Purchasers and the Holders of the Securities shall have received such amended or
Supplemented prospectus pursuant to this Section 2(h).
4
<PAGE> 5
(i) Not later than the effective date of the Resale Shelf
Registration Statement, the Company will provide CUSIP numbers for the Notes and
the Conversion Shares registered under the Resale Shelf Registration Statement,
and provide the applicable trustee with printed a certificate for the Notes in a
form eligible for deposit with The Depository Trust Company.
(j) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Resale Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 1l(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 1l(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the Resale Shelf
Registration Statement, which statement shall cover such 12-month period.
(k) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act of 1939, as amended, in a timely manner and containing such
changes, if any, as shall be necessary for such qualification. In the event that
such qualification would require the appointment of a new trustee under the
Indenture, the Company shall appoint a new trustee thereunder pursuant to the
application provisions of the Indenture.
(l) The Company may require each Holder of Securities to be sold
pursuant to the Resale Shelf Registration Statement to furnish to the Company
such information regarding the Holder and the distribution of the Securities as
the Company may from time to time reasonably require for inclusion in the Resale
Shelf Registration Statement, and the Company may exclude from such registration
the Securities of any Holder that unreasonably fails to furnish such information
within a reasonable time after receiving such request.
(m) The Company shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form) and take
all such other actions, if any, as any Holder of the Securities shall reasonably
request in order to facilitate the disposition of the Securities pursuant to any
Resale Shelf Registration.
(n) The Company shall (i) make reasonably available for inspection
by the Holders, any underwriter participating in any disposition pursuant to the
Resale Shelf Registration Statement and any attorney, accountant or other agent
retained by the Holders or any such underwriter all relevant financial and other
records, pertinent corporate documents and properties of the Company and (ii)
cause the Company's officers, directors, employees, accountants and auditors to
supply all relevant information reasonably requested by the Holders or any such
underwriter, attorney, accountant or agent in connection with the Resale Shelf
Registration Statement, in each case, as shall be reasonably necessary to enable
such persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
5
<PAGE> 6
inspection and information gathering shall be coordinated by one counsel (the
"Designated Counsel"). Shearman & Sterling shall be the Designated Counsel for
all purposes hereof until another Designated Counsel shall have been chosen by
the Holders of a majority in principal amount of the Securities covered by the
Resale Shelf Registration Statement (provided that Holders of Conversion Shares
shall be deemed to be Holders of the aggregate principal amount of Notes from
which such Conversion Shares were converted).
(o) The Company, if requested by any Holder of Securities covered
thereby, shall cause (i) its counsel to deliver an opinion and updates thereof
relating to the Securities in customary form addressed to such Holders and the
managing underwriters, if any, thereof and dated, in the case of the initial
opinion, the effective date of such Resale Shelf Registration Statement (it
being agreed that the matters to be covered by such opinion shall include,
without limitation, the due incorporation and good standing of the Company and
its subsidiaries, the qualification of the Company and its subsidiaries to
transact business as foreign corporations; the due authorization, execution and
delivery of the relevant agreement of the type referred to in Section 2(m)
hereof; the due authorization, execution, authentication and issuance, and the
validity and enforceability, of the applicable Securities; the absence of
material legal or governmental proceedings involving the Company and its
subsidiaries; the absence of governmental approvals required to be obtained in
connection with the Resale Shelf Registration Statement, the offering and sale
of the applicable Securities, or any agreement of the type referred to in
Section 2(m) hereof; the compliance as to form of such Resale Shelf Registration
Statement and any documents incorporated by reference therein and of the
Indenture with the requirements of the Securities Act and the Trust Indenture
Act, respectively; and, as of the date of the opinion and as of the effective
date of the Resale Shelf Registration Statement or most recent post-effective
amendment thereto, as the case may be, the absence from such Resale Shelf
Registration Statement and the prospectus included therein, as then amended or
supplemented, and from any documents incorporated by reference therein of an
untrue statement of a material fact or the omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading (in the case of any such documents, in light of the circumstances
existing at the time that such documents were filed with the Commission under
the Exchange Act); (ii) its officers to execute and deliver all customary
documents and certificates and updates thereof requested by any underwriters of
the applicable Securities and (iii) its independent public accountants and the
independent public accountants, if any, with respect to any other entity for
which financial information is provided in the Resale Shelf Registration
Statement to provide to the selling Holders of the applicable Securities and any
underwriter therefor a comfort letter in customary form and covering matters of
the type customarily covered in comfort letters in connection with primary
underwritten offerings, receipt of appropriate documentation as contemplated,
and only if permitted, by Statement of Auditing Standards No. 72.
(p) The Company will use its best efforts to (a) if the Notes have
been rated prior to the initial sale of such Notes, confirm such ratings will
apply to the Notes covered by the Resale Shelf Registration Statement, or (b) if
the Notes were not
6
<PAGE> 7
previously rated, cause the Notes covered by the Resale Shelf Registration
Statement to be rated with the appropriate rating agencies, if so requested by
Holders of a majority in aggregate principal amount of Securities covered by
such Resale Shelf Registration Statement, or by the managing underwriters, if
any.
(q) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Conduct Rules (the "Rules") of the National Association of
Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such
Securities or as an underwriter, a placement or sales agent or a broker or
dealer in respect thereof, or otherwise, the Company will assist such
broker-dealer in complying with the requirements of such Rules, including,
without limitation, by (i) if such Rules, including Rule 2720, shall so require,
engaging a "qualified independent underwriter" (as defined in Rule 2720) to
participate in the preparation of the Resale Shelf Registration Statement
relating to such Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated by such Resale
Shelf Registration Statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Securities, (ii)
indemnifying any such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 4 hereof and (iii) providing
such information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules.
(r) The Company shall use its best efforts to take all other steps
necessary to effect the registration of the Securities covered by the Resale
Shelf Registration Statement contemplated hereby.
3. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 1 and 2 hereof, whether or not a Resale Shelf Registration Statement is
filed or becomes effective, and shall bear or reimburse the Holders of the
Securities covered thereby for the reasonable fees and disbursements of the
Designated Counsel (provided that Holders of Conversion Shares shall be deemed
to be Holders of the aggregate principal amount of Notes from which such
Conversion Shares were converted) to act as counsel for the Holders in
connection therewith.
4. Indemnification. a) The Company agrees to indemnify and hold
harmless each Holder of the Securities and each person, if any, who controls
such Holder within the meaning of the Securities Act or the Exchange Act (each
Holder and such controlling persons are referred to collectively as the
"Indemnified Parties") from and against any losses, claims, damages or
liabilities, joint or several, or any actions in respect thereof (including, but
not limited to, any losses, claims, damages, liabilities or actions relating to
purchases and sales of the Securities) to which each Indemnified Party may
become subject under the Securities Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages, liabilities or actions arising out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Resale
7
<PAGE> 8
Shelf Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to the Resale Shelf
Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; provided, however, that
(i) the Company shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or omission or alleged omission made in the Resale Shelf Registration
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Resale Shelf Registration in reliance
upon and in conformity with written information pertaining to such Holder and
made available to the Company by or on behalf of such Holder specifically for
inclusion therein and (ii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus relating
to the Resale Shelf Registration Statement, the indemnity agreement contained in
this subsection (a) shall not inure to the benefit of any Holder from whom the
person asserting any such losses, claims, damages or liabilities purchased the
Securities concerned, to the extent that a prospectus relating to such
Securities was required to be delivered by such Holder under the Securities Act
in connection with such purchase and any such loss, claim, damage or liability
of such Holder results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Securities
to such person, a copy of the final prospectus if the Company had previously
furnished copies thereof to such Holder; provided further, however, that this
indemnity agreement will be in addition to any liability which the Company may
otherwise have to such Indemnified Party. The Company shall also indemnify
underwriters, their officers and directors and each person who controls such
underwriters within the meaning of the Securities Act or the Exchange Act to the
same extent as provided above with respect to the indemnification of the Holders
of the Securities if requested by such Holders.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act or the Exchange Act from
and against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Company or any such controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Resale Shelf Registration Statement or prospectus or in any amendment or
supplement thereto or in any preliminary prospectus to the Resale Shelf
Registration, or arise out of are based upon the omission or alleged omission to
state therein a material fact necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
omission or alleged untrue statement or omission was made in reliance upon and
in conformity with written information pertaining to such Holder and furnished
to the Company by or on behalf of such Holder specifically for inclusion
therein; and, subject to the limitation set forth
8
<PAGE> 9
immediately preceding this clause, shall reimburse, as incurred, the Company for
any legal or other expenses reasonably incurred by the Company or any such
controlling person in connection with investigating or defending any loss,
claim, damage, liability or action in respect thereof. This indemnity agreement
will be in addition to any liability which such Holder may otherwise have to the
Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 4 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 4,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the sale of the Securities,
pursuant to the Resale Shelf Registration, or (ii) if the allocation provided by
the foregoing clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or such other
9
<PAGE> 10
indemnified party, as the case may be, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first sentence
of this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this subsection (d).
Notwithstanding any other provision of this Section 4(d), the Holders shall not
be required to contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the Securities pursuant to
the Resale Shelf Registration Statement exceeds the amount of damages which such
Holders have otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 1l(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls such indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party and each person, if any, who controls the Company within the
meaning of the Securities Act or the Exchange Act shall have the same rights to
contributions as the Company.
(e) The agreements contained in this Section 4 shall survive the
sale of the Securities pursuant to the Resale Shelf Registration Statement and
shall remain in full force and effect, regardless of any termination or
cancellation or this Agreement or any investigation made by or on behalf of any
indemnified patty.
5. Additional Interest Under Certain Circumstances. a) Additional
interest (the "Additional Interest") with respect to the Notes shall be assessed
as follows if any of the following events occur (each event in clauses (i)
through (iii) below a "Registration Default":
(i) If on or prior to the 90th day after the first date of original
issuance of the Notes, the Resale Shelf Registration Statement has not been
filed with the Commission;
(ii) If on or prior to the 120th day after the first date of
original issuance of the Notes, the Resale Shelf Registration Statement is not
declared effective by the Commission; or
(iii) If after the Resale Shelf Registration Statement is declared
effective (A) such Resale Shelf Registration Statement thereafter ceases to be
effective; or (B) such Resale Shelf Registration Statement or the related
prospectus ceases to be usable (except as permitted in paragraph (b)) in
connection with resales of Transfer Restricted Securities during the periods
specified herein because either (1) any event occurs as a result of which the
related prospectus forming part of such Resale Shelf Registration Statement
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
10
<PAGE> 11
circumstances under which they were made not misleading, or (2) it shall be
necessary to amend such Resale Shelf Registration Statement or supplement the
related prospectus, to comply with the Securities Act or the Exchange Act or the
respective rules thereunder.
Additional Interest shall accrue on the Notes over and above the interest set
forth in the title of the Securities from and including the date on which any
such Registration Default shall occur to but excluding the date on which all
such Registration Defaults have been cured, at a rate of 0.50% per annum,
provided that in no event shall the rate of additional interest under this
Section 5(a) exceed 0.50% per annum.
(b) A Registration Default referred to in Section 5(a)(iii)(B)
hereof shall be deemed not to have occurred and be continuing in relation to the
Resale Shelf Registration Statement or the related prospectus if (i) such
Registration Default has occurred solely as a result of (x) the filing of a
post-effective amendment to such Resale Shelf Registration Statement to
incorporate annual audited financial information with respect to the Company
where such post-effective amendment is not yet effective and needs to be
declared effective to permit Holders to use the related prospectus or (y) other
material events, with respect to the Company that would need to be described in
such Resale Shelf Registration Statement or the related prospectus and (ii) in
the case of clause (y), the Company is proceeding promptly and in good faith to
amend or supplement such Resale Shelf Registration Statement and related
prospectus to describe such events; provided, however, that in any case if such
Registration Default occurs for a continuous period in excess of 30 days,
Additional Interest shall be payable in accordance with the above paragraph from
the day such Registration Default occurs until such Registration Default is
cured.
(c) Any amounts of Additional Interest due pursuant to clause (i),
(ii) or (iii) of Section 5(a) above will be payable in cash on the regular
interest payment dates with respect to the Notes. The amount of Additional
Interest will be determined by multiplying the applicable Additional Interest
rate by the principal amount of the Notes, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Securities" means each Security until (i)
the date on which such Note has been effectively registered under the Securities
Act and disposed of in accordance with the Resale Shelf Registration Statement
or (ii) the date on which such Note is distributed to the public pursuant to
Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under
the Securities Act.
6. Rules 144 and 144A. The Company shall use its best efforts to
file the reports required to be filed by it under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder of Notes, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rules 144 and 144A. The Company covenants that it
will take such further action as any Holder of Notes may
11
<PAGE> 12
reasonably request, all to the extent required from time to time to enable such
Holder to sell Notes without registration under the Securities Act within the
limitation of the exemptions provided by Rules 144 and 144A (including the
requirements of Rule 144A(d)(4)). The Company will provide a copy of this
Agreement to prospective purchasers of Notes identified to the Company by the
Initial Purchasers upon request. Upon the request of any Holder of Notes, the
Company shall deliver to such Holder a written statement as to whether it has
complied with such requirements. Notwithstanding the foregoing, nothing in this
Section 6 shall be deemed to require the Company to register any of its
securities pursuant to the Exchange Act.
7. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Resale Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering ("Managing Underwriters") will be
selected by the Holders of a majority in aggregate principal amount of such
Transfer Restricted Securities to be included in such offering, provided that it
or they are reasonably acceptable to the Company.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements to provide such information to the Company as
is necessary to include such persons as selling stockholders.
8. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Company and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current address
given by such Holder to the Company.
(2) if to the Initial Purchasers:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
12
<PAGE> 13
Fax No.: (212) 325-8278
Attention: Transactions Advisory Group
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Fax No.: (212) 848-7179
Attention: Joel S. Klaperman
(3) if to the Company, at its address as follows:
SPACEHAB, Incorporated
1595 Spring Hill Road, Suite 360
Vienna, Virginia 22182
Fax No.: (703) 821-3070
Attention: Chief Financial Officer
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Fax No.: (212) 259-6333
Attention: Frank E. Morgan II
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged by recipient's facsimile machine operator, if sent
by facsimile transmission; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(d) Successors and Assigns. This Agreement shall be binding upon the
Company and its successors and assigns.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
13
<PAGE> 14
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected.
(i) Securities Held by the Company. Whenever the consent or approval
of Holders of a specified percentage of principal amount of Securities is
required hereunder, Securities held by the Company or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
14
<PAGE> 15
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement on
the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
SPACEHAB, INCORPORATED
By: /s/ Margaret E. Grayson
-------------------------------------
Name: Margaret E. Grayson
Title: Vice President of Finance (CFO)
The foregoing Registration Rights
Agreement is hereby confirmed
and accepted as of the date first
above written.
CREDIT SUISSE FIRST BOSTON
CORPORATION
CIBC WOOD GUNDY
SECURITIES CORP.
OPPENHEIMER & CO., INC.
BY CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ Robert B. Dana
---------------------------
Name: Robert B. Dana
Title: Director
15
<PAGE> 1
Exhibit 5.1
December 22, 1997
SPACEHAB, Incorporated
1595 Spring Hill Road, Suite 360
Vienna, Virginia 22182
Gentlemen:
We have acted as counsel to SPACEHAB, Incorporated, a Washington
corporation (the "Company"), in connection with the preparation and filing by
the Company of a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"), for the
registration of (i) $63,250,000 aggregate principal amount of the Company's 8%
Convertible Subordinated Notes due 2007 (the "Notes") and (ii) 4,642,202 shares
of common stock, no par value per share (the "Common Stock"), of the Company
which may be issued upon the conversion thereof, plus such additional
indeterminate number of shares of Common Stock as may become issuable upon
conversion of the Notes as a result of adjustments to the conversion price.
We have examined and are familiar with originals or copies, certified or
otherwise identified to our satisfaction, of such documents, corporate records,
certificates of public officials and officers of the Company and such other
instruments as we have deemed necessary or appropriate as a basis for the
opinions expressed below, including the Registration Statement, the Indenture
under which the Notes were issued, the Restated Articles of Incorporation of the
Company and the By-laws of the Company.
Based on the foregoing, we are of the opinion that:
1. The Notes are valid, legal and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting creditors' rights generally and by general
principles of equity, regardless of whether considered in equity or at law; and
2. The Common Stock issuable upon conversion of the Notes has been validly
authorized and reserved for issuance and, when duly issued and delivered upon
conversion of the Notes in accordance with the terms of the Notes, will be
validly issued, fully paid and nonassessable.
<PAGE> 2
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ DEWEY BALLANTINE LLP
DEWEY BALLANTINE LLP
<PAGE> 1
Exhibit 12.1
SPACEHAB, Incorporated and Subsidiary
Computation of Ratios of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year ended September 30, Nine months
-------------------------------------------------- ended June 30,
1993 1994 1995 1996
------------- --------------- ---------------- ----------------
Fixed charges:
<S> <C> <C> <C> <C>
Interest expense, net of capitalized interest $ 4,209,113 4,863,332 1,364,520 698,997
Capitalized interest 3,600,000 - 262,046 766,000
Portion of rent expense representative of interest (1) 70,333 72,333 70,667 60,914
------------- --------------- ---------------- ----------------
Total fixed charges $ 7,879,446 4,935,665 1,697,233 1,525,911
Earnings (loss):
Income (loss) before income taxes $ 4,127,546 9,678,891 16,044,520 31,740,638
Fixed charges, less capitalized interest 4,279,446 4,935,665 1,435,187 759,911
------------- --------------- ---------------- ----------------
Earnings (loss) adjusted for fixed charges $ 8,406,992 14,614,556 17,479,707 32,500,549
Ratio of earnings (loss) to fixed charges 1.07 x 2.96 x 10.30 x 21.30 x
Deficiency in earnings to cover fixed charges $ - - - -
<CAPTION>
Three months ended
Year ended September 30,
June 30, ----------------------------------
1997 1996 1997
---------------- --------------- ---------------
Fixed charges:
<S> <C> <C> <C>
Interest expense, net of capitalized interest 955,015 360,282 201,576
Capitalized interest 345,315 - 343,000
Portion of rent expense representative of interest (1) 152,382 25,095 41,688
---------------- --------------- ---------------
Total fixed charges 1,452,712 385,377 586,264
Earnings (loss):
Income (loss) before income taxes 13,528,537 (7,073,581) (5,654,140)
Fixed charges, less capitalized interest 1,107,397 385,377 243,264
---------------- --------------- ---------------
Earnings (loss) adjusted for fixed charges 14,635,934 (6,688,204) (5,410,876)
Ratio of earnings (loss) to fixed charges 10.07 x - -
Deficiency in earnings to cover fixed charges - 7,073,581 5,997,140
</TABLE>
(1) One-third of rent expense is deemed to be representative of interest.
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
SPACEHAB, Incorporated and Subsidiary:
We consent to the use of our report incorporated herein by reference, which
report appears in the Company's 1997 Annual Report on Form 10-K, and the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
McLean, Virginia
December 22, 1997
<PAGE> 1
Exhibit 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM T-1
-----------------
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT FOR 1939, AS AMENDED,
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a trustee pursuant to
Section 3.05(b)(2)___
-------------------------
FIRST UNION NATIONAL BANK
(Exact name of trustee as specified in its charter)
230 SOUTH TRYON STREET, 9TH FL.
CHARLOTTE, NC 28288-1179 56-0900030
(Address of principal executive office) (Zip Code (I.R.S. Employer
Identification No.)
Dante M. Monakil, (804) 788-9659
901 E. Cary Street, Richmond, Virginia 23219
--------------------------------------------
SPACEHAB, INCORPORATED
(Exact name of obligor as specified in its charter)
WASHINGTON
(State or other jurisdiction of incorporation or organization)
91-1273737
(I.R.S. Employer Identification No.)
1595 Springhill Road
Vienna, VA
(Address of principal executive offices)
22182
(Zip Code)
CONVERTIBLE SUBORDINATED NOTES DUE 2007
(Title of the indenture securities)
================================================================================
<PAGE> 2
1. General Information.
(a) The following are the names and addresses of each examining or
supervising authority to which the Trustee is subject:
The Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Richmond, Richmond, Virginia
Federal Deposit Insurance Corporation, Washington, D.C.
Securities and Exchange Commission, Division of Market
Regulation, Washington, D.C.
(b) The Trustee is authorized to exercise corporate trust powers.
2. Affiliations with obligor.
The obligor is not an affiliate of the Trustee.
3. Voting Securities of the Trustee.
Not applicable
(See answer to Item 13)
4. Trustees under other indentures.
Not applicable
(See answer to Item 13)
5. Interlocking directorates and similar relationships with the obligor or
underwriters.
Not applicable
(See answer to Item 13)
6. Voting securities of the Trustee owned by the obligor or its officials.
Not applicable
(See answer to Item 13)
7. Voting securities of the Trustee owned by underwriters or their officials.
Not applicable
(See answer to Item 13)
8. Securities of the obligor owned or held by the Trustee.
Not applicable
(See answer to Item 13)
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<PAGE> 3
9. Securities of underwriters owned or held by the Trustee.
Not applicable
(See answer to Item 13)
10. Ownership or holdings by the Trustee of voting securities of certain
affiliates or security holders of the obligor.
Not applicable
(See answer to Item 13)
11. Ownership of holders by the Trustee of any securities of a person owning
50 percent or more of the voting securities of the obligor.
Not applicable
(See answer to Item 13)
12. Indebtedness of the obligor to the Trustee.
Not applicable
(See answer to Item 13)
13. Defaults by the obligor.
A. None
B. None
14. Affiliations with the underwriters.
Not applicable
(See answer to Item 13)
15. Foreign trustee.
Trustee is a national banking association organized under the laws
of the United States.
16. List of Exhibits.
(1) Articles of Incorporation. (Incorporated by reference from Exhibit
25 to Registration 333-25575, filed June 5, 1997).
(2) Certificate of Authority of the Trustee to conduct business.
(Incorporated by reference from Exhibit 25 to Registration
333-25575, filed June 5, 1997.)
(3) Certificate of Authority of the Trustee to exercise corporate trust
powers. (Incorporated by reference from Exhibit 25 to Registration
333-25575, filed June 5, 1997.)
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<PAGE> 4
(4) By-Laws. (Incorporated by reference from Exhibit 25 to Registration
333-25575, filed June 5, 1997.)
(5) Inapplicable.
(6) Consent by the Trustee required by section 321(b) of the Trust
Indenture Act of 1939. Included at Page 4 of this Form T-1
Statement.
(7) Report of condition of Trustee.
(8) Inapplicable.
(9) Inapplicable.
4
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the Trustee, FIRST UNION NATIONAL BANK, a national association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Richmond, and Commonwealth of Virginia on the 23rd day of December, 1997.
FIRST UNION NATIONAL BANK
(Trustee)
By: /s/ Dante M. Monakil
-------------------------------
Dante M. Monakil, Vice President
EXHIBIT T-1(6)
CONSENTS OF TRUSTEE
Under section 321(b) of the Trust Indenture Act of 1939 and in
connection with the proposed issuance by Spacehab, Inc., Convertible
Subordinated Notes due 2007, First Union National Bank, as the Trustee herein
named, hereby consents that reports of examinations of said Trustee by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon requests therefor.
FIRST UNION NATIONAL BANK
By: /s/ John M. Turner
-------------------------------
John M. Turner,
Vice President and Managing Director
Dated: December 23, 1997
5
<PAGE> 6
REPORT OF CONDITION
Consolidating domestic subsidiaries of the
First Union National Bank Charlotte
Name of Bank City
in the state of North Carolina, at the close of business on September 30, 1997,
published in response to call made by Comptroller of the Currency, under title
12, United States Code, Section 161. Charter Number 02737 Comptroller of the
Currency Southeastern District
Statement of Resources and Liabilities
ASSETS
Thousands of dollars
1 Cash and balances due from depository
institutions:
a. Noninterest-bearing balances and
currency and coin......................... 5,101,644
b. Interest-bearing balances.............. 102,192
2 Securities:
a. Held-to-maturity securities............ 1,751,546
b. Available-for-sale securities.......... 12,629,007
3 Federal funds sold and securities
purchased under agmts to resell: 2,640,885
4 Loans and lease financing receivables:
a. Loans and leases, net of unearned
income ................................ 78,530,867
b. LESS: Allowance for loan and lease
losses ................................ 1,143,846
c. less: Allocated transfer risk reserve.. 0
d. Loans and leases, net of unearned
income, allowance, and reserve......... 74,387,021
5 Assets held in trading accounts........... 3440660
6 Premises and fixed assets (including
capitalized leases)....................... 2,024,718
7 Other real estate owned................... 68,264
8 Investments in unconsolidated subsidiaries
and associated companies.................. 155,345
9 Customers' liability to this bank on
acceptances outstanding................... 751,815
10 Intangible assets......................... 2,449,609
11 Other assets.............................. 3,610,109
12 Total assets.............................. 109,112,815
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<PAGE> 7
LIABILITIES
13 Deposits:
a. In domestic offices.................... 69,612,110
(1) Noninterest-bearing............... 12,956,103
(2) Interest-bearing.................. 56,656,007
b. In foreign offices, Edge and Agmt
subsidiaries, and IBFs................. 5,163,776
(1) Noninterest-bearing............... 0
(2) Interest-bearing.................. 5,163,776
14 Federal funds purchased and securities
sold under agmts to repurchase............ 14,135,805
15 a. Demand notes issued to the U.S. Treasury 191,337
b. Trading liabilities.................... 3,064,414
16 Other borrowed money:
a. With a remaining maturity of one year
or less .................................. 2,889,205
b. With a remaining maturity of more than
one year through three years........... 525,793
c. With a remaining maturity of more than
three years............................ 59,777
17 Not applicable
18 Bank's liability on acceptances executed
and outstanding........................... 751,815
19 Subordinated notes and debentures......... 2,195,501
20 Other liabilities......................... 1,983,925
21 Total liabilities......................... 100,573,458
22 Not applicable
EQUITY CAPITAL
23 Perpetual preferred stock and related
surplus .................................. 0
24 Common stock.............................. 82,795
25 Surplus .................................. 6.197,897
26 a. Undivided profits and capital reserves. 2,148,062
b. Net unrealized holding gains (losses)
on available-for-sale securities....... 110,603
27 Cumulative foreign currency translation
adjustments............................... 0
28 Total equity capital...................... 8,539,357
29 Total liabilities, limited-life preferred
stock, and equity capital (sum of items
21 and 28) ............................... 109,112,815
2
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We, the undersigned directors, attest to the correctness of this statement of
resources and liabilities. We declare that it has been examined by us, and to
the best of our knowledge and belief has been prepared in conformance with the
instructions and is true and correct.
Directors
Warner N. Dalhouse I. Gary R. Sessions
- ------------------ -------------------
Benjamin P. Jenkins, III Name
- ------------------------ Vice President
Robert W. Helms --------------
- --------------- Title
of the above-named bank do
hereby declare that this Report
of Condition is true and correct
to the best of my knowledge and
belief.
report condition 9/30/97
3
