<PAGE>
As Filed with the Securities and Exchange Commission on November 30, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SIEBEL SYSTEMS, INC.
(Exact Name of Registrant As Specified in Its Charter)
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Delaware 94-3187233
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1855 South Grant Street
San Mateo, California 94402
(650) 295-5000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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THOMAS M. SIEBEL
Chairman and Chief Executive Officer
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, California 94402
(650) 295-5000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies To:
ERIC C. JENSEN, ESQ.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306
(650) 843-5000
---------------
Approximate Date of Proposed Sale To The Public: From time to time after the
effective date of this registration statement.
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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<TABLE>
<CAPTION>
Proposed Proposed
Amount Maximum Maximum
Title of Securities to be to be Aggregate Aggregate Amount of
Registered Registered Price Per Unit Offering Price Registration Fee
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
5 1/2% Convertible Subordinated
Notes due September 15, 2006.... $300,000,000 100%(1)(2) $300,000,000(1) $79,200
Common Stock, $0.001 par value 6,433,260
per share....................... shares(3) -- (4) -- (4) -- (4)
</TABLE>
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(1) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(i) of the Securities Act of 1933.
(2) Exclusive of accrued interest and distributions, if any.
(3) This number represents the number of shares of common stock that are
initially issuable upon conversion of the 5 1/2% Convertible Subordinated
Notes due September 15, 2006 registered hereby. For purposes of estimating
the number of shares of common stock to be included of the notes, we
calculated the number of shares issuable upon conversion of the notes based
on a conversion rate of 21.4442 shares per $1,000 principal amount of the
notes. In addition, the amount of shares set forth in this table to be
registered includes an indeterminate number of shares of common stock
issuable upon conversion of the notes, as this amount may be adjusted as a
result of stock splits, stock dividends and antidilution provisions.
(4) No additional consideration will be received for the common stock and
therefore, no registration fee is required pursuant to Rule 457(i).
---------------
The registrant hereby amends this Registration Statement on such date or
dates 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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. These +
+securities may not be sold until the registration statement filed with the +
+Securities and Exchange Commission is effective. The prospectus is not an +
+offer to sell these securities, and is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED NOVEMBER 30, 1999
P R O S P E C T U S
[SIEBEL LOGO]
$300,000,000
of 5 1/2% Convertible Subordinated Notes due September 15, 2006 and
6,433,260 Shares of Common Stock Issuable upon Conversion of the Notes
------------
This prospectus relates to 5 1/2% Convertible Subordinated Notes due
September 15, 2006 of Siebel Systems, Inc., a Delaware corporation, held by
certain security holders who may offer for sale the notes and the shares of our
common stock into which the notes are convertible at any time at market prices
prevailing at the time of sale or at privately negotiated prices. The selling
security holders may sell the notes or the common stock directly to purchasers
or through underwriters, broker-dealers or agents, who may receive compensation
in the form of discounts, concessions or commissions.
The holders of the notes may convert the notes into shares of our common
stock at any time at a conversion rate of 21.4442 shares per $1,000 principal
amount of notes. After September 15, 2002, we may redeem the notes, in whole or
in part, at the redemption prices set forth in the section entitled
"Description of the Notes--Optional Redemption."
In the event of a Change of Control, as defined in the section entitled
"Description of the Notes--Change in Control," each holder of the notes may
require us to repurchase the notes at 100% of the principal amount of the notes
plus accrued interest. At our option, we may repurchase the notes for cash or
common stock.
The notes are general, unsecured obligations that are subordinated in right
of payment to all of our existing and future senior indebtedness. See
"Description of the Notes--Subordination."
Our common stock currently trades on the Nasdaq National Market under the
symbol "SEBL." The last reported sale price on November 29, 1999 was $68 3/8
per share.
Our 5 1/2% Convertible Subordinated Notes are currently eligible for trading
on the PORTAL Market of the Nasdaq Stock Market.
Investing in our common stock or our convertible subordinated notes involves
a high degree of risk. Please carefully consider the "Risk Factors" beginning
on page 2 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
In connection with this offering, no person is authorized to give any
information or to make any representations not contained in this prospectus. If
information is given or representations are made, you may not rely on that
information or representations as having been authorized by us. This prospectus
is neither an offer to sell nor a solicitation of an offer to buy any
securities other than those registered by this prospectus, nor is it an offer
to sell or a solicitation of an offer to buy securities where an offer or
solicitation would be unlawful. You may not imply from the delivery of this
prospectus, nor from any sale made under this prospectus, that our affairs are
unchanged since the date of this prospectus or that the information contained
in this prospectus is correct as of any time after the date of this prospectus.
The date of this prospectus is , 1999
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this prospectus. Prospective investors
should consider carefully the information in this prospectus under the heading
"Risk Factors." Unless indicated otherwise, all share data is adjusted to
reflect two for one stock splits that occurred on each of December 19, 1996,
March 20, 1998 and November 12, 1999.
The Company
We are the market leader in web-based front office information systems for
organizations focused on increasing sales, marketing and customer service
effectiveness in field sales, telesales, telemarketing, retail, customer
service, call centers, field service, resellers, business partners and
Internet-based eCommerce, marketing and customer service. We design, develop,
market and support Siebel Front Office Applications, a leading web-based
application software product family designed to meet the sales, marketing and
customer service information system requirements of even the largest multi-
national organizations.
Our front office applications deliver the first entirely web-based family of
sales, marketing and customer service applications. The Siebel Front Office
allows organizations to manage, synchronize and coordinate all customer
interactions via the web, call center, field and business partner network. Our
front office applications fully support ActiveX, Java and HTML and can be
delivered over the Internet or via an organization's intranet, supporting
multiple desktop platforms.
Our products are also available in industry-specific versions designed for
the pharmaceutical, consumer goods, telecommunications, insurance and finance
vertical markets.
Our customers are comprised of global market leaders, known for delivering
the highest levels of quality in their products and services and for their
commitment to maintain the highest levels of customer satisfaction. Spanning
diverse industries and locations, our customers represent global organizations
of all sizes.
Deploying front office solutions is no longer viewed as a means of gaining a
competitive advantage, but rather is fundamental to an organization's ability
to survive. Employing front office applications technology to better manage
their customer relationships today, our customers continue to be the leaders in
their markets.
Our principal executive offices are located at 1855 South Grant Street, San
Mateo, CA 94402. Our telephone number is (650) 295-5000 and our e-mail address
is [email protected]. We also maintain an Internet home page at siebel.com.
Recent Events
On October 20, 1999 at a special stockholders' meeting, the stockholders
approved an amendment to our certificate of incorporation to increase our
authorized number of shares of common stock from 300,000,000 to 800,000,000
shares.
On November 12, 1999 we effected a two for one stock split by way of a stock
dividend of one share of common stock for each share of common stock held by
each stockholder. All share data is adjusted to reflect the stock split.
On November 18, 1999, we announced an agreement to acquire OnTarget, Inc., a
provider of consulting services and training programs for sales and marketing
organizations. OnTarget will operate as a wholly owned subsidiary.
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RISK FACTORS
In addition to the other information contained in this prospectus, investors
should carefully consider the following risk factors in evaluating an
investment in the notes or the common stock issuable upon conversion of the
notes. This prospectus includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical fact are "forward-looking
statements" for purposes of these provisions, including any projections of
earnings, revenues or other financial items, any statements of the plans and
objectives of management for future operations, any statements concerning
proposed new products or services, any statements regarding future economic
conditions or performance and any statement of assumptions underlying any of
the foregoing. In some cases, forward-looking statements can be identified by
the use of terminology such as "may," "will," "expects," "plans,"
"anticipates," "estimates," "potential," or "continue" or the negative thereof
or other comparable terminology. Although we believe that the expectations
reflected in the forward-looking statements contained herein are reasonable,
there can be no assurance that such expectations or any of the forward-looking
statements will prove to be correct and actual results could differ materially
from these projected or assumed in the forward-looking statements. Our future
financial condition and results of operations, as well as any forward-looking
statements, are subject to inherent risks and uncertainties, including but not
limited to the risk factors set forth below and for the reasons described
elsewhere in this prospectus. All forward-looking statements and reasons why
results may differ included in this prospectus are made as of the date hereof
and we assume no obligation to update any such forward-looking statement or
reason why actual results might differ.
Risks Related to Our Business
We have a limited operating history upon which to evaluate our business.
You should evaluate our prospects in light of the risks, expenses and
uncertainties that companies in their early stage of development frequently
encounter. We began operations in July 1993. We first shipped our Siebel Sales
Enterprise product in April 1995 and our Siebel Service Enterprise product in
December 1996. Subsequent versions of these products were first shipped in 1996
and 1997. Accordingly, we have a limited operating history upon which you may
evaluate our business and prospects.
Our net revenue and operating results may fluctuate.
We may experience a shortfall in revenue or earnings or otherwise fail to
meet public market expectations, which could materially adversely affect our
business and the market price of our common stock. Our net revenue and
operating results may fluctuate significantly because of a number of factors,
many of which are outside of our control. These factors include:
. Level of product and price competition;
. Length of our sales cycle and customer purchasing patterns;
. The size and timing of individual license transactions;
. Delay or deferral of customer implementations of our products;
. Success in expanding our customer support organization, direct sales
force and indirect distribution channels;
. Timing of new product introductions and product enhancements;
. Appropriate mix of products and services sold;
. Levels of international sales;
. Activities of and acquisitions by competitors;
2
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. Activities of and acquisitions by competitors;
. Timing of new hires and the allocation of our resources;
. Changes in the economy and foreign currency exchange rates; and
. Our ability to develop and market new products and control costs.
One or more of the foregoing factors may cause our operating expenses to be
disproportionately high during any given period or may cause our net revenue
and operating results to fluctuate significantly. Based upon the preceding
factors, we may experience a shortfall in revenue or earnings or otherwise fail
to meet public market expectations, which could materially adversely affect our
business, financial condition and the market price of our common stock.
Our quarterly operating results may fluctuate.
Our net revenue and operating results may vary drastically from quarter to
quarter. The main factors that may affect these fluctuations are:
. The discretionary nature of our customer's purchase and budget cycles;
. The size and complexity of our license transactions;
. The potential delays in recognizing revenue from license transactions;
. The timing of new product releases;
. Seasonal variations in operating results; and
. Variations in the fiscal or quarterly cycles of our customers.
Each customer's decision to implement our products and services is
discretionary, involves a significant commitment of resources and is subject to
their budget cycles. In addition, the timing of license revenue is difficult to
predict because of the length of our sales cycle, which has ranged to date from
two to eighteen months. We base our operating expenses on anticipated revenue
trends. Because a high percentage of these expenses are relatively fixed, a
delay in recognizing revenue from license transactions could cause significant
variations in operating results from quarter to quarter and could result in
operating losses. If these expenses precede, or are not subsequently followed
by, increased revenues, our operating results could be materially and adversely
affected. Although we have not experienced significant seasonal variations in
operating results, such variations could develop in the future.
As a result of these and other factors, revenues for any quarter are subject
to significant variation and we believe that period-to-period comparisons of
our results of operations are not necessarily useful. You should not rely on
these comparisons as indications of future performance. It is likely that our
future quarterly operating results from time to time will not meet the
expectations of market analysts or investors, which would likely have an
adverse effect on the price of our common stock.
We need to successfully integrate acquisitions and manage growth.
Our business strategy includes pursuing opportunities to grow our business,
both internally and through selective acquisitions, investments, joint ventures
and strategic alliances. Our ability to implement this strategy depends, in
part, on our success in making such acquisitions, investments, joint ventures
and strategic alliances on satisfactory terms and successfully integrating them
into our operations. Implementation of our growth strategy may impose
significant strains on our management, operating systems and financial
resources. Failure to manage this growth, or unexpected difficulties
encountered during expansion, could have an adverse effect on our business,
operating results and financial condition.
3
<PAGE>
We rely on strategic relationships with systems integrators.
Failure to maintain existing strategic relationships with systems
integrators, or to establish new relationships in the future, could have a
material adverse effect on our business. We have established strategic
relationships with a number of organizations that we believe are important to
our sales, marketing and support activities, and the implementation of our
products. We believe that our relationships with these organizations provide
marketing and sales opportunities for our direct sales force and expand the
distribution of our products. These relationships allow us to keep pace with
the technological and marketing developments of major software vendors and
provide us with technical assistance for our product development efforts.
In particular, we have established a non-exclusive strategic relationship
with Andersen Consulting, one of our principal stockholders. We have also
entered into significant relationships with other third-party systems
integrators such as PricewaterhouseCoopers and Deloitte Consulting. A
significant portion of our revenues have historically been derived from
customers for whom Andersen Consulting, or another systems integrator with
which we have a significant relationship, have been engaged to provide system
integration services. Any deterioration of our relationship with these
significant third-party systems integrators could have a material adverse
effect on our business, financial condition and results of operations. We also
have relationships with Compaq Computer Corporation, IBM Corporation, Microsoft
Corporation and Sun Microsystems, among others. Failure to maintain existing
relationships, or to establish new relationships in the future, could have a
material adverse effect on our business, results of operations and financial
condition.
Our current and potential customers may also rely on third-party system
integrators to develop, deploy and/or manage Siebel Front Office Applications.
If we do not adequately train a sufficient number of system integrators, or if
these integrators do not have, or do not devote, the resources necessary to
implement our products, our business, operating results and financial condition
could be materially and adversely affected.
The Internet presents unique risks.
We may not be able to effectively compete in the Internet-related products
and services market. Siebel Front Office Applications communicate through
public and private networks over the Internet. The success of our products may
depend, in part, on our ability to continue developing products that are
compatible with the Internet. We cannot predict with any assurance whether the
Internet will be a viable commercial marketplace or whether the demand for
Internet-related products and services will increase or decrease in the future.
The increased commercial use of the Internet could require substantial
modification and customization of our products and the introduction of new
products.
Critical issues concerning the commercial use of the Internet, including
security, demand, reliability, cost, ease of use, accessibility, quality of
service and potential tax or other government regulation, remain unresolved and
may affect the use of the Internet as a medium to support the functionality of
our products and distribution of our software. If these critical issues are not
favorably resolved, our business, operating results and financial condition
could be materially and adversely affected.
We operate in a competitive and rapidly changing market.
If the client-server and web-based applications markets fail to grow or grow
more slowly than we currently anticipate, our business, operating results and
financial condition could be materially and adversely affected. The market for
client-server and web-based application software is relatively new, highly
competitive and rapidly changing. We market our products only to customers who
have migrated or are in the process of migrating their enterprise computing
systems to client-server and web-based computing environments. Our future
financial performance will partly depend on the continued growth of
organizations successfully adopting client-server and web-based computing
environments.
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Our customers may not successfully implement our products.
If existing customers have difficulty further deploying Siebel Front Office
Applications or for any other reason are not satisfied with Siebel Front Office
Applications, our business, operating results and financial condition could be
materially and adversely affected. Many of our customers purchase and implement
our products in phases. Our customers frequently deploy our products to large
numbers of sales, marketing and customer service personnel. These end-users may
not accept our products. Our products are also being deployed on a variety of
computer hardware platforms and used with a number of third-party software
applications and programming tools. This use may present significant technical
challenges, particularly as large numbers of personnel attempt to use our
product concurrently.
A limited number of products provides a substantial part of our license
revenues.
In 1998 and the first nine months of 1999, a substantial majority of our
license revenues were attributable to sales of Siebel Sales Enterprise, Siebel
Service Enterprise, Siebel Call Center and related products. We expect that
such products and related consulting, maintenance and training services will
continue to account for a majority of our future revenues. As a result, factors
adversely affecting the pricing of or demand for such products, such as
competition or technological change, could have a material adverse effect on
our business, operating results and financial condition.
The length of time required to engage a client and to implement our products
may be lengthy and unpredictable.
The timing of the sales and implementation of our products and services is
lengthy and not predictable with any degree of accuracy. You should not rely on
prior sales and implementation cycles as any indication of future cycles.
The license of our software products is often an enterprise-wide decision by
prospective customers and generally requires us to provide a significant level
of education to prospective customers regarding the use and benefits of our
products. In addition, the implementation of our products involves a
significant commitment of resources by prospective customers and is commonly
associated with substantial reengineering efforts that may be performed by the
customer or third-party system integrators. The cost to the customer of our
product is typically only a portion of the related hardware, software,
development, training and integration costs of implementing a large-scale front
office software system. For these and other reasons, the period between initial
contact and the implementation of our products is often lengthy and is subject
to a number of factors that may cause significant delays, over many of which we
have little or no control. These factors include (i) the size and complexity of
the overall project and (ii) delays in our customers' implementation of web-
based computing environments. A delay in the sale or implementation of even a
limited number of license transactions could have a material adverse effect on
our business and operations and cause our operating results to vary
significantly from quarter to quarter.
Our success will require us to continue to expand our direct sales force and
technical support staff.
Failure to expand our direct sales force or technical and customer support
staff or to expand our distribution channels could materially and adversely
affect our business, operating results and financial condition. We have
expanded the distribution of our products in recent years. This expansion has
placed new and increased demands on our direct sales force and technical and
sales support staff. Our ability to achieve revenue growth in the future will
depend, in part, on our success in recruiting and training sufficient direct
sales, technical and customer support personnel. Although we invest significant
resources to expand our direct sales force and our technical and customer
support staff, there is only a limited number of qualified personnel in these
areas. Therefore, we may not be able to expand our direct sales force and
technical support staff as necessary to support our growing operations. In
addition, such expansion may not result in increased revenues.
5
<PAGE>
Our expanding distribution may create additional risks.
Failure to minimize channel conflicts could materially and adversely affect
our business, operating results and financial condition. We have recently
entered into a number of relationships with resellers in order to obtain broad
market coverage. We have generally avoided exclusive relationships with
resellers of our products. Discount policies and reseller licensing programs
are intended to support each distribution channel with a minimum level of
channel conflicts.
Our revenue is concentrated in a relatively small number of customers.
Our success depends on maintaining relationships with our existing
customers. A relatively small number of customers have accounted for a
significant percentage of our revenues. For 1998 and the nine months ended
September 30, 1999, license revenues from our ten largest customers accounted
for 22% and 15% of total revenues, respectively. We expect that licenses of our
products to a limited number of customers will continue to account for a
significant percentage of revenue for the foreseeable future. The loss of a
small number of customers or any reduction or delay in orders by any such
customer, or failure to successfully market our products to new customers,
could have a material adverse effect on our business, financial condition and
results of operations.
Our continued success will require us to keep pace with technological
developments, evolving industry standards and changing customer needs.
The software market in which we compete is characterized by (i) rapid
technological change, (ii) frequent introductions of new products, (iii)
changing customer needs and (iv) evolving industry standards. To keep pace with
technological developments, evolving industry standards and changing customer
needs, we must support existing products and develop new products. We may not
be successful in developing, marketing and releasing new products or new
versions of the Siebel Front Office Applications that respond to technological
developments, evolving industry standards or changing customer requirements. We
may also experience difficulties that could delay or prevent the successful
development, introduction and sale of these enhancements. In addition, these
enhancements may not adequately meet the requirements of the marketplace and
may not achieve any significant degree of market acceptance. If release dates
of any future products or enhancements to the Siebel Front Office Applications
are delayed, or if these products or enhancements fail to achieve market
acceptance when released, our business, operating results and financial
condition could be materially and adversely affected. In addition, new products
or enhancements by our competitors may cause customers to defer or forego
purchases of our products, which could have a material adverse effect on our
business, financial condition and results of operations.
To be successful, we must effectively compete in the front office systems
market.
Our products target the front office systems market. This market is highly
competitive, rapidly changing and significantly affected by new product
introductions. We face competition primarily from our customers' internal
information technology departments and systems integrators, as well as from
other application software providers that offer a variety of products and
services to address this market. Many of our customers and potential customers
have attempted to develop front office systems in-house, either alone or with
the help of systems integrators. We may not be able to compete successfully
against such internal development efforts.
We rely on a number of systems consulting and systems integration firms for
a substantial portion of implementation and other customer support services, as
well as for recommendations of our products during the evaluation stage of the
purchase process. Although we seek to maintain close relationships with these
service providers, many of them have similar and often more established,
relationships with our competitors. If we are unable to develop and retain
effective, long-term relationships with these third parties, our competitive
position could be materially and adversely affected. Further, many of these
third parties have significantly greater resources than we do and may market
software products that compete with us.
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<PAGE>
A large number of personal, departmental, enterprise-wide and other products
exist in the front office software market. Companies (Products) such as
Symantec (ACT!), Borealis Corporation (Arsenal), Saratoga Systems (Avenue),
Aurum (BaanFrontOffice) (acquired by Baan Company N.V.), Corepoint (Corepoint
Field Sales, Corepoint Telesales), Clarify Inc. (ClearSales, ClearSupport),
ONYX (Customer Center), Epiphany (e.4 System), Silknet (eBusiness System), IMA
(EDGE), Rubric (EMA), Applix (Enterprise), Dendrite International, Inc. (Force
One), Marketrieve Company (Marketrieve PLUS), Firstwave Technologies, Inc.
(Netgain), Broadvision, Inc. (One-To-One Application System), Oracle
Corporation (Oracle Field Sales Online, Oracle Service and Oracle Call, Front
Office Application), Relavis (OverQuota), Pivotal Software, Inc.
(Relationship), SAP AG (Sales Force Automation Solution), SalesLogix
(SalesLogix), Portera (ServicePort), MEI (UniverSell), Exchange Applications
(ValEX) and The Vantive Corporation (Vantive Enterprise) are among the many
firms in this market segment.
Some of these competitors have longer operating histories, significantly
greater financial, technical, marketing and other resources, significantly
greater name recognition and a larger installed base of customers than we do.
In addition, many competitors have well-established relationships with our
current and potential customers. As a result, these competitors may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the development, promotion and
sale of their products than we can.
There are many factors that may increase competition in the front office
systems market, including (i) entry of new competitors, (ii) alliances among
existing competitors (iii) consolidation in the software industry and (iv)
technological changes or changes in the use of the Internet. Increased
competition may result in price reductions, reduced gross margins or loss of
market share, any of which could materially and adversely affect our business,
operating results and financial condition. If we cannot compete successfully
against current and future competitors or overcome competitive pressures, our
business, operating results and financial condition may be adversely affected.
If we do not maintain our relationships with third-party vendors, interruptions
in the supply of our products may result.
We may not be able to replace the functionality provided by the third-party
software currently offered with our products if that software becomes obsolete
or incompatible with future versions of our products or is not adequately
maintained or updated. Portions of our products incorporate software that was
developed and is maintained by third-party software developers. Although we
believe there are other sources for these products, any significant
interruption in the supply of these products could adversely impact our sales
unless and until we can secure another source. We depend in part on these third
parties' abilities to enhance their current products, to develop new products
on a timely and cost-effective basis and to respond to emerging industry
standards and other technological changes. The absence of or any significant
delay in the replacement of functionality provided by third-party software in
our products could materially and adversely affect our sales.
Software errors or defects in our products could reduce revenues.
Software products frequently contain errors or failures, especially when
first introduced or when new versions are released. Although we conduct
extensive product testing during product development, we have, in the past,
been forced to delay the commercial release of products until the correction of
software problems. We could lose revenues as a result of software errors or
defects. Our products are intended for use in sales applications that may be
critical to a customer's business. As a result, we expect that our customers
and potential customers will have a greater sensitivity to product defects than
the market for software products generally. Testing errors may also be found in
new products or releases after commencement of commercial shipments, resulting
in loss of revenue or delay in market acceptance, damage to our reputation, or
increased service and warranty costs, any of which could have a material
adverse effect upon our business, operating results and financial condition.
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If we do not successfully manage our growth, our business may be negatively
impacted.
If we fail to manage our growth effectively, our business, financial
condition and results of operations could be materially and adversely affected.
Our business has grown rapidly in recent years. This growth has placed a
significant strain on our management systems and resources. To manage future
growth, we must continue to (i) improve our financial and management controls,
reporting systems and procedures on a timely basis and (ii) expand, train and
manage our employee work force.
The loss of key personnel could negatively affect our performance.
Our performance depends on the continued service of our key technical, sales
and senior management personnel, particularly Thomas M. Siebel, our Chairman
and Chief Executive Officer. None of our key employees has entered into an
employment agreement with us. The loss of the services of one or more of our
executive officers could have a material adverse effect on our business,
operating results and financial condition.
The protection of our proprietary information is limited.
We rely primarily on a combination of patent, copyright, trade secret and
trademark laws, confidentiality procedures and contractual provisions to
protect our proprietary rights. We also believe that the technological and
creative skills of our personnel, new product developments, frequent product
enhancements, name recognition and reliable product maintenance are essential
to establishing and maintaining a technology leadership position. We seek to
protect our software, documentation and other written materials under patent,
trade secret and copyright laws, which afford only limited protection. Any
patents issued to us may be invalidated, circumvented or challenged. Any of our
pending or future patent applications, whether or not being currently
challenged, may not be issued with the scope of the claims we seek, if at all.
Furthermore, others may develop technologies that are similar or superior to
our technology or design around our patents. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy aspects of our
products or to obtain and use information that we regard as proprietary.
Policing unauthorized use of our products is difficult. In addition, the laws
of some foreign countries do not protect our proprietary rights as fully as do
the laws of the United States. Our means of protecting our proprietary rights
in the United States or abroad may not be adequate. We have entered into
agreements with substantially all of our customers that require us to place
Siebel Front Office Applications source code into escrow. Such agreements
generally provide that such parties will have a limited, non-exclusive right to
use such code if (i) there is a bankruptcy proceeding by or against us, (ii) we
cease to do business, or (iii) we fail to meet our support obligations.
Although we do not believe that we are infringing any proprietary rights of
others, third parties may claim that we have infringed their intellectual
property rights. Furthermore, former employers of our former, current or future
employees may assert claims that such employees have improperly disclosed to us
the confidential or proprietary information of such former employers. Any such
claims, with or without merit, could (i) be time consuming to defend, (ii)
result in costly litigation, (iii) divert management's attention and resources,
(iv) cause product shipment delays and (v) require us to pay money damages or
enter into royalty or licensing agreements. A successful claim of product
infringement against us and our failure or inability to license or create a
workaround for such infringed or similar technology may materially and
adversely affect our business, operating results and financial condition.
We license certain software from third parties. These third-party software
licenses may not continue to be available to us on acceptable terms. The loss
of, or inability to maintain, any of these software licenses could result in
shipment delays or reductions. This could materially and adversely affect our
business, operating results and financial condition.
8
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Year 2000 problems may cause an interruption in our business.
Many existing computer programs and systems use only two-digit fields to
identify the year, e.g. 85=1985 and they are unable to process date and time
information between the twentieth and twenty-first centuries. Accordingly,
computer programs and software may need to be modified prior to the year 2000
in order to remain functional. Although we have spent a large amount of time
and resources to address potential Y2K problems, there is no assurance that we
will be successful in our efforts to identify and address all Y2K issues.
Failure to complete the necessary modifications could cause a disruption or
failure of our programs and systems.
International operations involve unique risks.
Our revenues are primarily derived from large multi-national companies. To
service the needs of these companies, we must provide worldwide product support
services. We have expanded and intend to continue expanding, our international
operations and enter additional international markets. This will require
significant management attention and financial resources that could adversely
affect our operating margins and earnings. We may not be able to maintain or
increase international market demand for Siebel Front Office Applications. If
we do not, our international sales will be limited and our business, operating
results and financial condition could be materially and adversely affected.
Our international operations are subject to a variety of risks, including
(i) foreign currency fluctuations, (ii) economic or political instability,
(iii) shipping delays and (iv) various trade restrictions. Any of these risks
could have a significant impact on our ability to deliver products on a
competitive and timely basis. Significant increases in the level of customs
duties, export quotas or other trade restrictions could also have an adverse
effect on our business, financial condition and results of operations. In
situations where direct sales are denominated in foreign currency, any
fluctuation in foreign currency or the exchange rate may adversely affect our
business, financial condition and results of operations. We manage our foreign
currency exchange rate risk by entering into contracts to sell foreign currency
at the time a foreign currency receivable is generated. When the foreign
currency receivable is collected, the contract is liquidated, thereby
converting the foreign currency to US dollars and mitigating the exchange rate
risk. In certain instances, we have not hedged foreign currency receivables
when the forward contracts in the relevant currency were not readily available
or were not cost effective.
Certain stockholders may be able to exercise control over matters requiring
stockholder approval.
Our current officers, directors and entities affiliated with us together
beneficially owned a significant portion of the outstanding shares of common
stock as of September 30, 1999. While these stockholders do not hold a majority
of our outstanding common stock, they will be able to exercise significant
influence over matters requiring stockholder approval, including the election
of directors and the approval of mergers, consolidations and sales of our
assets. This may prevent or discourage tender offers for our common stock.
Our stock price may continue to be volatile.
Our stock price has fluctuated substantially since our initial public
offering in June 1996. The trading price of our common stock and, as a result,
the market price of the notes, is subject to significant fluctuations in
response to variations in quarterly operating results, the gain or loss of
significant orders, changes in earning estimates by analysts, announcements of
technological innovations or new products by us or our competitors, general
conditions in the software and computer industries and other events or factors.
In addition, the stock market in general has experienced extreme price and
volume fluctuations that have affected the market price for many companies in
industries similar or related to ours and that have been unrelated to the
operating performance of these companies. These market fluctuations have
adversely affected and may continue to adversely affect the market price of our
common stock.
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Certain provisions in our charter documents may prevent certain corporate
actions.
Our Board of Directors is authorized to issue up to 2,000,000 shares of
preferred stock and to determine the price, rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further
approval by our stockholders. The preferred stock could be issued with voting,
liquidation, dividend and other rights superior to those of the common stock.
The rights of the holders of common stock will be subject to and may be
adversely affected by, the rights of the holders of any preferred stock that
may be issued in the future. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could make it more difficult for a third party to acquire a
majority of our outstanding voting stock. We have a classified Board of
Directors. This and certain other provisions of our certificate of
incorporation and certain provisions of our Bylaws and of Delaware law, could
delay or make more difficult a merger, tender offer or proxy contest.
Risks Related to the Notes
Substantial leverage and debt service obligations may adversely affect our cash
flow.
We have substantial amounts of outstanding indebtedness, primarily the
notes. As a result of this indebtedness, our principal and interest payment
obligations are substantial. We may be unable to generate cash sufficient to
pay the principal of, interest on and other amounts due in respect of our
indebtedness when due. We also expect to add additional equipment loans and
lease lines to finance capital expenditures and may obtain additional long-term
debt, working capital lines of credit and lease lines. There can be no
assurance that any financing arrangements will be available.
Our substantial leverage could have significant negative consequences,
including:
. increasing our vulnerability to general adverse economic and industry
conditions;
. limiting our ability to obtain additional financing;
. requiring the dedication of a substantial portion of our expected cash
flow from operations to service our indebtedness, thereby reducing the
amount of our expected cash flow available for other purposes, including
capital expenditures;
. limiting our flexibility in planning for, or reacting to, changes in our
business and the industry in which we compete; and
. placing us at a competitive disadvantage compared to less leveraged
competitors and competitors that have better access to capital resources.
The notes are subordinated to all other senior debt.
The notes are unsecured and subordinated in right of payment to all of our
existing and future senior indebtedness, as defined in the indenture governing
the notes. As a result, in the event of bankruptcy, liquidation or
reorganization or upon acceleration of the notes due to an event of default, as
described in "Description of the Notes," and in specific other events, our
assets will be available to pay obligations on the notes only after all senior
indebtedness has been paid in full in cash or other payment satisfactory to the
holders of senior indebtedness. There may not be sufficient assets remaining to
pay amounts due on any or all of the notes then outstanding. The notes are also
effectively subordinated to the liabilities, including trade payables, of our
subsidiaries. The indenture governing the notes does not prohibit or limit the
incurrence of senior indebtedness or the incurrence of other indebtedness and
other liabilities by us or our subsidiaries. The incurrence of additional
indebtedness and other liabilities by us or our subsidiaries could adversely
affect our ability to pay obligations on the notes. As of September 30, 1999,
we had approximately $38.1 million of indebtedness outstanding that would have
constituted senior indebtedness. As of September 30, 1999, our subsidiaries had
no material indebtedness or other liabilities. We anticipate that from time to
time we will incur additional indebtedness, including senior indebtedness. See
"Description of the Notes-Subordination."
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The notes contain limitations on redemption upon a change in control.
Upon a change in control, as defined in "Description of the Notes," each
holder of notes has rights, at the holder's option, to require us to redeem all
or a portion of the holder's notes. Although the indenture allows us, subject
to satisfaction of conditions, to pay the redemption price in shares of common
stock, if a change in control were to occur, we may not have sufficient funds
to pay the redemption price for all the notes tendered by holders. Any future
credit agreements or other agreements relating to other indebtedness, including
other senior indebtedness, to which we become a party may contain restrictions
or prohibitions on the payment of the redemption price while such indebtedness
is outstanding. In the event a change in control occurs at a time when we are
prohibited from purchasing or redeeming the notes, we could seek the consent of
lenders to the purchase of the notes or could attempt to refinance the
borrowings that contain this prohibition. If we do not obtain a consent or
repay these borrowings, we would remain prohibited from purchasing or redeeming
the notes. Our failure to redeem tendered notes would constitute an event of
default pursuant to the indenture under which the notes were issued, which
might constitute a default under the terms of other indebtedness that we may
enter into from time to time. In these circumstances, the subordination
provisions in the indenture would likely restrict payments to the holders of
the notes. The term "change in control" is limited to specified transactions
and may not include other events that might adversely affect our financial
condition. In addition, the requirement that we offer to repurchase the notes
upon a change in control does not necessarily afford holders of the notes
protection in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving us. See "Description of the Notes-
Repurchase at Option of Holders Upon a Change in Control."
There is no public market for the notes and there are restrictions on resale of
the notes.
Prior to this offering, the notes have traded in the Private Offerings,
Resale and Trading through Automated Linkages (PORTAL) Market of the National
Association of Securities Dealers, Inc. Although Goldman, Sachs & Co., Banc of
America Securities LLC and Thomas Weisel Partners LLC have advised us that they
currently intend to make a market in the notes, they are not obligated to do so
and may discontinue their market making activities at any time without notice.
Consequently, we cannot ensure that any market for the notes will develop, or
if one does develop, that it will be maintained. If an active market for the
notes fails to develop or be sustained, the trading price of the notes could be
materially and adversely affected. We do not intend to apply for listing of the
notes on any securities exchange or any automated quotation system.
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WHERE YOU CAN FIND MORE INFORMATION
Our principal executive offices are located at 1855 South Grant Street, San
Mateo, CA 94402. Our telephone number is (650) 295-5000 and our e-mail address
is [email protected]. We also maintain an Internet home page at siebel.com.
We have filed with the Securities and Exchange Commission, the SEC, a
registration statement on Form S-3 to register the securities offered by this
prospectus. However, this prospectus does not contain all of the information
contained in the registration statement and the exhibits and schedules to the
registration statement. We strongly encourage you to carefully read the
registration statement and the exhibits and schedules to the registration
statement. We also file annual, quarterly and special reports, proxy statements
and other information with the SEC.
You may inspect and copy such material at the public reference facilities
maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as at the SEC's regional offices at 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New
York, New York 10048. You may also obtain copies of such material from the SEC
at prescribed rates by writing to the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the
SEC's web site at www.sec.gov.
If at any time during the two-year period following September 15, 1999, we
are not subject to the information requirements of Section 13 or 15(d) of the
Exchange Act, we will furnish to note holders, to holders of common stock
issued upon conversion thereof and to prospective purchasers thereof the
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act in order to permit compliance with Rule 144A in connection with
resales of such notes and common stock issued upon conversion thereof.
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information contained in
documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1998, filed on March 31, 1999, including all material incorporated by
reference therein;
2. Our Definitive Revised Proxy Statement on Schedule 14A, filed on
April 5, 1999;
3. Our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1998, filed on May 14, 1999, including all material incorporated by
reference therein;
4. Our Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1999, filed on August 13, 1999, including all material incorporated by
reference therein;
5. Our Definitive Proxy Statement on Schedule 14A, filed on September
17, 1999;
6. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1999, filed on November 15, 1999, including all material
incorporated by reference therein;
7. All other reports filed by us pursuant to Section 13(a) or 15(d) of
the Exchange Act since December 31, 1998, including all material
incorporated by reference therein; and
8. The description of the common stock contained in our Registration
Statement on Form 8-A.
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You may request a copy of these filings, at no cost to you, by writing or
telephoning us at: Siebel Systems, Inc., Attention: Investor Relations, 1855
South Grant Street, San Mateo, California 94402, Telephone (650) 295-5000.
Our common stock is quoted on the Nasdaq National Market under the symbol
"SEBL." The last reported sales price of the common stock on the Nasdaq
National Market ("Nasdaq") on November 29, 1999 was $68 3/8 per share. You may
inspect reports and other information concerning us at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
You should rely only on the information incorporated by reference or
provided in this prospectus. We have authorized no one to provide you with
different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the notes or the shares of
common stock offered hereby. See "Selling Security Holders."
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
each of the last five years and for the nine months ended September 30, 1998
and 1999:
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
---------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
---- ----- ----- ----- ----- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges (1)(2) ............... -- 14.75 37.25 10.73 33.95 26.05 59.73
</TABLE>
--------
(1) For the purposes of computing the ratio of earnings to fixed charges,
earnings consist of income (loss) before provision for income taxes plus
fixed charges. Fixed charges consist of interest charges, amortization of
debt expense and discount or premium related to indebtedness, whether
expensed or capitalized, and that portion of rental expense we believe to
be representative of interest.
(2) Net loss before tax of $221,000 was inadequate to cover fixed charges of
$147,000 in 1994.
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BUSINESS
Overview
We are the market leader in web-based front office information systems for
organizations focused on increasing sales, marketing and customer service
effectiveness in field sales, telesales, telemarketing, retail, customer
service, call centers, field service, resellers, business partners and
Internet-based eCommerce, marketing and customer service. We design, develop,
market and support Siebel Front Office Applications, a leading web-based
application software product family designed to meet the sales, marketing and
customer service information system requirements of even the largest multi-
national organizations.
Our front office applications deliver the first entirely web-based family of
sales, marketing and customer service applications. The Siebel Front Office
allows organizations to manage, synchronize and coordinate all customer
interactions via the web, call center, field and business partner network.
Siebel front office applications fully support ActiveX, Java and HTML and can
be delivered over the Internet or via an organization's intranet, supporting
multiple desktop platforms.
Designed to run within a browser with no previously installed client-side
software, Siebel front office applications allow organizations to dramatically
reduce the cost of ownership for our applications and extend their reach
throughout the organization's network of third-party resellers and service
providers, business partners and customers (the organization's "extraprise").
Organizations configure our applications once and deploy them to mobile
laptop or handheld computers for field sales and service, in call centers, or
via the Internet to resellers and customers.
Our products are also available in industry-specific versions designed for
the pharmaceutical, consumer goods, telecommunications, insurance and finance
vertical markets.
Our customers are comprised of global market leaders, known for delivering
the highest levels of quality in their products and services and for their
commitment to maintaining the highest levels of customer satisfaction. Spanning
diverse industries and locations, our customers represent global organizations
of all sizes.
Deploying front office solutions is no longer viewed as a means of gaining a
competitive advantage, but rather is fundamental to an organization's ability
to survive. Employing front office applications technology to better manage
their customer relationships today, our customers continue to be the leaders in
their markets.
Through our global strategic alliances with industry-leading organizations,
we continue to enhance our Siebel Front Office product suite, ensuring that we
fully support our customers' technology requirements and industry best
practices today and in the future.
Products
Siebel 99.5, released in June 1999, brings the first entirely web-based
family of front office applications to market. Our web-based architecture and
diverse product offerings, are designed to provide support for sales, marketing
and customer service organizations and extends that support and seamlessly
unites, the organization's extraprise. This extended support not only enhances
communication between the organization and its customers but does so without
dependence on any particular method of communication.
Siebel Sales Enterprise
Siebel Sales Enterprise is designed to allow teams of sales and marketing
professionals to manage sales information throughout the entire sales cycle.
This core application includes the Opportunity Management, Account Management,
Contact Management, Activity Tracking, Message Broadcasting, Siebel Search,
Quotas and Incentives modules.
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Siebel Sales Enterprise options, as of July 31, 1999, include Siebel Quotes,
Siebel Revenue Forecasting, Siebel Product Forecasting, Siebel Proposal
Generator, Siebel Presentations, Siebel Campaigns, Siebel Sales Assistant,
Siebel Target Account Selling, Siebel Customer Service Integration, Siebel
Product Configuration and Siebel Product Configuration Integration Object.
Siebel Service Enterprise
Siebel Service Enterprise enables teams of customer service, sales and
marketing professionals to ensure complete customer satisfaction by using
closed-loop, service request management capabilities. The base application
includes the Service Request Management, Account Management, Asset Tracking,
Contact Management, Activity Tracking, Message Broadcasting, Solution
Management and Siebel Search modules.
Siebel Service Enterprise options, as of July 31, 1999, include Siebel
Service Assistant, Siebel Quality Management and Siebel Mail Agent.
Siebel Field Service
Siebel Field Service extends upon Siebel's customer service solution and
provides field engineers with service functionality for entitlement/contracts
management, integration with other customer facing departments, dispatch and
scheduling, parts management and repair center operations. Siebel Field Service
provides a complete solution for the mobile technician as well as the connected
service agent.
Siebel Field Service options, as of July 31, 1999, include Siebel Service
Inventory, Siebel Shipping/Receiving, Siebel Logistics Manager, Siebel Repair,
Siebel Service Assistant, Siebel Quality Management and Siebel Mail Agent.
Siebel Call Center
Siebel Call Center provides blended Sales and Service functionality that
enables call center agents to provide both sales and customer service
assistance to customers. It accesses the power of Siebel Sales and Service
Enterprise to integrate all available customer information. This allows each
service request to result in additional sales opportunities and provides
integrated sales and service histories for each opportunity. This base
application includes the Opportunity Management, Service Request Management,
Account Management, Asset Tracking, Contact Management, Activity Tracking,
Message Broadcasting, Solution Management and Siebel Search modules.
Siebel Call Center options, as of July 31, 1999, include all of the options
available for both Siebel Sales Enterprise and Siebel Service Enterprise.
Siebel Marketing Enterprise
The Siebel Marketing Enterprise is designed to allow marketing
professionals, sales and service managers and business analysts to monitor
overall company performance and the effectiveness of company programs and
activities. Siebel Marketing Enterprise is designed to extract information from
Siebel Sales Enterprise, Siebel Service Enterprise and Siebel Call Center into
a customer data mart, designed for fast data analysis. Siebel Marketing
Enterprise is designed to include a broad range of pre-built analyses about
customers, sales pipeline, customer service, competitors, campaigns and
products, allowing managers and analysts to drill down into key operational
details. Siebel Marketing Enterprise also includes powerful database marketing
capabilities that allow marketing professionals to immediately develop multi-
level campaigns that are tailored to target specific market segments.
General product options are typically available on any of the Siebel
Enterprise Base applications and as of July 31, 1999, include Siebel Thin
Client, Siebel Encyclopedia, Siebel Office, Siebel Calendar, Siebel Reports,
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Siebel Expense Reporting, Siebel Executive Information System, Siebel Incentive
Compensation, Siebel Order Entry, Siebel Contracts, Siebel SmartScript, Siebel
CTI, Siebel CTI Connect, Siebel Remote, Siebel Anywhere, Siebel Workflow
Manager, Siebel Assignment Manager, Siebel Data Quality, Siebel Professional
Services, Siebel Training and Siebel Advanced Search.
Siebel eBusiness
Siebel eBusiness allows organizations to interact directly with customers
and partners over the Internet. Using Siebel eBusiness, organizations can
immediately deploy scalable, secure and web-based applications for acquiring,
growing and retaining customers. Siebel eBusiness Applications include Siebel
eSales, Siebel eMarketing and Siebel eService.
Siebel eSales. Siebel eSales is a web-based application to support
unassisted business-to-business and business-to-consumer selling over the Web.
Siebel eSales includes a visual product catalog, web-based quote generation,
self-service solution configuration and on-line ordering. Siebel eSales
options, as of July 31, 1999, include Siebel eShopping Basket, Siebel eCatalog,
Siebel eConfigurator and Siebel eOrders.
Siebel eMarketing. Siebel eMarketing enables enterprises to create, execute
and assess web-based marketing campaigns. With Siebel eMarketing, enterprises
segment their customers and prospects; target them with a personalized,
automatically generated web- or email-based promotions; and create graphical
reports to assess the effectiveness and return-on-investment of the campaign.
Siebel eService. Through web- and email-based service automation, Siebel
eService allows organizations to manage the entire service process and to
provide world-class customer service and support via the Internet.
Siebel InterActive. Allows organizations to provide customized web-based
personalized briefings to partners and resellers over the web. Briefings
include key customer information including opportunities, accounts and contacts
and on-line content such as news and company profiles.
Industry Applications
Our products are available in industry-specific versions, all with similar
functionality, but each specifically designed for a particular industry.
Examples of our vertical products include:
. Siebel Pharma;
. Siebel Consumer Goods;
. Siebel Communications;
. Siebel Insurance;
. Siebel Finance; and
. Siebel Utilities.
Product Development Expense
During 1996, 1997, 1998 and the nine-month period ended September 30, 1999,
we had product development expenses of $14.8 million, $26.1 million, $42.7
million and $50.2 million, respectively.
Professional Services
We provide implementation consulting and other technical services to license
customers through our worldwide professional services organization. We provide
these services in connection with similar services provided by certain global
alliance partners to provide the customer with the full array of services
necessary to install, integrate, customize and deploy Siebel Front Office
Applications.
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Customer Support and Training
We offer a comprehensive, multi-tiered, integrated family of global support
programs designed to ensure successful implementation and customer
satisfaction. These programs include maintenance, technical support,
professional services and customer communications, as well as extensive
educational offerings.
Marketing and Sales
In the United States, we market and sell our products and services primarily
through our direct sales and services organization. We have sales and service
professionals in 33 offices throughout the United States. Outside the United
States, we sell our products primarily through our direct sales and services
organization in the countries where we have an office. We have sales and
service professionals in 22 offices outside of the United States. We also
market and sell our products through distributors, primarily in Japan, Latin
America, South Africa and Asia.
Our ability to achieve significant revenue growth in the future will depend
in large part on our success in recruiting and training sufficient direct
sales, technical and customer support personnel and establishing and
maintaining relationships with our strategic partners. We believe the
complexity of our products and the large-scale deployment anticipated by our
customers will require a number of highly trained customer support personnel.
Our marketing and sales strategy includes the following key elements:
Target Large Multi-National Customers in a Broad Range of Industries
Our products are intended to be deployed on a global basis and provide
shared, up-to-date information for field sales, telemarketing, telesales,
marketing, customer service and third party reseller sales organizations. We
have a considerable number of large, multinational companies in our customer
base and intend to leverage our experience and continue to target sales and
marketing activities through our direct sales force to expand worldwide market
acceptance of Siebel Front Office Applications.
Maintain and Extend Advanced Technology Position
The Siebel Front Office Applications utilize advanced information
technology. We employ the use of configurable business objects (BusObjects)
that allow organizations to configure the Siebel application to fit their
unique needs while ensuring a clear and consistent upgrade path for future
releases. Our's web-centric, multi-tiered architecture is designed to enable
large-scale web, mobile and call center deployments with a single object
metadata repository. We have developed patented synchronization capabilities
that allow large numbers of mobile users to intermittently connect and
synchronize their local database with a server database. We have made extensive
use of object oriented component technology with extensible application program
interfaces (APIs) to enable seamless integration to other applications. We
intend to continue to commit substantial resources to maintain and extend our
advanced technology position.
Global Strategic Alliances
Long-term strategic business partnerships with leading technology providers
continue to serve as a core component of our strategy to maintain our
technology and market leadership, consistently deliver superior customer
satisfaction and enable corporate growth.
We have partnered with best-of-class business and systems integrators,
hardware, software, support and training partners to ensure the successful
deployment of Siebel Front Office Applications. These strategic global
partnerships with industry leaders help ensure that we deliver comprehensive
solutions that completely meet our global customers' sales, marketing and
customer service information systems needs.
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Promote Successful Customer Implementations
Our success is dependent upon our customers' successful implementation of
Siebel Front Office Applications. As a result, we actively support the
customer's deployment efforts by providing Internet and telephone technical
support, providing comprehensive instructor-led training and assigning an
account management team that consists of a sales representative, a technical
account manager and an executive sponsor. To objectively measure customer
satisfaction, we employ an independent third-party organization to perform
periodic customer satisfaction audits.
Expand Global Sales Capabilities
We intend to expand our global sales capabilities by increasing the size of
our direct sales organization in major markets and continuing to leverage
distributors in other selected markets. In particular, we plan to expand our
direct sales and marketing activities in Asia, Australia, Europe, South America
and North America. We have operations in Australia, Brazil, Canada, Colombia,
France, Germany, Italy, Japan, Mexico, the Netherlands, Norway, Sweden,
Switzerland, the United Kingdom and the United States and have introduced
localized versions of Siebel Front Office Applications for major European and
Asian markets. We are currently developing other localized versions, which will
be released as market conditions warrant.
During each of 1996, 1997, 1998 and the nine-month period ended September
30, 1999, no individual customer accounted for more than 10% of revenues.
Export sales for 1996, 1997, 1998 and the nine-month period ended September 30,
1999 were $7.7 million, $41.8 million, $88.2 million and $100.9 million,
respectively. This represented 10%, 27%, 30% and 31% of total license revenues,
respectively.
Competition
The market for our products is intensely competitive, subject to rapid
change and significantly affected by new product introductions and other market
activities of industry participants. Our products are targeted at the emerging
market for sales, marketing and customer information systems. We face
competition from customers' internal development efforts, custom system
integration products, as well as other application software providers that
offer a variety of products and services designed to address this market. We
believe that the market for global front office information systems has
historically not been well served by the application software industry. We
believe that most customer deployments have been the result of large internal
development projects, custom solutions from systems integrators or the
application of personal and departmental productivity tools to the global
enterprise.
Internal Development
Many of our customers and potential customers have in the past attempted to
develop sales, marketing and customer service information systems in-house,
either alone or with the help of systems integrators. Internal information
technology departments have staffed projects to build their own systems
utilizing a variety of tools. In some cases, such internal development projects
have been successful in satisfying the needs of an organization. However, since
software development, support and maintenance are not core competencies of
these organizations in some cases such projects are unsuccessful. The
competitive factors in this area require that we produce a product that
conforms to the customer's information technology standards, scales to meet the
needs of large enterprises, operates globally and costs less than the result of
an internal development effort. There can be no assurance that we will be able
to compete effectively against such internal development efforts.
Custom System Integration Projects
A second source of competition results from system integrators engaged to
build a custom development application. The introduction of a system integrator
typically increases the likelihood of success for the
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customer. However, this approach can be expensive as compared to the purchase
of third party products and typically results in a product that has not been
designed to be supported, maintained and enhanced by a focused software
development company. Maintenance and support for the custom code can become
burdensome in future years, with enhancements and modifications being cost-
prohibitive. The competitive factors in this area require that we demonstrate
to the customer the cost savings and advantages of a configurable, upgradeable
and commercially-supported product developed by a dedicated professional
software organization.
We rely on system consulting and system integration firms for implementation
and other customer support services, as well as recommendations of our products
during the evaluation stage of the purchase process. Although we seek to
maintain close relationships with these service providers, many of these third
parties have similar and often more established, relationships with our
competitors. There can be no assurance that these third parties, many of which
have significantly greater resources than us, will not market software products
in competition with us in the future or will not otherwise reduce or
discontinue their relationships with or support of us and our products.
Other Competitors
A large number of personal, departmental and other products exist in the
front office applications market. Companies (Products) such as Silknet
(eBusiness System), Rubric (EMA), Exchange Applications, Portera (ServicePort),
Relavis (OverQuota), Symantec (ACT!), Saratoga Systems (Avenue), Epiphany (e.4
System), Clarify Inc. (ClearSales, ClearSupport), ONYX (Customer Center), IMA
(EDGE), Applix (Enterprise), Dendrite International, Inc. (Force One),
Marketrieve Company (Marketrieve PLUS), Firstwave Technologies, Inc. (Netgain),
Broadvision, Inc. (One-To-One Application System), Oracle Corporation (Oracle
Field Sales Online, Oracle Service and Oracle Call, Front Office Application),
Pivotal Software, Inc. (Relationship), SAP AG (Sales Force Automation
Solution), SalesLogix (SalesLogix), Aurum (BaanFrontOffice) (recently acquired
by Baan Company N.V.), MEI (UniverSell) and The Vantive Corporation (Vantive
Enterprise) are among the many firms in this market segment. Some of these
competitors have longer operating histories, significantly greater financial,
technical, marketing and other resources, significantly greater name
recognition and a larger installed base of customers than us. In addition, many
competitors have well-established relationships with current and potential
customers of ours. As a result, these competitors may be able to respond more
quickly to new or emerging technologies and changes in customer requirements,
or to devote greater resources to the development, promotion and sale of their
products, than we can. We believe that we compete favorably in this marketplace
based on the following competitive advantages: breadth and depth of
functionality, a modern and enduring web-based product architecture, ability to
manage all customer interactions support across multiple channels, configurable
business objects, support for the global enterprise, scalability allowing
support for large user communities and strategic alignments with industry
leaders. In general, we have priced our products at or above those of its
competitors, which pricing we believe is justified by the scope of
functionality delivered and the performance characteristics afforded by our
products.
It is also possible that new competitors or alliances among competitors may
emerge and rapidly acquire significant market share. We also expect that
competition will increase as a result of consolidation in the software
industry. Increased competition may result in price reductions, reduced gross
margins and loss of market share, any of which could materially and adversely
affect our business, operating results and financial condition. There can be no
assurance that we will be able to compete successfully against current and
future competitors or that competitive pressures faced by us will not
materially and adversely affect our business, operating results and financial
condition.
Employees
As of September 30, 1999, we had a total of 2,516 employees, of which 1,974
were based in the United States, 3 in Argentina, 11 in Australia, 1 in Austria,
14 in Brazil, 3 in Colombia, 52 in Canada, 1 in Denmark, 51 in France, 74 in
Germany, 8 in Ireland, 10 in Italy, 30 in Japan, 11 in Malaysia, 7 in Mexico,
23 in the Netherlands, 2 in Norway, 1 in Portugal, 1 in Scotland, 14 in Spain,
4 in Sweden, 8 in Switzerland and 213 in
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the United Kingdom. Of the total, 901 were engaged in sales and marketing, 418
were in product development, 1,022 were in customer support and professional
services and 175 were in finance, administration and operations. Our future
performance depends in significant part upon the continued service of its key
technical, sales and senior management personnel, particularly Thomas M.
Siebel, the Chairman and Chief Executive Officer, none of whom is bound by an
employment agreement. The loss of the services of one or more of our key
employees could have a material adverse effect on our business, operating
results and financial condition. Our future success also depends on our
continuing ability to attract, train and retain highly qualified technical,
sales and managerial personnel. Competition for such personnel is intense and
there can be no assurance that we will be able to retain our key technical,
sales and managerial personnel in the future. None of our employees are
represented by a labor union. We have not experienced any work stoppages and
consider our relations with our employees to be good.
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DESCRIPTION OF THE NOTES
The notes were issued under a document called the "Indenture." The Indenture
is a contract between us and Chase Manhattan Bank and Trust Company, National
Association, who will act as trustee (the "Trustee"). The Indenture and the
notes are governed by New York law. Because this section is a summary, it does
not describe every aspect of the notes. This summary is subject to and
qualified in its entirety by reference to all the provisions of the Indenture,
including definitions of certain terms used in the Indenture. For example, in
this section we use capitalized words to signify defined terms that have been
given special meaning in the Indenture. We describe the meaning for only the
more important terms. We also include references in parentheses to certain
Sections of the Indenture. Wherever we refer to particular Sections or defined
terms, those Sections or defined terms are incorporated by reference here. In
this section, references to "Siebel" or "we" or "us" refer solely to Siebel
Systems, Inc. and not its subsidiaries.
General
The notes are general, unsecured obligations of Siebel. The notes are
subordinated, which means that they will rank behind certain of our other
indebtedness as described below. The notes are limited to $300,000,000
aggregate principal amount. Payment of the full principal amount of the notes
will be due on September 15, 2006.
The notes bear interest at the annual rate shown on the front cover of this
prospectus from September 21, 1999. We will pay interest twice a year, on each
March 15 and September 15, beginning March 15, 2000, until the principal is
paid or made available for payment. Interest will be paid to the person in
whose name the note is registered at the close of business on the preceding
March 1 or September 1, as the case may be. Interest payable per $1,000
principal amount of notes for the period from September 21, 1999 to March 15,
2000, will be $26.58.
You may convert the notes into shares of our common stock initially at the
conversion rate stated on the front cover of this prospectus at any time before
the close of business on September 15, 2006, unless the notes have been
previously redeemed or repurchased. The conversion rate may be adjusted as
described below.
We may redeem the notes at our option at any time on or after September 15,
2002, in whole or in part, at the redemption prices set forth below under "--
Optional Redemption," plus accrued and unpaid interest to the redemption date.
If there is a change in control of us, you may have the right to require us to
repurchase your notes as described below under "--Repurchase at Option of
Holders Upon a Change in Control."
Form, Denomination, Transfer, Exchange and Book-Entry Procedures
The notes were issued:
. in fully registered form;
. without interest coupons; and
. in denominations of $1,000 and greater multiples.
The notes are evidenced by two global notes that have been deposited with
the Trustee as custodian for DTC and registered in the name of Cede & Co.
("Cede"), as nominee of DTC. The global note and any notes issued in exchange
for the global note will be subject to restrictions on transfer and will bear a
restrictive legend. Except as set forth below, record ownership of the global
note may be transferred, in whole or in part, only to another nominee of DTC or
to a successor of DTC or its nominee.
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The global note will not be registered in the name of any person, or
exchanged for notes that are registered in the name of any person, other than
DTC or its nominee unless either of the following occurs:
. DTC notifies us that it is unwilling, unable or no longer qualified to
continue acting as the depositary for the global note; or
. an Event of Default with respect to the notes represented by the global
note has occurred and is continuing.
In those circumstances, DTC will determine in whose names any securities
issued in exchange for the global note will be registered.
DTC or its nominee will be considered the sole owner and holder of the
global note for all purposes and as a result:
. you cannot receive notes registered in your name if they are represented
by the global note;
. you cannot receive certificated (physical) notes in exchange for your
beneficial interest in the global notes;
. you will not be considered to be the owner or holder of the global note
or any note it represents for any purpose; and
. all payments on the global note will be made to DTC or its nominee.
The laws of some jurisdictions require that certain kinds of purchasers (for
example, certain insurance companies) can only own securities in definitive
(certificated) form. These laws may limit your ability to transfer your
beneficial interests in the global note to these types of purchasers.
Only institutions (such as a securities broker or dealer) that have accounts
with DTC or its nominee (called "participants") and persons that may hold
beneficial interests through participants can own a beneficial interest in the
global note. The only place where the ownership of beneficial interests in the
global note will appear and the only way the transfer of those interests can be
made will be on the records kept by DTC (for their participants' interests) and
the records kept by those participants (for interests of persons held by
participants on their behalf).
Secondary trading in bonds and notes of corporate issuers is generally
settled in clearing-house (that is, next-day) funds. In contrast, beneficial
interests in a global note usually trade in DTC's same-day funds settlement
system and settle in immediately available funds. We make no representations as
to the effect that settlement in immediately available funds will have on
trading activity in those beneficial interests.
We will make cash payments of interest on and principal of and the
redemption or repurchase price of, the global note, as well as any payment of
Liquidated Damages, to Cede, the nominee for DTC, as the registered owner of
the global note. We will make these payments by wire transfer of immediately
available funds on each payment date.
We have been informed that, with respect to any cash payment of interest on,
principal of, or the redemption or repurchase price of, the global note, as
well as any payment of Liquidated Damages, DTC's practice is to credit
participants' accounts on the payment date with payments in amounts
proportionate to their respective beneficial interests in the notes represented
by the global note as shown on DTC's records, unless DTC has reason to believe
that it will not receive payment on that payment date. Payments by participants
to owners of beneficial interests in notes represented by the global note held
through participants will be the responsibility of those participants, as is
now the case with securities held for the accounts of customers registered in
"street name."
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We will send any redemption notices to Cede. We understand that if less than
all the notes are being redeemed, DTC's practice is to determine by lot the
amount of the holdings of each participant to be redeemed.
We also understand that neither DTC nor Cede will consent or vote with
respect to the notes. We have been advised that under its usual procedures, DTC
will mail an "omnibus proxy" to us as soon as possible after the record date.
The omnibus proxy assigns Cede's consenting or voting rights to those
participants to whose accounts the notes are credited on the record date
identified in a listing attached to the omnibus proxy.
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge the
interest to persons or entities that do not participate in the DTC book-entry
system, or otherwise take actions in respect of that interest, may be affected
by the lack of a physical certificate evidencing its interest.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes (including the presentation of notes for exchange) only at the
direction of one or more participants to whose account with DTC interests in
the global note are credited and only in respect of such portion of the
principal amount of the notes represented by the global note as to which such
participant has, or participants have, given such direction.
DTC has also advised us as follows: DTC is a limited purpose trust company
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 Uniform
Commercial Code, as amended and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants. Participants include securities
brokers and dealers, banks, trust companies and clearing corporations and may
include certain other organizations. Certain of such participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to
beneficial interests in the global note. We and the Trustee have no
responsibility or liability for any aspect of DTC's or any participants'
records relating to beneficial interests in the global note, including for
payments made on the global note and we and the Trustee are not responsible for
maintaining, supervising or reviewing any of those records.
Conversion Rights
You may, at your option, convert any portion of the principal amount of a
note that is an integral multiple of $1,000 into shares of our common stock at
any time prior to the close of business on the maturity date, unless the note
has been previously redeemed or repurchased, at a conversion rate equal to
21.4442 shares per $1,000 principal amount of notes. This conversion rate is
equivalent to a conversion price of approximately $46.64 per share. The
conversion rate is subject to adjustment as described below. Your right to
convert a note called for redemption or delivered for repurchase will terminate
at the close of business on the business day immediately preceding the
redemption date or repurchase date for that note, unless we default in making
the payment due upon redemption or repurchase.
The holder of a note can convert the note by delivering the note at the
Corporate Trust Office of the Trustee, accompanied by a duly signed and
completed notice of conversion, a copy of which may be obtained from the
Trustee. In the case of a global note, DTC will effect the conversion upon
notice from the holder of a beneficial interest in the global note in
accordance with DTC's rules and procedures. The conversion date will be the
date on which the note and the duly signed and completed notice of conversion
are so delivered. As promptly as practicable on or after the conversion date,
we will issue and deliver to the Trustee a certificate or certificates for the
number of full shares of common stock issuable upon conversion, together with
payment in
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lieu of any fraction of a share. The certificates will be sent by the Trustee
to the Conversion Agent for delivery to the holder of the note being converted.
The shares of common stock issuable upon conversion of the notes will be fully
paid and nonassessable and will also rank equally with other shares of our
common stock outstanding from time to time.
If you surrender a note for conversion on a date that is not an Interest
Payment Date, you will not be entitled to receive any interest for the period
from the preceding Interest Payment Date to the date of conversion, except as
described below. If you are a holder of a note on a Regular Record Date,
including a note that is subsequently surrendered for conversion after the
Regular Record Date, you will receive the interest payable on such note on the
next Interest Payment Date. Thus to correct for this resulting overpayment of
interest, any note surrendered for conversion during the period from the close
of business on a Regular Record Date to the opening of business on the next
Interest Payment Date will be required to be accompanied by payment of an
amount equal to the interest payable on such Interest Payment Date on the
principal amount of notes being surrendered for conversion. However, you will
not be required to make that payment if you are converting a note, or a portion
of a note, that we have called for redemption, or that you are entitled to
require us to repurchase from you, if your conversion right would terminate
because of the redemption or repurchase between the Regular Record Date and the
close of business on the next Interest Payment Date.
No other payment or adjustment for interest, or for any dividends on our
common stock, will be made upon conversion. If you receive common stock upon
conversion of a note, you will not be entitled to receive any dividends payable
to holders of common stock as of any record date before the close of business
on the conversion date. We will not issue fractional shares upon conversion of
notes. Instead, we will pay an amount in cash based on the market price of the
common stock at the close of business on the conversion date.
If you deliver a note for conversion, you will not be required to pay any
taxes or duties in respect of the issue or delivery of common stock on
conversion. However, we are not required to pay any tax or duty that may be
payable in respect of any transfer involved in the issue or delivery of the
common stock in a name other than that of the holder of the note. We will not
issue or deliver certificates representing shares of common stock unless the
person requesting the issuance or delivery has paid to us the amount of any
such tax or duty or has established to our satisfaction that no such tax or
duty is payable.
The conversion rate is subject to adjustment if:
(1) there is a dividend or other distribution payable in common stock on
shares of our capital stock;
(2) we issue to all holders of common stock rights, options or warrants
entitling them to subscribe for or purchase common stock at less than
the then current market price, calculated as described in the
Indenture, of our common stock; however, if those rights, options or
warrants are only exercisable upon the occurrence of certain triggering
events, then the conversion rate will not be adjusted until the
triggering events occur;
(3) we subdivide, reclassify or combine our common stock;
(4) we distribute to all holders of our common stock evidences of our
indebtedness, shares of capital stock, cash or assets, including
securities, but excluding:
. those dividends, rights, options, warrants and distributions referred
to in paragraphs (1) and (2) above;
. dividends and distributions paid exclusively in cash; and
. distributions upon mergers or consolidations;
(5) we make a distribution consisting exclusively of cash, (excluding any
cash portion of distributions referred to in paragraph (4) above, or
cash distributed upon a merger or consolidation applicable as discussed
below) to all holders of our common stock if: the aggregate amount of
the distribution
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combined together with (A) other such all-cash distributions made within
the preceding 12 months in respect of which no adjustment has been made
and (B) any cash and the fair market value of other consideration
payable in respect of any tender offer by us or any of our subsidiaries
for our common stock concluded within the preceding 12 months in respect
of which no adjustment has been made, exceeds 10% of our market
capitalization, being the product of the Current Market Price per share
of our common stock on the record date for such distribution and the
number of shares of common stock then outstanding; or
(6) the successful completion of a tender offer made by us or any of our
subsidiaries for our common stock that involves aggregate consideration
that, together with (A) any cash and other consideration payable in a
tender offer by us or any of our subsidiaries for our common stock
expiring within the 12 months preceding the expiration of such tender
offer in respect of which no adjustment has been made and (B) the
aggregate amount of any such all-cash distributions referred to in
paragraph (5) above to all holders of common stock within the 12 months
preceding the expiration of such tender offer in respect of which no
adjustments have been made, exceeds 10% of our market capitalization on
the expiration of such tender offer.
We reserve the right to make such increases in the conversion rate in
addition to those required by the provisions described above as we may
consider to be advisable so that any event treated for United States federal
income tax purposes as a dividend of stock or stock rights will not be taxable
to the recipients. No adjustment of the conversion rate will be required to be
made until the cumulative adjustments amount to 1.0% or more of the conversion
rate. We will compute any adjustments to the conversion rate and give notice
to the holders of any such adjustments.
If we merge or consolidate with another person or sell or transfer all or
substantially all of our assets, each note then outstanding will, without the
consent of the holder of any note, become convertible only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
common stock into which the note was convertible immediately prior to the
merger, consolidation or sale. This calculation will be made based on the
assumption that the holder of common stock failed to exercise any rights of
election that the holder may have to select a particular type of
consideration. The adjustment will not be made for a merger that does not
result in any reclassification, conversion, exchange or cancellation of our
common stock.
We may, from time to time, increase the conversion rate by any amount for
any period of at least 20 days if our Board of Directors has determined that
such increase would be in our best interests. If our Board of Directors makes
such a determination, it will be conclusive. We will give holders of notes at
least 15 days' notice of such an increase in the conversion rate. No such
increase will be taken into account for purposes of determining whether the
closing price of the common stock exceeds the conversion price by 105% in
connection with an event which otherwise would be a "Change in Control," as
defined below.
If at any time we make a distribution of property to our stockholders that
would be taxable to such stockholders as a dividend for United States federal
income tax purposes, e.g., distributions of evidences of indebtedness or
assets of Siebel, but generally not stock dividends on common stock or rights
to subscribe for common stock and, pursuant to the anti-dilution provisions of
the Indenture, the number of shares into which notes are convertible is
increased, that increase may be deemed for United States federal income tax
purposes to be the payment of a taxable dividend to holders of notes. See
"Material United States Federal Income Tax Consequences--U.S. Holders."
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Subordination
The notes are subordinated and, as a result, the payment of the principal,
any premium and interest on the notes, including amounts payable on any
redemption or repurchase, will be subordinated to the prior payment in full of
all of our Senior Debt. "Senior Debt" means the principal of and premium, if
any and interest, including all interest accruing subsequent to the
commencement of any bankruptcy or similar proceeding, whether or not a claim
for post-petition interest is allowable as a claim in any such proceeding, on
and all fees and other amounts payable in connection with, the following,
whether absolute or contingent, secured or unsecured, due or to become due,
outstanding on the date of the Indenture or thereafter created, incurred or
assumed:
. all our indebtedness evidenced by a credit or loan agreement, note, bond,
debenture or other similar instrument;
. all our obligations for money borrowed;
. all our obligations as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting
principles;
. all our obligations under interest rate and currency swaps, caps, floors,
collars, hedge agreements, forward contracts or similar agreements or
arrangements;
. all our obligations with respect to letters of credit, bankers'
acceptances and similar facilities, including related reimbursement
obligations;
. all our obligations issued or assumed as the deferred purchase price of
property or services, but excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business;
. all our obligations of the type referred to above of another person and
all dividends of another person, the payment of which, in either case, we
have assumed or guaranteed, or for which we are responsible or liable,
directly or indirectly, jointly or severally, as obligor, guarantor or
otherwise, or which is secured by a lien on our property; and
. renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in exchange for
any indebtedness or obligation described in the bullets above.
Senior Debt will not include any indebtedness or obligation if the terms of
the indebtedness or obligation, or the terms of the instrument under which the
indebtedness or obligation is issued, expressly provide that the indebtedness
or obligation is not superior in right of payment to the notes. In addition,
Senior Debt will not include any particular indebtedness or obligation that we
may owe to any of our direct or indirect subsidiaries.
We will not make any payment on account of principal, premium or interest on
the note, or redemption or repurchase of the notes, if either of the following
occurs:
. we default in our obligations to pay principal, premium, interest or
other amounts on our Senior Debt, including a default under any
redemption or repurchase obligation and the default continues beyond any
grace period that we may have to make those payments; or
. an "event of default" occurs and is continuing on any Designated Senior
Debt, as defined below and (1) the event of default permits the holders
of the Designated Senior Debt to accelerate its maturity and (2) the
Trustee has received a notice (a "Payment Blockage Notice") of the
default from a holder of the Designated Senior Debt.
If payments of the notes have been blocked by a payment default on Senior
Debt, payments on the notes may resume when the payment default has been cured
or waived. If payments on the notes have been blocked by a nonpayment default,
payments on the notes may resume on the earlier of (1) the date the nonpayment
default is cured or waived or (2) 179 days after the Payment Blockage Notice is
received.
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No nonpayment default that existed on the day a Payment Blockage Notice was
delivered to the Trustee can be used as the basis for any subsequent Payment
Blockage Notice. In addition, once a holder of Designated Senior Debt has
blocked payment on the notes by giving a Payment Blockage Notice, no new period
of payment blockage can be commenced until both of the following are satisfied:
. 365 days have elapsed since the effectiveness of the immediately prior
Payment Blockage Notice; and
. all scheduled payments of principal, any premium and interest on the
notes that have come due have been paid in full in cash.
"Designated Senior Debt" means our obligations under any particular Senior
Debt in which the instrument creating or evidencing the debt, or the assumption
or guarantee of the debt, or related agreements or documents to which we are a
party, expressly provides that the indebtedness will be "Designated Senior
Debt" for purposes of the Indenture. That instrument, agreement or other
document may place limitations and conditions on the right of that Senior Debt
to exercise the rights of Designated Senior Debt.
In addition, upon any acceleration of the principal due on the notes as a
result of an Event of Default or payment or distribution of our assets to
creditors upon any dissolution, winding up, liquidation or reorganization,
whether voluntary or involuntary, marshaling of assets, assignment for the
benefit of creditors, or in bankruptcy, insolvency, receivership or other
similar proceedings, all principal, premium, interest and other amounts due on
all Senior Debt must be paid in full before you will be entitled to receive any
payment. Because of this subordination, in the event of insolvency, our
creditors who are holders of Senior Debt may recover more, ratably, than you
would and this subordination may reduce or eliminate payments to you. As of
September 30, 1999, we had approximately $38.1 million of Senior Debt
outstanding.
In addition, the notes will be "structurally subordinated" to all
indebtedness and other liabilities, including trade payables and lease
obligations, of our subsidiaries. This occurs because any right we have to
receive any assets of our subsidiaries upon their liquidation or reorganization
and the consequent right of the holders of the notes to participate in those
assets, will be effectively subordinated to the claims of that subsidiary's
creditors, including trade creditors, except to the extent that we are
recognized as a creditor of the subsidiary, in which case our claims would
still be subordinate to any security interest in the assets of the subsidiary
and any indebtedness of the subsidiary senior to that held by us.
The Indenture does not limit our ability or the ability of any of our
subsidiaries to incur indebtedness, including Senior Debt.
Optional Redemption
On and after September 15, 2002, we may redeem the notes, in whole or in
part, at our option, at the redemption prices specified below. The redemption
price, expressed as a percentage of principal amount, is as follows for the 12-
month periods beginning on September 15 of the following years:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002..................................................... 103.14%
2003..................................................... 102.36%
2004..................................................... 101.57%
2005..................................................... 100.79%
</TABLE>
and 100% of the principal amount on and after September 15, 2006. In each case
we will also pay accrued interest to the redemption date. The Indenture
requires us to give notice of redemption not more than 60 and not less than 30
days before the redemption date.
No "sinking fund" is provided for the notes, which means that the Indenture
does not require us to redeem or retire the notes periodically.
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Repurchase at Option of Holders upon a Change in Control
If a Change in Control, as defined below, occurs, you will have the right,
at your option, to require us to repurchase all of your notes not called for
redemption, or any portion of the principal amount of your notes that is equal
to $5,000 or any greater integral multiple of $1,000. The price we are required
to pay is 100% of the principal amount of the notes to be repurchased, together
with interest accrued to the repurchase date.
At our option, instead of paying the repurchase price in cash, we may pay
the repurchase price in our common stock, valued at 95% of the average of the
closing sales prices of the common stock for the five trading days immediately
preceding and including the third day prior to the repurchase date. We may only
pay the repurchase price in common stock if we satisfy conditions provided in
the Indenture.
Within 30 days after the occurrence of a Change in Control, we are obligated
to give you notice of the Change in Control and of the repurchase right arising
as a result of the Change in Control. We must also deliver a copy of this
notice to the Trustee. To exercise the repurchase right, you must deliver, on
or before the 30th day after the date of our notice, irrevocable written notice
to the Trustee of your exercise of your repurchase right, together with the
notes with respect to which that right is being exercised. We are required to
make the repurchase on the date that is 45 days after the date of our notice.
A Change in Control will be deemed to have occurred at the time after the
notes are originally issued that any of the following occurs:
(1) any person, including any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Exchange Act, acquires beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of our
capital stock entitling that person to exercise 50% or more of the
total voting power of all shares of our capital stock entitled to vote
generally in elections of directors; however, any acquisition by us,
any of our subsidiaries or any of our employee benefit plans will not
trigger this provision;
(2) we consolidate with or merge with or into any other person or another
person merges into us, except if the transaction satisfies any of the
following:
. the holders of 50% or more of the total voting power of all shares of
our capital stock entitled to vote generally in elections of
directors immediately prior to the transaction have, directly or
indirectly, 50% or more of the total voting power of all shares of
capital stock of the continuing or surviving corporation entitled to
vote generally in elections of directors of the continuing or
surviving corporation immediately after the transaction;
. the transaction is a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of our capital stock; or
. the transaction is a merger effected only to change our jurisdiction
of incorporation and it results in a reclassification, conversion or
exchange of outstanding shares of our common stock only into shares
of common stock of us or another corporation; or
(3) we convey, transfer, sell, lease or otherwise dispose of all or
substantially all of our assets to another person.
However, a Change in Control will not be deemed to have occurred if the
closing sales price per share of our common stock for any five trading days
within the period of 10 consecutive trading days ending immediately after the
later of the Change in Control or the public announcement of the Change in
Control, in the case of a Change in Control relating to an acquisition of
capital stock, or the period of 10 consecutive trading days ending immediately
before the Change in Control, in the case of Change in Control relating to a
merger, consolidation or asset sale, equals or exceeds 105% of the conversion
price of the notes in effect on each of those trading days.
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For purposes of these provisions:
. the conversion price is equal to $1,000 divided by the conversion rate;
. whether a person is a "beneficial owner" will be determined in accordance
with Rule 13d-3 under the Exchange Act; and
. ""Person'' includes any syndicate or group that would be deemed to be a
"person" under Section 13(d)(3) of the Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of prescribed
information to security holders in the event of an issuer tender offer and may
apply in the event that the repurchase option becomes available to you. We will
comply with this rule to the extent it applies at that time.
We may, to the extent permitted by applicable law, at any time purchase
notes in the open market or by tender at any price or by private agreement. Any
note that we so purchase may, to the extent permitted by applicable law, be
reissued or resold or may, at our option, be surrendered to the Trustee for
cancellation. Any notes surrendered may not be reissued or resold and will be
canceled promptly.
The definition of Change in Control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of "all or substantially all"
of our assets. There is no precise, established definition of the phrase
"substantially all" under applicable law. Accordingly, your ability to require
us to repurchase your notes as a result of conveyance, transfer, sale, lease or
other disposition of less than all of our assets may be uncertain.
The foregoing provisions would not necessarily provide you with protection
if we are involved in a highly leveraged or other transaction that may
adversely affect you.
Our ability to repurchase notes upon the occurrence of a Change in Control
is subject to important limitations. Some of the events constituting a Change
in Control could cause an event of default under, or be prohibited or limited
by, the terms of future Senior Debt. As a result, unless we were to obtain a
waiver, a repurchase of the notes could be prohibited under the subordination
provisions of the Indenture until that Senior Debt was paid in full. Further,
we cannot assure you that we would have the financial resources, or would be
able to arrange financing, to pay the repurchase price for all the notes that
might be delivered by holders of notes seeking to exercise the repurchase
right. If we were to fail to repurchase the notes when required following a
Change in Control, an Event of Default under the Indenture would occur, whether
or not such repurchase is permitted by the subordination provisions of the
Indenture. Any such default may, in turn, cause a default under our Senior
Debt. See "--Subordination."
Mergers and Sales of Assets
We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us, unless each of the following requirements
is met:
. the person formed by the consolidation or into or with which we merge or
the person to which our properties and assets are conveyed, transferred,
sold or leased, is a corporation, limited liability company, partnership
or trust organized and existing under the laws of the United States, any
State or the District of Columbia and, if other than us, shall expressly
assume the due and punctual payment of the principal of, any premium and
interest on the notes and the performance of our other covenants under
the Indenture; and
. immediately after giving effect to that transaction, no Event of Default
and no event that, after notice or lapse of time or both, would become an
Event of Default, shall have occurred and be continuing.
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Events of Default
The following will be Events of Default under the Indenture:
. we fail to pay principal of or any premium on any note when due, whether
or not the payment is prohibited by the subordination provisions of the
Indenture;
. we fail to pay any interest on any note when due and that default
continues for 30 days, whether or not the payment is prohibited by the
subordination provisions of the Indenture;
. we fail to give the notice that we are required to give in the event of a
Change in Control, whether or not the notice is prohibited by the
subordination provisions of the Indenture;
. we fail to perform any other covenant in the Indenture and that failure
continues for 60 days after written notice to us by the Trustee or the
holders of at least 25% in aggregate principal amount of outstanding
notes;
. failure to pay when due the principal of, or acceleration of, any
indebtedness for money borrowed by us or any of our subsidiaries in
excess of $25 million if the indebtedness is not discharged, or the
acceleration is not annulled, within 30 days after written notice to us
by the Trustee or the holders of at least 25% in aggregate principal
amount of the outstanding notes; and
. events of bankruptcy, insolvency or reorganization specified in the
Indenture.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the holders, unless such
holders shall have offered to the Trustee reasonable indemnity. Subject to such
provisions for the indemnification of the Trustee, the holders of a majority in
aggregate principal amount of the outstanding notes will 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.
If an Event of Default, other than an Event of Default arising from events
of bankruptcy, insolvency or reorganization, occurs and is continuing, either
the Trustee or the holders of at least 25% in principal amount of the
outstanding notes may accelerate the maturity of all notes. After acceleration,
but before a judgment or decree based on acceleration, the holders of a
majority in aggregate principal amount of outstanding notes may, under
circumstances set forth in the Indenture, rescind the acceleration if all
Events of Default, other than the nonpayment of principal of the notes which
have become due solely because of the acceleration, have been cured or waived
as provided in the Indenture. If an Event of Default arising from events of
bankruptcy, insolvency or reorganization occurs and is continuing, then the
principal of and accrued interest on, all of the notes will automatically
become immediately due and payable without any declaration or other act on the
part of the holders of the notes or the Trustee.
Before you may take any action to institute any proceeding relating to the
Indenture, or to appoint a receiver or a trustee, or for any other remedy, each
of the following must occur:
. you must have given the Trustee written notice of a continuing Event
of Default;
. the holders of at least 25% of the aggregate principal amount of all
outstanding notes must make a written request of the Trustee to take
action because of the default and must have offered reasonable
indemnification to the Trustee against the cost, liabilities and
expenses of taking such action; and
. the Trustee must not have taken action for 60 days after receipt of
such notice and offer of indemnification.
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These limitations do not apply to a suit for the enforcement of payment of
the principal of, or any premium or interest on, a note, or the repurchase
price payable for a note, on or after the due dates for such payments, or of
the right to convert the note in accordance with the Indenture.
We will furnish to the Trustee annually a statement as to our performance of
our obligations under the Indenture and as to any default in performance.
Modification and Waiver
The consent of the holders of a majority in principal amount of the
outstanding notes affected is required to make a modification or amendment to
the Indenture. However, a modification or amendment requires the consent of the
holder of each outstanding note affected if it would:
. change the stated maturity of the principal or interest of a note;
. reduce the principal amount, any premium or interest on any note;
. reduce the amount payable upon a redemption or mandatory repurchase;
. modify the provisions with respect to the repurchase rights of holders of
notes in a manner adverse to the holders;
. change the place or currency of payment on a note;
. impair the right to institute suit for the enforcement of any payment on
any note;
. modify the subordination provisions in a manner that is adverse to the
holders of the notes;
. adversely affect the right to convert the notes;
. modify our obligation to deliver information required under Rule 144A to
permit resales of the notes and common stock issued upon conversion of
the notes if we cease to be subject to the reporting requirements under
the Exchange Act;
. reduce the percentage of holders whose consent is needed to modify or
amend the Indenture;
. reduce the percentage of holders whose consent is needed to waive
compliance with certain provisions of the Indenture or to waive certain
defaults; or
. modify the provisions dealing with modification and waiver of the
Indenture.
The holders of a majority in principal amount of the outstanding notes must
consent to waive compliance by us with certain restrictive provisions of the
Indenture. The holders of a majority in principal amount of the outstanding
notes may waive any past default, except a default in the payment of principal,
any premium, interest or the repurchase price.
Notes will not be considered outstanding if money for their payment or
redemption has been deposited or set aside in trust for the holders.
We will generally be entitled to set any day as a record date for the
purpose of determining the holders of outstanding notes that are entitled to
take any action under the Indenture. In limited circumstances, the Trustee will
be entitled to set a record date for action by holders. If a record date is set
for any action to be taken by holders, such action may be taken only by persons
who are holders of outstanding notes on the record date and must be taken
within 180 days following the record date or such other period as we may
specify (or as the Trustee may specify, if it set the record date). This period
may be shortened or lengthened (but not beyond 180 days) from time to time.
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Registration Rights
We entered into a registration rights agreement with the initial purchasers
of the notes (the "Registration Rights Agreement"). In the Registration Rights
Agreement we agreed, for the benefit of the holders of the notes and the shares
of common stock issuable upon conversion of the notes (together, the
"Registrable Securities") that we will, at our expense:
. file with the Commission, within 90 after the date the notes were
originally issued, a shelf registration statement covering resales of the
Registrable Securities;
. use our reasonable efforts to cause the shelf registration statement to
be declared effective under the Securities Act within 180 days after the
date the notes were originally issued, subject to our right to postpone
having the shelf registration statement declared effective for an
additional 90 days in limited circumstances; and
. use our reasonable efforts to keep effective the shelf registration
statement until two years after the date it is declared effective or, if
earlier, until there are no outstanding Registrable Securities (the
"Effectiveness Period").
We are permitted to suspend the use of the prospectus that is part of the
shelf registration statement in connection with sales of Registrable Securities
during prescribed periods of time for reasons relating to pending corporate
developments, public filings with the Commission and other events. The periods
during which we can suspend the use of the prospectus may not, however, exceed
a total of 45 days in any 90 day period or a total of 90 days in any 365-day
period. We will provide to each holder of Registrable Securities copies of the
prospectus that is a part of the shelf registration statement, notify each
holder when the shelf registration statement has become effective and take
certain other actions required to permit public resales of the Registrable
Securities.
We may, upon written notice to all the holders of notes, postpone having the
shelf registration statement declared effective for a reasonable period not to
exceed 90 days if we possess material non-public information the disclosure of
which would have a material adverse effect on us and our subsidiaries taken as
a whole. Notwithstanding any such postponement, additional interest
("Liquidated Damages") will accrue on the notes if either of the following
events ("Registration Defaults") occurs:
. on or prior to 90 days following the date the notes were originally
issued, a shelf registration statement has not been filed with the
Commission; or
. on or prior to 180 days following the date the notes were originally
issued, the shelf registration statement is not declared effective.
In that case, Liquidated Damages will accrue on the notes from and including
the day following the Registration Default to but excluding the day on which
the Registration Default has been cured. Liquidated Damages will be paid semi-
annually in arrears, with the first semi-annual payment due on the first
Interest Payment Date following the date on which the Liquidated Damages begin
to accrue.
The rates at which Liquidated Damages will accrue will be as follows:
. 0.25% of the principal amount per annum to and including the 90th day
after the Registration Default; and
. 0.5% of the principal amount per annum from and after the 91st day after
the Registration Default.
In addition, the interest rate on the notes will be increased if:
. the shelf registration statement ceases to be effective, or we otherwise
prevent or restrict holders of Registrable Securities from making sales
under the shelf registration statement, for more than 45 days, whether or
not consecutive, during any 90-day period; or
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. the shelf registration statement ceases to be effective, or we otherwise
prevent or restrict holders of Registrable Securities from making sales
under the shelf registration statement, for more than 90 days, whether or
not consecutive, during any 12-month period.
In either event, the interest rate on the notes will increase by an
additional 0.50% per annum from the 46th day of the 90-day period or the 91st
day of the 12-month period. The increased rate will continue until the earlier
of the following:
. the time the shelf registration statement again becomes effective or the
holders of Registrable Securities are again able to make sales under the
shelf registration statement, depending on which event triggered the
increase in interest rate; or
. the time the Effectiveness Period expires.
A holder who elects to sell any Registrable Securities pursuant to the shelf
registration statement will be required to be named as a selling security
holder in the related prospectus, may be required to deliver a prospectus to
purchasers, may be subject to certain civil liability provisions under the
Securities Act in connection with those sales and will be bound by the
provisions of the Registration Rights Agreement that apply to a holder making
such an election, including certain indemnification provisions.
We have mailed the Notice and Questionnaire to the holders of Registrable
Securities not less than 30 calendar days prior to the time we intend in good
faith to have the shelf registration statement declared effective (the
"Effective Time").
No holder of Registrable Securities will be entitled to be named as a
selling security holder in the shelf registration statement as of the Effective
Time and no holder of Registrable Securities will be entitled to use the
prospectus forming a part of the shelf registration statement for offers and
resales of Registrable Securities at any time, unless such holder has returned
a completed and signed Notice and Questionnaire to us by the deadline for
response set forth in the Notice and Questionnaire. Holders of Registrable
Securities will, however, have at least 28 calendar days from the date on which
the Notices and Questionnaire was first mailed to them to return a completed
and signed Notice and Questionnaire to us.
Beneficial owners of Registrable Securities who have not returned a Notice
and Questionnaire by the questionnaire deadline described above may receive
another Notice and Questionnaire from us upon request. Following its receipt of
a completed and signed Notice and Questionnaire, we will include the
Registrable Securities covered thereby in the shelf registration statement,
subject to restrictions on the timing and number of supplements to the shelf
registration statement provided in the Registration Rights Agreement.
We agreed in the Registration Rights Agreement to use our reasonable efforts
to cause the shares of common stock issuable upon conversion of the notes to be
quoted on the Nasdaq National Market. However, if the common stock is not then
quoted on the Nasdaq National Market, we will use our reasonable efforts to
cause the shares of common stock issuable upon conversion of the common stock
to be quoted or listed on whichever market or exchange the common stock is then
quoted or listed, upon effectiveness of the shelf registration statement.
This summary of certain provisions of the Registration Rights Agreement is
not complete and is subject to and qualified in its entirety by reference to,
all the provisions of the Registration Rights Agreement, a copy of which will
be made available to beneficial owners of the notes upon request to us.
Notices
We will give notice to holders of the notes by mail to the addresses of the
holders as they appear in the Security Register. Notices will be deemed to have
been given on the date of mailing.
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Replacement of Notes
We will replace, at the expense of the holders, notes that become mutilated,
destroyed, stolen or lost upon delivery to the Trustee of the mutilated notes
or evidence of the loss, theft or destruction thereof satisfactory to us and
the Trustee. In the case of a lost, stolen or destroyed note, indemnity
satisfactory to the Trustee and us may be required at the expense of the holder
of the note before a replacement note will be issued.
The Trustee
The Trustee for the holders of notes issued under the Indenture will be
Chase Manhattan Bank and Trust Company, National Association. If an Event of
Default shall occur and shall not be cured, the Trustee will be required to use
the degree of care of a prudent person in the conduct of his own affairs in the
exercise of its powers. Subject to these provisions, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request of any holders of notes, unless they shall have offered to the
Trustee reasonable security or indemnity.
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DESCRIPTION OF CAPITAL STOCK
We are authorized to issue up to 802,000,000 shares, $0.001 par value,
divided into two classes designated "common stock" and "preferred stock." Of
such shares authorized, 800,000,000 shares are designated as common stock and
2,000,000 are designated preferred stock.
Common Stock
As of September 30, 1999, there were 186,485,456 shares of common stock
outstanding that were held of record by approximately 500 record holders.
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. The holders of
common stock are not entitled to cumulative voting rights with respect to the
election of directors and as a consequence, minority stockholders will not be
able to elect directors on the basis of their votes alone. Subject to
preferences that may be applicable to any then outstanding shares of preferred
stock, holders of common stock are entitled to receive ratably such dividends
as may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of us,
holders of the common stock are entitled to share ratably in all assets
remaining after payment of liabilities and the liquidation preference of any
then outstanding preferred stock. Holders of common stock have no preemptive
rights and no right their common stock into any other securities. There are no
redemption or sinking fund provisions applicable to the common stock.
Preferred Stock
Pursuant to our Certificate of Incorporation, the Board of Directors has the
authority, without further action by the stockholders, to issue up to 2,000,000
shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend rights,
conversion rights, voting rights, terms of redemption, liquidation preferences,
sinking fund terms and the number of shares constituting any series or the
designation of such series, without any further vote or action by stockholders.
The issuance of preferred stock could adversely affect the voting power of
holders of common stock and the likelihood that such holders will receive
dividend payments and payments upon liquidation and could have the effect of
delaying, deferring or preventing a change in control of us. We have no present
plan to issue any shares of preferred stock.
Registration Rights
The holders of 31,347,692 (as of November 24, 1999) shares of common stock
are entitled to certain rights with respect to the registration of such shares
under the Securities Act pursuant to the Restated Investor Rights Agreement
among such holders and Siebel, dated December 1, 1995, as amended. Under the
terms of the agreement, if we propose to register any of our securities under
the Securities Act, either for our own account or for the account of other
security holders exercising registration rights, such holders are entitled to
notice of such registration and are entitled, subject to certain limitations,
to include shares therein. The holders may also require us to file a
registration statement under the Securities Act with respect to their shares
and we are required to use our best efforts to effect two such registrations.
Furthermore, the holders may require us to register their shares on Form S-3.
Generally, we are required to bear all registration and selling expenses
incurred in connection with any such registrations. These rights are subject to
certain conditions and limitations, among them the right of the underwriters of
an offering to limit the number of shares included in such registration. Such
registration rights terminate on September 19, 2003. The rights of the holders
under the agreement may be waived with the written consent of the holders of at
least a majority of the shares registrable thereunder. Such rights have been
waived in connection with this offering.
Anti-Takeover Effects of Provisions of Our Charter and Bylaws
Our certificate of incorporation provides for the Board of Directors to be
divided into three classes, with staggered three-year terms. As a result, only
one class of directors will be elected at each annual meeting of
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stockholders, with the other classes continuing for the remainder of their
respective three-year terms. Stockholders have no cumulative voting rights and
the stockholders representing a majority of the shares of common stock
outstanding are able to elect all of the directors.
Our certificate of incorporation also requires that (a) any action required
or permitted to be taken by stockholders must be effected at a duly called
annual or special meeting of the stockholders and may not be effected by a
consent in writing and (b) the stockholders may amend our bylaws or adopt new
bylaws, only by the affirmative vote of 2/3 of the outstanding voting
securities. In addition, special meetings of the stockholders may be called
only by the Board of Directors, the Chairman of the Board or the Chief
Executive Officer. These provisions may have the effect of delaying, deferring
or preventing a change in control of us.
The classification of the Board of Directors and lack of cumulative voting
will make it more difficult for our existing stockholders to replace the Board
of Directors as well as for another party to obtain control of us by replacing
the Board of Directors. Since the Board of Directors has the power to retain
and discharge officers of Siebel, these provisions could also make it more
difficult for existing stockholders or another party to effect a change in
management.
These and other provisions may have the effect of deterring hostile
takeovers or delaying changes in control or management of us. These provisions
are intended to enhance the likelihood of continued stability in the
composition of the Board of Directors and in the policies of the Board of
Directors and to discourage certain types of transactions that may involve an
actual or threatened change in control. These provisions are designed to reduce
our vulnerability to an unsolicited acquisition proposal. The provisions also
are intended to discourage certain tactics that may be used in proxy rights.
However, such provisions could have the effect of discouraging others from
making tender offers for our shares and, as a consequence, they also may
inhibit fluctuations in the market price of our shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect
of preventing changes in our management.
Section 203 of the Delaware General Corporation Law
We are subject to Section 203 or the Delaware General Corporation Law
("Section 203"), which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the time that such
stockholder became an interested stockholder, unless: (i) prior to such time,
the board of directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder becoming an
interested holder, (ii) upon consummation of the transaction that resulted in
the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced, excluding for purposes of determining the
number of shares outstanding those shares owned (a) by persons who are
directors and also officers and (b) by employee stock plans in which employee
participants do not have the right to determine confidentially whether shares
held subject to the plan will be tendered in a tender or exchange offer; or
(iii) at or subsequent to such time, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders and not by written consent, by the affirmative vote of at least 66
2/3% of the outstanding voting stock which is not owned by the interested
stockholder.
In general, Section 203 defines "business combination" to include: (i) any
merger or consolidation involving the corporation and the interested
stockholder, (ii) any sale, transfer, pledge or other disposition of 10% or
more of the assets of the corporation involving the interested stockholder,
(iii) subject to certain exceptions, any transaction that results in the
issuance or transfer by the corporation of any stock of the corporation to the
interested stockholder, (iv) any transaction involving the corporation that has
the effect of increasing the proportionate share of the stock or any class or
series of the corporation beneficially owned by the interested stockholder or
(v) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits by or through the
corporation. In general, Section 203 defines "interested stockholder" as an
entity or person beneficially owning 15% or more of the outstanding voting
stock of the corporation and any entity or person affiliated with or
controlling or controlled by such entity or person. See "Risk Factors--Certain
provisions in our charter documents may prevent certain corporate actions."
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material U.S. federal income
tax consequences to holders of the notes or underlying common stock. This
discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed U.S. Treasury Regulations ("Regulations"),
Internal Revenue Service ("IRS") rulings and pronouncements and judicial
decisions now in effect, all of which are subject to change (possibly with
retroactive effect) or different interpretation.
This discussion is for general information only and does not address all
aspects of U.S. federal income taxation that may be relevant to holders of the
notes or common stock. This discussion does not describe the tax consequences
arising under the laws of any foreign, state or local jurisdiction, nor does it
describe all of the tax consequences that may be relevant to particular holders
in light of their personal circumstances (such as holders subject to the U.S.
federal alternative minimum tax), or to certain types of holders (such as
certain financial institutions, insurance companies, tax-exempt entities,
dealers in securities or foreign currencies, persons who hold the notes or
common stock in connection with a "straddle," "hedging," "conversion" or other
risk reduction transaction for U.S. federal income tax purposes, or persons
that have a "functional currency" other than the U.S. dollar) who may be
subject to special rules. This discussion assumes that each holder holds the
notes and common stock received upon conversion thereof as capital assets
within the meaning of Section 1221 of the Code. We have not sought any ruling
from the IRS with respect to statements made and the conclusions reached in
this discussion and there can be no assurance that the IRS will agree with such
statements and conclusions.
For purposes of this discussion, the term "U.S. holder" means a holder who
or that (i) is a citizen or resident of the United States, (ii) is a
corporation, partnership or other entity (other than a trust) created or
organized in or under the laws of the United States or a political subdivision
thereof, (iii) is an estate the income of which is subject to U.S. federal
income taxation regardless of its source, (iv) is a trust if (A) a U.S. court
is able to exercise primary supervision over the administration of the trust
and (B) one more U.S. persons, within the meaning of Section 7701(a)(30) of the
Code ("U.S. Persons"), have authority to control all substantial decisions of
the trust, or (v) is otherwise subject to U.S. federal income taxation on a net
income basis in respect of the notes or common stock. As used herein, a "Non-
U.S. holder" means a holder who or that is not a U.S. holder.
Prospective purchasers are urged to consult their own tax advisors regarding
the U.S. federal, state, local and foreign tax consequences of their
participation in this offering, and their ownership and disposition of the
notes (including conversion of the notes) or the common stock, including the
effect that their particular circumstances may have on such tax consequences.
U.S. Holders
Interest on Notes. Interest paid on a note will be taxable to a U.S. holder
as ordinary interest income, at the time that such interest is accrued or
actually or constructively received, in accordance with such U.S. holder's
method of accounting for U.S. federal income tax purposes.
Conversion of Notes. A U.S. holder of a note generally will not recognize
income, gain or loss on the conversion of the note into common stock, including
an optional conversion by us in the case of a repurchase upon a Change in
Control, except upon receipt of cash in lieu of a fractional share of common
stock or attributable to accrued but unpaid interest that would be taxable as
interest income. Such U.S. holder's aggregate tax basis in the common stock
received upon conversion of the note will be equal to the U.S. holders adjusted
tax basis in the note at the time of conversion (less any portion of that basis
allocable to cash received in lieu of a fractional share). The holding period
of the common stock received upon conversion of a note generally will include
the period during which the U.S. holder held such note prior to the conversion.
38
<PAGE>
Cash received in lieu of a fractional share of common stock should be
treated as a payment in exchange for such fractional share. Gain or loss
recognized on the receipt of cash paid in lieu of such fractional share
generally will be capital gain or loss equal to the difference between the
amount of cash received and the amount of adjusted tax basis allocable to the
fractional share.
Adjustment of Conversion Price. The conversion price of the notes is subject
to adjustment in certain circumstances. See "Description of the Notes--
Conversion Rights." Under Section 305(c) of the Code and the Treasury
Regulations issued thereunder, adjustments that have the effect of increasing
or decreasing the proportionate interest of U.S. holders of the notes in assets
or earnings of Siebel (for example, an adjustment following a distribution of
property by us to our stockholders) may in some circumstances give rise to
deemed distributions to U.S. holders; similarly, a failure to adjust the
conversion price of the notes to reflect a stock dividend or other event
increasing the proportionate interest of stockholders of outstanding common
stock can in some circumstances give rise to deemed distributions to such
stockholders. 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 "--Distributions on Common Stock" below whether or not the U.S.
holders ever convert such notes. Generally, a U.S. holder's tax basis in a note
will be increased to the extent any such constructive distribution is treated
as a dividend.
Distributions on Common Stock. Distributions on common stock will constitute
a dividend for U.S. federal income tax purposes to the extent of current or
accumulated earnings and profits of Siebel as determined under U.S. federal
income tax principles. Dividends paid to U.S. holders that are U.S.
corporations may qualify for the dividends-received deduction. Noncorporate
taxpayers and certain corporations are not entitled to the dividends-received
deduction.
To the extent, if any, that a U.S. holder receives a distribution on common
stock that would otherwise constitute a dividend for U.S. federal income tax
purposes but that exceeds current and accumulated earnings and profits of
Siebel, such distribution will be treated first as a nontaxable return of
capital reducing the U.S. holder's tax basis in the common stock. Any such
distributions in excess of the U.S. holder's tax basis in the common stock will
be treated as capital gain.
Sale, Exchange or Redemption of Notes or Common Stock. In general, subject
to the discussion under "Market Discount" below, a U.S. holder of a note will
recognize capital gain or loss upon the sale, redemption, retirement or other
disposition of the note measured by the difference between the amount of cash
and the fair market value of any property received (except to the extent
attributable to the payment of accrued interest income, which is taxable as
ordinary income) and such U.S. holders adjusted tax basis in the note. A U.S.
holder's adjusted tax basis in the note generally will equal the cost of the
note to such holder, increased by the amount of any market discount previously
taken into income by the holder or decreased by any premium amortized by the
holder with respect to the note. (For the basis and holding period of shares of
common stock received upon conversion of the note, see "--Conversion of Notes,"
above.) In general, subject to the discussion under "Market Discount" below, a
U.S. holder of common stock received upon conversion of a note will recognize
capital gain or loss upon the sale, exchange, redemption or other disposition
of the common stock under rules similar to the computation of gain or loss on
the disposition of the notes. However, special rules may apply to a redemption
of common stock which may result in the proceeds of the redemption being
treated as a dividend. In general, the maximum tax rate for noncorporate
taxpayers on long-term capital gain is 20% with respect to capital assets
(including the notes and common stock), but only if they have been held for
more than one year at the time of disposition. Capital gain on assets having a
holding period of one year or less at the time of disposition of the assets is
taxed as "short-term gain" at a maximum rate of 39.6% in the hands of
noncorporate taxpayers. For individual taxpayers, the deductibility of capital
losses is subject to limitations. For corporate taxpayers, capital gains or
ordinary income are subject to a maximum regular tax rate of 35%.
Market Discount. The resale of notes may be affected by the impact on a
purchaser of the "market discount" provisions of the Code. For this purpose,
the market discount on a note generally will be equal to the amount, if any, by
which the stated redemption price at maturity of the note immediately after its
acquisition
39
<PAGE>
(other than at original issue) exceeds the U.S. holder's adjusted tax basis in
the note. Subject to a de minimis exception, these provisions generally require
a U.S. holder who acquires a note at a market discount to treat as ordinary
income any gain recognized on the disposition of such note to the extent of the
"accrued market discount" on such note at the time of disposition, unless the
U.S. holder elects to include accrued market discount in income currently. This
election to include market discount in income currently, once made, applies to
all market discount obligations acquired on or after the first taxable year to
which the election applies and may not be revoked without the consent of the
IRS. In general, market discount will be treated as accruing on a straight-line
basis over the remaining term of the note at the time of acquisition, or, at
the election of the U.S. holder, under a constant yield method. A U.S. holder
who acquires a note at a market discount and who does not elect to include
accrued market discount in income currently may be required to defer the
deduction of a portion of the interest on any indebtedness incurred or
maintained to purchase or carry the note until the note is disposed of in a
taxable transaction. If a U.S. holder acquires a note with market discount and
receives common stock upon conversion of the note, the amount of accrued market
discount not previously included in income with respect to the converted note
through the date of conversion will be treated as ordinary income upon the
disposition of the common stock.
Amortizable Premium. A U.S. holder who purchases a note at a premium over
its stated principal amount, plus accrued interest, generally may elect to
amortize such premium ("Section 171 premium") from the purchase date to the
note's maturity date under a constant-yield method that reflects semiannual
compounding based on the note's payment period. Amortizable premium, however,
will not include any premium attributable to a note's conversion feature. The
premium attributable to the conversion feature is the excess, if any, of the
note's purchase price over what the note's fair market value would be if there
were no conversion feature. Amortized Section 171 premium is treated as an
offset to interest income on a note and not as a separate deduction. The
election to amortize premium on a constant yield method, once made, applies to
all debt obligations held or subsequently acquired by the electing U.S. holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.
Non-U.S. Holders
Payments of Interest. Generally, payments of interest on the notes to, or on
behalf of, a Non-U.S. holder will not be subject to U.S. federal withholding
tax if: (i) such interest is not effectively connected with the conduct of a
trade or business within the U.S. by such Non-U.S. holder; (ii) such Non-U.S.
holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of stock of Siebel within the meaning of
Code Section 871(h)(3); (iii) such Non-U.S. holder is not (a) a controlled
foreign corporation for U.S. federal income tax purposes that is related to
Siebel through stock ownership or (b) a bank that received the note on an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of its trade or business as described in Section 881(c)(3)(A)
of the Code; and (iv) the Non-U.S. holder provides a statement signed under
penalties of perjury that includes its name and address and certifies that it
is not a U.S. Person in compliance with applicable requirements of the
Regulations or an exemption is otherwise established. If certain requirements
are satisfied, the certification described above may be provided by a
securities clearing organization, a bank, or other financial institution that
holds customer's securities in the ordinary course of its trade or business.
For this purpose the Non-U.S. holder of notes would be deemed to own
constructively the common stock into which it could be converted. If these
requirements cannot be satisfied, a Non-U.S. holder will be subject to U.S.
federal withholding tax at a rate of 30% (or lower treaty rate, if applicable)
on interest payments on the notes unless (x) the interest is effectively
connected with the conduct of a United States trade or business, in which case
the interest will be subject to U.S. federal income tax on net income that
applies to U.S. persons generally, or (y) an applicable income tax treaty
provides for a lower rate of, or exemption from, withholding tax.
Conversion of Notes. A Non-U.S. holder generally will not be subject to U.S.
federal withholding tax on the conversion of a note into common stock. To the
extent a Non-U.S. holder receives cash in lieu of a fractional share of common
stock on the conversion, such cash may give rise to gain that would be subject
to
40
<PAGE>
the rules described below with respect to the sale or exchange of a note or
common stock. See "--Sales of Exchange of Notes or Common Stock" below.
Adjustment of Conversion Price. The conversion price of the notes is subject
to adjustment in certain circumstances. See "Description of the Notes--
Conversion Rights." Any such adjustment could, in certain circumstances, give
rise to a deemed distribution to Non-U.S. holders of the notes. See "--U.S.
Holders-Adjustment of Conversion Price" above. In such case, the deemed
distribution would be subject to the rules below regarding withholding of U.S.
federal tax on dividends in respect of common stock. See "--Distributions on
Common Stock" below.
Distributions on Common Stock. Distributions on common stock will constitute
a dividend for U.S. federal income tax purposes to the extent of current or
accumulated earnings and profits of Siebel as determined under U.S. federal
income tax principles. Dividends paid on common stock held by a Non-U.S. holder
will be subject to U.S. federal withholding tax at a rate of 30% (or lower
treaty rate, if applicable), unless the dividend is effectively connected with
the conduct of a trade or business within the United States by the Non-U.S.
holder and, if required by a tax treaty, is attributable to a permanent
establishment maintained in the United States, in which case the dividend will
be subject to U.S. federal income tax on net income that applies to U.S.
persons generally (and, with respect to corporate holders under certain
circumstances, the branch profits tax). A Non-U.S. holder may be required to
satisfy certain certification requirements in order to claim a reduction of or
exemption from withholding under the foregoing rules.
Sales of Exchange of Notes or Common Stock. In general, a Non-U.S. holder
generally will not be subject to U.S. federal withholding tax on gain
recognized upon the sale or other disposition (including a redemption) of a
note or common stock received upon conversion thereof unless the gain is
effectively connected with the conduct of a trade or business within the U.S.
by the Non-holder and, if required by a tax treaty, is attributable to a
permanent establishment maintained in the United States or unless, the Non-U.S.
holder (i) is a nonresident alien individual who is present in the United
States for 183 or more days in the taxable year in which the gain is realized
and certain other conditions are satisfied, or (ii) is subject to tax pursuant
to the provisions of U.S. tax law applicable to certain U.S. expatriates.
However, if we were to become a "United States real property holding
corporation" (a "USRPHC"), a Non-U.S. holder may be subject to federal income
tax withholding with respect to gain realized on the disposition of notes or
shares of common stock. In that case, any withholding tax withheld pursuant to
the rules applicable to dispositions of a "United States real property
interest" will be creditable against such Non-U.S. holder's U.S. federal income
tax liability and may entitle such Non-U.S. holder to a refund upon furnishing
required information to the IRS. We do not believe that we are a USRPHC or will
become a USRPHC in the future.
U.S. Estate Tax. Notes owned or treated as owned by an individual who is not
a citizen or resident (as specially defined for U.S. federal estate tax
purposes) of the United States at the time of death ("Nonresident Decedent")
will not be includible in the Nonresident Decedent's gross estate for U.S.
federal estate tax purposes as a result of the Nonresident Decedent's death,
provided that, at the time of death, the Nonresident Decedent does not own,
actually or constructively, 10% or more of the total combined voting power of
all classes of stock of Siebel and payments with respect to such notes would
not have been effectively connected with the conduct of a trade or business in
the United States by the Nonresident Decedent. Common stock owned or treated as
owned by a Nonresident Decedent will be includible in the Nonresident
Decedent's gross estate for U.S. federal estate tax purposes as a result of the
Nonresident Decedent's death. Subject to applicable treaty limitations, if any,
a Nonresident Decedent's estate may be subject to U.S. federal estate tax on
property includible in the estate for U.S. federal estate tax purposes.
IRS Reporting and Backup Withholding
Certain noncorporate U.S. holders may be subject to IRS reporting and backup
withholding at a rate of 31% on payments of interest on the notes, dividends on
common stock and proceeds from the sale or other disposition of the notes or
common stock. Backup withholding will only be imposed where the noncorporate
41
<PAGE>
U.S. holder (i) fails to furnish its taxpayer identification number ("TIN"),
which would ordinarily be his or her social security number, on a properly
completed Form W-9; (ii) furnishes an incorrect TIN, (iii) is notified by the
IRS that he or she has failed to properly report payments of interests or
dividends, or (iv) under certain circumstances, fails to certify, under
penalties of perjury, that he or she has furnished a correct TIN and has not
been notified by the IRS that he or she is subject to backup withholding. A
failure to provide us with a correct TIN may also subject a U.S. holder to
penalties imposed by the IRS.
We must report annually to the IRS and to each Non-U.S. holder any interest
and dividends paid with respect to a note or common stock, respectively and
that is subject to U.S. federal withholding tax or that is exempt from such tax
under applicable treaty or the Code. We also report to the IRS and to each non-
U.S. Person such income paid which is exempt from federal withholding tax
because it is effectively connected with such Non-U.S. Person's U.S. trade or
business. However, a Non-U.S. holder will not be subject to IRS reporting or
backup withholding if the payer has received appropriate certification
statements from or on behalf of the Non-U.S. holder and provided that the payer
does not have actual knowledge that the Non-U.S. holder is a U.S. Person. The
payment of the proceeds from the disposition of the notes or common stock to or
through the U.S. office of any U.S. or foreign broker will be subject to IRS
reporting and possibly backup withholding unless the owner certifies as to its
non-U.S. status under penalties of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. Person or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a note
or common stock to or through a non-U.S. office of a non-U.S. broker that is
not a U.S. related person will not be subject to IRS reporting or backup
withholding. For this purpose, a "U.S. related person" is (i) a "controlled
foreign corporation" for U.S. federal income tax purposes or (ii) a non-U.S.
Person 50% or more of whose gross income from all sources for the three-year
period ending with the close of its taxable year preceding the payment (or for
such part of the period that the broker has been in existence) is derived from
the activities that are effectively connected with the conduct of a U.S. trade
or business.
In the case of the payment of proceeds from the disposition of notes or
common stock to or through a non-U.S. office of a broker that is a U.S. related
person, the Regulations require IRS reporting on the payment unless the broker
has documentary evidence in its files that the owner is a Non-U.S. holder and
the broker has no knowledge to the contrary. Backup withholding will not apply
to payments made through foreign offices of a broker that is a U.S. Person or a
U.S. related person (absent actual knowledge that the payee is a U.S. Person).
Any amounts withheld under the backup withholding rates from a payment to
holder will be allowed as a credit against such holders U.S. federal income tax
liability, if any, or will otherwise be refundable, provided that the requisite
procedures are followed. holders of the notes or common stock should consult
their own tax advisors regarding their qualification for exemption from backup
withholding and the procedure for obtaining such an exemption, if applicable.
Prospective Final Regulations
The IRS has issued new withholding regulations effective generally for
payments made after December 31, 2000. The Proposed Regulations provide that
information reporting but not backup withholding, may apply to a payment made
outside the United States of the proceeds of a sale of a note through an office
outside the United States of a broker that is a foreign partnership if one or
more of its partners are "U.S. persons," as defined in U.S. Treasury
regulations, who in the aggregate hold more than 50% of the income or capital
interest in the partnership or such foreign partnership is engaged in a United
States trade or business unless the broker has documentary evidence in its
records that the holder is a non-U.S. person and does not have actual knowledge
that the holder is a U.S. person, or the holder otherwise establishes an
exemption. Non-U.S. holders should consult their own tax advisors with respect
to the future impact of these new withholding regulations.
42
<PAGE>
SELLING SECURITY HOLDERS
The notes were originally issued by us and sold by the initial purchasers in
a transaction exempt from the registration requirements of the Securities Act
to persons reasonably believed by the initial purchasers to be qualified
institutional buyers. Selling holders, including their transferees, pledgees or
donees or their successors, may from time to time offer and sell pursuant to
this prospectus any or all of the notes and common stock into which the notes
are convertible.
The following table sets forth information with respect to the selling
holders and the principal amounts of notes beneficially owned by each selling
holder that may be offered under this prospectus. The information is based on
information provided by or on behalf of the selling holders. The selling
holders may offer all, some or none of the notes or common stock into which the
notes are convertible. Because the selling holders may offer all or some
portion of the notes or the common stock, no estimate can be given as to the
amount of the notes or the common stock that will be held by the selling
holders upon termination of any sales. In addition, the selling holders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their notes since the date on which they provided the information
regarding their notes in transactions exempt from the registration requirements
of the Securities Act.
<TABLE>
<CAPTION>
Common Common
Principal Stock Stock
Amount of Issuable Owned
Notes upon after
Beneficially Conversion Common Completion
Owned and of the Stock of the
Name Offered(1) Notes(1) Offered(1) Offering
---- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
AIG/National Union Fire
Insurance....................... $ 840,000 18,013 18,013 --
Alexandra Global Investment Fund
1 Ltd. ......................... 1,000,000 21,444 21,444 --
Aloha Airlines Non-Pilots Pension
Trust........................... 140,000 3,002 3,002 --
Aloha Airlines Pilots Retirement
Trust........................... 80,000 1,715 1,715 --
Alscott Investments, LLC. ....... 1,950,000 41,816 41,816 --
Argent Classic Convertible
Arbitrage Fund (Bermuda) L.P. .. 9,000,000 192,997 192,997 --
Arkansas PERS.................... 1,260,000 27,019 27,019 --
Arkansas Teachers Retirement
System.......................... 2,285,000 49,000 49,000 --
Arpeggio Fund, L.P. ............. 500,000 10,722 10,722 --
American Home Assurance Co. ..... 1,250,000 26,805 26,805 --
Associated Electric & Gas
Insurance Services Limited...... 500,000 10,722 10,722 --
Bancroft Convertible Fund, Inc.
................................ 1,000,000 21,444 21,444 --
Bankers Trust Trustee for Daimler
Chrysler Corp. Emp. #1 Pension
Plan Dtd. 4/1/89................ 2,466,000 52,881 52,881 --
Baptist Health of South Florida.. 153,000 3,280 3,280 --
BBT Fund, L.P. .................. 8,000,000 171,553 171,553 --
Bear, Stearns & Co., Inc......... 1,500,000 32,166 32,166 --
BNP Arbitrage SNC................ 250,000 5,361 5,361 89,958
Boilermaker-Blacksmith Pension
Trust........................... 1,665,000 35,704 35,704 --
Boston Museum of Fine Arts....... 118,000 2,530 2,530 --
Boulder Capital, Inc. ........... 2,800,000 60,043 60,043 --
Boulder II Limited............... 7,300,000 156,542 156,542 --
BS Debt Income Fund--Class A..... 10,000 214 214 --
BVI Social Security Board........ 26,000 557 557 --
CALAMOS Convertible Fund--CALAMOS
Investment Trust................ 1,950,000 41,816 41,816 --
CALAMOS Convertible Portfolio--
CALAMOS Advisors Trust.......... 25,000 536 536 --
CALAMOS Global Growth and Income
Fund--CALAMOS Investment Trust.. 125,000 2,680 2,680 --
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Common Common
Principal Stock Stock
Amount of Issuable Owned
Notes upon after
Beneficially Conversion Common Completion
Owned and of the Stock of the
Name Offered Notes Offered Offering
---- ------------ ---------- ------- ----------
<S> <C> <C> <C> <C>
CALAMOS Growth and Income Fund--
CALAMOS Investment Trust.......... 430,000 9,221 9,221 --
CALAMOS Market Neutral Fund--
CALAMOS Investment Trust.......... 70,000 1,501 1,501 --
C&H Sugar Company, Inc. ........... 225,000 4,824 4,824 --
Champion International Corporation
Master Retirement Trust........... 1,425,000 30,557 30,557 --
Chrysler Corporation Master
Retirement Trust.................. 2,775,000 59,507 59,507 --
CIBC World Markets International
Equity Arbitrage.................. 4,500,000 96,498 96,498 --
City of Knoxville Pension System... 540,000 11,579 11,579 --
City University of New York........ 56,000 1,200 1,200 --
Consulting Group Capital Markets
Funds............................. 140,000 3,002 3,002 --
Coua Bond Debenture Fund........... 400,000 8,577 8,577 --
David Lipscomb University General
Endowment......................... 105,000 2,251 2,251 --
Delaware Group Equity Fund V--
Retirement Income Fund Series..... 85,000 1,822 1,822 --
Delaware Group Premium Fund, Inc.--
Convertible Securities Series..... 300,000 6,433 6,433 --
Delaware PERS...................... 1,150,000 24,660 24,660 --
Delta Airlines Master Trust........ 3,375,000 72,374 72,374 --
Delta Airlines Master Trust........ 1,085,000 23,266 23,266 --
Deutsche Bank Securities, Inc...... 25,520,000 547,255 547,255 --
Dorinco Reinsurance Company........ 625,000 13,402 13,402 --
Dow Chemical Company Employees'
Retirement Plan, The.............. 3,245,000 69,586 69,586 --
Ellsworth Convertible Growth and
Income Fund, Inc. ................ 1,000,000 21,444 21,444 --
Elf Aquitaine...................... 100,000 2,144 2,144 --
Engineers Joint Pension Fund....... 317,000 6,797 6,797 --
Equitable Life Assurance Separate
Account--Balanced................. 120,000 2,573 2,573 --
Equitable Life Assurance Separate
Account--Convertibles............. 1,985,000 42,566 42,566 --
Family Service Life Insurance
Company........................... 300,000 6,433 6,433 --
Fist--Franklin Convertible
Securities Fund................... 1,500,000 32,166 32,166 --
Fondren Foundation, The............ 135,000 2,894 2,894 --
Forest Alternative Strategies Fund
II L.P. A5I....................... 450,000 9,649 9,649 --
Forest Alternative Strategies Fund
II L.P. A5M....................... 180,000 3,859 3,859 --
Forest Fulcrum Fund L.P. .......... 5,900,000 126,520 126,520 --
Forest Global Convertible Fund
Series A-5........................ 8,255,000 177,021 177,021 --
Forest Performance Fund L.P. ...... 500,000 10,722 10,722 --
Forum Capital Markets LLC.......... 800,000 17,155 17,155 --
Franklin & Marshall College........ 184,000 3,945 3,945 --
Frist Foundation, The.............. 310,000 6,647 6,647 --
Gabelli Global Convertible
Securities Fund, The.............. 150,000 3,216 3,216 --
Global Bermuda Limited
Partnership....................... 1,650,000 35,382 35,382 29,000
Grable Foundation.................. 86,000 1,844 1,844 --
Greek Catholic Union............... 15,000 321 321 --
Greek Catholic Union (Calamos
Account #2)....................... 20,000 428 428 --
Gryphon Domestic III, LLC.......... 2,400,000 51,466 51,466 --
Guardian Life Insurance Company of
America, The...................... 4,500,000 96,498 96,498 --
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Common Common
Principal Stock Stock
Amount of Issuable Owned
Notes upon after
Beneficially Conversion Common Completion
Owned and of the Stock of the
Name Offered Notes Offered Offering
---- ------------ ---------- ------- ----------
<S> <C> <C> <C> <C>
Guardian Pension Trust, The......... 200,000 4,288 4,288 --
Hawaiian Airlines Employees Pension
Plan-IAM........................... 125,000 2,680 2,680 --
Hawaiian Airlines Pension Plan for
Salaried Employees................. 30,000 643 643 --
Hawaiian Airlines Pilots Retirement
Plan............................... 185,000 3,967 3,967 --
Highbridge Capital Corporation...... 19,880,000 426,310 426,310 --
Hudson River Trust Balanced
Account............................ 1,810,000 38,814 38,814 --
Hudson River Trust Growth & Income
Account............................ 3,630,000 77,842 77,842 --
Hudson River Trust Growth
Investors.......................... 1,510,000 32,380 32,380 --
IBM Retirement Plan................. 3,380,000 72,481 72,481 --
ICI American Holdings Trust......... 505,000 10,829 10,829 --
Investcorp--SAM Fund Limited........ 4,450,000 95,426 95,426 --
Island Holdings, Inc. .............. 15,000 321 321 --
Kapiolani Medical Center............ 275,000 5,897 5,897 --
Kentfield Trading, Ltd. ............ 10,180,000 218,301 218,301 --
Kettering Medical Center Funded
Depreciation Account............... 135,000 2,894 2,894 --
Key Asset Management, Inc. as Agent
for the Victory Convertible
Securities Fund.................... 500,000 10,722 10,722 --
Knoxville Utilities Board Retirement
System............................. 280,000 6,004 6,004 --
Lakeshore International, Ltd. ...... 3,350,000 71,838 71,838 59,000
Lipper Convertibles, L.P. .......... 10,000,000 214,442 214,442 --
Lipper Convertibles Series II, L.P.
................................... 550,000 11,794 11,794 --
Lipper Offshore Convertibles, L.P.
................................... 2,250,000 48,249 48,249 --
LLT Ltd. ........................... 440,000 9,435 9,435 --
Lord Abbett & Co. Oxford Fund....... 400,000 8,577 8,577 --
Lord Abbett Bond Debenture Fund..... 1,500,000 32,166 32,166 --
McMahan Securities Company, L.P. ... 1,000,000 21,444 21,444 --
Maryland State Retirement System.... 1,239,000 26,569 26,569 --
Memphis Light, Gas & Water
Retirement Fund.................... 1,530,000 32,809 32,809 --
Merrill Lynch Convertible Fund, Inc.
................................... 200,000 4,288 4,288 --
Merrill Lynch ECS Convertible
Securities Portfolio............... 50,000 1,072 1,072 --
Merrill Lynch Insurance Group....... 207,000 4,438 4,438 --
Merrill Lynch Pierce, Fenner, Smith
Inc. .............................. 10,000 214 214 --
Morgan Stanley Dean Witter.......... 5,500,000 117,943 117,943 --
Morgan Stanley Dean Witter
Convertible Securities Trust....... 2,000,000 42,888 42,888 --
Motion Picture Industry Health
Plan--Active Member Fund........... 325,000 6,969 6,969 --
Motion Picture Industry Health
Plan--Retiree Member Fund.......... 160,000 3,431 3,431 --
Nalco Chemical Company.............. 225,000 4,824 4,824 --
New Orleans Firefighters............ 92,000 1,972 1,972 --
New York Life Insurance and Annuity
Corporation........................ 1,600,000 34,310 34,310 --
New York Life Insurance Company..... 14,400,000 308,796 308,796 --
Nicholas-Applegate Convertible
Fund............................... 447,000 9,585 9,585 --
1976 Distribution Trust FBO A. R.
Lauder/Zinterhoffer................ 12,000 257 257 --
1976 Distribution Trust FBO Jane A.
Lauder............................. 12,000 257 257 --
Northern Income Equity Fund......... 3,000,000 64,332 64,332 --
OCM Convertible Trust............... 1,495,000 32,059 32,059 --
Occidental Petroleum................ 152,000 3,259 3,259 --
Ohio Bureau of Workers
Compensation....................... 100,000 2,144 2,144 --
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
Common Common
Principal Stock Stock
Amount of Issuable Owned
Notes upon after
Beneficially Conversion Common Completion
Owned and of the Stock of the
Name Offered Notes Offered Offering
---- ------------ ---------- ------- ----------
<S> <C> <C> <C> <C>
Onex Industrial Partners............ 3,700,000 79,343 79,343 --
Oppenheimer Convertible Securities
Fund (Colorado).................... 3,000,000 64,332 64,332 --
Oppenheimer Convertible Securities
Fund (New York).................... 3,000,000 64,332 64,332 --
Pacific Life Insurance Company...... 1,000,000 21,444 21,444 --
Partner Reinsurance Company Ltd. ... 575,000 12,330 12,330 --
Pebble Capital, Inc. ............... 1,100,000 23,588 23,588 --
Penn Treaty Network America
Insurance Company.................. 168,000 3,602 3,602 --
Physicians Life..................... 208,000 4,460 4,460 --
Pilgrim Convertible Fund............ 2,522,000 54,082 54,082 --
Port Authority of Allegheny County
Retirement and Disability Allowance
Plan for the Employees Represented
by Local 85 of the Amalgamated
Transit Union...................... 1,760,000 37,741 37,741 --
Q Investments, L.P.................. 788,000 16,898 16,898 --
Queen's Health Plan................. 50,000 1,072 1,072 --
R/2/ Investments, LDC............... 1,462,000 31,351 31,351 --
Rhapsody Fund, L.P. ................ 650,000 13,938 13,938 --
Robertson Stephens.................. 12,000,000 257,330 257,330 --
Salomon Brothers Asset Management,
Inc. .............................. 6,690,000 143,461 143,461 222,300
San Diego City Retirement........... 748,000 16,040 16,040 --
San Diego County Convertible........ 2,306,000 49,450 49,450 --
SG Cowen Securities................. 3,600,000 77,199 77,199 --
Shell Pension Trust................. 121,000 2,594 2,594 --
South Dakota Retirement System...... 1,250,000 26,805 26,805 86,000
Southern Farm Bureau Life Insurance
Company............................ 600,000 12,866 12,866 --
Southern Farm Bureau Life Insurance-
FRIC............................... 725,000 15,547 15,547 --
SPT................................. 1,400,000 30,021 30,021 --
Starvest Combined Portfolio......... 1,200,000 25,733 25,733 --
State of Connecticut Combined In-
vestment Funds..................... 3,225,000 69,157 69,157 --
State Employees' Retirement Fund of
the State of Delaware.............. 1,470,000 31,522 31,522 --
State of Oregon Equity.............. 5,600,000 120,087 120,087 --
State of Oregon/SAIF Corporation.... 6,500,000 139,387 139,387 --
State Street Bank Custodian for 6E
Pension Trust...................... 1,302,000 27,920 27,920 --
TCW Group, Inc., The................ 16,365,000 350,934 350,934 --
Transatlantic Reinsurance Co........ 1,500,000 32,166 32,166 --
UBKAM Arbitrage Fund Ltd. .......... 1,000,000 21,444 21,444 --
U.S. Olympic Foundation............. 150,000 3,216 3,216 --
Unifi, Inc. Profit Sharing Plan and
Trust.............................. 215,000 4,610 4,610 --
United Food and Commercial Workers
Local 1262 and Employers Pension
Fund............................... 900,000 19,299 19,299 --
Value Line Convertible Fund, Inc. .. 500,000 10,722 10,722 --
Vanguard Convertible Securities
Fund, Inc. ........................ 1,890,000 40,529 40,529 --
Van Waters & Rogers, Inc. Retirement
Plan............................... 480,000 10,293 10,293 --
Wake Forest University.............. 771,000 16,533 16,533 --
Warburg Dillon Read LLC............. 7,500,000 160,831 160,831 --
White River Securities.............. 1,500,000 32,166 32,166 --
Zeneca Holdings Trust............... 505,000 10,829 10,829 --
</TABLE>
--------
(1) Amounts indicated may be in excess of the total amount registered due to
sales or transfers exempt from the registration requirements of the
Securities Act since the date upon which selling holders provided to us the
information regarding their notes.
46
<PAGE>
None of the selling holders nor any of their affiliates, officers, directors
or principal equity holders has held any position or office or has had any
material relationship with us within the past three years. The selling holders
purchased all of the notes in private transactions on or after September 15,
1999. All of the notes were "restricted securities" under the Securities Act
prior to this registration.
Information concerning the selling holders may change from time to time and
any changed information will be set forth in supplements to this prospectus if
and when necessary. In addition, the conversion rate and therefore, the number
of shares of common stock issuable upon conversion of the notes, is subject to
adjustment under certain circumstances. Accordingly, the aggregate principal
amount of notes and the number of shares of common stock into which the notes
are convertible may increase or decrease.
47
<PAGE>
PLAN OF DISTRIBUTION
The selling holders and their successors, including their transferees,
pledgees or donees or their successors, may sell the notes and the common stock
into which the notes are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the
form of discounts, concessions or commissions from the selling holders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.
The notes and the common stock into which the notes are convertible may be
sold in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at prices related to the prevailing market prices, at
varying prices determined at the time of sale, or at negotiated prices. These
sales may be effected in transactions, which may involve crosses or block
transactions:
. on any national securities exchange or U.S. inter-dealer system of a
registered national securities association on which the notes or the
common stock may be listed or quoted at the time of sale;
. in the over-the-counter market;
. in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
. through the writing of options, whether the options are listed on an
options exchange or otherwise; or
. through the settlement of short sales.
In connection with the sale of the notes and the common stock into which the
notes are convertible or otherwise, the selling holders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the notes or the common stock into which the
notes are convertible in the course of hedging the positions they assume. The
selling holders may also sell the notes or the common stock into which the
notes are convertible short and deliver these securities to close out their
short positions, or loan or pledge the notes or the common stock into which the
notes are convertible to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling holders from the sale of the notes or
common stock into which the notes are convertible offered by them will be the
purchase price of the notes or common stock less discounts and commissions, if
any. Each of the selling holders reserves the right to accept and, together
with their agents from time to time, to reject, in whole or in part, any
proposed purchase of notes or common stock to be made directly or through
agents. We will not receive any of the proceeds from this offering.
Our outstanding common stock is listed for trading on the Nasdaq National
Market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the notes.
In order to comply with the securities laws of some states, if applicable,
the notes and common stock into which the notes are convertible may be sold in
these jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the notes and common stock into which the notes are
convertible may not be sold unless they have been registered or qualified for
sale or an exemption from registration or qualification requirements is
available and is complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under
the Securities Act. Selling holders who are "underwriters" within the meaning
of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act. The selling holders have
acknowledged that they understand their obligations to comply with the
provisions of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation M.
48
<PAGE>
In addition, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule
144 or Rule 144A rather than pursuant to this prospectus. A selling holder may
not sell any notes or common stock described in this prospectus and may not
transfer, devise or gift these securities by other means not described in this
prospectus.
To the extent required, the specific notes or common stock to be sold, the
names of the selling holders, the respective purchase prices and public
offering prices, the names of any agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a post-
effective amendment to the registration statement of which this prospectus is a
part.
We entered into a registration rights agreement for the benefit of holders
of the notes to register their notes and common stock under applicable federal
and state securities laws under specific circumstances and at specific times.
The registration rights agreement provides for cross-indemnification of the
selling holders and us and their and our respective directors, officers and
controlling persons against specific liabilities in connection with the offer
and sale of the notes and the common stock, including liabilities under the
Securities Act. We will pay substantially all of the expenses incurred by the
selling holders incident to the offering and sale of the notes and the common
stock.
49
<PAGE>
LEGAL MATTERS
The validity of the notes and the common stock offered hereby is being
passed upon for us by Cooley Godward LLP, Palo Alto, California. James C.
Gaither, a partner of Cooley Godward LLP, is one of our directors. As of the
date of this prospectus, certain members and associates of Cooley Godward LLP
beneficially own an aggregate of 93,966 shares of our common stock.
EXPERTS
The consolidated financial statements and schedule of Siebel Systems, Inc.
and subsidiaries as of December 31, 1997 and 1998, and for each of the years in
the three-year period ended December 31, 1998, have been incorporated by
reference herein and in the registration of which this prospectus is a part, in
reliance upon the reports of KPMG LLP, independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
50
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
We have authorized no one to give any information or to make any representa-
tions that are not contained in this prospectus. You should rely only on the
information provided in this prospectus or incorporated by reference therein.
You must not rely on any unauthorized information.
This prospectus does not offer to sell or buy any notes or shares in any ju-
risdiction where it is unlawful. You should not assume that the information in
this prospectus is accurate as of any date other than the date on the front of
the document.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................... 1
Risk Factors............................................................... 2
Where You Can Find More Information........................................ 12
Incorporation by Reference................................................. 12
Use of Proceeds............................................................ 14
Ratio of Earnings to Fixed Charges......................................... 14
Business................................................................... 15
Description of the Notes................................................... 22
Description of Capital Stock............................................... 36
Material United States Federal Income Tax Consequences..................... 38
Selling Security Holders................................................... 43
Plan of Distribution....................................................... 48
Legal Matters.............................................................. 50
Experts.................................................................... 50
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[SIEBEL LOGO]
$300,000,000
5 1/2% Convertible Subordinated Notes
Due September 15, 2006
and
6,433,260 Shares of Common Stock
Issuable Upon Conversion of the Notes
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the
sale of the securities being registered. All the amounts shown are estimates
except for the registration fee and the filing fee.
<TABLE>
<S> <C>
Registration fee................................................... $ 83,400
Legal fees and expenses............................................ 30,000
Accounting fees and expenses....................................... 10,000
Nasdaq National Market filing fee.................................. 17,500
Miscellaneous...................................................... 4,100
--------
Total............................................................ $145,000
========
</TABLE>
Item 15. Indemnification of Officers and Directors.
Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify our directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act").
The Registrant's Certificate of Incorporation, as amended, provides for the
elimination of liability for monetary damages for breach of the directors'
fiduciary duty of care to the Registrant and its stockholders. These provisions
do not eliminate the directors' duty of care and, in appropriate circumstances,
equitable remedies such an injunctive or other forms of non- monetary relief
will remain available under Delaware law. In addition, each director will
continue to be subject to liability for breach of the director's duty of
loyalty to the Registrant, for acts or omissions not in good faith or involving
intentional misconduct, for knowing violations of law, for any transaction from
which the director derived an improper personal benefit and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provision does not affect a director's responsibilities
under any other laws, such as the federal securities laws or state or federal
environmental laws.
The Registrant has entered into agreements with its directors and executive
officers that require the Registrant to indemnify such persons against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director or
officer of the Registrant or any of its affiliated enterprises, provided such
person acted in good faith and in a manner such person reasonably believed to
be in or not opposed to the best interests of the Registrant and, with respect
to any criminal proceeding, had no reasonable cause to believe his or her
conduct was unlawful. The indemnification agreements also set forth certain
procedures that will apply in the event of a claim for indemnification
thereunder.
II-1
<PAGE>
Item 16. Exhibits
(a) Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description of the Document
------- ---------------------------
<C> <S>
3.1 Restated Certificate of Incorporation of the Registrant.(3)
3.2 Bylaws of the Registrant.(1)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Stock Certificate.(1)
4.3 Restated Investor Rights Agreement, dated December 1, 1995, between
the Registrant and certain investors, as amended April 30, 1996 and
June 14, 1996.(1)
4.4 Form of Registration Rights Agreement, dated October 1, 1997 between
the Registrant and certain stockholders.(5)
4.5 Form of Registration Rights Agreement, dated November 1, 1997
between the Registrant and certain stockholders.(6)
4.6 Indenture between the Registrant, as Issuer, and Chase Manhattan
Bank and Trust Company, National Association, as Trustee, dated
September 15, 1999.(7)
4.7 Purchase Agreement among the Registrant, Goldman Sachs & Co., Banc
of America Securities LLC and Thomas Weisel Partners LLC dated
September 15, 1999.(7)
4.8 Registration Rights Agreement among the Registrant, Goldman Sachs &
Co., Banc of America Securities LLC and Thomas Weisel Partners LLC
dated September 15, 1999.(7)
5.1 Opinion of Cooley Godward LLP.(7)
10.1 Registrant's 1996 Equity Incentive Plan, as amended.(3)
10.2 Registrant's Employee Stock Purchase Plan, as amended.(3)
10.3 Form of Indemnity Agreement entered into between the Registrant and
its officers and directors.(1)
10.4 Registrant's Deferred Compensation Plan dated January 10, 1997.(4)
10.5 Master Alliance Agreement, dated March 17, 1995, between the
Registrant and Andersen
Consulting LLP.(1)(2)
10.6 Assignment Agreement, dated September 20, 1995, by and between the
Registrant and
Thomas M. Siebel.(1)
10.7 Lease Agreement, dated June 4, 1996, by and between the Registrant
and Crossroad Associates and Clocktower Associates.(1)
10.8 InterActive WorkPlace, Inc. 1996 Stock Option Plan.(5)
12.1 Statement regarding Computation of Ratios.(7)
23.1 Consent of KPMG LLP.(7)
23.2 Consent of Cooley Godward LLP. (included in Exhibit 5.1).(7)
24.1 Power of Attorney (included in the signature page).(7)
25.1 Form T-1 Statement of Eligibility and Qualification of Trustee.(7)
</TABLE>
--------
(1) Incorporated by reference to our Registration Statement on Form S-1 (No.
333-03751), as amended.
(2) Confidential treatment has been granted with respect to portions of this
exhibit.
(3) Incorporated by reference to our Registration Statement on Form S-8 (No.
333-07983), as amended.
(4) Incorporated by reference to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1997.
(5) Incorporated by reference to our Registration Statement on Form S-3 (No.
333-36967), as amended.
(6) Incorporated by reference to our Quarterly Report on Form 10-Q for the
quarter ended December 30, 1997.
(7) Filed herewith.
II-2
<PAGE>
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any 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.
(ii) To reflect in the prospectus any facts or events 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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment that contains a form of
prospectus 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.
(3) 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.
(4) The undersigned registrant hereby undertakes that, for purposes 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 Exchange Act) that is
incorporated by reference in the registration statement 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.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities 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
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
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 San Mateo, County of San Mateo, State of California
on November 30, 1999.
/s/ Thomas M. Siebel
By: _________________________________
Thomas M. Siebel
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Thomas M. Siebel and Howard H. Graham and each
of them, as his true and lawful attorneys-in-fact and agents, 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 (including post-
effective amendments, exhibits thereto and other documents in connection
therewith) to this registration statement and any subsequent registration
statement filed by the registrant pursuant to Securities and Exchange
Commission Rule 462, which relates to this registration statement and to file
the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
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
connection therewith, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys- in-fact
and agents, or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Thomas M. Siebel Chairman, Chief Executive November 30, 1999
______________________________________ Officer and Director
Thomas M. Siebel (Principal Executive
Officer)
/s/ Howard H. Graham Senior Vice President November 30, 1999
______________________________________ Finance and
Howard H. Graham Administration and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Eric E. Schmidt Director November 30, 1999
______________________________________
Eric E. Schmidt
/s/ James C. Gaither Director November 30, 1999
______________________________________
Jame C. Gaither
/s/ George T. Shaheen Director November 29, 1999
______________________________________
George T. Shaheen
Director
______________________________________
Charles R. Schwab
Director
______________________________________
A. Michael Spence
</TABLE>
II-4
<PAGE>
EXHIBITS INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of the Document
------- ---------------------------
<C> <S>
3.1 Restated Certificate of Incorporation of the Registrant.(3)
3.2 Bylaws of the Registrant.(1)
4.1 Reference is made to Exhibits 3.1 and 3.2.
4.2 Specimen Stock Certificate.(1)
4.3 Restated Investor Rights Agreement, dated December 1, 1995, between
the Registrant and certain investors, as amended April 30, 1996 and
June 14, 1996.(1)
4.4 Form of Registration Rights Agreement, dated October 1, 1997 between
the Registrant and certain stockholders.(5)
4.5 Form of Registration Rights Agreement, dated November 1, 1997 between
the Registrant and certain stockholders.(6)
4.6 Indenture between the Registrant, as Issuer, and Chase Manhattan Bank
and Trust Company, National Association, as Trustee, dated September
15, 1999. (7)
4.7 Purchase Agreement among the Registrant, Goldman Sachs & Co., Banc of
America Securities LLC and Thomas Weisel Partners LLC dated September
15, 1999. (7)
4.8 Registration Rights Agreement among the Registrant, Goldman Sachs &
Co., Banc of America Securities LLC and Thomas Weisel Partners LLC
dated September 15, 1999. (7)
5.1 Opinion of Cooley Godward LLP.(7)
10.1 Registrant's 1996 Equity Incentive Plan, as amended.(3)
10.2 Registrant's Employee Stock Purchase Plan, as amended.(3)
10.3 Form of Indemnity Agreement entered into between the Registrant and
its officers and directors.(1)
10.4 Registrant's Deferred Compensation Plan dated January 10, 1997.(4)
10.5 Master Alliance Agreement, dated March 17, 1995, between the
Registrant and Andersen Consulting LLP.(1)(2)
10.6 Assignment Agreement, dated September 20, 1995, by and between the
Registrant and Thomas M. Siebel.(1)
10.7 Lease Agreement, dated June 4, 1996, by and between the Registrant and
Crossroad Associates and Clocktower Associates.(1)
10.8 InterActive WorkPlace, Inc. 1996 Stock Option Plan.(5)
12.1 Statement regarding Computation of Ratios. (7)
23.1 Consent of KPMG LLP.(7)
23.2 Consent of Cooley Godward LLP. (included in Exhibit 5.1).(7)
24.1 Power of Attorney (included in the signature page).(7)
25.1 Form T-1 Statement of Eligibility and Qualification of Trustee. (7)
</TABLE>
--------
(1) Incorporated by reference to our Registration Statement on Form S-1 (No.
333-03751), as amended.
(2) Confidential treatment has been granted with respect to portions of this
exhibit.
(3) Incorporated by reference to our Registration Statement on Form S-8 (No.
333-07983), as amended.
(4) Incorporated by reference to our Annual Report on Form 10-K for the fiscal
year ended December 31, 1997.
(5) Incorporated by reference to our Registration Statement on Form S-3 (No.
333-36967), as amended.
(6) Incorporated by reference to our Quarterly Report on Form 10-Q for the
quarter ended December 30, 1997.
(7) Filed herewith.
<PAGE>
Exhibit 4.6
______________________________________
SIEBEL SYSTEMS, INC.
ISSUER
TO
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION,
TRUSTEE
----------------
INDENTURE
Dated as of September 15, 1999
----------------
Up to U.S.$300,000,000
5 1/2% CONVERTIBLE SUBORDINATED NOTES DUE SEPTEMBER 15, 2006
_____________________________________
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Page
----
<S> <C>
RECITALS OF THE COMPANY....................................................... 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. Definitions................................................. 2
-----------
Act.................................................................. 2
Affiliate............................................................ 2
Agent Member......................................................... 3
Applicable Procedures................................................ 3
Authenticating Agent................................................. 3
Authorized Newspaper................................................. 3
Board of Directors................................................... 3
Board Resolution..................................................... 3
Business Day......................................................... 3
Change in Control.................................................... 4
Closing Price Per Share.............................................. 4
Code................................................................. 4
Commission........................................................... 4
Common Stock......................................................... 4
Company.............................................................. 5
Company Notice....................................................... 5
Company Request "or" Company Order................................... 5
Constituent Person................................................... 5
Conversion Agent..................................................... 5
Conversion Price..................................................... 5
Conversion Rate...................................................... 5
Corporate Trust Office............................................... 6
Defaulted Interest................................................... 6
Depositary........................................................... 6
Designated Senior Debt............................................... 6
Dollar............................................................... 6
U.S.$................................................................ 6
</TABLE>
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of the Indenture.
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<CAPTION>
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<S> <C>
DTC.................................................................. 6
Event of Default..................................................... 6
Exchange Act......................................................... 7
Global Security ..................................................... 7
Holder............................................................... 7
Indenture............................................................ 7
Initial Purchasers................................................... 7
Interest Payment Date................................................ 7
Liquidated Damages................................................... 7
Maturity............................................................. 7
Non-electing Share................................................... 7
Notice of Default.................................................... 8
Officers'Certificate................................................. 8
Opinion of Counsel................................................... 8
Outstanding.......................................................... 8
Paying Agent......................................................... 9
Person............................................................... 9
Place of Conversion.................................................. 9
Place of Payment..................................................... 10
Predecessor Security................................................. 10
Purchase Agreement................................................... 10
Record Date.......................................................... 10
Record Date Period................................................... 10
Redemption Date...................................................... 10
Redemption Price..................................................... 10
Registrable Securities............................................... 10
Registration Default................................................. 10
Registration Rights Agreement........................................ 11
Regular Record Date.................................................. 11
Repurchase Date...................................................... 11
Repurchase Price..................................................... 11
Responsible Officer.................................................. 11
Restricted Global Security........................................... 11
Restricted Securities Legend......................................... 11
Rule 144A............................................................ 11
Rule 144A Information................................................ 11
Securities........................................................... 12
</TABLE>
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of the Indenture.
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<CAPTION>
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<S> <C>
Securities Act....................................................... 12
Securities Act Legend................................................ 12
Security Register "and" Security Registrar........................... 12
Senior Debt.......................................................... 12
Shelf Registration Statement......................................... 13
Special Record Date.................................................. 13
Stated Maturity...................................................... 13
Subsidiary........................................................... 13
Successor Security................................................... 14
Trading Days......................................................... 14
Trust Indenture Act.................................................. 14
Trustee.............................................................. 15
United States........................................................ 15
Vice President....................................................... 15
SECTION 1.2 Compliance Certificates and Opinions....................... 15
------------------------------------
SECTION 1.3 Form of Documents Delivered to the Trustee................. 16
------------------------------------------
SECTION 1.4 Acts of Holders of Securities.............................. 17
-----------------------------
SECTION 1.5 Notices, Etc., to Trustee and Company...................... 20
-------------------------------------
SECTION 1.6 Notice to Holders of Securities; Waiver.................... 21
--------------------------------------
SECTION 1.7 Effect of Headings and Table of Contents................... 22
----------------------------------------
SECTION 1.8 Successors and Assigns..................................... 22
----------------------
SECTION 1.9 Separability Clause........................................ 22
-------------------
SECTION 1.10 Benefits of Indenture...................................... 22
---------------------
SECTION 1.11 Governing Law.............................................. 23
-------------
SECTION 1.12 Legal Holidays............................................. 23
--------------
SECTION 1.13 Conflict with Trust Indenture Act.......................... 23
---------------------------------
ARTICLE TWO SECURITY FORMS
SECTION 2.1 Form Generally............................................. 24
--------------
SECTION 2.2 Form of Security........................................... 26
----------------
SECTION 2.3 Form of Certificate of Authentication...................... 46
-------------------------------------
SECTION 2.4 Form of Conversion Notice.................................. 46
-------------------------
ARTICLE THREE THE SECURITIES
SECTION 3.1 Title and Terms............................................ 48
---------------
</TABLE>
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of the Indenture.
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SECTION 3.2 Denominations.................................................................. 49
------------
SECTION 3.3 Execution, Authentication, Delivery and Dating................................. 49
----------------------------------------------
SECTION 3.4 Global Securities; Non-Global Securities....................................... 50
----------------------------------------
SECTION 3.5 Registration, Registration of Transfer and Exchange; Restrictions on Transfer.. 53
----------------------------------------------------------------------------
SECTION 3.6 Mutilated, Destroyed, Lost or Stolen Securities................................ 57
-----------------------------------------------
SECTION 3.7 Payment of Interest; Interest Rights Preserved................................ 58
----------------------------------------------
SECTION 3.8 Persons Deemed Owners.......................................................... 60
---------------------
SECTION 3.9 Cancellation................................................................... 60
------------
SECTION 3.10 Computation of Interest........................................................ 61
-----------------------
SECTION 3.11 CUSIP Numbers.................................................................. 61
-------------
ARTICLE FOUR SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture...................................... 61
---------------------------------------
SECTION 4.2. Application of Trust Money................................................... 63
--------------------------
ARTICLE FIVE REMEDIES
SECTION 5.1 Events of Default.............................................................. 64
-----------------
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment............................. 66
--------------------------------------------------
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee................ 68
---------------------------------------------------------------
SECTION 5.4 Trustee May File Proofs of Claim............................................... 69
--------------------------------
SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities.................... 70
-----------------------------------------------------------
SECTION 5.6 Application of Money Collected................................................. 71
------------------------------
SECTION 5.7 Limitation on Suits............................................................ 71
-------------------
SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium and Interest
-------------------------------------------------------------------------
and to Convert................................................................. ??
--------------
SECTION 5.9 Restoration of Rights and Remedies............................................. 73
---------------------------------
SECTION 5.10 Rights and Remedies Cumulative................................................. 73
------------------------------
SECTION 5.11 Delay or Omission Not Waiver................................................... 73
----------------------------
SECTION 5.12 Control by Holders of Securities............................................... 74
--------------------------------
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SECTION 5.13 Waiver of Past Defaults........................................................ 74
-----------------------
SECTION 5.14 Undertaking for................................................................ 75
--------------
SECTION 5.15 Waiver of Stay, Usury or Extension Laws........................................ 75
---------------------------------------
ARTICLE SIX THE TRUSTEE
SECTION 6.1 Certain Duties and Responsibilities.............................................. 77
-----------------------------------
SECTION 6.2 Notice of Defaults............................................................... 78
------------------
SECTION 6.3 Certain Rights of Trustee........................................................ 79
-------------------------
SECTION 6.4 Not Responsible for Recitals or Issuance of Securities........................... 80
------------------------------------------------------
SECTION 6.5 May Hold Securities, Act as Trustee Under Other Indentures....................... 81
----------------------------------------------------------
SECTION 6.6 Money Held in Trust.............................................................. 81
-------------------
SECTION 6.7 Compensation and Reimbursement................................................... 81
------------------------------
SECTION 6.8 Corporate Trustee Required; Eligibility.......................................... 83
SECTION 6.9 Resignation and Removal; Appointment
------------------------------------
of Successor..................................................................... 83
-----------
SECTION 6.10 Acceptance of Appointment by Successor........................................... 85
--------------------------------------
SECTION 6.11 Merger, Conversion, Consolidation or Succession to Business...................... 86
-----------------------------------------------------------
SECTION 6.12 Authenticating Agents............................................................ 86
---------------------
SECTION 6.13 Disqualification; Conflicting Interests.......................................... 88
---------------------------------------
SECTION 6.14 Preferential Collection of Claims Against Company................................ 88
-------------------------------------------------
ARTICLE SEVEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. Company May Consolidate, Etc., Only on Certain Terms.......................... 90
----------------------------------------------------
SECTION 7.2. Successor Substituted......................................................... 91
---------------------
ARTICLE EIGHT SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without Consent of
------------------------------------------
Holders of Securities............................................................. 92
---------------------
SECTION 8.2 Supplemental Indentures with Consent of Holders of Securities..................... 93
-------------------------------------------------------------
SECTION 8.3 Execution of Supplemental Indentures.............................................. 95
------------------------------------
</TABLE>
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SECTION 8.4 Effect of Supplemental Indentures................................................. 95
---------------------------------
SECTION 8.5 Reference in Securities to Supplemental Indentures................................ 96
--------------------------------------------------
SECTION 8.6 Notice of Supplemental Indentures................................................. 96
---------------------------------
ARTICLE NINE COVENANTS
SECTION 9.1 Payment of Principal, Premium and Interest........................................ 97
------------------------------------------
SECTION 9.2 Maintenance of Offices or Agencies................................................ 97
----------------------------------
SECTION 9.3 Money for Security Payments To Be Held in Trust.................................. 98
-----------------------------------------------
SECTION 9.4 Existence........................................................................ 100
---------
SECTION 9.5 Maintenance of Properties........................................................ 100
-------------------------
SECTION 9.6 Payment of Taxes and Other Claims................................................ 101
---------------------------------
SECTION 9.7 Registration and Listing......................................................... 101
------------------------
SECTION 9.8 Statement by Officers as to Default.............................................. 102
-----------------------------------
SECTION 9.9. Delivery of Certain Information.................................................. 102
-------------------------------
SECTION 9.10 Resale of Certain Securities; Reporting Issuer................................... 103
----------------------------------------------
SECTION 9.11. Registration Rights.............................................................. 103
-------------------
SECTION 9.12. Waiver of Certain Covenants...................................................... 107
---------------------------
ARTICLE TEN REDEMPTION OF SECURITIES
SECTION 10.1. Right of Redemption.............................................................. 107
-------------------
SECTION 10.2. Applicability of Article......................................................... 107
------------------------
SECTION 10.3. Election to Redeem; Notice to Trustee............................................ 107
-------------------------------------
SECTION 10.4. Selection by Trustee of Securities To Be Redeemed................................ 108
-------------------------------------------------
SECTION 10.5. Notice of Redemption............................................................. 109
--------------------
SECTION 10.6. Deposit of Redemption Price...................................................... 110
---------------------------
SECTION 10.7. Securities Payable on Redemption Date............................................ 110
-------------------------------------
SECTION 10.8. Securities Redeemed in Part...................................................... 111
---------------------------
SECTION 10.9. Conversion Arrangement on Call for Redemption.................................... 111
---------------------------------------------
ARTICLE ELEVEN CONVERSION OF SECURITIES
SECTION 11.1. Conversion Privilege and Conversion Rate........................................... 113
--------------------------------------
</TABLE>
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SECTION 11.2. Exercise of Conversion Privilege............................................. 113
--------------------------------
SECTION 11.3. Fractions of Shares.......................................................... 116
-------------------
SECTION 11.4. Adjustment of Conversion Rate................................................ 117
-----------------------------
SECTION 11.5. Notice of Adjustments of Conversion Rate..................................... 124
----------------------------------------
SECTION 11.6. Notice of Certain Corporate Action........................................... 125
----------------------------------
SECTION 11.7. Company to Reserve Common Stock.............................................. 126
-------------------------------
SECTION 11.8. Taxes on Conversions......................................................... 127
--------------------
SECTION 11.9. Covenant as to Common Stock.................................................. 127
---------------------------
SECTION 11.10. Cancellation of Converted Securities......................................... 127
------------------------------------
SECTION 11.11. Provision in Case of Consolidation, Merger or Sale of Assets................. 127
------------------------------------------------------------
SECTION 11.12. Responsibility of Trustee for Conversion Provisions.......................... 129
---------------------------------------------------
ARTICLE TWELVE SUBORDINATION OF SECURITIES
SECTION 12.1. Securities Subordinate to Senior Debt........................................ 131
-------------------------------------
SECTION 12.2. No Payments in Certain Circumstances; Payment Over of Proceeds
--------------------------------------------------------------
Upon Dissolution, Etc........................................................ 131
---------------------
SECTION 12.3. Trustee to Effectuate Subordination.......................................... 134
-----------------------------------
SECTION 12.4. No Waiver of Subordination Provisions........................................ 134
-------------------------------------
SECTION 12.5. Notice to Trustee............................................................ 135
-----------------
SECTION 12.6. Reliance on Judicial Order or Certificate of Liquidating Agent............... 136
--------------------------------------------------------------
SECTION 12.7. Trustee Not Fiduciary for Holders of Senior Debt............................. 137
------------------------------------------------
SECTION 12.8. Reliance by Holders of Senior Debt on Subordination Provisions............... 137
--------------------------------------------------------------
SECTION 12.9. Rights of Trustee as Holder of Senior Debt; Preservation of
-----------------------------------------------------------
Trustee's Rights............................................................. 138
----------------
SECTION 12.10. Article Applicable to Paying Agents.......................................... 138
-----------------------------------
SECTION 12.11. Certain Conversions and Repurchases Deemed Payment........................... 138
</TABLE>
ARTICLE THIRTEEN REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER
UPON A CHANGE IN CONTROL
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SECTION 13.1. Right to Require Repurchase.................................................. 140
---------------------------
SECTION 13.2. Conditions to the Company's Election to Pay the Repurchase Price in Common
--------------------------------------------------------------------------
Stock........................................................................ 141
-----
SECTION 13.3. Notices; Method of Exercising Repurchase Right, Etc.......................... 142
---------------------------------------------------
SECTION 13.4. Certain Definitions.......................................................... 146
-------------------
ARTICLE FOURTEEN HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY; NON-
RECOURSE
SECTION 14.1. Company to Furnish Trustee Names and Addresses of Holders.................... 149
---------------------------------------------------------
SECTION 14.2. Preservation of Information.................................................. 149
---------------------------
SECTION 14.3. No Recourse Against Others................................................... 150
--------------------------
SECTION 14.4. Reports by Trustee........................................................... 150
------------------
SECTION 14.5. Reports by Company........................................................... 151
------------------
</TABLE>
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of the Indenture.
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<PAGE>
INDENTURE, dated as of September 15, 1999, between Siebel Systems, Inc., a
corporation duly organized and existing under the laws of the State of Delaware,
having its principal office at 1855 South Grant Street, San Mateo, California
94402 (herein called the "Company"), and Chase Manhattan Bank Trust Company,
National Association, a national banking association, as Trustee hereunder
(herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 5 1/2%
Convertible Subordinated Notes due September 15, 2006 (herein called the
"Securities") of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture.
All things necessary to make the Securities, when the Securities are
executed by the Company and authenticated and delivered hereunder, 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. Further, all
things necessary to duly authorize the issuance of the Common Stock of the
Company issuable upon the conversion of the Securities, and to duly reserve for
issuance the number of shares of Common Stock issuable upon such conversion,
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 covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. 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 accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States, 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; and
(3) 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.
"Act", when used with respect to any Holder of a Security, has the
meaning specified in Section 1.4.
------- ---
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect 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;
-2-
<PAGE>
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, to the extent
applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized pursuant to
Section 6.12 to act on behalf of the Trustee to authenticate Securities.
------------
"Authorized Newspaper" means a newspaper in the English language,
customarily published on each Monday, Tuesday, Wednesday, Thursday and Friday,
whether or not published on Saturdays, Sundays or holidays, and of general
circulation in a Place of Payment.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, 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, shall have been
delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, Place
of Conversion or any other place, as the case may be, means each Monday,
Tuesday, Wednesday, Thursday and Friday which is not a day on which banking
institutions in such Place of Payment, Place of Conversion or other place, as
the case may be, are authorized or obligated by law or executive order to close;
provided, however, that a day on which banking institutions in New York, New
-------- -------
York are authorized or obligated by law or
-3-
<PAGE>
executive order to close shall not be a Business Day for purposes of Section
-------
10.6 or Section 11.5.
----
"Change in Control" has the meaning specified in Section 13.4(b).
---------------
"Closing Price Per Share" means, with respect to the Common Stock of
the Company, for any day, (i) the closing price regular way on the New York
Stock Exchange or, (ii) if the Common Stock is not listed on the New York Stock
Exchange, the closing bid price regular way on the Nasdaq National Market, or
the reported last sales price regular way per share or, in case no such reported
sale takes place on such day, the average of the reported closing bid and asked
prices regular way, in either case, on the principal national securities
exchange on which the Common Stock is listed or admitted to trading, or (iii) if
the Common Stock is not quoted on the Nasdaq National Market or listed or
admitted to trading on any national securities exchange, the average of the
closing bid prices in the over-the-counter market as furnished by any New York
Stock Exchange member firm selected from time to time by the Company for that
purpose.
"Code" has the meaning specified in Section 2.1.
-----------
"Commission" means the United States 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" means the common stock, par value $0.001 per share, of
the Company authorized at the date of this instrument as originally executed.
Subject to the provisions of Section 11.11, shares issuable on conversion or
-------------
repurchase of Securities shall include only shares of Common Stock or shares of
any class or classes of common stock resulting from any reclassification or
reclassifications thereof; provided, however, that if at any
-------- -------
-4-
<PAGE>
time there shall be more than one such resulting class, the shares so issuable
on conversion of Securities shall include shares of all such classes, and 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 Notice " has the meaning specified in Section 13.3.
------------
"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 Chief Executive Officer, its President or a Vice
President, and by its principal financial officer, Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Constituent Person" has the meaning specified in Section 11.11.
-------------
"Conversion Agent" means any Person authorized by the Company to
convert Securities in accordance with Article Eleven. The Company has initially
--------------
appointed the Trustee as its Conversion Agent in the City and County of San
Francisco.
"Conversion Price" has the meaning specified in Section 13.4(c).
---------------
"Conversion Rate" has the meaning specified in Section 11.1.
------------
-5-
<PAGE>
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located at 101 California
Street, 27th Floor, San Francisco, California 94111).
"corporation" means a corporation, company, association, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in Section 3.7.
-----------
"Depositary" means, with respect to any Registered Securities, a
clearing agency that is registered as such under the Exchange Act and is
designated by the Company to act as Depositary for such Registered Securities
(or any successor securities clearing agency so registered).
"Designated Senior Debt" means any particular Senior Debt in which
the instrument creating or evidencing the same or the assumption or guarantee
thereof (or related agreements or documents to which the Company is a party)
expressly provides that such indebtedness shall be "Designated Senior Debt" for
purposes of this Indenture (provided that such instrument, agreement or other
document may place limitations and conditions on the right of such Senior Debt
to exercise the rights of Designated Senior Debt).
"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 5.1.
-----------
<PAGE>
"Exchange Act" means the United States Securities Exchange Act of
1934 (or any successor statute), as amended from time to time.
"Global Security" means a Registered Security that is registered in
the Security Register in the name of a Depositary or a nominee thereof.
"Holder" means the Person in whose name the 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 Goldman, Sachs & Co., Banc of America
Securities LLC and Thomas Weisel Partners LLC, collectively.
"Interest Payment Date" means the Stated Maturity of an installment
of interest on the Securities.
"Liquidated Damages" has the meaning specified in Section 9.11.
------------
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security 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 set forth in
Article Thirteen or otherwise.
----------------
"Non-electing Share " has the meaning specified in Section 11.11.
-------------
-7-
<PAGE>
"Notice of Default" has the meaning specified in Section 5.1.
-----------
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President or a Vice President and by the principal financial officer, the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
------
(i) Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Securities for the payment or redemption of which 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 has been
duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made; and
(iii) Securities which have been paid pursuant to Section 3.6 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
-8-
<PAGE>
satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
-------- -------
principal amount of Outstanding Securities are present at a meeting of Holders
of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or 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 determination as to the presence of a quorum or upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Securities which a Responsible Officer of the Trustee actually 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 such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed
the Trustee as its Paying Agent in the City and County of San Francisco.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, trust, estate, unincorporated organization
or government or any agency or political subdivision thereof.
"Place of Conversion" has the meaning specified in Section 3.1.
-----------
-9-
<PAGE>
"Place of Payment" has the meaning specified in Section 3.1.
-----------
"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 3.6 in exchange for or in
-----------
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Purchase Agreement" means the Purchase Agreement, dated as of
September 15, 1999, between the Company and the Initial Purchasers, as such
agreement may be amended from time to time.
"Record Date" means any Regular Record Date or Special Record Date.
"Record Date Period" means the period from the close of business of
any Regular Record Date next preceding any Interest Payment Date to the opening
of business on such Interest Payment Date.
"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 pursuant to this
Indenture.
"Registered Securities" has the meaning specified in Section 2.1.
-----------
"Registrable Securities" has the meaning specified in Section 9.11.
------------
"Registration Default" has the meaning specified in Section 9.11.
------------
-10-
<PAGE>
"Registration Rights Agreement" has the meaning specified in Section
-------
2.2.
---
"Regular Record Date" for interest payable in respect of any
Registered Security on any Interest Payment Date means the 1st day of March or
the 1st day of September (whether or not a Business Day), as the case may be,
next preceding such Interest Payment Date.
"Repurchase Date" has the meaning specified in Section 13.1.
------------
"Repurchase Price" has the meaning specified in Section 13.1.
------------
"Responsible Officer", when used with respect to the Trustee, means
any officer within the Corporate Trust Office of the Trustee, including, without
limitation, any vice president, assistant vice president, assistant treasurer,
corporate trust officer or other employee of the Trustee customarily performing
functions similar to those performed by any of the above designated officers,
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge and familiarity
with the particular subject.
"Restricted Global Security" has the meaning specified in Section
-------
2.1.
---
"Restricted Securities Legend" means, collectively, the legends
substantially in the forms of the legends required in the form of Security set
forth in Section 2.2 to be placed upon each Security.
-----------
"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 9.9.
-----------
"Securities" has the meaning ascribed to it in the first paragraph
under the caption "Recitals of the Company".
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<PAGE>
"Securities Act" means the United States Securities Act of 1933 (or
any successor statute), as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 3.5.
-----------
"Senior Debt" means the principal of (and premium, if any) and
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of this Indenture or thereafter created, incurred or assumed: (a) all
indebtedness of the Company evidenced by credit or loan agreements, notes,
bonds, debentures, or other similar instruments, (b) all obligations of the
Company for money borrowed, (c) all obligations of the Company (1) as lessee
under leases required to be capitalized on the balance sheet of the lessee under
generally accepted accounting principles and (2) as lessee under other leases
for facilities, equipment, or other assets, whether or not capitalized, entered
into for financing purposes (including any so-called "synthetic leases"), (d)
all obligations of the Company under interest rate and currency swaps, caps,
floors, collars, hedge agreements, forward contracts, or similar agreements or
arrangements including, without limitation, agreements and arrangements intended
to protect the Company against fluctuations in interest or currency exchange
rates or commodity prices, (e) all obligations of the Company with respect to
letters of credit, bank guarantees, bankers' acceptances and similar facilities
issued for the account of the Company and all reimbursement obligations of the
Company with respect to the foregoing, (f) all obligations of the Company issued
or assumed as the deferred purchase price of any business, property, assets
(including intangibles) or
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<PAGE>
services (but excluding trade accounts payable and accrued liabilities that
constitute liabilities arising in the ordinary course of business), (g) all
obligations of the Company of the type referred to in clauses (a) through (f)
above of another Person and all dividends of another Person, the payment of
which, in either case, the Company has assumed or guaranteed, or for which the
Company is responsible or liable, directly or indirectly, jointly or severally,
as obligor, guarantor or otherwise, or which is secured by a lien on property of
the Company, and (h) renewals, extensions, modifications, replacements,
restatements and refundings of, or any indebtedness or obligation issued in
exchange for, any such indebtedness or obligation described in clauses (a)
through (g) of this paragraph; provided, however, that Senior Debt shall not
-------- -------
include the Securities or any such indebtedness or obligation if the terms of
such indebtedness or obligation (or the terms of the instrument under which, or
pursuant to which it is issued) expressly provides that such indebtedness or
obligation is not superior in right of payment to the Securities; provided,
--------
further, that Senior Debt shall not include any indebtedness or obligation owed
-------
by the Company to any direct or indirect Subsidiary.
"Shelf Registration Statement" has the meaning specified in Section
-------
9.11.
----
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Company pursuant to Section 3.7.
-----------
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
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
-13-
<PAGE>
stock" means stock or other similar interests in the corporation which
ordinarily has or have voting power for the election of directors, or persons
performing similar functions, whether at all times or only so long as no senior
class of stock or other interests has or have such voting power by reason of any
contingency.
"Successor Security" of any particular Security means every Security
issued after, and 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 3.6 in exchange for or in
-----------
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Trading Days" means (i) if the Common Stock is listed or admitted
for trading on any national securities exchange, days on which such national
securities exchange is open for business; (ii) if the Common Stock is quoted on
the Nasdaq National Market or any other system of automated dissemination of
quotations of securities prices, days on which trades may be effected through
such system; or (iii) if the Common Stock is not listed or admitted for trading
on any national securities exchange or quoted on the Nasdaq National Market or
any other system of automated dissemination of quotation of securities prices,
days on which the Common Stock is traded regular way in the over-the-counter
market and for which a closing bid and a closing asked price for the Common
Stock are available.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
-------- -------
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor
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<PAGE>
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 and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction (its "possessions" including Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).
"Vice President", when used with respect to the Company, 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 1.2. 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 stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and, if required by the Trust Indenture Act, an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that in the case of any such application or
request as to which the furnishing of such documents is specifically required by
any provision of this Indenture relating to such particular application or
request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided for in Section 9.8) 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;
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<PAGE>
(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;
(3) a statement that, in the opinion of 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 1.3. Form of Documents Delivered to the 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 such 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 or any other Person
stating that the information with respect to such factual matters is in the
possession of the Company or such other Person, unless such counsel knows, or in
the exercise of reasonable care
-16-
<PAGE>
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 1.4. Acts of Holders of Securities .
-----------------------------
(a) 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 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 or proxy duly appointed in writing by such Holders. Such action
shall become effective when such instrument or instruments record is delivered
to the Trustee and, where it is hereby expressly required, to the Company. The
Trustee shall promptly deliver to the Company copies of all such instruments
delivered to the Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders of Securities signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent or proxy, or of the holding by any Person of a Security, shall be
sufficient for any purpose of this Indenture and (subject to Section 6.1)
-----------
conclusive in favor of the Trustee and the Company if made in the manner
provided in this Section.
(b) 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 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
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<PAGE>
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The principal amount and serial number of any Registered Security
held by any Person, and the date of his holding the same, shall be proved by the
Security Register.
(d) The fact and date of execution of any such instrument or writing
and the authority of the Person executing the same may also be proved in any
other manner which the Trustee deems sufficient; and the Trustee may in any
instance require further proof with respect to any of the matters referred to in
this Section 1.4.
-----------
(e) The Company may set any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted by this Indenture to be given or taken by
Holders. Promptly and in any case not later than ten days after setting a
record date, the Company shall notify the Trustee and the Holders of such record
date. If not set by the Company prior to the first solicitation of a Holder
made by any Person in respect of any such action, or, in the case of any such
vote, prior to such vote, the record date for any such action or vote shall be
the 30th day (or, if later, the date of the most recent list of Holders required
to be provided pursuant to Section 14.1) prior to such first solicitation or
------------
vote, as the case may be. With regard to any record date, the Holders on such
date (or their duly appointed agents or proxies), and only such Persons, shall
be entitled to give or take, or vote on, the relevant action, whether or not
such Holders remain Holders after such record date. Notwithstanding the
foregoing, the Company shall not set a record date for, and the provisions of
this paragraph shall not apply with respect to, any notice, declaration or
direction referred to in the next paragraph.
Upon receipt by the Trustee from any Holder of (i) any notice of
default or breach referred to in Section 5.1(4), if such default or breach has
--------------
occurred and
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<PAGE>
is continuing and the Trustee shall not have given such a notice to the Company,
(ii) any declaration of acceleration referred to in Section 5.2, if Event of
-----------
an Default has occurred and is continuing and the Trustee shall not have
given such a declaration to the Company, or (iii) any direction referred to in
Section 5.12, if the Trustee shall not have taken the action specified in
------------
such direction, then, with respect to clauses (ii) and (iii), a record date
shall automatically and without any action by the Company or the Trustee be set
for determining the Holders entitled to join in such declaration or direction,
which record date shall be the close of business on the tenth day (or, if such
day is not a Business Day, the first Business Day thereafter) following the day
on which the Trustee receives such declaration or direction, and, with respect
to clause (i), the Trustee may set any day as a record date for the purpose of
determining the Holders entitled to join in such notice of default. Promptly
after such receipt by the Trustee of any such declaration or direction referred
to in clause (ii) or (iii), and promptly after setting any record date with
respect to clause (i), and as soon as practicable thereafter, the Trustee shall
notify the Company and the Holders of any such record date so fixed. The Holders
on such record date (or their duly appointed agents or proxies), and only such
Persons, shall be entitled to join in such notice, declaration or direction,
whether or not such Holders remain Holders after such record date; provided
--------
that, unless such notice, declaration or direction shall have become effective
by virtue of Holders of the requisite principal amount of Securities on such
record date (or their duly appointed agents or proxies) having joined therein on
or prior to the 90th day after such record date, such notice, declaration or
direction shall automatically and without any action by any Person be cancelled
and of no further effect. Nothing in this paragraph shall be construed to
prevent a Holder (or a duly appointed agent or proxy thereof) from giving,
before or after the expiration of such 90-day period, a notice, declaration or
direction contrary to or different from, or, after the expiration of such
period, identical to, the notice, declaration or direction to which such record
date relates, in which event a new record date in respect thereof shall be set
pursuant
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<PAGE>
to this paragraph. In addition, nothing in this paragraph shall be construed to
render ineffective any notice, declaration or direction of the type referred to
in this paragraph given at any time to the Trustee and the Company by Holders
(or their duly appointed agents or proxies) of the requisite principal amount of
Securities on the date such notice, declaration or direction is so given.
(f) Except as provided in Sections 5.12 and 5.13, any request,
------------- ----
demand, authorization, direction, notice, consent, election, 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.
SECTION 1.5. Notices, Etc., to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of Holders of Securities 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 of Securities or by the Company shall
be sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee and received at its Corporate Trust
Office, Attention: Corporate Trust Department, and shall be deemed given
when received.
(2) the Company by the Trustee or by any Holder of Securities shall
be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing, mailed, first-class postage prepaid, or
telecopied and confirmed by mail, first-class postage prepaid, or delivered
by hand or overnight courier, addressed to the Company at 1855 South Grant
Street, San Mateo, California 94402, Attention: Chief
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<PAGE>
Financial Officer (telecopy no.: (650) 295-5118), or at any other address
previously furnished in writing to the Trustee by the Company, and shall be
deemed given when received.
Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
SECTION 1.6. Notice to Holders of Securities; Waiver.
---------------------------------------
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders if in writing and mailed, first-class postage
prepaid, to each Holder of a Security affected by such event, at the address of
such Holder as it appears in the Security Register, not earlier than the
earliest date and not later than the latest date prescribed for the giving of
such notice.
Neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder of a Registered Security shall affect the
sufficiency of such notice with respect to other Holders of Registered
Securities. 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 to Holders of Registered Securities as shall be made with
the approval of the Trustee, which approval shall not be unreasonably withheld
or delayed, shall constitute a sufficient notification to such Holders for every
purpose hereunder.
Such notice shall be deemed to have been given when such notice is
mailed.
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
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<PAGE>
event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders of Securities 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.
SECTION 1.7. 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 1.8. 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 1.9. Separability Clause.
-------------------
In case any provision in this Indenture or 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.
SECTION 1.10. Benefits of Indenture.
---------------------
Except as provided in the next sentence, nothing in this Indenture or
in the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture. The provisions of Article Twelve are intended to be for the benefit
--------------
of, and shall be enforceable directly by, the holders of Senior Debt.
SECTION 1.11. Governing Law.
-------------
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE
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<PAGE>
STATE OF NEW YORK, THE UNITED STATES OF AMERICA, WITHOUT REGARD TO THE CONFLICTS
OF LAWS PRINCIPLES THEREOF.
SECTION 1.12. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity of any Security or the last day on which a
Holder of a Security has a right to convert his Security shall not be a Business
Day at a Place of Payment or Place of Conversion, as the case may be, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of principal of, premium, if any, or interest on, or the payment of the
Repurchase Price (whether the same is payable in cash or in shares of Common
Stock) with respect to, or delivery for conversion of, such Security need not be
made at such Place of Payment or Place of Conversion, as the case may be, on or
by such day, but may be made on or by the next succeeding Business Day at such
Place of Payment or Place of Conversion, as the case may be, with the same force
and effect as if made on the Interest Payment Date, Redemption Date or
Repurchase Date, or at the Stated Maturity or by such last day for conversion;
provided, however, that in the case that payment is made on such succeeding
-------- -------
Business Day, no interest shall accrue on the amount so payable for the period
from and after such Interest Payment Date, Redemption Date, Repurchase Date,
Stated Maturity or last day for conversion, as the case may be.
SECTION 1.13. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that 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 that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be. Until such time as this Indenture shall be qualified under the Trust
Indenture Act, this Indenture, the Company and the Trustee shall be deemed for
all purposes
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<PAGE>
hereof to be subject to and governed by the Trust Indenture Act to the same
extent as would be the case if this Indenture were so qualified on the date
hereof.
ARTICLE TWO
SECURITY FORMS
SECTION 2.1. Form Generally.
--------------
The Securities shall be in substantially the form 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 identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or the Internal Revenue Code of 1986, as amended, and
regulations thereunder (the "Code"), or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. All Securities shall be issued in registered form, as
opposed to bearer form, and shall sometimes be referred to as "Registered
Securities".
The Trustee's certificates of authentication shall be in substantially
the form set forth in Section 2.3.
-----------
Conversion notices shall be in substantially the form set forth in
Section 2.4.
-----------
Repurchase notices shall be substantially in the form set forth in
Section 2.2.
-----------
The Securities shall be printed, lithographed, typewritten or engraved
or produced by any combination of these methods on steel engraved borders if so
required by any securities exchange upon which the Securities may be listed, or
may be produced in any other manner permitted by the rules of any such
securities exchange, or, if the Securities are not listed on a securities
exchange, in any
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<PAGE>
other manner approved by the Company, all as determined by the officers
executing such Securities, as evidenced by their execution thereof.
Upon their original issuance, Securities shall be issued in the form
of one or more Global Securities without interest coupons and shall be
registered in the name of DTC, as Depositary, or its nominee 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".
-25-
<PAGE>
SECTION 2.2. Form of Security
----------------
[FORM OF FACE]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED SECURITY OTHER
THAN ANY RESTRICTED GLOBAL SECURITY:
THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER.
THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A
PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN
ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF
THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND
ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE AND ANY SUCH
SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF
RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND SUCH SHARES SHALL
BE DEEMED BY THE ACCEPTANCE OF THIS NOTE AND ANY SUCH SHARES TO HAVE AGREED TO
ANY SUCH AMENDMENT OR SUPPLEMENT.]
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<PAGE>
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH RESTRICTED GLOBAL
SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY AND ANY COMMON STOCK
ISSUABLE UPON THE CONVERSION OF THE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT
BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY BENEFICIAL INTEREST IN
THE SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF SUCH BENEFICIAL INTEREST IN
THE SECURITIES 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 ANY SUCH
PARTICIPANT) AGREES FOR THE BENEFIT OF SIEBEL SYSTEMS, INC. (THE "COMPANY") THAT
(A) ANY BENEFICIAL INTEREST IN THE SECURITIES AND ANY SHARES OF COMMON STOCK
ISSUABLE UPON THEIR CONVERSION MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (I) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) PURSUANT TO THE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (III) TO AN INSTITUTIONAL INVESTOR THAT IS AN
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN EACH OF CASES (I) THROUGH
(V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES AND THAT (B) THE BENEFICIAL OWNER WILL, AND
EACH SUBSEQUENT BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES
EVIDENCED BY THIS GLOBAL SECURITY OR ANY COMMON STOCK ISSUABLE UPON CONVERSION
THEREOF IS REQUIRED TO, NOTIFY ANY PURCHASER OF ANY BENEFICIAL INTEREST IN THE
SECURITIES OR SUCH COMMON STOCK ISSUABLE UPON ITS CONVERSION FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
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<PAGE>
THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION
AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME
TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS SECURITY AND
ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF
RESTRICTED SECURITIES GENERALLY. THE HOLDER AND BENEFICIAL OWNERS OF AN
INTEREST IN THIS SECURITY AND ANY SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND THE BENEFICIAL
INTERESTS THEREIN AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR
SUPPLEMENT.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY FOR WHICH
THE DEPOSITORY TRUST COMPANY IS TO BE THE DEPOSITARY:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
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 INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
-28-
<PAGE>
SIEBEL SYSTEMS, INC.
5 1/2% CONVERTIBLE SUBORDINATED NOTES
DUE SEPTEMBER 15, 2006
No. _____________ U.S.$_____
CUSIP No._______
SIEBEL SYSTEMS, INC., a corporation duly organized and existing under
the laws of the State of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to _______________, or
registered assigns, the principal sum of _____________ United States Dollars
(U.S.$ _____) [if this security is a global security, then insert -- (which
principal amount may from time to time be increased or decreased to such other
principal amounts (which, taken together with the principal amounts of all other
Outstanding Securities, shall not exceed $300,000,000 in the aggregate at any
time) by adjustments made on the records of the Trustee hereinafter referred to
in accordance with the Indenture)] on September 15, 2006 and to pay interest
thereon, from September 21, 1999, or from the most recent Interest Payment Date
(as defined below) to which interest has been paid or duly provided for, semi-
annually in arrears on March 15 and September 15 in each year (each, an
"Interest Payment Date"), commencing March 15, 2000, at the rate of 5 1/2% per
annum, until the principal hereof is due, and at the rate of 5 1/2% per annum on
any overdue principal and premium, if any, and, to the extent permitted by law,
on any overdue interest. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the 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 1st day of March or 1st day of September
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Except as otherwise provided in the Indenture, any such
interest not so
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<PAGE>
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 Company, notice whereof shall be given to Holders of
Registered 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 the Indenture. Payments of principal shall be made upon the
surrender of this Security at the option of the Holder at the Corporate Trust
Office of the Trustee, or at such other office or agency of the Company as may
be designated by it for such purpose in the Borough of Manhattan, The City of
New York, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts, or at such other offices or agencies as the Company may designate, by
United States Dollar check drawn on, or wire transfer to, a United States Dollar
account (such a wire transfer to be made only to a Holder of an aggregate
principal amount of Registered Securities in excess of U.S.$2,000,000, and only
if such Holder shall have furnished wire instructions in writing to the Trustee
no later than 15 days prior to the relevant payment date) maintained by the
payee with a bank in the Borough of Manhattan, The City of New York. Payment of
interest on this Security may be made by United States Dollar check drawn on a
bank in the Borough of Manhattan, The City of New York mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register, or, upon written application by the Holder to the Security Registrar
setting forth wire instructions not later than the relevant Record Date, by wire
transfer to a United States Dollar account (such a wire transfer to be made only
to a Holder of an aggregate principal amount of Registered Securities in excess
of U.S.$2,000,000 and only if such Holder shall have furnished wire instructions
in writing to the Trustee no later than 15 days prior to the relevant payment
date)
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<PAGE>
maintained by the payee with a bank in the Borough of Manhattan, The City
of New York.
Except as specifically provided herein and in the Indenture, the
Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.
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 or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Security to be duly
executed under its corporate seal.
SIEBEL SYSTEMS, INC.
[Corporate Seal]
By:___________________________
Name:
Title:
Attest:
________________________
Name:
Title:
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<PAGE>
[FORM OF REVERSE]
This Security is one of a duly authorized issue of securities of the
Company designated as its "5 1/2% Convertible Subordinated Notes due September
15, 2006" (herein called the "Securities"), limited in aggregate principal
amount to U.S.$300,000,000, issued and to be issued under an Indenture, dated as
of September 15, 1999 (herein called the "Indenture"), between the Company and
Chase Manhattan Bank and Trust Company, National Association, as Trustee (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 Debt and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. As provided in the
Indenture and subject to certain limitations therein set forth, Registered
Securities are exchangeable for a like aggregate principal amount of Registered
Securities of any authorized denominations as requested by the Holder
surrendering the same upon surrender of the Registered Security or Registered
Securities to be exchanged, at the Corporate Trust Office of the Trustee. The
Trustee upon such surrender by the Holder will issue the new Registered
Securities in the requested denominations.
No sinking fund is provided for the Securities.
The Securities are subject to redemption at the option of the Company
at any time on or after September 15, 2002, in whole or in part, upon not less
than 30 nor more than 60 days' notice to the Holders prior to the Redemption
Date at the following Redemption Prices (expressed as percentages of the
principal amount) for the twelve-month period beginning on September 15 of the
following years:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002.................... 103.14%
2003.................... 102.36%
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
2004.................... 101.57%
2005.................... 100.79%
</TABLE>
and at a Redemption Price equal to 100% of the principal amount on and after
September 15, 2006, together, in each case, with accrued interest to the
Redemption Date; provided, however, that interest installments on Securities
-------- -------
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 the event of a redemption of the Securities, the Company will not
be required (a) to register the transfer or exchange of Registered Securities
for a period of 15 days immediately preceding the date notice is given
identifying the serial numbers of the Securities called for such redemption or
(b) to register the transfer or exchange of any Registered Security, or portion
thereof, called for redemption.
Notice to the Holders will be given not less than 30 nor more than 60
days prior to the Redemption Date as provided in the Indenture.
In any case where the due date for the payment of the principal of,
premium, if any, interest, or Liquidated Damages on any Security or the last day
on which a Holder of a Security has a right to convert his Security shall be, at
any Place of Payment or Place of Conversion, as the case may be, a day on which
banking institutions at such Place of Payment or Place of Conversion are
authorized or obligated by law or executive order to close, then payment of
principal, premium, if any, interest, or Liquidated Damages, or delivery for
conversion of such Security need not be made on or by such date at such place
but may be made on or by the next succeeding day at such place which is not a
day on which banking institutions are authorized or obligated by law or
executive order to close, with the same force and effect as if made on the date
for such payment or the date
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<PAGE>
fixed for redemption or repurchase, or by such last day for conversion, and no
interest shall accrue on the amount so payable for the period from and after
such due date.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time following
the original issue date of the Securities and on or before the close of business
on September 15, 2006, or in case this Security or a portion hereof is called
for redemption or the Holder hereof has exercised his right to require the
Company to repurchase this Security or such portion hereof, then in respect of
this Security until and including, but (unless the Company defaults in making
the payment due upon redemption or repurchase, as the case may be) not after,
the close of business on the Business Day immediately preceding the Redemption
Date or the Repurchase Date, as the case may be, to convert this Security (or
any portion of the principal amount hereof that is an integral multiple of
U.S.$1,000, provided that the unconverted portion of such principal amount is
--------
U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof) into fully
paid and nonassessable shares of Common Stock of the Company at an initial
Conversion Rate of 10.7221 (or at the current adjusted Conversion Rate if an
adjustment has been made as provided in the Indenture) by surrender of this
Security, duly endorsed or assigned to the Company or in blank and, in case such
surrender shall be made during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date (except if this Security has been called
for redemption on a Redemption Date or is repurchasable on a Repurchase Date,
with the consequence that the conversion right of such Security would terminate
between such Regular Record Date and the close of business on such Interest
Payment Date), also accompanied by payment in New York Clearing House or other
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, and also the conversion notice hereon duly executed, to the
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<PAGE>
Company at the Corporate Trust Office of the Trustee, or at such other office or
agency of the Company, subject to any laws or regulations applicable thereto and
subject to the right of the Company to terminate the appointment of any
Conversion Agent (as defined below) as may be designated by it for such purpose
in the City and County of San Francisco, or at such other offices or agencies as
the Company may designate (each a "Conversion Agent"), provided, further, that
-------- -------
in case surrender of this Security for conversion shall be made during the
period from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business on such Interest Payment Date
and if this Security or portion hereof has been called for redemption on a
Redemption Date or is repurchasable on a Repurchase Date, with the consequence
that the conversion right of such Security would terminate between such Regular
Record Date and the close of business on such Interest Payment Date, then the
Holder of this Security will be entitled to receive the interest accruing hereon
from the Interest Payment Date next preceding the date of such conversion to
such succeeding Interest Payment Date and shall not be required to pay such
interest upon surrender of this Security for conversion. Subject to the
provisions of the preceding sentence and, in the case of a conversion after the
close of business on the Regular Record Date next preceding any Interest Payment
Date and on or before the close of business on such Interest Payment Date, to
the right of the Holder of this Security (or any Predecessor Security of record
as of such Regular Record Date) to receive the related installment of interest
to the extent and under the circumstances provided in the Indenture, no cash
payment or adjustment is to be made on conversion for interest accrued hereon
from the Interest Payment Date next preceding the day of conversion, or for
dividends on the Common Stock issued on conversion hereof. The Company shall
thereafter deliver to the Holder the fixed number of shares of Common Stock
(together with any cash adjustment, as provided in the Indenture) into which
this Security is convertible and such delivery will be deemed to satisfy the
Company's obligation to pay the principal amount of this Security. No fractions
of shares or scrip representing fractions of shares will be issued on
conversion, but
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<PAGE>
instead of any fractional interest (calculated to the nearest 1/100th of a
share) the Company shall pay a cash adjustment as provided in the Indenture. The
Conversion Rate is subject to adjustment as provided in the Indenture. In
addition, the Indenture provides that in case of certain consolidations or
mergers to which the Company is a party or the conveyance, transfer, sale or
lease of all or substantially all of the property and assets of the Company, 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 such
consolidation, merger, conveyance, transfer, sale or lease by a holder of the
number of shares of Common Stock of the Company into which this Security could
have been converted immediately prior to such consolidation, merger, conveyance,
transfer, sale or lease (assuming such holder of Common Stock is not a
Constituent Person, 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). No adjustment in the Conversion Rate will be made until such adjustment
would require an increase or decrease of at least one percent of such rate,
provided that any adjustment that would otherwise be made will be carried
--------
forward and taken into account in the computation of any subsequent adjustment.
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 of a Security 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 of Securities 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 of 1933, as amended (the
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<PAGE>
"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).
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 hereof is entitled to
the benefits of a Registration Rights Agreement, dated as of September 15, 1999
(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 Registered Securities and the Common Stock issuable
upon conversion thereof, in each case, that are Registrable Securities, at the
Company's expense, (a) 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
Registrable Securities, (b) thereafter to use its best efforts to cause such
Shelf Registration Statement to be declared effective by the Commission within
180 days after the first date of original issuance of the Securities, and (c) to
use its reasonable efforts to maintain such Shelf Registration Statement
continuously effective under the Securities Act until a period of the two years
from the date of the effectiveness of the Shelf Registration Statement or, if
earlier, until (A) there are no outstanding Registrable Securities registered
under the Shelf Registration Statement or (B) the expiration of the period
referred to in Rule 144(k) (or any successor provision thereto) under the
Securities Act with respect to all Registrable Securities held by Persons that
are not Affiliates of the Company.
Section 2(a) of the Registration Rights Agreement provides that, upon
written notice to each Holder of a Registrable Security, the Company may
postpone having the Shelf Registration Statement declared effective as required
by Section 2(a) of the Registration Rights Agreement for a reasonable time
specified in the notice but not exceeding 90 days if the Company is in
possession of material non-public
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<PAGE>
information the disclosure of which would have a material adverse effect on the
business, operations, prospects, condition (financial or otherwise) of the
Company and its subsidiaries, taken as a whole. Notwithstanding any postponement
pursuant to Section 2(b) of the Registration Rights Agreement, if (i) on or
prior to 90 days following the date of original issuance of the Registrable
Securities, a Shelf Registration Statement has not been filed with the
Commission, or (ii) on or prior to the 180th day following the date of original
issuance of the Registrable Securities, such Shelf Registration Statement is not
declared effective (each, a "Registration Default"), additional interest
("Liquidated Damages") 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 or, if earlier, the last day upon which the
Shelf Registration Statement is required to be kept effective. Liquidated
Damages will be paid semi-annually in arrears, with the first semi-annual
payment due on the first interest payment date in respect of the Registrable
Securities following the date on which such Liquidated Damages begin to accrue,
and will accrue at a rate per annum equal to an additional one-quarter of one
percent (.25%) of the principal amount of the Registrable Securities to and
including the 90th day following such Registration Default and at a rate per
annum equal to one-half of one percent (.50%) thereof from and after the 91st
day following such Registration Default. In the event that the Shelf
Registration Statement ceases to be effective prior to the second annual
anniversary of the initial effective date of the Shelf Registration Statement or
such earlier date as is provided in the Registration Rights Agreement for a
period in excess of 45 days, whether or not consecutive, during any 90-day
period or more than 90 days, whether or not consecutive, during any 12-month
period, then the interest rate borne by the Registrable Securities shall
increase by an additional one-half of one percent (.50%) per annum from the 46th
day of the 90-day period or the 91st day of the applicable 12-month period such
Shelf Registration Statement ceases to be effective to but excluding the day on
which the Shelf Registration Statement again becomes effective or, it
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<PAGE>
earlier, the last day upon which the Shelf Registration Statement is required to
be kept effective.
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
Liquidated Damages payable as described in the preceding paragraph to the extent
that, in such context, Liquidated Damages are, were or would be payable in
respect of this Security pursuant to such paragraph, and an express mention of
the payment of Liquidated Damages (if applicable) in any provisions of this
Security shall not be construed as excluding Liquidated Damages in those
provisions of this Security where such express mention is not made.
If 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)] elects to sell this Security pursuant to the Shelf Registration
Statement then, by its acceptance hereof, such Holder of this Security agrees to
be bound by the terms of the Registration Rights Agreement relating to the
Registrable Securities which are the subject of such election.
If a Change in Control occurs, the Holder of this Security, at the
Holder's option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is equal to U.S.$5,000 or any greater integral
multiple of U.S.$1,000) for cash at a Repurchase Price equal to 100% of the
principal amount thereof plus interest accrued to the Repurchase Date. At the
option of the Company, the Repurchase Price may be paid in cash or, subject to
the conditions provided in the Indenture, by delivery of shares of Common Stock
having a fair market value equal to the Repurchase Price. For purposes of this
paragraph, the fair market value of shares of Common Stock shall be determined
by the Company and shall be equal to 95% of the average of the Closing Price Per
Share for the five consecutive Trading Days immediately preceding and including
the third Trading Day prior to the
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<PAGE>
Repurchase Date. Whenever in this Security there is a reference, in any context,
to the principal of any Security as of any time, such reference shall be deemed
to include reference to the Repurchase Price payable in respect of such Security
to the extent that such Repurchase Price is, was or would be so payable at such
time, and express mention of the Repurchase Price in any provision of this
Security shall not be construed as excluding the Repurchase Price so payable in
those provisions of this Security when such express mention is not made;
provided, however, that, for the purposes of the paragraph below concerning the
-------- -------
consequences of an Event of Default, such reference shall be deemed to include
reference to the Repurchase Price only to the extent the Repurchase Price is
payable in cash.
[The following paragraph shall appear in each registered security that
is not a global security:
In the event of redemption, repurchase or conversion of this Security
in part only, a new Registered Security or Registered Securities for the
unredeemed, unrepurchased or unconverted portion hereof will be issued in the
name of the Holder hereof.]
[The following paragraph shall appear in each global security:
In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, redemption, repurchase or conversion
of this Security in part only, the Trustee, as custodian of the Depositary,
shall make an adjustment on its records to reflect such deposit or withdrawal in
accordance with the Applicable Procedures.]
The indebtedness evidenced by this Security is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Debt of the Company, and this
Security is issued subject to such 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
-41-
<PAGE>
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, together with accrued interest to the date of declaration,
may be declared due and payable in the manner and with the effect provided in
the Indenture. Upon payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of declaration, and (ii) of
interest on any overdue principal and, to the extent permitted by applicable
law, overdue interest, all of the Company's obligations in respect of the
payment of the principal of and interest on the Securities shall terminate.
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 written consent of the Holders
of a majority in principal amount of the Securities at the time Outstanding.
The Indenture also contains provisions permitting the Holders of specified
percentages in 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 in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security or such other Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall
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<PAGE>
have previously given the Trustee written notice of a continuing Event of
Default, 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 as Trustee and offered the
Trustee reasonable indemnity, and shall have failed to institute any such
proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal hereof, premium,
if any, or interest hereon (including Liquidated Damages) on or after the
respective due dates expressed herein or for the enforcement of the right to
convert this Security as provided in the Indenture.
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 Liquidated Damages) this Security at the times, places
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 Registered Securities is registrable on the
Security Register upon surrender of a Registered Security for registration of
transfer at the Corporate Trust Office of the Trustee or at such other office or
agency of the Company as may be designated by it for such purpose in the City
and County of San Francisco, or at such other offices or agencies as the Company
may designate, 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 thereof or his attorney duly authorized in writing, and
thereupon one or more new Registered Securities, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees by the Registrar. No service charge shall be made for
any such registration of transfer or exchange, but the Company may require
payment of
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<PAGE>
a sum sufficient to recover any tax or other governmental charge payable in
connection therewith.
Prior to due presentation of a Registered 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 Registered Security is registered as the
owner thereof for all purposes, whether or not such Security be overdue, and
neither the Company, the Trustee nor any such agent shall be affected by notice
to the contrary.
Interest on the Securities (including any Liquidated Damages) shall be
computed on the basis of a 360-day year of twelve 30-day months.
The indenture and this security shall be governed by and construed in
accordance with the laws of the State of New York, United States of America,
without regard to the conflicts of laws principles thereof.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
-44-
<PAGE>
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to Section 13.1 of the Indenture, the undersigned hereby
------------
elects to have this Security repurchased by the Company.
2. The undersigned hereby directs the Trustee or the Company to pay
it or __________________ an amount in cash or, at the Company's election, Common
Stock valued as set forth in the Indenture, equal to 100% of the principal
amount to be repurchased (as set forth below), plus interest accrued to the
Repurchase Date, as provided in the Indenture.
Dated: _______________________
_______________________
Signature
_______________________
Signature Guaranteed
Principal amount to be repurchased
(must be equal to U.S. $5,000 or any greater integral multiple of U.S.$1,000):
Remaining principal amount following such repurchase:
______________________
NOTICE: The signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
-45-
<PAGE>
SECTION 2.3. Form of Certificate of Authentication.
-------------------------------------
The Trustee's certificates of authentication shall be in substantially
the following form:
Dated: [Date of Authentication]
This is one of the Securities referred to in the within-mentioned
Indenture.
______________________________
as Trustee
By:___________________________
Authorized Signatory
SECTION 2.4. Form of Conversion Notice.
-------------------------
CONVERSION NOTICE
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or any portion of the principal amount
hereof (which is an integral multiple of U.S.$1,000) below designated, into
shares of Common Stock in accordance with the terms of the Indenture referred to
in this Security, and directs that such shares, together with a check in payment
for any fractional share and any Securities representing any unconverted
principal amount hereof, be delivered to and be registered in the name of the
undersigned unless a different name has been indicated below. If shares of
Common Stock or Securities are to be registered in the name of a Person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto. Any amount required to be paid by the undersigned on account
of interest accompanies this Security.
Dated: _____________________
____________________
-46-
<PAGE>
Signature
If shares or Registered If only a portion of the
Securities are to be Securities is to be converted,
registered in the name of a please indicate:
Person other than the Holder,
please print such Person's
name and address: 1. Principal amount to be
converted:
U.S.$___________
_________________________ (any integral multiple of
Name U.S. $1,000)
2. Principal amount and
denomination of Registered
_________________________ Securities representing
Address unconverted principal amount
to be issued:
_________________________
Social Security or other Amount: U.S.$________
Taxpayer Identification
Number, if any Denominations:
U.S.$______
(any integral multiple of
U.S.$1,000)
_________________________ [Signature Guaranteed]
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<PAGE>
ARTICLE THREE
THE SECURITIES
SECTION 3.1. Title and Terms.
---------------
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to U.S.$300,000,000,
except for Securities authenticated and delivered in exchange for, or in lieu
of, other Securities pursuant to Section 3.4, 3.5, 3.6, 8.5, 10.8, 11.2 or
----------- --- --- --- ---- ----
13.3(e).
-------
The Securities shall be known and designated as the "5 1/2%
Convertible Subordinated Notes due September 15, 2006" of the Company. Their
Stated Maturity shall be September 15, 2006 and they shall bear interest on
their principal amount from September 21, 1999, payable semi-annually in arrears
on March 15 and September 15 in each year, commencing March 15, 2000, at the
rate of 5 1/2% per annum until the principal thereof is due and at the rate of 5
1/2% per annum on any overdue principal and, to the extent permitted by law, on
any overdue interest; provided, however, that payments shall only be made on
-------- -------
Business Days as provided in Section 1.12.
------------
The principal of, premium, if any, and interest on the Securities
shall be payable as provided in the form of Securities set forth in Section 2.2,
-----------
and the Repurchase Price, whether payable in cash or in shares of Common Stock,
shall be payable at such places as are identified in the Company Notice given
pursuant to Section 13.3 (any city in which any Paying Agent is located being
------------
herein called a "Place of Payment").
The Registrable Securities are entitled to the benefits of a
Registration Rights Agreement as provided by Sections 2.2 and 9.11. The
------------ ----
Securities are entitled to the payment of Liquidated Damages and additional
interest as provided by Section 9.11.
------------
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<PAGE>
The Securities shall be redeemable at the option of the Company, as
provided in Article Ten and in the form of Securities set forth in Section 2.2.
----------- -----------
The Securities shall be convertible as provided in Article Eleven
--------------
(any city in which any Conversion Agent is located being herein called a "Place
of Conversion").
The Securities shall be subordinated in right of payment to Senior
Debt of the Company as provided in Article Twelve.
--------------
The Securities shall be subject to repurchase by the Company at the
option of the Holders as provided in Article Thirteen.
----------------
SECTION 3.2. Denominations.
-------------
The Securities shall be issuable only in registered form, without
coupons, in denominations of U.S.$1,000 and integral multiples thereof.
SECTION 3.3. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President or one of its Vice Presidents, under a facsimile of its
corporate seal reproduced thereon attested by its Secretary or one of its
Assistant Secretaries. Any such signature may be manual or facsimile.
Securities bearing the manual or facsimile signature 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 executed by the Company to
the Trustee or
-49-
<PAGE>
to its order 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 make available for delivery such
Securities as in this Indenture provided and not otherwise.
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 of an authorized signatory, 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 3.4. Global Securities; Non-Global Securities.
----------------------------------------
(A) Global Securities
-----------------
(a) 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.
(b) 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 (i) such Depositary (A) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (B)
has ceased to be a clearing agency registered as such under the Exchange Act or
announces an intention permanently
-50-
<PAGE>
to cease business or does in fact do so or (ii) there shall have occurred and be
continuing an Event of Default with respect to such Global Security.
(c) 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 3.5, then either (i) such Global Security
-----------
shall be so surrendered for exchange or cancellation, as provided in this
Article Three, 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 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 3.5(c) and as
--------------
otherwise provided in this Article Three, authenticate and make available for
-------------
delivery 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 Three if such order, direction or request is given
-------------
or made in accordance with the Applicable Procedures.
-51-
<PAGE>
(d) 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 Three or otherwise, shall be
-------------
authenticated and delivered in the form of, and shall be, a registered 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
Registered Security shall be authenticated and delivered in definitive, fully
registered form, without interest coupons.
(e) 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 Registered 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.
(B) Non-Global Securities
---------------------
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Registered Securities in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Registered
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
-52-
<PAGE>
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 9.2, 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 make available for delivery 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 3.5. Registration, Registration of Transfer and Exchange; Restrictions
-----------------------------------------------------------------
on Transfer.
-----------
(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 of the Company designated pursuant to Section 9.2 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 Registered Securities and of transfers of
Registered Securities. The Trustee is hereby appointed "Security Registrar" for
the purpose of registering Registered Securities and transfers and exchanges of
Registered Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 9.2 for such
-----------
purpose, 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 any authorized denominations and of a like aggregate principal
amount and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, and subject to the other provisions of
this Section 3.5, Securities may be exchanged for other Securities of any
-----------
authorized denomination and of a like aggregate principal amount, upon
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<PAGE>
surrender of the Securities to be exchanged at any such office or agency.
Whenever any Securities are so surrendered for exchange, and subject to the
other provisions of this Section 3.5, the Company shall execute, and the Trustee
-----------
shall authenticate and make available for delivery, the Securities which the
Holder making the exchange is entitled to receive. Every Security presented or
surrendered for registration of transfer or for exchange shall (if so required
by the Company or the Security Registrar) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed, by the Holder thereof or his attorney duly
authorized in writing.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and subject to the other provisions of this Section 3.5, entitled to the
-----------
same benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
No service charge shall be made for any registration of transfer or
exchange of Securities except as provided in Section 3.6, 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 3.4, 8.5, 10.8,
----------- --- ----
11.2 or 13.3 (other than where the shares of Common Stock are to be issued or
---- ----
delivered in a name other than that of the Holder of the Security) not involving
any transfer and other than any stamp and other duties, if any, which may be
imposed in connection with any such transfer or exchange by the United States or
any political subdivision thereof or therein, which shall be paid by the
Company.
In the event of a redemption of the Securities, the Company will not
be required (a) to register the transfer of or exchange Securities for a period
of 15 days immediately preceding the date notice is given identifying the serial
numbers of the Securities called for such
-54-
<PAGE>
redemption or (b) to register the
transfer of or exchange any Security, or portion thereof, called for redemption.
(b) Securities Act Legends. All Securities shall bear the applicable
----------------------
Restricted Securities Legend subject to the following:
(i) subject to the following Clauses of this Section 3.5(b), a
--------------
Security or any portion thereof which is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Securities Act Legend borne by such Global Security while represented
thereby;
(ii) subject to the following Clauses of this Section 3.5(b), a
--------------
new Security which is not a Global Security and is issued in exchange for
another Security (including a Global Security) or any portion thereof, upon
transfer or otherwise, shall bear the Securities Act Legend borne by such
other Security;
(iii) any Securities which are sold or otherwise disposed of
pursuant to an effective registration statement under the Securities Act
(including the Shelf Registration Statement), together with their Successor
Securities shall not bear a Securities Act Legend; the Company shall inform
the Trustee in writing of the effective date of any such registration
statement registering the Securities under the Securities Act and shall
notify the Trustee at any time when prospectuses may not be delivered with
respect to Securities to be sold pursuant to such registration statement.
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 registration
statement;
(iv) at any time after the Securities may be freely transferred
without registration under the Securities Act or without being subject
-55-
<PAGE>
to transfer restrictions pursuant to the Securities Act, a new Security
which does not bear a Securities Act Legend may be issued in exchange for
or in lieu of a Security (other than a Global Security) or any portion
thereof which bears such a legend if the Trustee has received an
Unrestricted Securities Certificate, satisfactory to the Trustee and duly
executed by the Holder of such legended Security or his attorney duly
authorized in writing, and after such date and receipt of such certificate,
the Trustee shall authenticate and make available for delivery such a new
Security in exchange for or in lieu of such other Security as provided in
this Article Three;
-------------
(v) a new Security which does not bear a Securities Act Legend
may be issued in exchange for or in lieu of a Security (other than a Global
Security) or any portion thereof which bears such a legend if, in the
Company's judgment, placing such a legend upon such new Security is not
necessary to ensure compliance with the registration requirements of the
Securities Act, and the Trustee, at the direction of the Company, shall
authenticate and make available for delivery such a new Security as
provided in this Article Three; and
-------------
(vi) notwithstanding the foregoing provisions of this Section
-------
3.5(b), a Successor Security of a Security that does not bear a particular
------
form of Securities Act Legend shall not bear such form of legend unless the
Company has reasonable cause to believe that such Successor Security is a
"restricted security" within the meaning of Rule 144, in which case the
Trustee, at the direction of the Company, shall authenticate and make
available for delivery a new Security bearing a Restricted Securities
Legend in exchange for such Successor Security as provided in this Article
-------
Three.
-----
-56-
<PAGE>
(c) Neither the Trustee, the Paying Agent nor any of their agents
shall (1) have any duty to monitor compliance with or with respect to any
federal or state or other securities or tax laws or (2) have any duty to obtain
documentation on any transfers or exchanges other than as specifically required
hereunder.
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen Securities.
-----------------------------------------------
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
If there be delivered to the Company and to the Trustee:
(1) evidence to their satisfaction of the destruction, loss or theft
of any Security, and
(2) such security or indemnity as may be satisfactory to the Company
and the Trustee to save each of them and any agent of either of them
harmless,
then, in the absence of actual 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 make available for delivery, 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 satisfaction of the conditions set forth in the preceding
paragraph.
-57-
<PAGE>
Upon the issuance of any new Security under this Section 3.6, 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 (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
the United States or any political subdivision thereof or therein, which shall
be paid by the Company) and any other expenses (including the fees and expenses
of the Trustee) connected therewith.
Every new Security issued pursuant to this Section 3.6 in lieu of any
-----------
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security 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 3.6 are exclusive and shall preclude
-----------
(to the extent lawful) all other rights and remedies of any Holder with respect
to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.
SECTION 3.7. 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 such 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
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<PAGE>
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, the date of the proposed payment and the Special Record Date, 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 provided. The Special Record
Date for the payment of such Defaulted Interest 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, 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 such Holder's 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).
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<PAGE>
(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,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and Section 3.5,
-----------
each Security delivered under this Indenture upon registration of transfer of or
in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
Interest on any Security which is converted in accordance with Section
-------
11.2 during a Record Date Period shall be payable in accordance with the
----
provisions of Section 11.2.
------------
SECTION 3.8. 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 3.7) 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 3.9. 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. All Securities so
delivered to the Trustee shall be canceled promptly by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this
-60-
<PAGE>
Section 3.9. The Trustee shall dispose of all canceled Securities in accordance
-----------
with applicable law and its customary practices in effect from time to time.
SECTION 3.10. Computation of Interest.
-----------------------
Interest on the Securities (including any Liquidated Damages) shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3.11. CUSIP Numbers.
-------------
The Company in issuing Securities may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; the Trustee shall use such
CUSIP numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; provided that any such notice may state
--------
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such CUSIP
numbers. The Company shall promptly notify the Trustee in writing of any change
in any such CUSIP number.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 4.1. 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, or registration of
transfer or exchange, or replacement of Securities herein expressly provided for
and any right to receive Liquidated Damages as provided in the form of
Securities set forth in Section 2.2 and the Company's obligations to the Trustee
-----------
pursuant to Section
-------
-61-
<PAGE>
6.7), and the Trustee, at the expense of the Company, shall execute proper
---
instruments in form and substance satisfactory to the Trustee 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 3.6 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 9.3) have been delivered to the Trustee for cancellation; or
-----------
(B) all such Securities not theretofore delivered to the Trustee
or its agent for cancellation (other than Securities referred to in
clauses (i) and (ii) of clause (1)(A) above)
(i) have become due and payable, or
(ii) will have 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 clause (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds
(immediately available to the Holders in the case of clause (i)) in
trust for the purpose an amount sufficient to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for
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<PAGE>
principal, premium, if any, and interest (including any Liquidated
Damages) 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; and
(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.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the obligations of
-----------
the Company to any Authenticating Agent under Section 6.12, the obligation of
------------
the Company to pay Liquidated Damages, if money shall have been deposited with
the Trustee pursuant to clause (1)(B) of this Section 4.1, the obligations of
-----------
the Trustee under Section 4.2 and the last paragraph of Section 9.3 and the
----------- -----------
obligations of the Company and the Trustee under Section 3.5 and Article Eleven
----------- --------------
shall survive. Funds held in trust pursuant to this Section are not subject to
the provisions of Article Twelve.
--------------
SECTION 4.2. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 9.3, all
-----------
money deposited with the Trustee pursuant to Section 4.1 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), to the Persons entitled
thereto, of the principal, 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 4.1 (and
-----------
held by it or any Paying Agent) for the
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payment of Securities subsequently converted shall be returned to the Company
upon Company Request.
ARTICLE FIVE
REMEDIES
SECTION 5.1. 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 Twelve 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 the principal of or premium, if any, on
any Security at its Maturity, whether or not the such payment is prohibited
by the subordination provisions of this Indenture; or
(2) default in the payment of any interest (including any Liquidated
Damages) upon any Security when it becomes due and payable, and continuance
of such default for a period of 30 days, whether or not the such payment is
prohibited by the subordination provisions of this Indenture; or
(3) failure by the Company to give the Company notice in accordance
with Section 13.3; 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 the performance or breach of which is specifically
dealt with elsewhere in this Section), and continuance of such default or
breach for a period of 60 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in principal
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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;
(5) a default in the payment when due of the principal of, or
acceleration of, any indebtedness under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company or any
Subsidiary of the Company or under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or any
Subsidiary of the Company with a principal amount then outstanding in
excess of U.S.$25,000,000, whether such indebtedness now exists or shall
hereafter be created, if the indebtedness is not discharged, or such
acceleration is not rescinded or annulled, within a period of 30 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 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 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 a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs,
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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 of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by it to the entry
of a decree or order for relief in respect of the Company in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, or the filing
by it of a petition or answer or consent seeking reorganization or similar
relief under any applicable Federal or State law, or the consent by it to
the filing of such petition or to the appointment of or taking possession
by a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due, or the taking of corporate action by
the Company in furtherance of any such action.
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default (other than an Event of Default specified in
Section 5.1(6) or 5.1(7)) occurs and is continuing, then in every such case the
-------------- ------
Trustee or the Holders of not less than 25% 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 the Holders), and upon any such declaration such principal
and all accrued interest thereon shall become immediately due and payable. If
an Event of Default specified in Section 5.1(6) or 5.1(7) occurs, the principal
-------------- ------
of, and
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accrued interest on, all the Securities shall ipso facto become immediately due
---- -----
and payable without any declaration or other Act of the Holder or any act on the
part of the Trustee.
At any time after such 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 Five 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 any Liquidated Damages) 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
any interest (including any Liquidated Damages) thereon at the rate
borne by the Securities,
(C) to the extent permitted by applicable law, interest upon
overdue interest at a rate of 5 1/2% per annum, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel;
and
(2) all Events of Default, other than the nonpayment of the principal
of, and any premium and interest on, Securities which have become due
solely by such declaration of acceleration, have been cured or waived as
provided in Section 5.13.
------------
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No rescission or annulment referred to above shall affect any
subsequent default or impair any right consequent thereon.
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
---------------------------------------------------------------
The Company covenants that if
(1) default is made in the payment of any interest (including any
Liquidated Damages) on any Security when it 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 Company will upon demand of the Trustee pay to it, for the benefit of the
Holders of such Securities the whole amount then due and payable on such
Securities for principal and interest (including any Liquidated Damages) and
interest on any overdue principal and premium, if any, and, to the extent
permitted by applicable law, on any overdue interest (including any Liquidated
Damages), at a rate of 5 1/2% per annum, and in addition thereto, such further
amount as shall be sufficient to cover the reasonable costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
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<PAGE>
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 of Securities 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 5.4. Trustee May File Proofs of Claim.
--------------------------------
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or the
creditors of either, the Trustee (irrespective of whether the principal of, and
any interest on, the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal
or interest) 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,
premium, if any, and interest (including any Liquidated Damages) owing and
unpaid in respect of the Securities and take such other actions, including
participating as a member, voting or otherwise, of any official committee
of creditors appointed in such matter, and to file such other papers or
documents, in each of the foregoing cases, as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel) and of the Holders of Securities
allowed in such judicial proceeding, and
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(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 of Securities 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 of Securities to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel and any other amounts due the Trustee under Section
-------
6.7.
---
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, 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 of a Security in any such proceeding;
provided, however, that the Trustee may, on behalf of such Holders, vote for the
-------- -------
election of a trustee in bankruptcy or similar official.
SECTION 5.5. 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 its counsel, be for
the ratable benefit of the Holders of the Securities in respect of which
judgment has been recovered.
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SECTION 5.6. Application of Money Collected.
------------------------------
Subject to Article Twelve, any money collected by the Trustee pursuant
--------------
to this Article Five shall be 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, 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
-------
6.7;
---
SECOND: To the payment of the amounts then due and unpaid for
principal of, premium, if any, or interest (including any Liquidated
Damages) 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
principal, premium, if any, and interest (including any Liquidated
Damages), respectively; and
THIRD: Any remaining amounts shall be repaid to the Company.
SECTION 5.7. Limitation on Suits.
-------------------
No Holder of any Security shall have any right to institute any
proceeding, 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
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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; and
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding;
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 rights of any other of
such Holders, or to obtain or 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 such
Holders.
SECTION 5.8. 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, premium, if any, and (subject to Section
-------
3.7) interest (including any Liquidated Damages) 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 Eleven, 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 5.9. Restoration of Rights and Remedies.
----------------------------------
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If the Trustee or any Holder of a Security has instituted any
proceeding to enforce any 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, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Securities shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and such 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
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 3.6, no right or remedy herein conferred upon or reserved to the
-----------
Trustee or to the Holders of Securities 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 Security
to 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
any acquiescence therein. Every right and remedy given by this Article Five or
------------
by law to the Trustee or to the Holders of Securities may be exercised from time
to time, and as often as may be deemed expedient, by the Trustee or (subject to
the limitations contained in this Indenture) by the Holders of Securities as the
case may be.
SECTION 5.12. Control by Holders of Securities.
--------------------------------
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<PAGE>
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, 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, either (a) through the written consent of not less than a
majority in principal amount of the Outstanding Securities, or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least a majority in principal
amount of the Outstanding Securities represented at such meeting, 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, premium,
if any, or interest (including any Liquidated Damages) on any Security, or (2)
in respect of a covenant or provision hereof which under Article Eight 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 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.
---------------------
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion
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require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this Section 5.14 shall not apply to any suit instituted by
------------
the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities, or to any suit instituted by any
Holder of any Security for the enforcement of the payment of the principal of,
premium, if any, or interest (including any Liquidated Damages) on any Security
on or after the respective Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption or repurchase, on or after the
Redemption Date or Repurchase Date, as the case may be) or for the enforcement
of the right to convert any Security in accordance with Article Eleven.
--------------
SECTION 5.15. Waiver of Stay, Usury 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 stay, usury 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 by reason of such law 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.
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ARTICLE SIX
THE TRUSTEE
SECTION 6.1. 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, but not to verify the
contents thereof.
(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 man would exercise or use under the circumstances in the conduct of his
own affairs.
(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
------
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(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, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(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 shall be subject to the provisions of this
Section.
SECTION 6.2. Notice of Defaults.
------------------
Within 90 days after the occurrence of any default hereunder as to
which the Trustee has actually received written notice, the Trustee shall give
to all Holders of Securities, in the manner provided in Section 1.6, notice of
-----------
such default, unless such default shall have been cured or waived; provided,
--------
however, that, except in the case of a default in the payment of the principal
-------
of, premium, if any, or interest on any Security the Trustee shall be protected
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<PAGE>
in withholding such notice if and so long as the board of directors, the
executive committee or a trust committee of directors or Responsible Officers of
the Trustee in good faith determine that the withholding of such notice is in
the interest of the Holders; and provided, further, that in the case of any
-------- -------
default of the character specified in Section 5.1(4), no such notice to Holders
--------------
of Securities shall be given until at least 60 days after the occurrence
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 6.3. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 6.1:
-----------
(1) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, other
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, coupon, 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;
(2) 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;
(3) 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, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion
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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;
(5) 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 of Securities 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;
(6) 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, coupon, other evidence of indebtedness or other
paper or document, but the Trustee 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
(7) 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 6.4. 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 the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the
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validity or sufficiency of this Indenture, of the Securities or of the Common
Stock issuable upon the conversion of the Securities. The Trustee shall not be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
SECTION 6.5. May Hold Securities, Act as Trustee Under Other Indentures.
----------------------------------------------------------
The Trustee, any Authenticating Agent, any Paying Agent, any
Conversion Agent or any other agent of the Company or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and may otherwise deal with the Company with the same rights it would have if it
were not Trustee, Authenticating Agent, Paying Agent, Conversion Agent or such
other agent.
The Trustee may become and act as trustee under other indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding in the same manner as if it were not
Trustee hereunder.
SECTION 6.6. Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 6.7. Compensation and Reimbursement.
------------------------------
The Company agrees
(1) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing 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);
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(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 (and its directors, officers, employees
and agents) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense, including taxes (other than taxes based on the
income of the Trustee), incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of this trust, including the reasonable costs, expenses and reasonable
attorneys' fees of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 5.1(6) or Section 5.1(7), the
-------------- --------------
expenses (including the reasonable charges of its counsel) and the compensation
for the services are intended to constitute expenses of the administration under
any applicable Federal or State bankruptcy, insolvency or other similar law.
The Trustee shall have a lien prior to the Securities as to all
property and funds held by it hereunder for any amount owing it or any
predecessor Trustee pursuant to this Section 6.7, except with respect to funds
-----------
held in trust for the benefit of the Holders of particular Securities.
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The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee.
SECTION 6.8. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such,
having a combined capital and surplus (or for such purposes, the combined
capital and surplus of any parent holding company) of at least U.S.$25,000,000,
subject to supervision or examination by Federal or State authority, in good
standing and having an established place of business in the Borough of
Manhattan, The City of New York. If such corporation 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 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 and a
successor shall be appointed pursuant to Section 6.9.
-----------
SECTION 6.9. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor 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 6.10.
------------
(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 6.10 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the
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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 the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.10 shall not have been delivered to the Trustee within 30
------------
days after the giving of such notice of removal, the removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(d) If at any time:
(1) the Trustee shall cease to be eligible under Section 6.8 and
-----------
shall fail to resign after written request therefor by the Company or by
any Holder of a Security who has been a bona fide Holder of a Security for
at least six months, or
(2) 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 of a Security 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 and
shall comply with the applicable requirements of this
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Section and Section 6.10. If, within one year after such resignation, removal or
------------
incapability, or 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 6.10,
------------
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the Company
or the Holders of Securities and accepted appointment in the manner required by
this Section and Section 6.10, any Holder of a Security 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 of Securities in the manner provided in Section 1.6. Each notice shall
-----------
include the name of the successor Trustee and the address of its Corporate Trust
Office.
SECTION 6.10. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Trustee appointed hereunder shall execute, acknowledge
and 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
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execute any and all 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 eligible under this Article.
SECTION 6.11. 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 of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise 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 6.12. Authenticating Agents.
---------------------
The Trustee may, with the consent of the Company, appoint an
Authenticating Agent or Agents acceptable to the Company with respect to the
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon exchange or substitution pursuant to this
Indenture.
Securities authenticated by an Authenticating Agent 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, and every reference in
this Indenture to the authentication and delivery of
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Securities by the Trustee or the Trustee's certificate of authentication 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
subject to acceptance by the Company and shall at all times be a corporation
organized and doing business under the laws of the United States of America, any
State thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent and subject to supervision or examination by government or
other fiscal authority. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 6.12, such
------------
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section 6.12.
------------
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 6.12, 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 6.12, the Trustee may appoint a successor
------------
Authenticating Agent which shall be subject to acceptance by the Company. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its
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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 6.12.
------------
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section 6.12.
------------
If an Authenticating Agent is appointed with respect to the Securities
pursuant to this Section 6.12, the Securities may have endorsed thereon, in
------------
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
______________________________,
as Trustee
By [Authenticating Agent],
as Authenticating Agent
By ___________________________
Authorized Signature
SECTION 6.13. 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 6.14. Preferential Collection of Claims Against Company.
-------------------------------------------------
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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).
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ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1. Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease all its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease 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, limited
liability company, 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, premium, if any, and interest (including Liquidated Damages, if any,
payable pursuant to Section 9.11) on all of the Securities as applicable,
------------
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 Eleven;
--------------
(2) immediately after giving effect to such transaction, no Event of
Default, and no event that after notice or lapse of time or both, would
become an
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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, together with any
documents required under Section 8.3.
-----------
SECTION 7.2. 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 all or
substantially all the properties and assets of the Company in accordance with
Section 7.1, the successor Person formed by such consolidation or into or with
-----------
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 predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
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ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1. Supplemental Indentures Without Consent of
------------------------------------------
Holders of Securities.
---------------------
Without the consent of any Holders of Securities, 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 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 and obligations of
the Company herein and in the Securities as permitted by this Indenture; or
(2) to add to the covenants of the Company for the benefit of the
Holders of Securities or to surrender any right or power herein conferred
upon the Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights of
Holders of Securities pursuant to Section 11.11; or
-------------
(5) to make any changes or modifications to this Indenture necessary
in connection with the registration of any Registrable Securities under the
Securities Act as contemplated by Section 9.11, provided, such action
------------ --------
pursuant to this clause (5) shall not, in the judgment of the Company,
adversely affect the interests of the Holders of Securities in any material
respect; or
(6) to comply with the requirements of the Trust Indenture Act or the
rules and regulations of the Commission thereunder in order to effect or
maintain
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the qualification of this Indenture under the Trust Indenture Act, as
contemplated by this Indenture or otherwise; or
(7) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee; or
(8) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which
is otherwise defective, or to make any other provisions with respect to
matters or questions arising under this Indenture as the Company and the
Trustee may deem necessary or desirable, provided such action pursuant to
--------
this clause (8) shall not, in the judgment of the Company, adversely affect
the interests of the Holders of Securities in any material respect.
Upon Company Request, accompanied by a Board Resolution authorizing
the execution of any such supplemental indenture, and subject to and upon
receipt by the Trustee of the documents described in Section 8.3 hereof, the
-----------
Trustee shall join with the Company in the execution of any supplemental
indenture authorized or permitted by the terms of this Indenture and to make any
further appropriate agreements and stipulations which may be therein contained.
SECTION 8.2. Supplemental Indentures with Consent of Holders of Securities.
-------------------------------------------------------------
With either (a) the written 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, or (b) by the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of a majority in principal amount of the
Outstanding Securities represented at such meeting, 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 provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
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modifying in any manner the rights of the Holders of Securities under this
Indenture; provided, however, that no such supplemental indenture shall, without
-------- -------
the consent or affirmative vote 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 or
the rate of interest payable thereon or any amount payable upon redemption
or repurchase pursuant to Article Thirteen hereof, or change the obligation
----------------
of the Company to pay Liquidated Damages pursuant to Section 9.11 in a
------------
manner adverse to the Holders, or change the coin or currency in which any
Security or the interest or any premium thereon or any other amount in
respect thereof is payable, or impair the right to institute suit for the
enforcement of any payment in respect of any Security on or after the
Stated Maturity thereof (or, in the case of redemption or any repurchase,
on or after the Redemption Date or Repurchase Date, as the case may be) or,
except as permitted by Section 11.11, adversely affect the right to convert
-------------
any Security as provided in Article Eleven, or modify the provisions of
this Indenture with respect to the subordination of the Securities in a
manner adverse to the Holders of Securities; or
(2) 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;
or
(3) modify any of the provisions of this Section and Section 5.13 or
------------
9.12, except to increase any percentage contained herein or therein 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
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<PAGE>
(4) modify the provisions of Article Thirteen in a manner adverse to
the Holders; or
(5) modify any of the provisions of Section 9.9 or 9.10.
----------- ----
It shall not be necessary for any Act of Holders of Securities 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 8.3. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Sections 6.1 and 6.3) 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, and that such supplemental
indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable
against 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 8.4. 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
appertaining thereto shall be bound thereby.
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<PAGE>
SECTION 8.5. 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 opinion of the Company and the
Trustee, 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.
SECTION 8.6. Notice of Supplemental Indentures.
---------------------------------
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2, the Company
-----------
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture, in the manner
provided in Section 1.6. Any failure of the Company to give such notice, or any
-----------
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
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ARTICLE NINE
COVENANTS
SECTION 9.1 Payment of Principal, Premium and Interest.
------------------------------------------
The Company covenants and agrees that it 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. The Company
will deposit or cause to be deposited with the Trustee, no later than the
opening of business on the date of the Stated Maturity of any Security or no
later than the opening of business on the due date for any installment of
interest, all payments so due, which payments shall be in immediately available
funds on the date of such Stated Maturity or due date, as the case may be.
SECTION 9.2. Maintenance of Offices or Agencies.
----------------------------------
The Company hereby appoints the Corporate Trust Office of the Trustee
or such other office or agency of the Trustee as its agent in the Borough of
Manhattan, The City of New York, 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 may at any time and from time to time vary or terminate
the appointment of any such agent or appoint any additional agents for any or
all of such purposes; provided, however, that until all of the Securities have
-------- -------
been delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of Section 9.3, the Company will maintain in the Borough of
-----------
Manhattan, The City of New York, an office or agency where Securities may be
presented or surrendered
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for payment and conversion, where Securities may be for registration of transfer
or exchange 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, and notice to the Holders in accordance with
Section 1.6, of the appointment or termination of any such agents and
-----------
of the location and any change in the location of any 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,
presentations and surrenders may be made and notices and demands may be served
on the Corporate Trust Office of the Trustee.
SECTION 9.3. Money for Security Payments To Be
---------------------------------
Held in Trust.
-------------
If the Company shall act as its own Paying Agent, it will, on or
before each due date of the principal of, premium, if any, or interest 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, premium, if any, or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and the Company 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, no
later than the opening of business on each due date of the principal of,
premium, if any, or interest on any Securities, deposit with the Trustee a sum
sufficient to pay the principal, premium, if any, or interest so becoming due,
such sum to be held 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 any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an
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instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, 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 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 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 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.
Anything contained herein to the contrary notwithstanding, any money
held by the Trustee or any Paying Agent in trust for the payment and discharge
of the principal of, premium, if any, or interest on any Security which remains
unclaimed for two (2) years after the date when each payment of such principal,
premium or interest has become payable shall be repaid within sixty (60) days of
such date by the Trustee to the Company as its absolute property free from
trust, and the Trustee shall thereupon be released and discharged with respect
thereto and the Holders shall look only to the Company for the payment of the
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principal, premium or interest on such Security. The Trustee shall not be
liable to the Company or any Holder for interest on funds held by it for the
payment and discharge of the principal, premium or interest on any of the
Securities to any Holder. The Company shall not be liable for any interest on
the sums paid to it pursuant to this paragraph and shall not be regarded as a
trustee of such money.
SECTION 9.4. Existence.
---------
Subject to Article Seven, 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 9.5. 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
-------- -------
nothing in this Section shall prevent the Company from discontinuing the
operation or maintenance of any of such properties if such discontinuance 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 9.6. Payment of Taxes and Other Claims.
---------------------------------
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<PAGE>
The Company will pay or discharge, or cause to be paid or discharged,
before the same may 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, (2) all
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon the property of the Company or any Subsidiary, and (3) all
stamps and other duties, if any, which may be imposed by the United States or
any political subdivision thereof or therein in connection with the issuance,
transfer, exchange or conversion of any Securities or with respect to this
Indenture; provided, however, that, in the case of clauses (1) and (2), the
-------- -------
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (a) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company, or
(b) if the amount, applicability or validity is being contested in good faith by
appropriate proceedings.
SECTION 9.7. Registration and Listing.
------------------------
Within a reasonable time after the issuance of the Global Security,
the Company (i) will effect all registrations with, and obtain all approvals by,
all governmental authorities that may be necessary under any United States
Federal or state law (including the Securities Act, the Exchange Act and state
securities and Blue Sky laws) before the shares of Common Stock issuable upon
conversion of Securities may be lawfully issued and delivered, and qualified or
listed as contemplated by clause (ii) (it being understood that the Company
shall not be required to register the Securities under the Securities Act,
except pursuant to the Registration Rights Agreement referred to in Section
-------
9.11); and (ii) will cause the shares of Common Stock required to be issued and
----
delivered upon conversion of Securities, prior to such issuance or delivery, to
be listed on the New York Stock Exchange or, if the Common Stock is not then
listed on the New York Stock Exchange, list the Common Stock or qualify the
Common Stock for quotation on each national securities exchange or quotation
system on which outstanding Common Stock is listed
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<PAGE>
or quoted at the time of such delivery. Nothing in this Section 9.7 will limit
-----------
the application of Section 9.11.
------------
SECTION 9.8. Statement by Officers as to Default.
-----------------------------------
The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate (one of the signers of which shall be the Company's
principal executive, principal financial or principal accounting officer),
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.
The Company will deliver to the Trustee, forthwith upon becoming aware
of any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or any Event of Default, an Officers'
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to take
with respect thereto.
Any notice required to be given under this Section 9.8 shall be
-----------
delivered to the Trustee at its Corporate Trust Office.
SECTION 9.9. Delivery of Certain Information.
-------------------------------
At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, upon the request of a Holder of a Security 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 of Securities or such holder of shares of Common Stock issued upon
conversion of Securities, or to a prospective purchaser of
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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 (or any successor provision thereto) in connection
with the resale of any such security; provided, however, that the Company shall
-------- -------
not be required to furnish such information in connection with any request made
on or after the date which is two years from the later of (i) the date such a
security (or any such predecessor security) was last acquired from the Company
or (ii) the date such a security (or any such predecessor security) was last
acquired from an "affiliate" of the Company within the meaning of Rule 144 under
the Securities Act (or any successor provision thereto). "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).
SECTION 9.10. 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 not permit any of its subsidiaries or other
"affiliates" (as defined under Rule 144 under the Securities Act or any
successor provision thereto) controlled by it 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.
SECTION 9.11. Registration Rights.
-------------------
The Company agrees that the Holders from time to time of Registrable
Securities (as defined below) are entitled to the benefits of a Registration
Rights Agreement, dated as of September 15, 1999 (the "Registration Rights
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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 Registrable 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 Registrable Securities, (ii) thereafter use
reasonable efforts to cause such Shelf Registration Statement to be declared
effective by the Commission within 180 days after the first date of original
issuance of the Securities, and (iii) to use reasonable efforts to maintain such
Shelf Registration Statement continuously effective under the Securities Act of
1933, as amended, until a period of two years from the date of the effectiveness
of the Shelf Registration Statement or, if earlier, until (A) there are no
outstanding Registrable Securities registered under the Shelf Registration
Statement or (B) the expiration of the period referred to in Rule 144(k) (or any
successor provision thereto) under the Securities Act with respect to all
Registrable Securities held by Persons that are not Affiliates of the Company.
Section 2(a) of the Registration Rights Agreement provides that, upon
written notice to each Holder of a Registrable Security, the Company may
postpone having the Shelf Registration Statement declared effective as required
by Section 2(a) of the Registration Rights Agreement for a reasonable time
specified in the notice but not exceeding 90 days if the Company is in
possession of material non-public information the disclosure of which would have
a material adverse effect on the business, operations, prospects, condition
(financial or otherwise) of the Company and its subsidiaries, taken as a whole.
Notwithstanding any postponement pursuant to Section 2(a) of the Registration
Rights Agreement, if (i) on or prior to 90 days following the date of original
issuance of the Registrable Securities, a Shelf Registration Statement has not
been filed with the Commission, or (ii) on or prior to the 180th day following
the date of original issuance of the Registrable Securities, such Shelf
Registration Statement is not declared effective (each, a "Registration
Default"), additional interest
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("Liquidated Damages") will accrue on the Registrable Securities from and
including the day following such Registration Default to but excluding the day
on which such Registration Default has been cured or, if earlier, the last day
upon which the Shelf Registration Statement is required to kept effective.
Liquidated Damages will be paid semi-annually in arrears, with the first semi-
annual payment due on the first Interest Payment Date in respect of the
Registrable Securities following the date on which such Liquidated Damages begin
to accrue, and will accrue at a rate per annum equal to an additional one-
quarter of one percent (.25%) of the principal amount of the Registrable
Securities to and including the 90th day following such Registration Default and
at a rate per annum equal to one-half of one percent (.50%) thereof from and
after the 91st day following such Registration Default. In the event that the
Shelf Registration Statement ceases to be effective prior to the second annual
anniversary of the initial effective date of the Shelf Registration Statement or
such earlier date as is provided in the Registration Rights Agreement for a
period in excess of 45 days, whether or not consecutive, during any 90-day
period or more than 90 days, whether or not consecutive, during any 12-month
period, then the interest rate borne by the Registrable Securities shall
increase by an additional one-half of one percent (.50%) per annum on the 46th
day of the 90-day period or the 91st day of the applicable 12-month period such
Shelf Registration Statement ceases to be effective to but excluding the day on
which the Shelf Registration Statement again becomes effective or, if earlier,
the last day upon which the Shelf Registration Statement is required to be kept
effective.
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 Registrable Security, such mention shall be deemed to include mention of the
payment of Liquidated Damages provided for in this Section to the extent that,
in such context, Liquidated Damages are, were or would be payable in respect
thereof pursuant to the provisions of this Section, and express mention of the
payment of Liquidated Damages (if applicable) in any provisions hereof shall not
be construed as excluding
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Liquidated Damages in those provisions hereof where such express mention is not
made.
For the purposes of the Registration Rights Agreement, "Registrable
Securities" means all or any portion of the Registered Securities issued from
time to time under this Indenture and the shares of Common Stock issuable upon
conversion of such Securities; provided, however, that a Security or the shares
-------- -------
of Common Stock issuable upon conversion of a Security ceases to be a
Registrable Security when it (i) has been effectively registered under the
Securities Act and sold in a manner contemplated by the Shelf Registration
Statement, (ii) has been transferred in compliance with Rule 144 under the
Securities Act (or any successor provisions thereto) or is transferable pursuant
to paragraph (k) of Rule 144 (or any successor provision thereto) or (iii)
otherwise has been transferred and a new Security or share of Common Stock not
subject to transfer restrictions under the Securities Act has been delivered by
or on behalf of the Company in accordance with Section 3.5(b).
If a Security, or the shares of Common Stock issuable upon conversion
of a Security, is a Registrable Security, and the Holder thereof elects to sell
such Registrable Security pursuant to the Shelf Registration Statement then, by
its acceptance thereof, the Holder of such Registrable Security will have agreed
to be bound by the terms of the Registration Rights Agreement relating to the
Registrable Securities which are the subject of such election.
For the purposes of the Registration Rights Agreement, the term
"Holder" includes any Person that has a beneficial interest in any Global
Security or any beneficial interest in a global security representing shares of
Common Stock issuable upon conversion of a Security. The Company will give the
Trustee prompt written notice of any Registration Default, and of any cure
thereof.
SECTION 9.12. Waiver of Certain Covenants.
---------------------------
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The Company may omit in any particular instance to comply with any
covenant or conditions set forth in Sections 9.5 and 9.6, inclusive (other than
------------ ---
a covenant or condition which under Article Eight cannot be modified or amended
-------------
without the consent of the Holder of each Outstanding Security affected), if
before the time for such compliance the Holders shall, through the written
consent of, not less than a majority in principal amount of the Outstanding
Securities, 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 or any Paying or Conversion Agent in respect of
any such covenant or condition shall remain in full force and effect.
ARTICLE TEN
REDEMPTION OF SECURITIES
SECTION 10.1. Right of Redemption.
-------------------
The Securities may be redeemed in accordance with the provisions of
the form of Securities set forth in Section 2.2.
-----------
SECTION 10.2. Applicability of Article.
------------------------
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of the Securities or this Indenture,
shall be made in accordance with such provision and this Article Ten.
-----------
SECTION 10.3. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of any of the Securities, the Company shall, at least 45 days prior
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to the Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date. If the Securities are to be redeemed pursuant to an election of the
Company which is subject to a condition specified in the form of Securities set
forth in Section 2.2, the Company shall furnish the Trustee with an Officers'
-----------
Certificate stating that the Company is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to the
right of the Company so to redeem have occurred.
SECTION 10.4. 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 by the Trustee within three Business
Days after it receives the notice described in Section 10.3, from the
------------
Outstanding Securities not previously called for redemption, by such method as
the Trustee may deem fair and appropriate.
If any Registered 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 may 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 and
certificate numbers 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
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portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 10.5. Notice of Redemption.
--------------------
Notice of redemption shall be given in the manner provided in Section
-------
1.6 to the Holders of Securities to be redeemed not less than 30 nor more than
---
60 days prior to the Redemption Date, and such notice shall be irrevocable.
All notices of redemption shall identify the Securities to be redeemed
(including CUSIP numbers) and shall state:
(1) the Redemption Date,
(2) the Redemption Price, and accrued interest, if any,
(3) if less than all Outstanding Securities are to be redeemed, the
aggregate principal amount of Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price, and accrued
interest, if any, will become due and payable upon each such Security to be
redeemed, and that interest thereon shall cease to accrue on and after said
date,
(5) the Conversion Rate, the date on which the right to convert the
Securities to be redeemed will terminate and the 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 and accrued interest, if any.
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 written request,
by the Trustee in the name of and at the expense of the Company. Notice of
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redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name of
and at the expense of the Company.
SECTION 10.6. Deposit of Redemption Price.
---------------------------
Not less than one Business Day prior to any Redemption Date, the
Company shall deposit with the Trustee (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 9.3) an amount
-----------
of money (which shall be in immediately available funds on such Redemption Date)
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 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 3.7) be paid to the Company on Company Request or, if then held by
-----------
the Company, shall be discharged from such trust.
SECTION 10.7. 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, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice such Security shall be
paid by the Company at the Redemption Price together with accrued and unpaid
interest to the Redemption Date; provided, however, that installments of
-------- -------
interest on Securities whose Stated Maturity is on or prior to the
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Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such on the relevant Record Date
according to their terms and the provisions of Section 3.7.
-----------
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal amount of, premium, if any, and,
to the extent permitted by applicable law, accrued interest on such Security
shall, until paid, bear interest from the Redemption Date at a rate of 5 1/2%
per annum and such Security shall remain convertible until the principal of such
Security (or portion thereof, as the case may be) shall have been paid or duly
provided for.
SECTION 10.8. 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 9.2 (with, if the Company or the 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 duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and make available for delivery to the Holder of such Security without service
charge, a new Registered 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 of the Security so
surrendered.
SECTION 10.9. Conversion Arrangement on Call for Redemption.
---------------------------------------------
In connection with any redemption of the 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 (the "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 and unpaid to the Redemption Date, of such
Securities. Notwithstanding anything to the contrary contained in this Article
-------
Ten, the obligation of the Company to pay the Redemption Price,
---
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together with interest accrued and unpaid to the Redemption Date, 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 shall be
filed with the Trustee prior to the close of business on the second Business Day
immediately prior to the Redemption Date), any Securities called for redemption
that are 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, and
consistent with any agreement or agreements with such Purchasers, to be acquired
by such Purchasers from such Holders and (notwithstanding anything to the
contrary contained in this Article Ten) 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 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 by the Purchasers to the Holders 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, including the costs and expenses, including reasonable legal fees,
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.
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ARTICLE ELEVEN
CONVERSION OF SECURITIES
SECTION 11.1. Conversion Privilege and Conversion Rate.
----------------------------------------
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security or any portion of the principal
amount thereof that is U.S.$1,000 or an integral multiple of U.S.$1,000 may be
converted into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Common Stock of the Company at
the Conversion Rate, determined as hereinafter provided, in effect at the time
of conversion. Such conversion right shall commence upon the original issuance
of the Securities and expire at the close of business on September 15, 2006,
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 exercises his right to require
the Company to repurchase the Security, such conversion right in respect of the
Security, or portion thereof so called, shall expire at the close of business on
the Business Day immediately preceding the Redemption Date or the 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 rate at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Rate") shall be initially 10.7221
shares of Common Stock for each U.S.$1,000 principal amount of Securities. The
Conversion Rate shall be adjusted in certain instances as provided in this
Article Eleven.
--------------
SECTION 11.2. Exercise of Conversion Privilege.
--------------------------------
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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 of the Company
maintained for that purpose pursuant to Section 9.2, accompanied by a duly
-----------
signed conversion notice substantially in the form set forth in Section 2.4
-----------
stating 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. Each Security surrendered for conversion (in whole or in part)
during the period from the close of business on any Regular Record Date next
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date shall (except in the case of any Security or portion thereof which
has been called for redemption on a Redemption Date, or is to be repurchased on
a Repurchase Date, with the consequence that the conversion right of such
Security would terminate between such Regular Record Date and the close of
business on such Interest Payment Date) be accompanied by payment 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 of
such Security (or part thereof, as the case may be) being surrendered for
conversion. The interest so payable on such Interest Payment Date with respect
to any Security (or portion thereof, if applicable) which is surrendered for
conversion during the period from the close of business on any Record Date next
preceding any Interest Payment Date to the opening of business on such Interest
Payment Date and which Security has been called for redemption on a Redemption
Date, or is repurchasable on a Repurchase Date, with the consequence that the
conversion right of such Security would terminate between such Regular Record
Date and the close of business on such Interest Payment Date, shall be paid to
the Holder of such Security being converted in an amount equal to the interest
that would have been payable on such Security if such Security had been
converted as of the close of business on such Interest Payment Date. The
interest so payable on such Interest Payment Date in respect of any Security (or
portion thereof, as the case may be) which has not been called for redemption on
a Redemption Date, or is not
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eligible for repurchase on a Repurchase Date, with the consequence of
termination of the conversion right as aforesaid, which Security (or portion
thereof, as the case may be) is surrendered for conversion during the period
from the close of business on any Record Date next preceding any Interest
Payment Date to the opening of business on such Interest Payment Date, shall be
paid to the Holder of such Security as of such Regular Record Date. Interest
payable in respect of any Security surrendered for conversion on or after an
Interest Payment Date shall be paid to the Holder of such Security as of the
next preceding Regular Record Date, notwithstanding the exercise of the right of
conversion. Except as provided in this paragraph and subject to the last
paragraph of Section 3.7, no cash payment or adjustment shall be made
-----------
upon any conversion on account of any interest accrued from the Interest Payment
Date next preceding the conversion date, in respect of any Security (or part
thereof, as the case may be) surrendered for conversion, or on account of any
dividends on the Common Stock issued upon conversion. The Company's delivery to
the Holder of the number of shares of Common Stock (and cash in lieu of
fractions thereof, as provided in this Indenture) into which a Security is
convertible will be deemed to satisfy the Company's obligation to pay the
principal amount of the Security.
Securities shall be deemed to have been converted 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 deliver to the
Trustee, for delivery to the Holder, 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 11.3.
------------
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All shares of Common Stock delivered upon such conversion of
Securities shall bear restrictive legends substantially in the form of the
legends required to be set forth on the Securities pursuant to Section 3.5 and
-----------
shall be subject to the restrictions on transfer provided in such legends.
Neither the Trustee nor any agent maintained for the purpose of such conversion
shall have any responsibility for the inclusion or content of any such
restrictive legends on such Common Stock; provided, however, that the Trustee or
-------- -------
any agent maintained for the purpose of such conversion shall have provided to
the Company or to the Company's transfer agent for such Common Stock, prior to
or concurrently with a request to the Company to deliver such Common Stock,
written notice that the Securities delivered for conversion are Securities.
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 make
available for delivery to the Holder thereof, at the expense of the Company, a
new Registered Security or Securities of authorized denominations in an
aggregate principal amount equal to the unconverted portion of the principal
amount of such Security. A Security may be converted in part, but only if the
principal amount of such Security to be converted is any integral multiple of
U.S.$1,000 and the principal amount of such security to remain Outstanding after
such conversion is equal to U.S.$1,000 or any integral multiple of U.S.$1,000 in
excess thereof.
SECTION 11.3. Fractions of Shares.
-------------------
No fractional shares of Common Stock shall be issued upon conversion
of any Security or 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),
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the Company shall calculate and pay a cash adjustment in respect of such
fraction (calculated to the nearest 1/100th of a share) in an amount equal to
the same fraction of the Closing Price Per Share at the close of business on the
day of conversion.
SECTION 11.4. Adjustment of Conversion Rate.
-----------------------------
The Conversion Rate shall be subject to adjustments from time to time
as follows:
(1) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company payable in shares of
Common Stock, the Conversion Rate in effect at the opening of business on the
day following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be increased by dividing such
Conversion Rate 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 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 increase to become effective immediately after the opening of
business on the day following the date fixed for such determination. If, after
any such date fixed for determination, any dividend or distribution is not in
fact paid, the Conversion Rate shall be immediately readjusted, effective as of
the date the Board of Directors determines not to pay such dividend or
distribution, to the Conversion Rate that would have been in effect if such
determination date had not been fixed. 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 will 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 issue rights, options or warrants to
all holders of its Common Stock
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entitling them 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 (8) of this Section 11.4) of the Common Stock on the date fixed
------------
for the determination of stockholders entitled to receive such rights, options
or warrants (other than any rights, options or warrants that by their terms will
also be issued to any Holder upon conversion of a Security into shares of Common
Stock without any action required by the Company or any other Person), the
Conversion Rate in effect at the opening of business on the day following the
date fixed for such determination shall be increased by dividing such Conversion
Rate 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 increase to
become effective immediately after the opening of business on the day following
the date fixed for such determination. If, after any such date fixed for
determination, any such rights, options or warrants are not in fact issued, the
Conversion Rate shall be immediately readjusted, effective as of the date the
Board of Directors determines not to issue such rights, options or warrants, to
the Conversion Rate that would have been in effect if such determination date
had not been fixed. 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
will not issue any rights, options or warrants 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 Rate in effect
at the opening
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<PAGE>
of business on the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or reduction, 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) 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, or other property (including cash or assets or
securities, but excluding (i) any rights, options or warrants referred to in
paragraph (2) of this Section, (ii) any dividend or distribution paid
exclusively in cash, (iii) any dividend or distribution referred to in paragraph
(1) of this Section and (iv) any merger or consolidation to which Section 11.11
-------------
applies), the Conversion Rate shall be adjusted so that the same shall equal the
rate determined by dividing the Conversion Rate in effect immediately prior to
the close of business on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which the numerator shall
be the current market price per share (determined as provided in paragraph (8)
of this Section 11.4) of the Common Stock on the date fixed for such
------------
determination less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Trustee) of the portion of the assets, shares or
evidences of indebtedness 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 adjustment to become effective immediately prior to the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution. If, after any such date
fixed for determination, any such distribution is not in fact made, the
Conversion Rate shall be immediately readjusted,
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effective as of the date the Board of Directors determines not to make such
distribution, to the Conversion Rate that would have been in effect if such
determination date had not been fixed.
(5) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed
upon a merger or consolidation to which Section 11.11 applies or as part of a
-------------
distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (I) the aggregate amount of any other cash
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 adjustment pursuant to this paragraph (5) has been made and (II) the
aggregate of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender offer by the
Company or any of its subsidiaries 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 adjustment pursuant to paragraph (6) of
this Section 11.4 has been made (the "combined cash and tender amount") exceeds
------------
10% of the product of the current market price per share (determined as provided
in paragraph (8) of this Section 11.4) of the Common Stock on the date for the
------------
determination of holders of shares of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on such date
(the "aggregate current market price"), then, and in each such case, immediately
after the close of business on such date for determination, the Conversion Rate
shall be adjusted so that the same shall equal the rate determined by dividing
the Conversion Rate in effect immediately prior to the close of business on the
date fixed for determination of the stockholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be equal to the
current market price per share (determined as provided in paragraph (8) of this
Section) of the Common Stock on the date fixed for such determination less an
amount equal to
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the quotient of (x) the excess of such combined cash and tender amount over such
aggregate current market price divided by (y) the number of shares of Common
Stock outstanding on such date for determination and (ii) the denominator of
which shall be equal to the current market price per share (determined as
provided in paragraph (8) of this Section 11.4) of the Common Stock on such
------------
date for determination.
(6) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall expire and such tender offer (as
amended upon the expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the terms of the tender
offer) of Purchased Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) that
combined together with (I) the aggregate of the cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of such
tender offer, of consideration payable in respect of any other tender offer by
the Company or any Subsidiary for all or any portion of the Common Stock
expiring within the 12 months preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to this paragraph (6) has been made
and (II) the aggregate amount of any cash distributions to all holders of the
Company's Common Stock within 12 months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to paragraph (5) of this
Section has been made (the "combined tender and cash amount") exceeds 10% of the
product of the current market price per share of the Common Stock (determined as
provided in paragraph (8) of this Section 11.4) as of the last time (the
------------
"Expiration Time") tenders could have been made pursuant to such tender offer
(as it may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) as of the Expiration Time, then, and in each
such case, immediately prior to the opening of business on the day after the
date of the Expiration Time, the Conversion Rate
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shall be adjusted so that the same shall equal the rate determined by dividing
the Conversion Rate immediately prior to close of business on the date of the
Expiration Time by a fraction (i) the numerator of which shall be equal to (A)
the product of (I) the current market price per share of the Common Stock
(determined as provided in paragraph (8) of this Section 11.4) on the date of
------------
the Expiration Time multiplied by (II) the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time less
(B) the combined tender and cash amount, and (ii) the denominator of which shall
be equal to the product of (A) the current market price per share of the Common
Stock (determined as provided in paragraph (8) of this Section 11.4) as of the
------------
Expiration Time multiplied by (B) the number of shares of Common Stock
outstanding (including any tendered shares) as of the Expiration Time less
the number of all shares validly tendered 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").
(7) The reclassification of Common Stock into securities including
other than Common Stock (other than any reclassification upon a consolidation or
merger to which Section 11.11 applies) shall be deemed to involve (a) a
-------------
distribution of such securities other than Common Stock to all holders of Common
Stock (and the effective date of such reclassification shall be deemed to be
"the date fixed for the determination of stockholders entitled to receive such
distribution" and "the date fixed for such determination" within the meaning of
paragraph (4) of this Section), and (b) a subdivision or combination, as the
case may be, of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of Common Stock
outstanding immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon which such subdivision
becomes effective" or "the day upon which such combination becomes effective",
as the case may be, and "the day upon which such subdivision or combination
becomes effective" within the meaning of paragraph (3) of this Section 11.4).
------------
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(8) For the purpose of any computation under paragraphs (2), (4), (5)
or (6) of this Section 11.4, the current market price per share of Common Stock
------------
on any date shall be calculated by the Company and be deemed to be the average
of the daily Closing Prices Per Share for the five consecutive Trading Days
selected by the Company commencing not more than 10 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
"ex" date with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "'ex' date", when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way in the applicable securities market or on the
applicable securities exchange without the right to receive such issuance or
distribution.
(9) No adjustment in the Conversion Rate shall be required unless
such adjustment (plus any adjustments not previously made by reason of this
paragraph (9)) would require an increase or decrease of at least one percent in
such rate; 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. All calculations under this Article
shall be made to the nearest cent or to the nearest one-hundredth of a share, as
the case may be.
(10) The Company may make such increases in the Conversion Rate, for
the remaining term of the Securities or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (4), (5) and (6) of this Section 11.4, as
------------
it considers to be advisable in order to avoid or diminish any income tax
liability to any holders of shares of Common Stock resulting from any dividend
or distribution of Common Stock or issuance of rights or warrants to purchase or
subscribe for Common Stock or from any event treated as such for income tax
purposes.
To the extent permitted by applicable law, the Company from time to
time may increase the Conversion Rate by any amount for any period of time if
the period is at least twenty (20) days and the Board of Directors shall have
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made a determination that such increase would be in the best interests of the
Company, which determination shall be conclusive; provided, however, that such
-------- -------
increase shall not be taken into account for purposes of determining whether the
Closing Price Per Share of the Common Stock exceeds the Conversion Price by 105%
in connection with an event which would otherwise be a Change in Control.
Whenever the Conversion Rate is increased pursuant to the preceding sentence,
the Company shall give notice of the increase to the Holders of Securities in
the manner provided in Section 1.6 at least fifteen (15) days prior to the date
the increased Conversion Rate takes effect, and such notice shall state the
increased Conversion Rate and the period during which it will be in effect.
(11) Notwithstanding the foregoing provisions of this Section, no
adjustment of the Conversion Rate shall be required to be made (a) upon the
issuance of shares of Common Stock pursuant to any present or future plan for
the reinvestment of dividends or (b) because of a tender or exchange offer of
the character described in Rule 13e-4(h)(5) under the Exchange Act or any
successor rule thereto.
SECTION 11.5. Notice of Adjustments of Conversion Rate.
----------------------------------------
Whenever the Conversion Rate is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Rate in
accordance with Section 11.4 and shall prepare a certificate signed by the
------------
Chief Financial Officer of the Company setting forth the adjusted
Conversion Rate and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall promptly be filed with the
Trustee and with each Conversion Agent; and
(2) upon each such adjustment, a notice stating that the Conversion
Rate has been adjusted and setting forth the adjusted Conversion Rate shall
be required, and as soon as practicable after it is required, such
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notice shall be provided by the Company to all Holders in accordance with
Section 1.6.
------- ---
Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours.
SECTION 11.6. 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 any adjustment pursuant
to Section 11.4; or
------------
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, options or warrants to subscribe for or purchase
any shares of capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock of the Company, or of
any consolidation, merger or share exchange to which the Company is a party
and for which approval of any stockholders of the Company is required, or
of the conveyance, sale, transfer or lease 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;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to Section 9.2, and shall cause
-----------
to be provided to all Holders in accordance with Section 1.6, at
-----------
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least 20 days (or 10 days in any case specified in clause (a) or (b) above)
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, rights, options or warrants,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, options or warrants are to be determined
or (y) the date on which such reclassification,consolidation, merger,
conveyance, transfer, sale, lease, 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, conveyance, transfer, sale, lease,
dissolution, liquidation or winding up. Neither the failure to give such notice
or the notice referred to in the following paragraph nor any defect therein
shall affect the legality or validity of the proceedings described in clauses
(a) through (d) of this Section 11.6. If at the time the Trustee shall not be
------------
Conversion the Agent, a copy of such notice shall also forthwith be filed by
the Company with the Trustee.
The Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of Securities pursuant to Section 9.2,
-----------
and shall cause to be provided to all Holders in accordance with Section 1.6,
-----------
notice of any tender offer by the Company or any Subsidiary for all or any
portion of the Common Stock at or about the time that such notice of tender
offer is provided to the public generally.
SECTION 11.7. 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, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all Outstanding Securities.
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SECTION 11.8. Taxes on Conversions.
--------------------
Except as provided in the next sentence, the Company will pay any and
all taxes and duties 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 or duty 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 duty, or has established to the satisfaction of the Company that such tax or
duty has been paid.
SECTION 11.9. Covenant as to Common Stock.
---------------------------
The Company agrees that all shares of Common Stock which may be
delivered upon conversion of Securities, upon such delivery, will be newly
issued shares and will have been duly authorized and validly issued and will be
fully paid and nonassessable and, except as provided in Section 11.8, the
------------
Company will pay all taxes, liens and charges with respect to the issue thereof.
SECTION 11.10. Cancellation of Converted Securities.
------------------------------------
All Securities delivered for conversion shall be delivered to the
Trustee or its agent to be canceled by or at the direction of the Trustee, which
shall dispose of the same as provided in Section 3.9.
-----------
SECTION 11.11. Provision in Case of Consolidation, Merger or Sale of Assets.
------------------------------------------------------------
In case of any consolidation or merger of the Company with or into any
other Person, any merger of another Person with or into the Company (other than
a merger which does not result in any reclassification, conversion,
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exchange or cancellation of outstanding shares of Common Stock of the Company)
or any conveyance, sale, transfer or lease of all or substantially all of the
assets of the Company, the Person formed by such consolidation or resulting from
such merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then Outstanding shall have the right thereafter, during the
period such Security shall be convertible as specified in Section 11.1, to
------------
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease by a holder of the number of shares of Common Stock of the
Company into which such Security might have been converted immediately prior to
such consolidation, merger, conveyance, sale, transfer or lease, assuming such
holder of Common Stock of the Company (i) is not a Person with which the Company
consolidated or merged with or into or which merged into or with the Company or
to which such conveyance, sale, transfer or lease was made, as the case may be
("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease (provided that if the kind or amount of
--------
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer, or lease is not the same for each share of Common
Stock of the Company held immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease by others than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have
been exercised ("Non-electing Share"), then for the purpose of this Section
-------
11.11 the kind and amount of securities, cash and other property receivable
-----
upon such consolidation, merger, conveyance, sale, transfer or lease by the
holders of each Non-electing Share shall be deemed to be the kind and amount so
receivable per share by a plurality of the Non-electing Shares). 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 prac-
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ticable to the adjustments provided for in this
Article. The above provisions of this Section 11.11 shall similarly apply to
-------------
successive consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture shall be given by the
Company to the Holder of each Security as provided in Section 1.6 promptly
-----------
upon such execution.
Neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or other securities or property or cash receivable by Holders of
Securities upon the conversion of their Securities after any such consolidation,
merger, conveyance, transfer, sale or lease or to any such adjustment, but may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, an Officers Certificate or an Opinion of
Counsel with respect thereto, which the Company shall cause to be furnished to
the Trustee upon request.
SECTION 11.12. Responsibility of Trustee for Conversion Provisions.
---------------------------------------------------
The Trustee, subject to the provisions of Section 6.1, and any
-----------
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Securities to determine whether any facts exist which may require
any adjustment of the Conversion Rate, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same, or whether a supplemental indenture need be entered into. Neither the
Trustee, subject to the provisions of Section 6.1, nor any Conversion Agent
-----------
shall be accountable with respect to the validity or value (or the kind or
amount) of any Common Stock, or of any other securities or property or cash,
which may at any time be issued or delivered upon the conversion of any
Security; and it or they do not make any representation with respect thereto.
Neither the Trustee, subject to the provisions of
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Section 6.1, nor any Conversion Agent shall be responsible for any
-----------
failure of the Company to make or calculate any cash payment or to issue,
transfer or deliver any shares of Common Stock or share certificates or other
securities or property or cash upon the surrender of any Security for the
purpose of conversion; and the Trustee, subject to the provisions of Section
-------
6.1, and any Conversion Agent shall not be responsible for any failure
---
of the Company to comply with any of the covenants of the Company contained in
this Article.
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ARTICLE TWELVE
SUBORDINATION OF SECURITIES
SECTION 12.1. Securities Subordinate to Senior Debt.
-------------------------------------
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 (subject to the provisions
of Article Four), the indebtedness represented by the Securities and the payment
of the principal of (and premium, if any) and interest on, and any payment of
the Repurchase Price with respect to, each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the prior payment
in full of all Senior Debt.
SECTION 12.2. No Payments in Certain Circumstances; Payment Over of Proceeds
--------------------------------------------------------------
Upon Dissolution, Etc.
----------------------
No payment on account of principal of, premium, if any, or interest
on, or redemption or repurchase of, the Securities or any coupons appertaining
thereto shall be made if, at the time of such payment or immediately after
giving effect thereto: (i) a default in the payment of principal, premium, if
any, or interest or other amounts due on any Senior Debt, including any default
under any redemption or repurchase obligation, occurs and is continuing (or, in
the case of Senior Debt for which there is a period of grace, in the event of
such a default that continues beyond the period of grace, if any, specified in
the instrument or lease evidencing such Senior Debt), unless and until such
default shall have been cured or waived or shall have ceased to exist; or (ii) a
default, other than a payment default, on Designated Senior Debt occurs and is
continuing that then permits holders of such Designated Senior Debt to
accelerate its maturity and the Trustee receives a notice of the default (a
"Payment Blockage Notice") from a Person who may give it pursuant to Sections
--------
12.5 and 12.6 hereof. Notwithstanding the foregoing, the Company may make, and
---- ----
the Trustee may receive and shall apply, any payment in respect
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of the Securities (for principal, premium, if any, or interest or repurchase) if
such payment was made prior to the occurrence of any of the contingencies
specified in clauses (i) and (ii) above.
If the Trustee receives any Payment Blockage Notice pursuant to clause
(ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until (A) at least 365 days shall have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice, and (B) all scheduled payments of principal, premium, if any, and
interest on the Securities that have come due have been paid in full in cash.
No nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of: (i) the date upon which the
default is cured or waived, or (ii) in the case of a default referred to in
clause (ii) of the second preceding paragraph, 179 days pass after notice is
received if the maturity of such Designated Senior Debt has not been
accelerated, unless this Article otherwise prohibits the payment or distribution
at the time of such payment or distribution.
Upon (i) any acceleration of the principal amount due on the
Securities or (ii) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities, to creditors upon
any dissolution, winding up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, premium, if any, sinking
fund and interest or other amounts due or to become due upon all Senior Debt
shall first be paid in full, or payment thereof provided for in money or money's
worth in accordance with its terms, before any payment is made on account of the
principal of, premium, if any, or interest on, or repurchase of, the
indebtedness evidenced by the
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Securities or any coupon appertaining thereto, and upon any such dissolution or
winding up or liquidation or reorganization any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities, to which the Holders of the Securities or any coupons appertaining
thereto or the Trustee under this Indenture would be entitled, except for the
provisions hereof, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Holders of the Securities or any coupons appertaining
thereto or by the Trustee under this Indenture if received by them or it, as the
case may be, directly to the holders of Senior Debt (pro rata to each such
holder on the basis of the respective amounts of Senior Debt held by such
holder) or their representatives, to the extent necessary to pay all Senior Debt
in full, in money or money's worth, after giving effect to any concurrent
payment or distribution to or for the holders of Senior Debt, before any payment
or distribution is made to the Holders of the Securities or any coupons
appertaining thereto or to the Trustee under this Indenture.
In the event that, contrary to the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by the Trustee or the Holders of the
Securities before all Senior Debt is paid in full or provision made for such
payment, in accordance with its terms, such payment or distribution shall be
paid over or delivered to, the holders of such Senior Debt or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior Debt
have been issued, as their respective interests may appear, for application to
the payment of all Senior Debt remaining unpaid to the extent necessary to pay
all such Senior Debt in full in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Debt.
Subject to the payment in full of all Senior Debt, the Holders of the
Securities and any coupons (together with
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the holders of any other indebtedness of the Company which is subordinated in
right of payment to the payment in full of all Senior Debt, which is not
subordinated in right of payment to the Securities and which by its terms grants
such right of subrogation to the holders thereof) shall be subrogated to the
rights of the holders of Senior Debt to receive payments or distribution of
assets of the Company made on the Senior Debt until the principal of, premium,
if any, and interest on, or amounts payable upon repurchase of, the Securities
shall be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of Senior Debt of any cash, property or securities
to which the Holders of the Securities and any coupons appertaining thereto or
the Trustee would be entitled except for the provisions of this Article, and no
payment over pursuant to the provisions of this Article to the holders of Senior
Debt by the Holders of the Securities or any coupon or the Trustee, shall, as
between the Company, its creditors other than the holders of Senior Debt, and
the Holders of Securities and coupons, be deemed to be a payment by the Company
to the holders of or on account of Senior Debt, it being understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Securities and coupons, on
the one hand, and the holders of Senior Debt, on the other hand.
SECTION 12.3. 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 and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 12.4. No Waiver of Subordination Provisions.
-------------------------------------
No right of any present or future holder of any Senior Debt 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
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<PAGE>
of any Senior Debt, or by any non-compliance by the Company with the terms,
provisions 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 Debt 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 or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, 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 Debt, or otherwise
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the collection of Senior Debt; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
SECTION 12.5. 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 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 Debt or from any trustee, agent or representative
therefor; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of Section 6.1, shall be entitled in all respects to
-----------
assume that no such facts exist; provided, however, that if the
-------- -------
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Trustee shall not have received the notice provided for in this Section 12.5
------------
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 6.1, 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 Debt (or a trustee, agent or
representative therefor) to establish that such notice has been given by a
holder of Senior Debt (or a trustee, agent or representative 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 Debt to
participate in any payment or distribution pursuant to this Article, the Trustee
may request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Debt 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 such Person under this Article, 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 12.6. Reliance on Judicial Order or Certificate of Liquidating Agent.
--------------------------------------------------------------
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 6.1, 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
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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 Debt 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.
SECTION 12.7. Trustee Not Fiduciary for Holders of Senior Debt.
------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt 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 Debt shall be entitled by virtue of this Article or otherwise.
With respect to the holders of Senior Debt, the Trustee undertakes to perform or
to observe only such of its covenants or obligations as are specifically set
forth in this Article Twelve, and no implied covenants or obligations with
--------------
respect to holders of Senior Debt shall be read into this Indenture against the
Trustee.
SECTION 12.8. Reliance by Holders of Senior Debt on Subordination Provisions.
--------------------------------------------------------------
Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Debt, whether such Senior Debt
was created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Senior Debt and such
holder of Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Debt.
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SECTION 12.9. Rights of Trustee as Holder of Senior Debt; Preservation of
-----------------------------------------------------------
Trustee's Rights.
----------------
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
-----------
SECTION 12.10. 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 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 in addition to or in place of the Trustee; provided,
--------
however, that Section 12.9 shall not apply to the Company or any Affiliate of
------- ------------
the Company if it or such Affiliate acts as Paying Agent.
SECTION 12.11. Certain Conversions and Repurchases Deemed Payment.
--------------------------------------------------
For the purposes of this Article only, (1) the issuance and delivery
of junior securities upon conversion of Securities in accordance with Article
-------
Eleven or upon the repurchase of Securities in accordance with Article Thirteen
------ ----------------
shall not be deemed to constitute 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
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<PAGE>
constitute payment on account of the principal of such Security. For the
purposes of this Section, the term "junior securities" means (a) shares of any
stock of any class of the Company and any cash, property or securities into
which the Securities are convertible pursuant to Article Eleven and (b)
--------------
securities of the Company which are subordinated in right of payment to all
Senior Debt 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. Nothing contained in
this Article 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 Debt 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 Eleven or to exchange such Security for Common Stock in
--------------
accordance with Article Thirteen if the Company elects to satisfy the
----------------
obligations under Article Thirteen by the delivery of Common Stock.
----------------
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<PAGE>
ARTICLE THIRTEEN
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 13.1. Right to Require Repurchase.
---------------------------
In the event that a Change in Control (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, but
subject to the provisions of Section 13.2, to require the Company to repurchase,
------------
and upon the exercise of such right the Company shall repurchase, all of such
Holder's Securities not theretofore called for redemption, or any portion of the
principal amount thereof that is equal to U.S.$5,000 or any greater integral
multiple of U.S.$1,000, on the date (the "Repurchase Date") that is 45 days
after the date of the Company Notice (as defined in Section 13.3) at a purchase
------------
price equal to 100% of the principal amount of the Securities to be repurchased
plus interest accrued to the Repurchase Date (the "Repurchase Price"); provided,
--------
however, that installments of interest on Securities whose Stated Maturity is on
-------
or prior to the Repurchase Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such on the
relevant Record Date according to their terms and the provisions of Section 3.7.
-----------
Such right to require the repurchase of the Securities shall not continue after
a discharge of the Company from its obligations with respect to the Securities
in accordance with Article Four, unless a Change in Control shall have occurred
------------
prior to such discharge. At the option of the Company, the Repurchase Price may
be paid in cash or, subject to the fulfillment by the Company of the conditions
set forth Section 13.2, by delivery of shares of Common Stock having a fair
------------
market value equal to the Repurchase Price. Whenever in this Indenture
(including Sections 2.2, 3.1, 5.1(1) and 5.8) there is a reference, in any
------------------------- ---
context, to the principal of any Security as of any time, such reference shall
be deemed to include reference to the Repurchase Price payable in respect of
such Security to the extent that such Repurchase Price is, was or would be so
payable at such time, and express mention of the Repurchase
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<PAGE>
Price in any provision of this Indenture shall not be construed as excluding the
Repurchase Price in those provisions of this Indenture when such express mention
is not made; provided, however, that for the purposes of Article Twelve such
-------- ------- --------------
reference shall be deemed to include reference to the Repurchase Price only to
the extent the Repurchase Price is payable in cash.
SECTION 13.2. Conditions to the Company's Election to Pay the Repurchase Price
----------------------------------------------------------------
in Common Stock.
---------------
The Company may elect to pay the Repurchase Price by delivery of shares of
Common Stock pursuant to Section 13.1 if and only if the following conditions
------------
shall have been satisfied:
(a) The shares of Common Stock deliverable in payment of the
Repurchase Price shall have a fair market value as of the Repurchase Date of not
less than the Repurchase Price. For purposes of Section 13.1 and this Section
------------ -------
13.2, the fair market value of shares of Common Stock shall be determined by the
----
Company and shall be equal to 95% of the average of the Closing Price Per Share
for the five consecutive Trading Days immediately preceding and including the
third Trading Day prior to the Repurchase Date;
(b) As to each Holder, the Repurchase Price shall be paid only in
cash in the event any shares of Common Stock to be issued to such Holder upon
repurchase of Securities hereunder (i) require registration under any federal
securities law before such shares may be freely transferrable without being
subject to any transfer restrictions under the Securities Act upon repurchase
and if such registration is not completed or does not become effective prior to
the Repurchase Date, and/or (ii) require registration with or approval of any
governmental authority under any state law or any other federal law before such
shares may be validly issued or delivered upon repurchase and if such
registration is not completed or does not become effective or such approval is
not obtained prior to the Repurchase Date;
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<PAGE>
(c) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, approved for listing on the New York
Stock Exchange or listed or quoted on a national securities exchange or
quotation system, in either case, prior to the Repurchase Date; and
(d) All shares of Common Stock which may be issued upon repurchase of
Securities will be issued out of the Company's authorized but unissued Common
Stock and, will upon issue, be duly and validly issued and fully paid and non-
assessable and free of any preemptive rights.
If all of the conditions set forth in this Section 13.2 are not
------------
satisfied in accordance with the terms thereof, the Repurchase Price shall be
paid by the Company only in cash.
SECTION 13.3. Notices; Method of Exercising Repurchase Right, Etc.
----------------------------------------------------
(a) Unless the Company shall have theretofore called for redemption
all of the Outstanding Securities, on or before the 30th day after the
occurrence of a Change in Control, the Company or, at the request and expense of
the Company on or before the 30th day after such occurrence, the Trustee, shall
give to all Holders of Securities, in the manner provided in Section 1.6, notice
-----------
(the "Company Notice") of the occurrence of the Change of Control and of the
repurchase right set forth herein arising as a result thereof. 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:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be exercised,
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<PAGE>
(3) the Repurchase Price, and whether the Repurchase Price shall be
paid by the Company in cash or by delivery of shares of Common Stock,
(4) a description of the procedure which a Holder must follow to
exercise a repurchase right, and the place or places where such Securities,
are to be surrendered for payment of the Repurchase Price and accrued
interest, if any,
(5) that on the Repurchase Date the Repurchase Price, and accrued
interest, if any, will become due and payable upon each such Security
designated by the Holder to be repurchased, and that interest thereon shall
cease to accrue on and after said date,
(6) the Conversion Rate then in effect, the date on which the right
to convert the principal amount of the Securities to be repurchased will
terminate and the place or places where such Securities may be surrendered
for conversion,
(7) the place or places that the Notice of Election of Holder to
Require Repurchase as provided in Section 2.2, shall be delivered, and the
-----------
form of such notice, and
(8) the Cusip number or numbers of such Securities.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this Article
-------
Thirteen are inconsistent with applicable law, such law shall govern.
--------
(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee on or before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which notice shall set
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<PAGE>
forth the name of the Holder, the principal amount of the Securities to be
repurchased (and, if any Security is to repurchased in part, the serial number
thereof, the portion of the principal amount thereof to be repurchased and the
name of the Person in which the portion thereof to remain Outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, in the event that the Repurchase
Price shall be paid in shares of Common Stock, the name or names (with
addresses) in which the certificate or certificates for shares of Common Stock
shall be issued, and (ii) the Securities with respect to which the repurchase
right is being exercised. Such written notice shall be irrevocable, except that
the right of the Holder to convert the Securities with respect to which the
repurchase right is being exercised shall continue until the close of business
on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
the Repurchase Price in cash or shares of Common Stock, as provided above, for
payment to the Holder on the Repurchase Date or, if shares of Common Stock are
to be paid, as promptly after the Repurchase Date as practicable, together with
accrued and unpaid interest to the Repurchase Date payable with respect to the
Securities as to which the purchase right has been exercised; provided, however,
-------- -------
that installments of interest that mature on or prior to the Repurchase Date
shall be payable in cash to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Regular Record Date.
(d) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate of 5 1/2% per annum, and each Security shall remain convertible into
Common Stock until the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
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<PAGE>
(e) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the 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
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
(f) Any issuance of shares of Common Stock in respect of the
Repurchase Price shall be deemed to have been effected immediately prior to the
close of business on the Repurchase Date and the Person or Persons in whose name
or names any certificate or certificates for shares of Common Stock shall be
issuable upon such repurchase shall be deemed to have become on the Repurchase
Date the holder or holders of record of the shares represented thereby;
provided, however, that any surrender for repurchase on a date when the stock
-------- -------
transfer books of the Company shall be closed shall constitute the Person or
Persons in whose name or names the certificate or certificates for such shares
are to be issued as the record holder or holders thereof for all purposes at the
opening of business on the next succeeding day on which such stock transfer
books are open. No payment or adjustment shall be made for dividends or
distributions on any Common Stock issued upon repurchase of any Security
declared prior to the Repurchase Date.
(g) No fractions of shares shall be issued upon repurchase of
Securities. If more than one Security shall be repurchased from the same Holder
and the Repurchase Price shall be payable in shares of Common Stock, the number
of full shares which shall be issuable upon such repurchase shall be computed on
the basis of the aggregate principal amount of the Securities so repurchased.
Instead of any fractional share of Common Stock which would otherwise be
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<PAGE>
issuable on the repurchase of any Security or Securities, the Company will
deliver to the applicable Holder its check for the current market value of such
fractional share. The current market value of a fraction of a share is
determined by multiplying the current market price of a full share by the
fraction, and rounding the result to the nearest cent. For purposes of this
Section, the current market price of a share of Common Stock is the Closing
Price Per Share of the Common Stock on the Trading Day immediately preceding the
Repurchase Date.
(h) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or the securities
represented thereby; provided, however, that the Company shall not be required
-------- -------
to pay any tax or duty which may be payable in respect of (i) income of the
Holder or (ii) any transfer involved in the issuance or delivery of certificates
for shares of Common Stock in a name other than that of the Holder of the
Securities being repurchased, and no such issuance or delivery shall be made
unless and until the Person requesting such issuance or delivery has paid to the
Company the amount of any such tax or duty or has established, to the
satisfaction of the Company, that such tax or duty has been paid.
(i) All Securities delivered for repurchase shall be delivered to the
Trustee to be canceled at the direction of the Trustee, which shall dispose of
the same as provided in Section 3.9.
-----------
SECTION 13.4. Certain Definitions.
-------------------
For purposes of this Article Thirteen,
----------------
(a) the term "beneficial owner" shall be determined in accordance
with Rule 13d-3, as in effect on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to the Exchange Act;
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<PAGE>
(b) a "Change in Control" shall be deemed to have occurred at the
time, after the original issuance of the Securities, of:
(i) the acquisition by any person of beneficial ownership,
directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares
of capital stock of the Company entitling such person to
exercise 50% or more of the total voting power of all shares
of capital stock of the Company entitled to vote generally
in the elections of directors (any shares of voting stock of
which such person or group is the beneficial owner that are
not then outstanding being deemed outstanding for purposes
of calculating such percentage), other than any such
acquisition by the Company, any Subsidiary of the Company or
any employee benefit plan of the Company existing on the
date of this Indenture; or
(ii) any consolidation or merger of the Company with or into any
other person, or any merger of another person with or into
the Company (other than (a) any such transaction (x) which
does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common
Stock and (y) pursuant to which holders of Common Stock
immediately prior to such transaction have the entitlement
to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of capital stock entitled
to vote generally in the election of directors
-146-
<PAGE>
of the continuing or surviving person immediately after such
transaction and (b) any merger which is effected solely to
change the jurisdiction of incorporation of the Company and
results in a reclassification, conversion or exchange of
outstanding shares of Common Stock into solely shares of
common stock); or
(iii) any conveyance, transfer, sale, lease or similar disposition
of all or substantially all of the Company's assets to
another person;
provided, however, that a Change in Control shall not be deemed to have occurred
-------- -------
if the Closing Price Per Share on any five Trading Days within the period of 10
consecutive Trading Days ending immediately after the later of the date of the
Change in Control or the date of the public announcement of the Change in
Control (in the case of a Change in Control under Clause (i) above) or the
period of 10 consecutive Trading Days ending immediately prior to the date of
the Change in Control (in the case of a Change in Control under Clause (ii)
above) shall equal or exceed 105% of the Conversion Price of the Securities in
effect on each such Trading Day;
(c) the term "Conversion Price" shall equal U.S.$1,000 divided by the
Conversion Rate; and
(d) for purposes of Section 13.4(b)(i), the term "person" shall
------------------
include any syndicate or group which would be deemed to be a "person" under
Section 13(d)(3) of the Exchange Act, as in effect on the date of the original
execution of this Indenture.
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<PAGE>
ARTICLE FOURTEEN
HOLDERS LISTS AND REPORTS
BY TRUSTEE AND COMPANY; NON-RECOURSE
SECTION 14.1. 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 the Regular Record
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Securities as of such Regular Record
Date, and
(b) at such other times as the Trustee may reasonably 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 14.2. Preservation of Information.
---------------------------
(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 14.1 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 14.1 upon receipt of a new list so furnished.
------------
(b) After this Indenture has been qualified under the Trust Indenture
Act, the rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the
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<PAGE>
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 14.3. No Recourse Against Others.
--------------------------
An incorporator or any past, present or future director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. Such waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 14.4. Reports by Trustee.
------------------
(a) After this Indenture has been qualified under the Trust Indenture
Act, 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. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
sixty days after each July 15 following the date of this Indenture, deliver to
Holders a brief report, dated as of such July 15, which complies with the
provisions of such Section 313(a).
--------------
(b) After this Indenture has been qualified under the Trust Indenture
Act, 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 and with the Company. The Company
will promptly notify the Trustee when the Securities are listed on any stock
exchange.
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<PAGE>
SECTION 14.5. Reports by Company.
------------------
After this Indenture has been qualified under the Trust Indenture Act,
the Company shall file with the Trustee and the Commission, 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.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt thereof shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
_____________________
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.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, all as of the day and year first above written.
SIEBEL SYSTEMS, INC.
By /s/ Howard H. Graham
----------------------------------
Name: Howard H. Graham
Title: Chief Financial Officer
and Senior Vice President,
Finance and Administration
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL
ASSOCIATION, Trustee
By /s/ James Nagy
----------------------------------
Name: James Nagy
Title: Assistant Vice President
<PAGE>
EXHIBIT 4.7
SIEBEL SYSTEMS, INC.
5 1/2% Convertible Subordinated Notes due September 15, 2006
____________
Purchase Agreement
------------------
September 15, 1999
Goldman, Sachs & Co.,
Banc of America Securities LLC,
Thomas Weisel Partners LLC,
As representatives of the several Purchasers
Named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Siebel Systems, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
$300,000,000 principal amount of the Convertible Subordinated Notes specified
above, convertible into common stock, par value $0.001 ("Stock"), of the Company
(the "Securities").
The Purchasers and other holders (including subsequent transferees) of
Securities in registered form without coupons will be entitled to the benefits
of the registration rights agreement, to be dated as of the Time of Delivery (as
defined in Section 4) (the "Registration Rights Agreement"), by and among the
Company and the Purchasers, in the form attached hereto as Exhibit A. Pursuant
to the Registration Rights Agreement, the Company will agree to file with the
Securities and Exchange Commission (the "Commission") under the circumstances
set forth therein a shelf registration statement (the "Registration Statement")
pursuant to Rule 415 under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the resale of the Securities and shares of Stock
initially issuable upon conversion of the Securities by holders thereof, and to
use its reasonable efforts to cause such shelf registration statement to be
declared effective as provided therein.
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) (i) A preliminary offering circular, dated September 2, 1999
(the "Preliminary Offering Circular") and an offering circular, dated
September 15, 1999 (the "Offering Circular"), have been prepared in
connection with the offering of the Securities and the shares
<PAGE>
of Stock issuable upon conversion thereof. The Preliminary Offering
Circular and the Offering Circular and any amendments or supplements
thereto did not and will not, as of their respective dates, contain an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a Purchaser through
Goldman, Sachs & Co. expressly for use therein;
(ii) For purposes of this Agreement, the Company's most recent
Annual Report on Form 10-K and all subsequent documents filed by the
Company with the Commission pursuant to Section 13(a), 13(c) or 15(d) of
the United States Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or prior to the date of the Offering Circular or any
Time of Delivery hereunder, as the case may be, are hereinafter called the
"Exchange Act Reports". The Exchange Act Reports, when they were or are
filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder, and the
Exchange Act Reports did not and will not, as of their respective dates,
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and
(iii) The information provided by the Company pursuant to Section
5(f) will not, at the date thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
(b) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Offering Circular any material loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Offering
Circular; and, since the respective dates as of which information is given
in the Offering Circular, there has not been any material decrease in the
capital stock or material increase in long-term debt of the Company or any
of its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise than
as set forth or contemplated in the Offering Circular;
(c) The Company and its subsidiaries have good and marketable title
in fee simple to all material real property and good and marketable title
to all material personal property owned by them, in each case free and
clear of all liens, encumbrances and defects except such as are described
in the Offering Circular or such as do not interfere with the use made and
proposed to be made of such property by the Company and its subsidiaries;
and any real property and buildings held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;
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(d) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware,
with full corporate power and authority to own or lease its properties and
conduct its business as described in the Offering Circular, and has been
duly qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and each
subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(e) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; the shares of Stock initially issuable upon conversion
of the Securities have been duly and validly authorized and reserved for
issuance and, when issued and delivered in accordance with the provisions
of the Securities and the Indenture (as defined in Section I(f)), will be
duly and validly issued, fully paid and non-assessable and will conform to
the description of the Stock contained in the Offering Circular; and all of
the issued shares of capital stock of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-
assessable and (except for directors' qualifying shares and except as
otherwise set forth in the Offering Circular) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(f) The Securities have been duly authorized and, when issued and
delivered pursuant to this Agreement, will have been duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of the Company enforceable in accordance with their
terms and entitled to the benefits provided by the indenture to be dated
as of September 15, 1999 (the "Indenture") between the Company and Chase
Manhattan Bank and Trust Company, National Association, as Trustee (the
"Trustee"), under which they are to be issued, which will be substantially
in the form previously delivered to you; the Indenture has been duly
authorized and, when executed and delivered by the Company and the Trustee,
the Indenture will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and the Securities and the Indenture will conform to the
descriptions thereof in the Offering Circular and will be in substantially
the form previously delivered to you;
(g) None of the transactions contemplated by this Agreement
(including, without limitation, the use of the proceeds from the sale of
the Securities) will violate or result in a violation of Section 7 of the
Exchange Act, or any regulation promulgated thereunder, including, without
limitation, Regulations G, T, U, and X of the Board of Governors of the
Federal Reserve System;
(h) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might reasonably have been expected to cause or result
in stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Securities;
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(i) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Registration
Rights Agreement, the Indenture and this Agreement and the consummation of
the transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action result
in any violation of the provisions of the Certificate of Incorporation or
By-laws of the Company or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
issue and sale of the Securities or the consummation by the Company of the
transactions contemplated by this Agreement, the Registration Rights
Agreement or the Indenture, except (i) as required pursuant to the
Registration Rights Agreement, (ii) for the approval of the Stock issuable
upon conversion of the Securities for quotation on the Nasdaq National
Market, and, (iii) such consents, approvals, authorizations, registrations
or qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Securities by
the Purchasers;
(j) Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By-laws or in default in the
performance or observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
material lease or other material agreement or instrument to which it is a
party or by which it or any of its properties may be bound;
(k) The statements set forth in the Offering Circular under the
captions "Description of the Notes" and "Description of Capital Stock",
insofar as they purport to constitute a summary of the terms of the
Securities and the Stock, and under the caption "Underwriting", insofar as
they purport to describe the provisions of the documents referred to
therein, fairly present in all material respects such matters and documents
(to the same extent as would be required if the Offering Circular were a
prospectus included in a Registration Statement of the Company on Form S-1
under the Securities Act);
(l) Other than as set forth in the Offering Circular, there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate
have a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and its subsidiaries or
on the ability of the Company to consummate the transactions contemplated
herein (a "Material Adverse Effect"); and, to the Company's knowledge, no
such proceedings are threatened by governmental authorities or by others;
(m) When the Securities are issued and delivered pursuant to this
Agreement, the Securities will not be of the same class (within the
meaning of Rule 144A under the Securities
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Act) as securities which are listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S.
automated inter-dealer quotation system;
(n) The Company is subject to Section 13 or 15(d) of the Exchange
Act;
(o) The Company is not, and after giving effect to the offering and
sale of the Securities, will not be, an "investment company", as such term
is defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act");
(p) Neither the Company, nor any person acting on its behalf has
offered or sold the Securities by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities
Act (except that no representation or warranty is made with respect to the
Purchasers or any persons acting on their behalf);
(q) Within the preceding six months, neither the Company nor any
other person acting on behalf of the Company has offered or sold to any
person any Securities, or any securities of the same or a similar class as
the Securities, other than Securities offered or sold to the Purchasers
hereunder. The Company will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Securities Act) of any
Securities or any substantially similar security issued by the Company,
within six months subsequent to the date on which the distribution of the
Securities has been completed (as notified to the Company by Goldman, Sachs
& Co.), is made under restrictions and other circumstances reasonably
designed not to affect the status of the offer and sale of the Securities
in the United States and to U.S. persons contemplated by this Agreement as
transactions exempt from the registration provisions of the Securities Act
(except that no representation or warranty is made with respect to the
Purchasers or any persons acting on their behalf);
(r) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Purchasers, or in connection with the
initial resale of the Securities by the Purchasers in accordance with this
Agreement, to register the Securities under the Securities Act or to
qualify an indenture under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act");
(s) The Securities have been designated PORTAL eligible securities in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc.;
(t) The Company has all requisite corporate power to enter into this
Agreement and the Registration Rights Agreement. This Agreement has been
and, as of the Time of Delivery, the Registration Rights Agreement will
have been, duly authorized, executed and delivered by the Company and upon
such execution by the Company (assuming the due authorization, execution
and delivery of such agreements by the other parties thereto) this
Agreement and the Registration Rights Agreement will constitute the valid
and binding obligations of the Company enforceable against the Company in
accordance with the terms hereof or thereof, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles, and except as the enforcement of indemnification and
contribution provisions hereof and thereof may be limited by applicable
law;
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<PAGE>
(u) Except as disclosed in the Offering Circular, there are no
persons with registration rights or other similar rights to have any
securities of the Company (other than the Securities and the shares of
Stock issuable upon conversion thereof) registered under any Securities Act
registration statement;
(v) None of the holders of outstanding shares of capital stock of the
Company and no other person has or will have any preemptive or other rights
to purchase, subscribe for or otherwise acquire (i) the shares of Stock to
be issued upon conversion of the Securities or any rights to such shares
(other than those granted by the holders of the Securities) or (ii) as a
result of or in connection with the transactions contemplated by the
Indenture, this Agreement or the Registration Rights Agreement, any other
capital stock of the Company or rights thereto;
(w) Certain of the Company's directors and executive officers and
shareholders of the Company, in each case as listed on Exhibit B-1, will
have entered into a written agreement with the Company in the form of
Exhibit B hereto (each such agreement, a "Lock-up Agreement") by the Time
of Delivery, and executed originals of each Lock-up Agreement shall have
been delivered to you by such time;
(x) To the Company's knowledge, KPMG LLP, who have certified certain
financial statements of the Company and its subsidiaries, are independent
public accountants as required by the Securities Act and the rules and
regulations of the Commission thereunder;
(y) The Company has reviewed its operations and those of its
subsidiaries and its and their interfaces with third-party systems to
evaluate the extent to which the business or operations of the Company or
any of its subsidiaries will be affected by the Year 2000 Problem. As a
result of such review, the Company represents and warrants that the
disclosure in the Offering Circular relating to the Year 2000 Problem is
accurate and complies in all material respects with the rules and
regulations under the Securities Act (to the same extent as would be
required if the Offering Circular were a prospectus included in a
Registration Statement of the Company on Form S-1 under the Securities
Act). The "Year 2000 Problem" as used herein means any significant risk
that computer hardware or software used in the receipt, transmission,
processing, manipulation, storage, retrieval, retransmission or other
utilization of data or in the operation of mechanical or electrical systems
of any kind will not, in the case of dates or time periods occurring after
December 31, 1999, function at least as effectively as in the case of dates
or time periods occurring prior to January 1, 2000;
(z) (i) The Company owns, or possesses adequate rights to use, all
material trademarks, service marks, trade names, trademark registrations,
service mark registrations, domain names and copyrights necessary for the
conduct of its business and, except as set forth in the Offering Circular,
has not received any notice of any claim of conflict with any such rights
of others except as would not have a Material Adverse Effect; and (ii) to
the Company's knowledge, neither the Company nor any of its subsidiaries
have infringed or are infringing any trademarks, service marks, trade
names, trademark registrations, service mark registrations, domain names or
copyrights, which infringement could reasonably be expected to result in
any Material Adverse Effect;
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(aa) (i) The Company owns or possesses adequate rights to use, all
material patents necessary for the conduct of its business; (ii) to the
Company's knowledge, no valid United States patent is or would be infringed
by the activities of the Company, except as would not have a Material
Adverse Effect; (iii) there are no actions, suits or judicial proceedings
pending relating to patents or proprietary information to which the Company
is a party or of which any property of the Company is subject, and, to the
knowledge of the Company, no actions, suits or judicial proceedings are
threatened in writing by governmental authorities or, except as set forth
in the Offering Circular, others, in each case except as would not result
in any Material Adverse Effect; and (iv) except as set forth in the
Offering Circular or as would not result in any Material Adverse Effect,
the Company has not been notified in writing that the Company is infringing
or otherwise violating the patents or other intellectual property of others
and is not aware of any rights of third parties to any of the Company's
material patent applications, license patents or licenses that in any case
could affect materially the use thereof by the Company;
(bb) The Company carries, or is covered by, insurance as is customary
for companies similarly situated and engaged in similar businesses in
similar industries; and
(cc) No labor disturbance by the employees of the Company exists or,
to the knowledge of the Company, is imminent which might be expected to
have a Material Adverse Effect.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at a purchase
price of 97.25% of the principal amount thereof, plus accrued interest, if any,
from September 21, 1999 to the Time of Delivery hereunder, the principal amount
of Securities set forth opposite the name of such Purchaser in Schedule I
hereto.
3. Upon the authorization by you of the release of the Securities, the
several Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to: persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within the
meaning of Rule 144A under the Securities Act in transactions meeting the
requirements of Rule 144A;
(b) It is an institution that is an "accredited investor" within the
meaning of Rule 501 under the Securities Act; and
(c) It will not offer or sell the Securities by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Securities Act.
4. (a) The Securities will be represented by one or more definitive
global Securities in book-entry form which will be deposited by or on behalf of
the Company with The Depository Trust Company ("DTC") or its designated
custodian. The Company will deliver the Securities to the Purchasers, against
payment by the Purchasers of the purchase price therefor by wire transfer to the
Company of Federal (same day) funds, by causing DTC to credit the Securities to
the account of the
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Purchasers at DTC. The Company will cause the certificates representing the
Securities to be made available to the Purchasers for checking at least twenty-
four hours prior to the Time of Delivery (as defined below) at the office of DTC
or its designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be, 7:00 a.m., San Francisco time, on September 21,
1999 or such other time and date as the Purchasers and the Company may agree
upon in writing. Such time and date for delivery of the Securities is herein
called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross-receipt
for the Securities and any additional documents requested by the Purchasers
pursuant to Section 7(j) hereof, will be delivered at such time and date at the
offices of Cooley Godward LLP, 3000 El Camino Real, Palo Alto, California 94306
(the "Closing Location"), and the Securities will be delivered at the Designated
Office, all at the Time of Delivery. A meeting will be held at the Closing
Location at 2:00 p.m., San Francisco time, on the New York Business Day next
preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to make no
amendment or any supplement to the Offering Circular which shall be reasonably
disapproved by you promptly after reasonable notice thereof; and to furnish you
with copies thereof;
(b) Promptly from time to time to take such action as you may reasonably
request to qualify the Securities and the shares of Stock issuable upon
conversion of the Securities for offering and sale under the securities laws of
such U.S. jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such U.S. jurisdictions
for as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process or taxation in any jurisdiction;
(c) To furnish the Purchasers with four copies of the Offering Circular
and each amendment or supplement thereto signed by an authorized officer of the
Company with the independent accountants' report in the Offering Circular, and
any amendment or supplement containing amendments to the financial statements
covered by such report, signed by the accountants, and additional copies thereof
in such quantities as you may from time to time reasonably request, and if, at
any time prior to the expiration of nine months after the date of the Offering
Circular, any event shall have occurred as a result of which the Offering
Circular as then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such Offering Circular is delivered, not misleading, or, if for any other
reason it shall be necessary or desirable during such same period to amend or
supplement the Offering Circular, to notify you and upon your request to prepare
and furnish without charge to each Purchaser and to any dealer in securities as
many copies as you may from time to time reasonably request of an amended
Offering Circular or a supplement to the Offering Circular which will correct
such statement or omission or effect such compliance;
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(d) During the period beginning from the date of the Offering Circular and
continuing until the date 90 days after the date of the Offering Circular, not
to offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to the
Securities or the Stock, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities other than (i) pursuant to
employee stock option plans and employee stock purchase plans existing on, or
upon the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement, or upon conversion of the
Securities, or (ii) the issuance by the Company of shares of the Stock as
consideration for acquisitions of businesses occurring after the date of the
Offering Circular, provided that each recipient of shares pursuant to this
clause (ii) agrees that all such shares remain subject to restrictions
substantially similar to those contained in this subsection; and that the
Company will use reasonable efforts to cause each person who has entered into a
Lock-up Agreement to comply therewith, will not grant any waivers or consents to
non-compliance therewith and will enforce its rights under each such agreement,
in each case unless and to the extent that it shall have obtained your prior
consent;
(e) Not to be or become, at any time prior to the expiration of three
years after the Time of Delivery, an open-end investment company, unit
investment trust, closed-end investment company or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, for the benefit of holders from time to time of Securities, to
furnish at its expense, upon request, to holders of Securities and prospective
purchasers of securities information (the "Additional Issuer Information")
satisfying the requirements of subsection (d)(4)(i) of Rule 144A under the
Securities Act;
(g) To use its reasonable efforts to cause the Securities to be eligible
for the PORTAL trading system of the National Association of Securities Dealers,
Inc.;
(h) To furnish to the holders of the Securities as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the Company and
its consolidated subsidiaries certified by independent public accountants) and,
as soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the date of the
Offering Circular), consolidated summary financial information of the Company
and its subsidiaries for such quarter in reasonable detail;
(i) During a period of five years from the date of the Offering Circular,
provided any of the Securities are then outstanding, to furnish to you copies of
all reports or other communications (financial or other) furnished to
stockholders of the Company, and to deliver to you (i) as soon as they are
available, copies of any reports and financial statements furnished to or filed
with the Commission or any securities exchange on which the Securities or any
class of securities of the Company is listed, provided that any reports,
financial statements or other communications that are available by EDGAR need
not be furnished; and (ii) such additional information concerning the business
and financial condition of the Company as you may from time to time reasonably
request (such financial statements to be on a consolidated basis to the extent
the accounts of the Company and its subsidiaries are consolidated in reports
furnished to its stockholders generally or to the Commission);
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(j) During the period of two years after the Time of Delivery, the Company
will not, and will not permit any of its "affiliates" (as defined in Rule 144
under the Securities Act) to, resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of them;
(k) To use the net proceeds received by it from the sale of the Securities
pursuant to this Agreement in the manner specified in the Offering Circular
under the caption "Use of Proceeds";
(l) To reserve and keep available at all times, free of preemptive rights,
shares of Stock for the purpose of enabling the Company to satisfy any
obligations to issue shares of its Stock upon conversion of the Securities; and
(m) To use its reasonable efforts to list, subject to notice of issuance,
the shares of Stock issuable upon conversion of the Securities on the Nasdaq
National Market.
6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Securities and the shares of Stock issuable upon conversion of the
Securities and all other expenses in connection with the preparation, printing
and filing of the Preliminary Offering Circular and the Offering Circular and
any amendments and supplements thereto and the mailing and delivering of copies
thereof to the Purchasers and dealers; (ii) the cost of producing the Blue Sky
and Legal Investment Memoranda, if any, in connection with the offering,
purchase, sale and delivery of the Securities; (iii) all expenses in connection
with the qualification of the Securities and the shares of Stock issuable upon
conversion of the Securities for offering and sale under state securities laws
as provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Purchasers in connection with such qualification and in
connection with the Blue Sky and legal investment surveys; (iv) any fees charged
by securities rating services for rating the Securities; (v) the cost of
preparing the Securities; (vi) the fees and expenses of the Trustee and any
agent of the Trustee and the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Securities; (vii) any cost incurred in
connection with the designation of the Securities for trading in PORTAL and the
listing of the shares of Stock issuable upon conversion of the Securities on the
Nasdaq National Market; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Purchasers will pay
all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder, as to the Securities to
be delivered at the Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) Sullivan & Cromwell, counsel for the Purchasers, shall have furnished
to you such opinion or opinions, dated such Time of Delivery, with respect to
such matters as you may reasonably request, and such counsel shall have received
such papers and information as they may reasonably request to enable them to
pass upon such matters;
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(b) Cooley Godward LLP, counsel for the Company, shall have furnished to
you their written opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the state of Delaware,
with full corporate power and authority to own or lease its properties and
conduct its business as described in the Offering Circular;
(ii) The Company has an authorized capitalization as set forth in
the Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; and the shares of Stock initially issuable upon
conversion of the Securities have been duly and validly authorized and
reserved for issuance and, when issued and delivered in accordance with the
provisions of the Securities and the Indenture, will be duly and validly
issued and fully paid and non-assessable, and will conform to the
description of the Stock contained in the Offering Circular under the
caption "Description of Capital Stock";
(iii) To such counsel's knowledge, the Company has been duly
qualified as a foreign corporation and is in good standing as a foreign
corporation authorized to do business under the laws of each other
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on the Company;
(iv) Each Significant Subsidiary (as defined in Rule 1-02(w) of
Regulation S-X under the Securities Act) of the Company listed in the
Company's most recent Annual Report on Form 10-K has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation; and all of the issued shares of capital
stock of each Significant Subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable, and (except for directors'
qualifying shares and except as otherwise set forth in the Offering
Circular) are owned of record directly or indirectly by the Company;
(v) To such counsel's knowledge and other than as set forth in the
Offering Circular, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is subject that would be
required to be described in the Offering Circular, to the same extent
required if the Offering Circular were a prospectus included in a
Registration Statement of the Company on Form S-1 under the Securities Act;
(vi) This Agreement and the Registration Rights Agreement have been
duly authorized, executed and delivered by the Company;
(vii) The Securities have been duly authorized, executed,
authenticated, issued and delivered and constitute valid and legally
binding obligations of the Company enforceable in accordance with their
terms and entitled to the benefits provided by the Indenture, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and the Securities and the Indenture conform to
the descriptions thereof contained in the Offering
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<PAGE>
Circular under the caption "Description of the Notes" (such counsel being
entitled to rely on the opinion of Sullivan & Cromwell as to matters of New
York law);
(viii) The Indenture has been duly authorized, executed and delivered
by the Company and, assuming due authorization, execution and delivery by
the Trustee, constitutes a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles (such counsel being entitled to rely on the opinion of
Sullivan & Cromwell as to matters of New York law);
(ix) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, the
Registration Rights Agreement and this Agreement and the consummation of
the transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument listed by the Company as an
exhibit to the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, nor will such actions result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the Company or
any statute or to such counsel's knowledge any rule or regulation of any
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties (except for the securities or
Blue Sky laws of the various states as to which such counsel need not
express any opinion) or, to such counsel's knowledge, any order of any
court entered against the Company or any of its subsidiaries;
(x) No consent, approval, authorization, order, registration or
qualification of or with any governmental agency or body is required for
the offer and sale of the Securities or the consummation by the Company of
the transactions contemplated by this Agreement, the Registration Rights
Agreement or the Indenture, except such as may be required under the
Securities Act and Blue Sky laws of the various states in connection with
registration, pursuant to the Registration Rights Agreement, of the
Securities and the shares of Stock issuable upon conversion of the
Securities and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws
in connection with the purchase and distribution of the Securities by the
Purchasers;
(xi) The statements set forth in the Offering Circular under the
captions "Description of the Notes" and "Description of Capital Stock",
insofar as they purport to constitute a summary of the terms of the
Securities and the Stock, and under the captions "Certain United States
Federal Income Tax Consequences", insofar as they purport to describe the
provisions of the laws and documents referred to therein, fairly present in
all material respects such legal matters and documents (to the same extent
as would be required if the Offering Circular were a prospectus included in
a Registration Statement of the Company on Form S-1 under the Securities
Act);
(xii) No registration of the Securities or the shares of Stock issued
upon conversion of the Securities under the Securities Act, and no
qualification of an indenture under the Trust Indenture Act with respect to
the Securities, is required for the offer and sale by the Company and the
offer and initial resale of the Securities by the Purchasers in the manner
contemplated by this Agreement assuming (i) the accuracy of, and compliance
with, the Purchasers'
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<PAGE>
representations and agreements contained in Section 3 of the Purchase
Agreement, (ii) the accuracy of the representations of the Company set
forth in Sections 1(m), 1(n), 1(p) and 1(q) of the Purchase Agreement and
(iii) the Securities are sold pursuant to the Offering Circular; and
(xiii) The Company is not an "investment company", as such term is
defined in the Investment Company Act;
Subject to the final sentence of this paragraph, such counsel shall
also state that they have no reason to believe that the Offering Circular
and any further amendments or supplements thereto made by the Company prior
to such Time of Delivery (other than the financial statements, including
supporting schedules and other financial data derived from accounting
records and included therein, as to which such counsel need express no
opinion) contained as of its date or contains as of such Time of Delivery
an untrue statement of a material fact or omitted or omits, as the case may
be, to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Such counsel will be required to provide the statement described in this
paragraph only if counsel for the Purchasers is concurrently providing a
similar statement to the Purchasers pursuant to Section 7(a).
The opinion of Cooley Godward LLP described in this Section 7(b) shall
be rendered to you at the request of the Company and shall so state
therein. In providing the statement with respect to the matters covered in
the last paragraph of Section 7(b), Cooley Godward LLP may state that its
statement and belief are based upon its participation in the preparation,
together with the Purchasers, Purchaser's counsel and the Company's
independent accountants, of the Offering Circular and any amendments and
supplements thereto and review and discussion of the contents thereof, but
are without independent check or verification except as specified;
(c) On the date of the Offering Circular prior to the execution of this
Agreement and also at such Time of Delivery, KPMG LLP shall have furnished to
you a letter or letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to you, to the effect set forth in Annex I hereto;
(d) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the Offering Circular there
shall not have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Offering
Circular, the effect of which, in any such case described in clause (i) or (ii),
is in the judgment of the Purchasers so material and adverse as to make it
impracticable or inadvisable to proceed with the offering or the delivery of the
Securities on the terms and in the manner contemplated in this Agreement and in
the Offering Circular;
-14-
<PAGE>
(e) On or after the date hereof (i) no downgrading shall have occurred in
the rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization", as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act, and (ii) no such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the Company's
debt securities;
(f) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on the Nasdaq National Market; (ii)
a suspension or material limitation in trading in the Company's securities on
the Nasdaq National Market; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York State authorities; or (iv) the
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if the effect
of any such event specified in this clause (iv) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the
offering or the delivery of the Securities on the terms and in the manner
contemplated in the Offering Circular;
(g) The Securities shall have been designated for trading on PORTAL;
(h) Each Lock-up Agreement shall have been duly executed and delivered to
the Company and you, and there shall have occurred no breach of any Lock-up
Agreement;
(i) The shares of Stock issuable upon conversion of the Securities shall
have been duly listed, subject to notice of issuance, on the Nasdaq National
Market; and
(j) The Company shall have furnished or caused to be furnished to you at
such Time of Delivery certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by the Company
of all of its obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as you may reasonably request.
8. (a) The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Circular or
the Offering Circular, or any amendment or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact necessary to make the statements therein not misleading, and will reimburse
each Purchaser for any legal or other expenses reasonably incurred by such
Purchaser in connection with investigating or defending any such action or claim
as such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through Goldman, Sachs & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Securities Act or
-15-
<PAGE>
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Circular or the Offering Circular, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Offering Circular or the Offering Circular or any such amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Purchaser through Goldman, Sachs & Co. expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel 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 shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to, or an admission of, fault, culpability or a failure to act, by
or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant
-16-
<PAGE>
equitable considerations. The relative benefits received by the Company on the
one hand and the Purchasers on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Purchasers, in each case as set forth in the
Offering Circular. The relative fault 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 the Purchasers on the
other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in 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 such action
or claim. Notwithstanding the provisions of this subsection (d), no Purchaser
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to
investors were offered to investors exceeds the amount of any damages which such
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. The Purchasers' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Securities Act; and the obligations of the
Purchasers under this Section 8 shall be in addition to any liability which the
respective Purchasers may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company and to each person,
if any, who controls the Company within the meaning of the Securities Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within thirty-six hours after such default by
any Purchaser you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of thirty-six hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering Circular,
or in any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion may
thereby be made necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Securities.
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<PAGE>
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then the Company shall have
the right to require each non-defaulting Purchaser to purchase the principal
amount of Securities which such Purchaser agreed to purchase hereunder and, in
addition, to require each non-defaulting Purchaser to purchase its pro rata
share (based on the principal amount of Securities which such Purchaser agreed
to purchase hereunder) of the Securities of such defaulting Purchaser or
Purchasers for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Purchasers to purchase
Securities of a defaulting Purchaser or Purchasers, then this Agreement shall
thereupon terminate, without liability on the part of any non-defaulting
Purchaser or the Company, except for the expenses to be borne by the Company and
the Purchasers as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Purchasers in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Goldman, Sachs & Co. on behalf of you as the
Representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the Representatives in care of Goldman, Sachs &
Co., 32 Old Slip, 21st Floor, New York, New York 10005, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular,
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<PAGE>
Attention: Director, Legal Affairs; provided, however, that any notice
to a Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Purchaser at its address set forth
in its Purchasers' Questionnaire, or telex constituting such Questionnaire,
which address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
-19-
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
SIEBEL SYSTEMS, INC.
By: /s/ Howard H. Graham
---------------------
Name: Howard H. Graham
Title: Chief Financial Officer and
Senior Vice President, Finance and
Administration
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC
THOMAS WEISEL PARTNERS LLC
By: /s/ Goldman, Sachs & Co.
-------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
-20-
<PAGE>
SCHEDULE I
Principal Amount of
Securities to be
Purchaser Purchased
--------- ---------
Goldman, Sachs & Co............................. $180,000,000
Banc of America Securities LLC.................. 60,000,000
Thomas Weisel Partners LLC...................... 60,000,000
------------
Total........................................... $300,000,000
============
<PAGE>
ANNEX I
Pursuant to Section 7(c) of the Purchase Agreement, the accountants shall
furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Securities
Exchange Act of 1934 (the "Exchange Act") and the applicable published
rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements and
financial statement schedules audited by them and included in the Offering
Circular comply as to form in all material respects with the applicable
requirements of the Exchange Act and the related published rules and
regulations;
(iii) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Offering
Circular agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such five
fiscal years;
(iv) On the basis of limited procedures not constituting an audit in
accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Offering Circular, inquiries
of officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused them
to believe that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Offering Circular are not in conformity with generally
accepted accounting principles applied on the basis substantially
consistent with the basis for the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Offering Circular;
(B) any other unaudited income statement data and balance sheet
items included in the Offering Circular do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Offering Circular;
(C) the unaudited financial statements which were not included
in the Offering Circular but from which were derived any unaudited
condensed financial statements
<PAGE>
referred to in clause (A) and any unaudited income statement data and
balance sheet items included in the Offering Circular and referred to
in clause (B) were not determined on a basis substantially consistent
with the basis for the audited consolidated financial statements
included in the Offering Circular;
(D) any unaudited pro forma consolidated condensed financial
statements included in the Offering Circular do not comply as to form
in all material respects with the applicable accounting requirements
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the
date of such letter, there have been any changes in the consolidated
capital stock (other than issuances of capital stock upon exercise of
options and stock appreciation rights, upon earn-outs of performance
shares and upon conversions of convertible securities, in each case
which were outstanding on the date of the latest financial statements
included in the Offering Circular) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any decreases
in consolidated net current assets or stockholders' equity or other
items specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the Offering
Circular except in each case for changes, increases or decreases which
the Offering Circular discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Offering Circular to the specified date
referred to in clause (E) there were any decreases in consolidated net
revenues or operating profit or the total or per share amounts of
consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
decreases or increases which the Offering Circular discloses have
occurred or may occur or which are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection of
minute books, inquiries and other procedures referred to in paragraphs
(iii) and (iv) above, they have carried out certain specified procedures,
not constituting an audit in accordance with generally accepted auditing
standards, with respect to certain amounts, percentages and financial
information specified by the Representatives, which are derived from the
general accounting records of the Company and its subsidiaries, which
appear in the Offering Circular, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.
I-2
<PAGE>
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
[SEE EXHIBIT 4.8]
<PAGE>
EXHIBIT B
Siebel Systems, Inc.
Lock-Up Agreement
Dated as of September 15, 1999
Goldman, Sachs & Co.
Banc of America Securities LLC
Thomas Weisel Partners LLC
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Re: Siebel Systems, Inc. - Lock-Up Agreement
----------------------------------------
Ladies and Gentlemen:
The undersigned understands that you, as representatives (the
"Representatives"), propose to enter into a Purchase Agreement on behalf of the
several Purchasers named in Schedule I to such agreement (collectively, the
"Purchasers"), with Siebel Systems, Inc., a Delaware corporation (the
"Company"), providing for an offering of Convertible Subordinated Notes (the
"Notes") of the Company that will be convertible into shares of the Common Stock
of the Company (the "Common Stock").
In consideration of the agreement by the Purchasers to offer and sell the
Notes, and of other good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the undersigned agrees that, during the period
beginning from the date of the final Offering Circular covering the offering of
the Notes and continuing to and including the date 90 days after the date of
such final Offering Circular (the "Lock-Up Period"), the undersigned will not
offer, sell, contract to sell, pledge, grant any option to purchase, make any
short sale or otherwise dispose of, or exercise any registration rights with
respect to, any shares of Common Stock, or any options or warrants to purchase
any shares of Common Stock, or any securities convertible into, exchangeable for
or that represent the right to receive shares of Common Stock, whether now owned
or hereinafter acquired, owned directly by the undersigned (including holding as
a custodian) or with respect to which the undersigned has beneficial ownership
within the rules and regulations of the Securities and Exchange Commission (the
"SEC") (collectively the "Undersigned's Shares").
The foregoing restriction is expressly agreed to preclude the undersigned
from engaging in any hedging or other transaction which is designed to or which
reasonably could be expected to lead to or result in a sale or disposition of
the Undersigned's Shares even if such shares would be disposed of by someone
other than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or any purchase, sale or grant of any
right (including without limitation any put or call option) with respect to any
of the Undersigned's Shares or with respect to any security that includes,
relates to, or derives any significant part of its value from such shares.
<PAGE>
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, (iii) with the prior written consent of Goldman, Sachs & Co. on behalf of
the Purchasers or, (iv) during the final 30 days of the Lock-Up Period, with the
prior written consent of the Company, in its sole discretion, the undersigned
may transfer up to ten percent (10%) of the Undersigned's Shares (including for
the purpose of this computation all shares of Common Stock owned, directly or
indirectly, by the undersigned, together with all shares of Common Stock
underlying options to purchase Common Stock held by the undersigned that are
outstanding as of the date hereof (whether vested or unvested)) without
restriction pursuant to this Lock-Up Agreement. For purposes of this Lock-Up
Agreement, "immediate family" shall mean any relationship by blood, marriage or
adoption, not more remote than first cousin. In addition, notwithstanding the
foregoing, if the undersigned is a corporation, the corporation may transfer the
capital stock of the Company to any wholly-owned subsidiary of such corporation;
provided, however, that in any such case, it shall be a condition to the
-------- -------
transfer that the transferee execute an agreement stating that the transferee is
receiving and holding such capital stock subject to the provisions of this
Agreement and there shall be no further transfer of such capital stock except in
accordance with this Agreement, and provided further that any such transfer
shall not involve a disposition for value. The undersigned now has, and, except
as contemplated by clause (i), (ii), (iii) or (iv) above, or as contemplated by
the immediately preceding sentence, for the duration of this Lock-Up Agreement
will have, good and marketable title to the Undersigned's Shares, free and clear
of all liens, encumbrances, and claims whatsoever. The undersigned also agrees
and consents to the entry of stop transfer instructions with the Company's
transfer agent and registrar against the transfer of the Undersigned's Shares
except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Purchasers are relying
upon this Lock-Up Agreement in proceeding toward consummation of the offering.
The undersigned further understands that this Lock-Up Agreement is irrevocable
and shall be binding upon the undersigned's heirs, legal representatives,
successors, and assigns.
Very truly yours,
________________________________________
Exact Name of Shareholder
________________________________________
Authorized Signature
________________________________________
Title
-2-
<PAGE>
EXHIBIT B-1
List of persons to sign
Lock-Up Agreements:
------------------
Thomas M. Siebel
Andersen Consulting
James C. Gaither
Howard H. Graham
Patricia A. House
Eric E. Schmidt
Charles R. Schwab
George T. Shaheen
A. Michael Spence
Craig D. Ramsey
Myron Saranga
R. David Schmaier
Paul Wahl
<PAGE>
EXHIBIT 4.8
Siebel Systems, Inc.
5 1/2% Convertible Subordinated Notes due September, 2006
Registration Rights Agreement
September 15, 1999
Goldman, Sachs & Co.,
Banc of America Securities LLC,
Thomas Weisel Partners LLC,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004
Ladies and Gentlemen:
Siebel Systems, Inc., a Delaware corporation (the "Company"), proposes to
issue and sell to you (the "Purchasers") upon the terms set forth in a purchase
agreement dated September, 1999 (the "Purchase Agreement"), between the
Purchasers and the Company, its 5 1/2% Convertible Subordinated Notes due
September, 2006 (the "Securities"). As an inducement to the Purchasers to enter
into the Purchase Agreement and in satisfaction of a condition to the
obligations of the Purchasers thereunder, the Company agrees with the
Purchasers, (i) for the benefit of the Purchasers and (ii) for the benefit of
the Holders (as defined below) from time to time of the Registrable Securities
(as defined below), including the Purchasers, as follows:
1. Definitions. Capitalized terms used herein without definition shall
have the meanings ascribed to them in the Purchase Agreement or the Offering
Circular, each dated September 15, 1999, in respect of the Securities. As used
in this Agreement, the following capitalized defined terms shall have the
following meanings:
"Act" or "Securities Act" means the United States Securities Act of 1933,
as amended.
"Affiliate" of any specified person means any other person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with such specified person. For purposes of this definition, "control" of a
person means the power, direct or indirect, to direct or cause the direction of
the management and policies of such person whether by contract or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
A-1
<PAGE>
"Closing Date" means the First Time of Delivery as defined in the Purchase
Agreement.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the common stock, par value $0.001 per share, of the
Company, and any securities of the Company or any successor which may be
issuable upon conversion of the Securities pursuant to Article Eleven of the
Indenture.
"DTC" means The Depository Trust Company.
"Effectiveness Period" has the meaning set forth in Section 2(b) hereof.
"Electing Holder" means any Holder of Registrable Securities that has
returned a properly completed and signed Notice and Questionnaire to the Company
in accordance with Section 3(b) hereof.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended.
"Holder" means any person that is the record owner of Registrable
Securities (and includes any person that has a beneficial interest in any
Registrable Security in book-entry form).
"Indenture" means the Indenture, dated as of September 15, 1999, between
the Company and Chase Manhattan Bank and Trust Company, National Association, as
Trustee, as amended and supplemented from time to time in accordance with its
terms.
"Managing Underwriters" means the investment banker or investment bankers
and manager or managers that shall administer an underwritten offering, if any,
as set forth in Section 6 hereof.
"Person" means an individual, partnership, corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities.
"Registrable Security" means any Security and any share of Common Stock
issuable upon conversion or repurchase thereof except any such Security or share
of Common Stock which (i) has been effectively registered under the Securities
Act and sold in a manner contemplated by the Shelf Registration Statement, (ii)
has been transferred in compliance with Rule 144 under the Securities Act (or
any successor provision thereto) or is transferable pursuant to paragraph (k) of
such Rule 144 (or any successor provision thereto) ("Rule 144(k)"), or (iii) has
otherwise been transferred and a new Security or share of Common Stock not
subject to transfer restrictions under the Securities Act has been delivered by
or on behalf of the Company in accordance with Section 3.5(b) of the Indenture.
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<PAGE>
"Shelf Registration" means a registration effected pursuant to Section 2
hereof.
"Shelf Registration Statement" means a shelf registration statement of the
Company pursuant to the provisions of Section 2 hereof filed with the Commission
which covers some or all of the Registrable Securities, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Underwriter" means any underwriter of Registrable Securities in connection
with an offering thereof under a Shelf Registration Statement.
2. Shelf Registration.
(a) The Company shall, no later than 90 calendar days following the Closing
Date, file with the Commission a Shelf Registration Statement relating to the
offer and sale of the Registrable Securities by the Holders from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement and, thereafter, shall use its
reasonable efforts to cause such Shelf Registration Statement to be declared
effective under the Act within 180 calendar days following the Closing Date;
provided, however, that the Company may, upon written notice to all the Holders,
postpone having the Shelf Registration Statement declared effective for a
reasonable period not to exceed 90 days if the Company possesses material non-
public information, the disclosure of which would have a material adverse effect
on the Company and its subsidiaries taken as a whole; provided, further,
however, that no Holder shall be entitled to have the Registrable Securities
held by it covered by such Shelf Registration unless such Holder is an Electing
Holder.
(b) The Company shall use its reasonable efforts:
(i) To keep the Shelf Registration Statement continuously effective
in order to permit the Prospectus forming part thereof to be usable by
Holders until the earliest of (1) the sale of all Registrable Securities
registered under the Shelf Registration Statement; (2) the expiration of
the period referred to in Rule 144(k) with respect to all Registrable
Securities held by Persons that are not Affiliates of the Company; and (3)
two years from the date (the "Effective Date") such Shelf Registration
Statement is declared effective (such period being called the
"Effectiveness Period"); and
(ii) Subject to restrictions on the timing and number of supplements
to the Prospectus provided in Section 3(b)(4), after the Shelf Registration
Statement is declared effective by the Commission, upon the request of an
Electing Holder, to take action
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<PAGE>
reasonably necessary to register the sale of any Registrable Securities of
such Electing Holder and to identify such Electing Holder as a selling
securityholder.
The Company shall be deemed not to have used its reasonable efforts to keep the
Shelf Registration Statement effective during the requisite period if the
Company voluntarily takes any action that would result in Holders of Registrable
Securities covered thereby not being able to offer and sell any such Registrable
Securities during that period, unless such action is required by applicable law
and the Company thereafter promptly complies with the requirements of paragraph
3(k) below.
(c) The Company may suspend the use of the Prospectus for a period not to
exceed 45 days in any 90-day period or an aggregate of 90 days in any 12-month
period if the Board of Directors of the Company shall have determined in good
faith that because of valid business reasons (not including avoidance of the
Company's obligations hereunder), including the acquisition or divestiture of
assets, pending corporate developments and similar events, it is in the best
interests of the Company to suspend such use, and prior to suspending such use
the Company provides the Holders with written notice of such suspension, which
notice need not specify the nature of the event giving rise to such suspension.
(d) Without limiting the remedies available to the Electing Holders under
Section 7 hereof, the Company acknowledges that any failure by the Company to
comply with its obligations under Section 2(a) hereof may result in material
irreparable injury to the Purchasers or the Electing Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the
Purchasers or any Electing Holder may obtain such relief as may be required to
specifically enforce the Company's obligations under Section 2(a) hereof.
3. Registration Procedures. In connection with any Shelf Registration
Statement, the following provisions shall apply:
(a) The Company shall prepare and file with the Commission the Shelf
Registration Statement on the appropriate form under the Act (x) which form
shall be selected by the Company, (y) which form shall be available for the sale
of the Registrable Securities by the Electing Holders and (z) which Shelf
Registration Statement and any amendment thereto and the Prospectus forming part
thereof and any amendment or supplement thereto (and each other document
incorporated therein by reference in each case) shall comply as to form in all
material respects with the Act and the Exchange Act and the respective rules and
regulations thereunder and shall include (or incorporate by reference) all
financial statements required by the Commission to be filed therewith, and shall
use its reasonable efforts to cause such Shelf Registration Statement to become
effective and remain effective in accordance with Section 2 hereof.
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<PAGE>
(b) (1) The Company shall mail the Notice and Questionnaire to the
Holders of Registrable Securities not less than 30 calendar days prior to
the time the Company intends in good faith to have the Shelf Registration
Statement declared effective. Any Person that acquires any Registrable
Securities from an Electing Holder in compliance with the applicable
provisions of the Securities (excluding any Registrable Securities that
were not identified in the Notice and Questionnaire delivered by such
Electing Holder) will be entitled to have such Registrable Securities
included in the Shelf Registration Statement so long as such transferee
provides the Company with an updated Notice and Questionnaire prior to the
Questionnaire Deadline (as defined below). Subject to Section 3(b)(2)
hereof, no Holder of Registrable Securities shall be entitled to be named
as a selling securityholder in the Shelf Registration Statement as of the
Effective Date, and no Holder of Registrable Securities shall be entitled
to use the Prospectus forming a part thereof for offers and resales of
Registrable Securities at any time, unless such Holder has returned a
completed and signed Notice and Questionnaire to the Company by the
deadline for response set forth therein (the "Questionnaire Deadline"),
such response deadline to be on a date not less than 28 calendar days after
the date of mailing of the Notice and Questionnaire by the Company.
(2) If such complete Notice and Questionnaire is received by the
Company 10 days or more before the Effective Date, such Holder shall be
entitled to have its Registrable Securities included in the Shelf
Registration Statement at the Effective Date Following its receipt of such
Notice and Questionnaire, the Company will reasonably promptly include the
Registrable Securities covered thereby in the Shelf Registration Statement
(if not previously included). If the Company receives such complete Notice
and Questionnaire after the 10th day before the Effective Date, the
Registrable Securities covered by the Notice and Questionnaire will,
subject to Section 3(b)(4) be included in the Shelf Registration Statement
after receipt of such Notice and Questionnaire.
(3) After the Effective Date of the Shelf Registration Statement, the
Company shall, upon the request of any Holder of Registrable Securities
that is not then an Electing Holder, as promptly as reasonably practicable,
send a Notice and Questionnaire to such Holder. The Company shall not be
required to take any action to name such Holder as a selling securityholder
in the Shelf Registration Statement until such Holder has returned a
completed and signed Notice and Questionnaire to the Company. In the event
that the Company receives such complete Notice and Questionnaire after the
Shelf Registration Statement has been declared effective, the Company will,
subject to Section 3(b)(4), following receipt of the complete Notice and
Questionnaire, file any amendments to the Shelf Registration Statement or
supplements related to the Prospectus as are necessary to permit such
Holder to deliver the Prospectus to purchasers of the Registrable
Securities. The Company shall use reasonable efforts to cause such post-
effective amendment to the Shelf Registration Statement to be declared
effective within 45 days of the filing of such post-effective amendment.
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<PAGE>
(4) Notwithstanding anything to the contrary in this Agreement, the
Company shall be required to prepare and file amendments to the
Registration Statement or supplements to the Prospectus that are necessary
to add Holders and/or Registrable Securities to the Shelf Registration
Statement no more frequently than once within any 90-day period, the timing
of such filings to be within ten days after receipt of the Notice and
Questionnaire.
(c) The Company shall furnish to the Holders, prior to the filing thereof
with the Commission, a copy of any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the Prospectus
included therein and shall use reasonable efforts to reflect in each such
document, when so filed with the Commission, such comments as the Holders
reasonably may propose.
(d) The Company shall take such action as may be necessary so that (i) any
Shelf Registration Statement and any amendment thereto and any Prospectus
forming part thereof and any amendment or supplement thereto (and each report or
other document incorporated therein by reference in each case) complies in all
material respects with the Securities Act and the Exchange Act and the
respective rules and regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any Prospectus forming part of any Shelf Registration Statement, and
any amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements, in the light of the circumstances under which they were
made, not misleading.
(e) (i) The Company shall advise the Purchasers, the Electing Holders and
the Managing Underwriter or Underwriters promptly and, if requested by the
Purchasers or any Electing Holder, confirm such advice in writing:
(1) when a Shelf Registration Statement and any amendment
thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has
become effective in each case making a public announcement thereof by
release made to Reuters Economic Services and Bloomberg Business News;
(2) when the Company receives any request by the Commission for
amendments or supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information;
(3) when the Commission issues any stop order suspending
effectiveness of the Shelf Registration Statement or initiates any
proceedings for that purpose;
A-6
<PAGE>
(4) when the Company receives any notification with respect to
the suspension of the qualification of the securities included therein
for sale in any jurisdiction or the initiation of any proceeding for
such purpose; and
(ii) The Company shall, as promptly as reasonably practicable, advise
the Purchasers, the Electing Holders and each Managing Underwriter, if any,
of the happening of any event that requires the making of any changes to
the Shelf Registration Statement or the Prospectus so that, as of such
date, the Shelf Registration Statement and the Prospectus do not contain an
untrue statement of a material fact and do not 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 (which advice shall be accompanied by
an instruction to suspend the use of the Prospectus until the requisite
changes have been made).
(f) The Company shall use reasonable efforts to prevent the issuance, and
if issued to obtain the withdrawal, of any order suspending the effectiveness of
any Shelf Registration Statement at the earliest possible time.
(g) The Company shall furnish to each Electing Holder, counsel for the
Purchasers, each Purchaser and each Managing Underwriter, if any, with respect
to a Shelf Registration Statement, without charge, at least one copy of such
Shelf Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, and, if the Electing Holder so requests in
writing, all exhibits (including those incorporated by reference).
(h) The Company shall, during the Effectiveness Period, deliver to each
Electing Holder and each Managing Underwriter, if any, with respect to a Shelf
Registration Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto as such Electing Holder may
reasonably request; and the Company consents (except during the continuance of
any event described in Section 3(e)(ii)) to the use of the Prospectus or any
amendment or supplement thereto by each of the Electing Holders in connection
with the offering and sale of the Registrable Securities covered by the
Prospectus and any amendment or supplement thereto during the Effectiveness
Period.
(i) Prior to any offering of Registrable Securities pursuant to any Shelf
Registration Statement, the Company shall register or qualify or cooperate with
the Purchasers and their counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Electing Holders
reasonably request 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
Registrable Securities covered by such Shelf Registration Statement; provided,
however, that in no event shall the Company be obligated to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to so qualify but for this Section 3(i), (ii)
file any general consent to service of process or
A-7
<PAGE>
taxation in any jurisdiction where it is not as of the date hereof then so
subject or (iii) subject itself to taxation in any jurisdiction if it is not so
subject.
(j) Unless any Registrable Securities shall be in book-entry only form,
the Company shall cooperate with the Electing Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to any Shelf Registration Statement free of any restrictive
legends and in such permitted denominations and registered in such names as
Electing Holders may request in connection with the sale of Registrable
Securities pursuant to such Shelf Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph 3(e)(ii)
above, the Company shall promptly prepare a post-effective amendment to any
Shelf Registration Statement or an amendment or supplement to the related
Prospectus or file any other required document so that, as thereafter delivered
to purchasers of the Registrable Securities included therein, the Prospectus
will not include an 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. If the Company
notifies the Electing Holders of the occurrence of any event contemplated by
paragraph 3(e)(ii) above, the Electing Holders shall suspend the use of the
Prospectus until the requisite changes to the Prospectus have been made.
(l) Not later than the effective date of any Shelf Registration Statement
hereunder, the Company shall provide a CUSIP number for the Securities
registered under such Shelf Registration Statement.
(m) The Company shall use reasonable efforts to comply with all applicable
rules and regulations of the Commission and shall make generally available to
their security holders or otherwise provide in accordance with Section 11(a) of
the Securities Act as soon as practicable after the effective date of the
applicable Shelf Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act.
(n) The Company shall cause the Indenture and the Securities to be
qualified under the Trust Indenture Act in a timely manner; and in connection
with such qualification, the Company shall cooperate with the Trustee under the
Indenture and the Holders (as defined in the Indenture) to effect such changes
to the Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the Trust Indenture Act; and the Company shall
execute and use all reasonable efforts to cause the Trustee to execute, all
documents that may be required to effect such changes and all other forms and
documents required to be filed with the Commission to enable such Indenture to
be so qualified in a timely manner.
(o) In the event of an underwritten offering as set forth in Section 6
herein, the Company shall, if requested, promptly include or incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriter or Underwriters
reasonably request to be included therein and to which the Company does not
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<PAGE>
reasonably object and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after it is
notified of the matters to be included or incorporated in such Prospectus
supplement or post-effective amendment.
(p) The Company shall enter into such customary agreements (including
underwriting agreements in customary form) to take all other appropriate actions
in order to expedite or facilitate the registration or the disposition of the
Registrable Securities, and in connection therewith, if an underwriting
agreement is entered into, cause the same to contain indemnification provisions
and procedures substantially identical to those set forth in Section 5 (or such
other provisions and procedures acceptable to the Managing Underwriters, if any)
with respect to all parties to be indemnified pursuant to Section 5.
(q) The Company shall:
(i) make reasonably available for inspection by one or more
representative of the Electing Holders designated in writing by the Holders
of a majority of the Registrable Securities to be registered thereunder,
any Underwriter participating in any disposition pursuant to such Shelf
Registration Statement, and any attorney, accountant or other agent
retained by such representative or any such Underwriter all relevant
financial and other records, pertinent corporate documents and properties
of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to make
reasonably available for inspection all relevant information reasonably
requested by such representative or any such Underwriter, attorney,
accountant or agent in connection with any such Shelf Registration
Statement, in each case, as is customary for similar due diligence
examinations; provided, however, that any information that is designated in
writing by the Company, in good faith, as confidential at the time of
delivery of such information shall be kept confidential by such
representative, any Holders or any such Underwriter, attorney, accountant
or agent, unless such disclosure is made in connection with a court
proceeding or required by law, or such information becomes available to the
public generally or through a third party without an accompanying
obligation of confidentiality;
(iii) make such representations and warranties to the Electing
Holders and the Underwriters, if any, in form, substance and scope as are
customarily made by the Company to underwriters in primary underwritten
offerings and covering matters including, but not limited to, those set
forth in the Purchase Agreement;
(iv) use its reasonable efforts to obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Managing Underwriters,
if any) addressed to each Electing Holder and the Underwriters, if any,
covering such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Electing Holders and Underwriters (it being agreed that
the matters to be covered by such opinion or written statement by such
counsel delivered in connection with
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<PAGE>
such opinions shall include in customary form, without limitation, as of
the date of the opinion and as of the effective date of the Shelf
Registration Statement or most recent post-effective amendment thereto, as
the case may be, the absence from such Shelf Registration Statement and the
prospectus included therein, as then amended or supplemented, including the
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);
(v) use its reasonable efforts to obtain "cold comfort" letters and
updates thereof from the independent public accountants of the Company
(and, if necessary, any other independent public accountants of any
subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Shelf Registration Statement), addressed to each Electing
Holder and the Underwriters, if any, in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection
with primary underwritten offerings;
(vi) deliver such documents and certificates as may be reasonably
requested by any such Electing Holders and the Managing Underwriters, if
any, including those to evidence compliance with Section 3(d) and with any
customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of
this Section 3(p) shall be performed at each closing under any underwritten
offering to the extent required thereunder (including at any closing
relating to the exercise by underwriters of their over-allotment options,
if any).
(r) The Company will use its reasonable efforts to cause the Stock
issuable upon conversion of the Securities to be admitted for quotation on the
Nasdaq National Market or other stock exchange or trading system on which the
Stock primarily trades on or prior to the effective date of any Shelf
Registration Statement hereunder.
(s) In the event that any broker-dealer registered under the Exchange Act
shall be an "Affiliate" (as defined in Rule 2720(b)(i) of the Rules of Conduct
of the National Association of Securities Dealers, Inc. (the "NASD") (or any
successor or analogous provision thereto)) of the Company or has a "Conflict of
Interest" (as defined in Rule 2720(b)(7) of the Rules of Conduct of the NASD (or
any successor an analogous provision thereto)) and such broker-dealer shall
underwrite, participate as a member of an underwriting syndicate or selling
group or "assist in the distribution" (within the meaning of such rule) of any
Registrable Securities, whether as a holder of such Registrable Securities or as
an underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, assist such broker-dealer (at the expense of such broker-
dealer) in complying with the requirements of such rule, including, without
limitation, by (A) engaging a "qualified independent underwriter" (as defined in
such rule) to participate in the preparation of the
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<PAGE>
registration statement relating to such Registrable Securities, to exercise
usual standards of due diligence in respect thereto and to recommend the public
offering price of such Registrable Securities, (B) indemnifying such qualified
independent underwriter to the extent of the indemnification of Underwriters
provided in Section 5 hereof, and (C) 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 of Conduct of the NASD.
(t) The Company shall use reasonable efforts to take all other steps
necessary to effect the registration, offering and sale of the Registrable
Securities covered by the Shelf Registration Statement contemplated hereby.
(u) The Company may require each Electing Holder with respect to a Shelf
Registration Statement to furnish to the Company such information regarding the
Electing Holder and the distribution of Registrable Securities held by such
Electing Holder as may be required by applicable law or regulation for inclusion
in such Shelf Registration Statement and the Company may exclude from such
registration the Registrable Securities of any Electing Holder that fails to
furnish such information within a reasonable time after receiving such request.
4. Registration Expenses. Except as otherwise provided in Section 3 or
Section 6, the Company shall bear all fees and expenses incurred in connection
with the performance of its obligations under Sections 2 and 3 hereof and shall
bear or reimburse the Electing Holders for the reasonable fees and disbursements
of a single counsel selected by a plurality of all Electing Holders who own an
aggregate of not less than 25% of the Registrable Securities covered by the
Shelf Registration Statement to act as counsel therefor in connection therewith.
Each Electing Holder shall pay all underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of such Electing
Holder's Registrable Securities pursuant to the Shelf Registration Statement.
5. Indemnification and Contribution.
(a) In connection with any Shelf Registration Statement, the Company shall
indemnify and hold harmless each Electing Holder, each Underwriter who
participates in an offering of Registrable Securities, each person, if any, who
controls any of such parties within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act and each of their respective directors,
officers, employees, trustees and agents, as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, including any amounts paid in settlement of any investigation,
litigation, proceeding or claim, joint or several, as incurred, arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any Shelf Registration Statement (or any amendment thereto)
covering Registrable Securities, including all documents incorporated
therein by reference, or the omission or alleged omission therefrom of a
material fact required to be stated therein
A-11
<PAGE>
or necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, that the Company
shall not be liable under this clause (i) for any settlement of any action
effected without its written consent, which consent shall not be
unreasonably withheld; and
(ii) against any and all expenses whatsoever, as incurred (including
reasonable fees and disbursements of counsel chosen by the Electing
Holders, such Electing Holder or any Underwriter (except to the extent
otherwise expressly provided in Section 5(c) hereof)), reasonably incurred
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any court or governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under subparagraph (i) of this
Section 5(a);
provided that this indemnity shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by such Electing Holder or any
Underwriter in writing expressly for use in the Shelf Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto). Any amounts advanced by the Company to an indemnified party pursuant
to this Section 5 as a result of such losses shall be returned to the Company if
it shall be finally determined by such a court in a judgment not subject to
appeal or final review that such indemnified party was not entitled to
indemnification by the Company.
(b) Each Electing Holder shall agree, severally and not jointly, to
indemnify and hold harmless the Company, each Underwriter who participates in an
offering of Registrable Securities and the other Electing Holders and each of
their respective directors, officers (including each officer of the Company who
signed the Shelf Registration Statement), employees, trustees and agents and
each Person, if any, who controls the Company, any Underwriter or any other
Electing Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all loss, liability,
claim, damage and expense whatsoever described in the indemnity contained in
Section 5(a)(i) and (ii) hereof, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Shelf Registration Statement (or any amendment thereto) or any Prospectus (or
any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by such Electing Holder expressly
for use in the Shelf Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto); provided, however, that, no
such Electing Holder shall be liable for any claims hereunder in excess of the
amount of net proceeds received by such Electing Holder from the sale of
Registrable Securities pursuant to the Shelf Registration Statement.
A-12
<PAGE>
(c) Each indemnified party shall give prompt notice to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, enclosing a copy of all papers served on such indemnified
party, but failure to so notify an indemnifying party shall not relieve it of
any liability which it may have to the indemnified party otherwise than on
account of this indemnity agreement. An indemnifying party may participate at
its own expense in the defense of any such action. If an indemnifying party so
elects within a reasonable time after receipt of such notice, such indemnifying
party, jointly with any other indemnifying party, may assume the defense of such
action with counsel chosen by it and approved by the indemnified party or
parties defendant in such action, provided that if any such indemnified party
reasonably determines that there may be legal defenses available to such
indemnified party which are different from or in addition to those available to
such indemnifying party or that representation of such indemnifying party and
any indemnified party by the same counsel would present a conflict of interest,
then such indemnifying party or parties shall not be entitled to assume such
defense. If an indemnifying party is not entitled to assume the defense of such
action as a result of the proviso to the preceding sentence, counsel for such
indemnifying party shall be entitled to conduct the defense of such indemnifying
party and counsel for each indemnified party or parties shall be entitled to
conduct the defense of such indemnified party or parties. If an indemnifying
party assumes the defense of an action in accordance with and as permitted by
the provisions of this paragraph, such indemnifying party shall not be liable
for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
(in addition to any local counsel) separate from its own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnity provision provided for in this Section 5 is
for any reason held to be unavailable to an indemnified party although
applicable in accordance with its terms, then each indemnifying party shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity agreement incurred by such indemnified
party, as incurred; provided that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person that was not guilty of such
fraudulent misrepresentation. Each such indemnifying party shall contribute to
such aggregate losses, liabilities, claims, damages and expenses of such
indemnified party of the nature contemplated by such indemnity agreement in such
proportion as shall be appropriate to reflect the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, with respect to the statements or omissions which resulted in such loss,
liability, claim, damage or expense, or action in respect thereof, as well as
any other relevant equitable considerations. The relative fault of an
indemnifying party, on the one hand, and of an indemnified party, on the other
hand, 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 such
indemnifying party, on the one hand, or by or
A-13
<PAGE>
on behalf of such indemnified party, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Purchasers and the Holders of the
Registrable Securities agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account
the relevant equitable considerations. For purposes of this Section 5(d), each
director, officer, employee, trustee, agent and Person, if any, who controls a
Purchaser or Holder within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as
such Purchaser or Holder, as the case may be, and each director, officer,
employee, trustee and agent of the Company, and each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Company. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent, which consent
shall not be unreasonably withheld.
(e) The Company may require, as a condition to including any Registrable
Securities in any Registration Statement filed and to entering into any
underwriting agreement with respect thereto, that the Company shall have
received an undertaking reasonably satisfactory to it from the holder of such
Registrable Securities and from each Underwriter named in any such underwriting
agreement, severally and not jointly, to comply with the provisions of
paragraphs (a) through (d) of this Section 5.
The indemnity and contribution provisions contained in this Section 5 shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of the Managing
Underwriters, if any, any Electing Holder or any Person controlling any Electing
Holder, or by or on behalf of the Company, its officers or directors or any
Person controlling the Company and (iii) any sale of Registrable Securities
pursuant to the Shelf Registration Statement.
6. Underwritten Offering. The Electing Holders who desire to do so may
sell Registrable Securities in an underwritten offering upon request to the
Company. In any such underwritten offering, the investment banker or bankers
and manager or managers that will administer the offering will be selected by,
and the underwriting arrangements with respect thereto will be approved by the
Holders of a majority of the Registrable Securities to be included in such
offering; provided, however, that (i) such investment bankers and managers and
underwriting arrangements must be reasonably satisfactory to the Company and
(ii) the Company shall not be obligated to arrange for more than one
underwritten offering during the Effectiveness Period. No Holder may
participate in any underwritten offering contemplated hereby unless such Holder
(a) agrees to sell such Holder's Registrable Securities in accordance with any
approved underwriting arrangements, (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting agreements, lock-
up letters and other documents required under the terms of such approved
underwriting arrangements and (c) at least 20% of the outstanding Registrable
A-14
<PAGE>
Securities are included in such underwritten offering. The Holders
participating in any underwritten offering shall be responsible for any expenses
customarily borne by selling securityholders, including underwriting discounts
and commissions and fees and expenses of counsel to the selling securityholders
and shall reimburse the Company for the fees and disbursements of their counsel,
their independent public accountants and any printing expenses incurred in
connection with such underwritten offerings. Notwithstanding the foregoing or
the provisions of Section 3(o) hereof, upon receipt of a request from the
Managing Underwriter or a representative of Holders of a majority of the
Registrable Securities outstanding to prepare and file an amendment or
supplement to the Shelf Registration Statement and Prospectus in connection with
an underwritten offering, the Company may delay the filing of any such amendment
or supplement for up to 90 days if the Company in good faith has a valid
business reason for such delay.
7. Liquidated Damages
(a) Pursuant to Section 2(a) hereof, the Company may, upon written notice
to all the Holders, postpone having the Shelf Registration Statement declared
effective for a reasonable period not to exceed 90 days if the Company possesses
material non-public information, the disclosure of which would have a material
adverse effect on the Company and its subsidiaries taken as a whole.
Notwithstanding any such postponement, if (i) on or prior to the 90th day
following the Closing Date, a Shelf Registration Statement has not been filed
with the Commission or (ii) on or prior to the 180th day following the Closing
Date, such Shelf Registration Statement is not declared effective by the
Commission (each, a "Registration Default"), the Company shall be required to
pay liquidated damages ("Liquidated Damages"), from and including the day
following such Registration Default until such Shelf Registration Statement is
either so filed or so filed and subsequently declared effective, as applicable,
or, if earlier, the end of the Effectiveness Period at a rate per annum equal to
an additional one-quarter of one percent (0.25%) of the principal amount of
Registrable Securities, to and including the 90th day following such
Registration Default and one-half of one percent (0.5%) thereof from and after
the 91st day following such Registration Default.
(b) In the event that the Shelf Registration Statement ceases to be
effective (or the Holders of Registrable Securities are otherwise prevented or
restricted by the Company from effecting sales pursuant thereto) (an "Effective
Failure") for more than 45 days, whether or not consecutive, in any 90-day
period, or 90 days, whether or not consecutive, during any 12-month period, then
the Company shall pay Liquidated Damages at a rate per annum equal to an
additional one-half of one percent (0.5%) from the 46th day of the applicable
90-day period or the 91st day of the applicable 12-month period, as the case may
be, that such Shelf Registration Statement ceases to be effective (or the
Holders of Registrable Securities are otherwise prevented or restricted by the
Company from effecting sales pursuant thereto) until the earlier of (i) the time
the Shelf Registration Statement again becomes effective or the Holders of
Registrable Securities are again able to make sales under the Shelf Registration
Statement or (2) the time the Effectiveness Period expires. For the purpose of
determining an Effective Failure, days on which the Company has been obligated
A-15
<PAGE>
to pay Liquidated Damages in accordance with the foregoing in respect of a prior
Effective Failure within the applicable 90-day or 12-month period, as the case
may be, shall not be included.
(c) In the event the Company fails to file a post-effective amendment to
the Shelf Registration Statement, or the post-effective amendment is not
declared effective, within the periods required by Section 3(b)(4), the Company
shall pay Liquidated Damages at a rate per annum equal to an additional one-half
of one percent (0.5%) from and including the date of such Registration Default
until such time as such Registration Default is cured.
(d) Any amounts to be paid as Liquidated Damages pursuant to paragraphs
(a) or (b) of this Section shall be paid semi-annually in arrears, with the
first semi-annual payment due on the first Interest Payment Date (as defined in
the Indenture), as applicable, following the date of such Registration Default.
Such Liquidated Damages will accrue (1) in respect of the Securities at the
rates set forth in paragraphs (a) or (b) of this Section, as applicable, on the
principal amount of the Securities and (2) in respect of the Common Stock issued
upon conversion of the Securities, at the rates set forth in paragraphs (a) or
(b) of this Section, as applicable, applied to the Conversion Price (as defined
in the Indenture) at that time.
(e) Except as provided in Section 2(d), the Liquidated Damages as set
forth in this Section 7 shall be the exclusive monetary remedy available to the
Holders of Registrable Securities for such Registration Default or Effective
Failure. In no event shall the Company be required to pay Liquidated Damages in
excess of the applicable maximum amount of one-half of one percent (0.5%) set
forth above, regardless of whether one or multiple Registration Defaults exist.
8. Miscellaneous.
(a) Other Registration Rights. The Company may have granted and may in the
future grant registration rights that would permit any Person that is a third
party the right to piggy-back on any Shelf Registration Statement, provided that
if the Managing Underwriter, if any, of such offering notifies the Electing
Holders that the total amount of securities which they and the holders of such
piggy-back rights intend to include in any Shelf Registration Statement is so
large as to materially adversely affect the success of such offering (including
the price at which such securities can be sold), then only the amount, the
number or kind of securities to be offered for the account of holders of such
piggy-back rights will be reduced to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount, number or
kind recommended by the Managing Underwriter prior to any reduction in the
amount of Registrable Securities to be included.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of
Goldman, Sachs & Co.
A-16
<PAGE>
(c) No Inconsistent Agreements. Except for agreements listed in Schedule 1
hereto, the applicable provisions of which have been waived, the Company has not
entered into, and on or after the date of this Agreement will not enter into,
any agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 8(d);
(2) if to the Purchasers, initially at the address set forth in the
Purchase Agreement; and
(3) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly given when
received.
The Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties and the
Holders, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Registrable Securities. The Company
hereby agrees to extend the benefits of this Agreement to any Holder of
Registrable Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(f) 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.
(g) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
provisions relating to conflicts of laws.
A-17
<PAGE>
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
A-18
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
SIEBEL SYSTEMS, INC.
By: /s/ Howard H. Graham
-----------------------------------
Name: Howard H. Graham
Title: Chief Financial Officer and
Senior Vice President, Finance
and Administration
The foregoing Registration Rights Agreement is hereby confirmed and accepted as
of the date first above written.
GOLDMAN, SACHS & CO.
BANC OF AMERICA SECURITIES LLC,
THOMAS WEISEL PARTNERS LLC,
By: /s/ Goldman, Sachs & Co.
---------------------------
(Goldman, Sachs & Co.)
A-19
<PAGE>
SIEBEL SYSTEMS, INC.
INSTRUCTION TO DTC PARTICIPANTS
-------------------------------
(Date of Mailing)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE]
------------------------------
The Depository Trust Company ("DTC") has identified you as a DTC
Participant through which beneficial interests in the Siebel Systems, Inc. (the
"Company") 5 1/2% Convertible Subordinated Notes due September, 2006 (the
"Notes") are held. The Notes are identified by CUSIP No. 826170 AA 0.
In accordance with the terms of the Registration Rights Agreement,
dated as of September 15, 1999, between the Company and the Purchasers named
therein (the "Registration Rights Agreement"), the Company is in the process of
registering the Notes and the shares of common stock, par value $0.001 per share
(together, the "Securities"), issuable upon conversion thereof, under the
Securities Act of 1933, as amended, for resale by the beneficial owners thereof.
In order to have their Securities included in the registration statement, the
beneficial owners, INCLUDING BENEFICIAL OWNERS RESIDENT OUTSIDE THE UNITED
STATES, must complete and return the enclosed Notice of Registration Statement
and Selling Securityholder Questionnaire (the "Notice and Questionnaire").
It is important that beneficial owners of the Securities receive a
------------------------------------------------------------------
copy of the enclosed materials as soon as possible as their rights to have the
--------------------------------------------------
Securities included in the registration statement depend upon their returning
the Notice and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy
---------------------
of the enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact:
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, CA 94402
Attention: Director, Legal Affairs
Telephone: (650) 295-5662
Facsimile: (650) 295-5116
A-20
<PAGE>
Siebel Systems Inc.
Notice of Registration Statement
and
Selling Securityholder Questionnaire
(Date)
Siebel Systems, Inc. (the "Company") has filed or intends shortly to file with
the United States Securities and Exchange Commission (the "Commission") a
preliminary registration statement on Form S-3 (the "Shelf Registration
Statement") for the registration and resale under the United States Securities
Act of 1933, as amended (the "Securities Act"), of the Company's 5 1/2%
Convertible Subordinated Notes due September, 2006 (CUSIP No. 826170 AA 0) (the
"Notes"), and Common Stock issuable upon conversion thereof, in accordance with
the terms of the Registration Rights Agreement, dated as of September 15, 1999
(the "Registration Rights Agreement"), between the Company and the purchasers
named therein (the "Purchasers"). A copy of the Registration Rights Agreement
has been sent to each of the Purchasers. All capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Registration
Rights Agreement.
In order to have Registrable Securities included in the Shelf Registration
Statement (or a supplement or amendment thereto), this Notice of Registration
Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire")
must be completed, executed and delivered to the Company at the address set
forth herein for receipt ON OR BEFORE [insert date that is 28 days from the
Notice date] (the "Questionnaire Deadline"). Unless the Company otherwise
consents, beneficial owners of the Registrable Securities who do not complete,
execute and return this Notice and Questionnaire by such date (i) will not be
named as selling securityholders in the Shelf Registration Statement (or a
supplement or amendment thereto) and related Prospectus and (ii) may not sell
their Registrable Securities pursuant thereto. Beneficial owners of Registrable
Securities who have not returned a Notice and Questionnaire by the Questionnaire
Deadline may, however, receive another Notice and Questionnaire from the Company
upon request. Following its receipt of a completed and signed Notice and
Questionnaire, the Company will include the Registrable Securities covered
thereby in the Shelf Registration Statement subject to restrictions on the
timing and number of supplements to the Shelf Registration Statement provided in
the Registration Rights Agreement.
Certain legal consequences arise from being named as a selling securityholder
in the Shelf Registration Statement and related Prospectus. Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Shelf Registration Statement
and related Prospectus.
The term "Registrable Securities" is defined in the Registration Rights
Agreement to mean all or any portion of the Notes issued under the Trust
Indenture and the Common Stock issuable upon
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<PAGE>
conversion of such Notes, provided, however, that a security ceases to be a
Registrable Security when it is no longer a Restricted Security.
The term "Restricted Security" means any Note or Common Stock issuable upon
conversion thereof except any such Note or Common Stock which (i) has been
registered pursuant to an effective registration statement under the Securities
Act and sold in a manner contemplated by the Shelf Registration Statement, (ii)
has been transferred in compliance with Rule 144 under the Securities Act (or
any successor provision thereto) or is transferable pursuant to paragraph (k) of
Rule 144 (or any successor provision thereto) or (iii) has otherwise been
transferred and a new Note or share of Common Stock not subject to transfer
restrictions under the Securities Act has been delivered by or on behalf of the
Company in accordance with the Indenture.
ELECTION
The undersigned holder (the "Selling Securityholder") of Registrable
Securities hereby elects to include in the Shelf Registration Statement the
Registrable Securities beneficially owned by it and listed below in Item (3)
(unless otherwise specified under Item 3). The undersigned, by signing and
returning this Notice and Questionnaire, agrees to be bound with respect to such
Registrable Securities by the terms and conditions of this Notice and
Questionnaire and the Registration Rights Agreement, including, without
limitation, Section 5 of the Registration Rights Agreement, as if the
undersigned Selling Securityholder were an original party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and the Trustee the Notice of Transfer (completed and signed) set forth in
Exhibit 1 attached to this Notice and Questionnaire and hereby undertakes to do
so.
The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
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<PAGE>
QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
________________________________________________________________________
(b) Full Legal Name of Registered Holder (if not the same as in (a) above)
of Registrable Securities Listed in (3) Below:
________________________________________________________________________
(c) Full Legal Name of DTC Participant (if applicable and if not the same as
(b) above) Through Which Registrable Securities Listed in (3) Below are
Held:
________________________________________________________________________
(2) Address for Notices to Selling Securityholder:
____________________________________________________________________________
____________________________________________________________________________
___________________________________________________________________________
Telephone: _________________________________________________________________
Fax: _______________________________________________________________________
Contact: ___________________________________________________________________
(3) Beneficial Ownership of Registrable Securities:
Except as set forth below, the undesigned Selling Securityholder does not
beneficially own any Notes or Common Stock previously issued upon
conversion, repurchase or redemption of any Note.
Principal amount of Notes beneficially owned: ______________________________
Number of shares of Common Stock beneficially owned and issued to date upon
conversion, repurchase or redemption of Notes (if any): ____________________
Principal amount of Notes which the undersigned wishes to be included in the
Shelf Registration Statement: ______________________________________________
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<PAGE>
Number of shares of Common Stock (if any) issued upon conversion, repurchase
or redemption of Registrable Securities which are to be included in the
Shelf Registration Statement:
____________________________________________________________________________
(4) Other shares of Common Stock or other Notes of the Company owned by the
Selling Securityholder:
Except as set forth below, and under item (3) above, the undersigned Selling
Securityholder is not the beneficial or registered owner of any shares of
Common Stock or any other securities of the Company.
State any exceptions here:
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any of its
affiliates, officers, director or principal equity holders (5% or more) has
held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder intends to
distribute the Registrable Securities listed above in Item (3) only as
follows (if at all): Such Registrable Securities may be sold from time to
time directly by the undersigned Selling Securityholder or, alternatively,
through underwriters, broker-dealers or agents. Such Registrable Securities
may be sold in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time
of sale, or at negotiated prices. Such sales may be effected in transactions
(which may involve crosses or block transactions) (i) on any national
securities exchanges or U.S. inter-dealer quotation system of a registered
national securities association on which the Registrable Securities may be
listed or quoted at the time of sale, (ii) in the over-the-counter market,
(iii) in transactions otherwise than on such exchanges or services or in the
over-the-counter market, or (iv) through the writing of options. In
connection with sales of the Registrable Securities or otherwise, the
Selling Securityholder may enter into hedging transactions with broker-
dealers, which may in turn engage in short sales of the Registrable
Securities in the course of hedging the positions they assume. The Selling
Securityholders may also sell Registrable Securities short and deliver
Registrable Securities to close out such short
-24
<PAGE>
positions, or loan or pledge Registrable Securities to broker-dealers that
in turn may sell such securities.
State any exceptions here:
Note: In no event may such method(s) of distribution take the form of an
underwritten offering of the Registrable Securities without the prior agreement
of the Company.
By signing below, the Selling Securityholder acknowledges that it
understands its obligation to comply, and agrees that it will comply, with the
prospectus delivery and other provisions of the Securities Act and Exchange Act
and the respective rules and regulations thereunder, particularly Regulation M.
In the event that the Selling Securityholder transfers all or any portion
of the Registrable Securities listed in Item (3) above after the date on which
such information is provided to the Company, the Selling Securityholder agrees
to notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Registration Rights
Agreement.
-25
<PAGE>
By signing below, the Selling Securityholder consents to the disclosure of
the information contained herein in its answers to Items (1) through (6) above
and the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such
information will be relied upon by the Company in connection with the
preparation of the Shelf Registration Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation under the
Registration Rights Agreement to provide such information as may be required by
law for inclusion in the Shelf Registration Statement, the Selling
Securityholder agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Registration Rights Agreement
shall be made in writing by hand delivery, first-class mail, or air courier
guaranteeing overnight delivery as follows:
To the Company:
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, California 94402-2667
Attention: Director, Legal Affairs
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company, the terms of this Notice and
Questionnaire, and the representations and warranties contained herein, shall be
binding on, shall inure to the benefit of and shall be enforceable by the
respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder with respect to the Registrable
Securities beneficially owned by such Selling Securityholder and listed in Item
(3) above. This Agreement shall be governed in all respects by the laws of the
State of New York.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.
Dated: ____________________________________________
Selling Securityholder
(Print/type full legal name of beneficial
owner of Registrable Securities)
By:
Name:
Title:
-26
<PAGE>
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR
RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY AT:
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, California 94402-2667
Attention: Director, Legal Affairs
-27
<PAGE>
EXHIBIT 1
NOTICE TO TRANSFER PURSUANT TO REGISTRATION STATEMENT
[Trustee]
[Trustee's Address]
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, California 94402-2667
Attention: Director, Legal Affairs
Re: 5 1/2% Convertible Subordinated Notes
due September, 2006 (the "Notes")
Dear Sirs:
Please be advised that has transferred $
aggregate principal amount of the above-referenced Notes or shares of the
Company's Common Stock, issued on conversion, repurchase or redemption of Notes,
pursuant to the Registration Statement Form S-3 (File No. 333- ) filed by the
Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied with respect to the
transfer described above and that the above-named beneficial owner of the Notes
or Common Stock is named as a selling securityholder in the Prospectus dated or
in amendments or supplements thereto, and that the aggregate principal amount of
the Notes or number of Common Stock transferred are [a portion of] the Notes or
Common Stock listed in such Prospectus as amended or supplemented opposite such
owner's name.
Dated: _______________________________ Very truly yours,
_________________________________________
(Name)
By:______________________________________
(Authorized Signature)
-28
<PAGE>
SCHEDULE 1
----------
Inconsistent Agreements
-29
<PAGE>
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
November 30, 1999
Siebel Systems, Inc.
1855 South Grant Street
San Mateo, CA 94402
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Siebel Systems, Inc., a Delaware corporation (the
"Company"), of a Registration Statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission pursuant to which the
Company is registering under the Securities Act of 1933, as amended, of the
resale by the holders thereof of a total of $300,000,000 principal amount 5 1/2
Convertible Subordinated Notes due September 15, 2006 (the "Notes") and the
shares of Common Stock issuable upon conversion thereof (the "Shares"). The
Notes were issued pursuant to the Indenture dated September 15, 1999 between
the Company and Chase Manhattan Bank and Trust Company, National Association
(the "Indenture").
In connection with this opinion, we have examined copies of the Indenture,
the Notes and such other documents and have made such other inquiries and
investigations of law as we have deemed necessary or appropriate to enable us
to render the opinion expressed below. We have assumed the genuineness and
authenticity of all documents submitted to us as originals and the conformity
to originals of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof. With respect to our opinion as to
the enforceability of the Notes, we have relied upon the opinion of Sullivan &
Cromwell as to matters of New York law.
Our opinion is expressed only with respect to the federal laws of the United
States of America, the General Corporation Law of the State of Delaware and the
laws of the State of California. We express no opinion as to whether the laws
of any particular jurisdiction other than those identified above are applicable
to the subject matter hereof.
On the basis of the foregoing and in reliance thereon, we are of the opinion
that (i) the Notes constitute valid and binding obligations of the Company,
except as may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer and other similar laws of general application
relating to or affecting creditors' rights, by general principals of equity,
and by an implied covenant of good faith, and (ii) upon issuance upon
conversion of the Notes in accordance with their terms, the Shares will be
validly issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in
the prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Sincerely,
Cooley Godward LLP
/s/ Eric C. Jensen
By: _________________________________
Eric C. Jensen
<PAGE>
EXHIBIT 12.1
STATEMENT REGARDING COMPUTATION OF RATIOS
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
------------------------------------------------------------- --------------------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ---- ----
(in thousands, except ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges:
Assumed interest $147 $210 $567 $1,232 $2,220 $1,660 $2,120
element included in --------- ---------- ---------- ------------ ------------ ------------ ------------
rent expense
Total fixed changes $147 $210 $567 $1,232 $2,220 $1,660 $2,120
Earnings (loss):
Net income (loss) $(221) $2,887 $20,544 $11,993 $73,130 $41,584 $124,506
Fixed charges per 147 210 567 1,232 2,220 1,660 2,120
above --------- ---------- ---------- ------------ ------------ ------------ ------------
Total earnings (loss) $(74) $3,097 $21,111 $13,225 $75,350 $43,244 $126,626
Ratio of earnings to -- 14.75 37.25 10.73 33.95 26.05 59.73
fixed charges --------- ---------- ---------- ------------ ------------ ------------ ------------
Deficiency of earnings $(221) $ -- $ -- $ -- $ -- $ -- $ --
available to cover fixed --------- ---------- ---------- ------------ ------------ ------------ ------------
charges
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Siebel Systems, Inc.:
We consent to incorporation herein by reference of our report dated January
26, 1999, relating to the consolidated balance sheets of Siebel Systems, Inc.
and subsidiaries as of December 31, 1998 and 1997 and the related consolidated
statements of operations and comprehensive income (loss), stockholders' equity
and cash flows for each of the years in the three-year period ended December
31, 1998 and the related schedule, which reports appear in the December 31,
1998, annual report on Form 10-K of Siebel Systems, Inc.
We consent to the reference to our firm under the heading "Experts" in the
registration statement.
/s/ KPMG LLP
Mountain View, California
November 24, 1999
<PAGE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM T-1
Statement of Eligibility and Qualification Under the
Trust Indenture Act of 1939 of a Corporation
Designated to Act as Trustee
_______________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)____
_________________________
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
95-4655078
(I.R.S. Employer Identification No.)
101 California Street, San Francisco, California
(Address of principal executive offices)
94111
(Zip Code)
__________________
Siebel Systems, Inc.
(Exact name of Obligor as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
94-3187233
(I.R.S. Employer Identification No.)
1855 South Grant Street
San Mateo, California
(Address of principal executive offices)
94402
(Zip Code)
________________________________
5-1/2% Convertible Subordinated Notes due 2006
(Title of Indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the Obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility.
Exhibit 1. Articles of Association of the Trustee as Now in Effect (see
Exhibit 1 to Form T-1 filed in connection with Registration
Statement No. 333-41329 which is incorporated by reference).
Exhibit 2. Certificate of Authority of the Trustee to Commence Business
(see Exhibit 2 to Form T-1 filed in connection with
Registration Statement No. 333-41329, which is incorporated by
reference).
Exhibit 3. Authorization of the Trustee to Exercise Corporate Trust Powers
(contained in Exhibit 2).
Exhibit 4. Existing By-Laws of the Trustee (see Exhibit 4 to Form T-1
filed in connection with Registration Statement No. 333-41329,
which is incorporated by reference).
Exhibit 5. Not Applicable
Exhibit 6. The consent of the Trustee required by Section 321 (b) of the
Act (see Exhibit 6 to Form T-1 filed in connection with
Registration Statement No. 333-41329, which is incorporated by
reference).
Exhibit 7. A copy of the latest report of condition of the Trustee,
published pursuant to law or the requirements of its
supervising or examining authority.
Exhibit 8. Not Applicable
Exhibit 9. Not Applicable
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Chase Manhattan Bank and Trust Company, National Association, 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 San
Francisco, and State of California, on the 1st day of November, 1999.
CHASE MANHATTAN BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION
By /s/ James Nagy
------------------------
James Nagy
Assistant Vice President
<PAGE>
Exhibit 7. Report of Condition of the Trustee.
--------------------------------------------------------------------------------
Consolidated Report of Condition of Chase Manhattan Bank and Trust Company, N.A.
--------------------------------------------
(Legal Title)
Located at 1800 Century Park East, Ste. 400 Los Angeles, CA 94111
---------------------------------------------------------------------
(Street) (City) (State) (Zip)
as of close of business on June 30, 1999
-------------
================================================================================
================================================================================
ASSETS DOLLAR AMOUNTS IN THOUSANDS
<TABLE>
<S> <C>
1. Cash and balances due from
a. Noninterest-bearing balances and currency and coin (1,2) 1,910
b. Interest bearing balances (3) 0
2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A) 0
b. Available-for-sale securities (from Schedule RC-B, column D) 1,266
3. Federal Funds sold (4) and securities purchased agreements to resell 60,200
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C) 50
b. LESS: Allowance for loan and lease losses 0
c. LESS: Allocated transfer risk reserve 0
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c) 50
5. Trading assets 0
6. Premises and fixed assets (including capitalized leases) 233
7. Other real estate owned (from Schedule RC-M) 0
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 0
9. Customers liability to this bank on acceptances outstanding 0
10. Intangible assets (from Schedule RC-M) 1,203
11. Other assets (from Schedule RC-F) 2,064
12a. TOTAL ASSETS 66,926
</TABLE>
(1) includes cash items in process of collection and unposted debits.
(2) The amount reported in this item must be greater than or equal to the sum
of Schedule RC-M, items 3.a and 3.b
(3) includes time certificates of deposit not held for trading.
(4) Report "term federal funds sold" in Schedule RC, item 4.a "Loans and
leases, net of unearned income" and in Schedule RC-C, part 1
4
<PAGE>
<TABLE>
<S> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E) 37,379
(1) Noninterest-bearing 5,680
(2) Interest-bearing 31,699
b. In foreign offices, Edge and Agreement subsidiaries, and IBF'
(1) Noninterest-bearing
(2) Interest-bearing
14. Federal funds purchased (2) and securities sold under agreements to
repurchase 0
15. a. Demand notes issued to the U.S. Treasury 0
b. Trading liabilities 0
16. Other borrowed money (includes mortgage indebtedness and obligations
under capitalized leases):
a. With a remaining maturity of one year or less 0
b. With a remaining maturity of more than one year through three years 0
c. With a remaining maturity of more than three years 0
17. Not applicable
18. Bank's liability on acceptances executed and outstanding 0
19. Subordinated notes and Debentures (3) 0
20. Other liabilities (from Schedule RC-G) 4,218
21. Total liabilities (sum of items 13 through 20) 41,597
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus 0
24. Common stock-- 600
25. Surplus (exclude all surplus related to preferred stock) 12,590
26. a. Undivided profits and capital reserves 12,139
b. Net unrealized holding gains (losses) on available-for-sale securities 0
27. Cumulative foreign currency translation adjustments
28. a. Total equity capital (sum of items 23 through 27) 25,329
29. Total liabilities, equity capital, and losses deferred pursuant to 12 U.S.C.
1823 (j) (sum of items 21 and 28.c) 66,926
</TABLE>
5
