<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INGRAM MICRO INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 5045 62-1644402
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
1600 E. ST. ANDREW PLACE
SANTA ANA, CA 92705
(714) 566-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
<TABLE>
<S> <C>
JAMES E. ANDERSON, JR., ESQ. WITH COPIES TO:
SENIOR VICE PRESIDENT, SECRETARY
AND GENERAL COUNSEL WINTHROP B. CONRAD, JR., ESQ.
INGRAM MICRO INC. DAVIS POLK & WARDWELL
1600 E. ST. ANDREW PLACE 450 LEXINGTON AVENUE
SANTA ANA, CA 92705 NEW YORK, NEW YORK 10017
(714) 566-1000 (212) 450-4000
</TABLE>
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or 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, 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, 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. [ ]
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM
OFFERING PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SECURITY(1) PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
Zero Coupon Convertible Senior
Debentures due 2018 (the
"Debentures")(2)................. 1,330,000 36.44% $484,652,000 $142,973
- ---------------------------------------------------------------------------------------------------------------------------
Class A Common Stock, par value
$0.01 per share.................. (3) (3) (3) (4)
- ---------------------------------------------------------------------------------------------------------------------------
Total........................................................................ $484,652,000 $142,973
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the bid and asked prices
of the Debentures in The Portal Market on July 3, 1998.
(2) The Debentures were issued at an original price of $346.18 per $1,000
principal amount at maturity, which represents an aggregate issue price of
$460,419,400, and a principal amount at maturity of $1,330,000,000.
(3) Includes 7,308,350 shares of Class A Common Stock initially issuable upon
conversion of the Debentures at the rate of 5.495 shares of Class A Common
Stock per $1,000 principal amount of Debentures at maturity. Pursuant to
Rule 416 under the Securities Act, such number of shares of Class A Common
Stock registered hereby shall include an indeterminate number of shares of
Class A Common Stock that may be issued in connection with a stock split,
stock dividend, recapitalization or similar event. See "Description of
Debentures" in the accompanying Prospectus.
(4) Pursuant to Rule 457(i), there is no filing fee with respect to the shares
of Class A Common Stock issuable upon conversion of the Debentures, because
no additional consideration will be received in connection with the exercise
of the conversion privilege.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS
(SUBJECT TO COMPLETION -- DATED JULY 10, 1998)
INGRAM MICRO INC.
$1,330,000,000 PRINCIPAL AMOUNT AT MATURITY OF
ZERO COUPON CONVERTIBLE SENIOR DEBENTURES DUE 2018
AND
SHARES OF CLASS A COMMON STOCK,
PAR VALUE $0.01 PER SHARE, ISSUABLE UPON CONVERSION THEREOF
This Prospectus relates to the offering for resale of the Zero Coupon
Convertible Senior Debentures due 2018 (the "Debentures") of Ingram Micro Inc.,
a Delaware corporation ("Ingram Micro" or the "Company"), and the shares of
Class A Common Stock, par value $0.01 per share ("Common Stock") of the Company,
issuable upon conversion of the Debentures (the "Conversion Shares"). The
Debentures were issued and sold on June 9, 1998 in a private placement to the
Initial Purchaser (as defined herein, see "Selling Securityholders") and were
simultaneously sold by the Initial Purchaser in transactions exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), to qualified institutional buyers (as defined in Rule 144A
under the Securities Act).
The Debentures and the Conversion Shares (the "Offered Securities") may be
offered and sold from time to time by the holders named herein or by their
transferees, pledgees, donees or their successors (collectively, the "Selling
Securityholders") pursuant to this Prospectus. The Offered Securities may be
offered and sold by the Selling Securityholders from time to time directly to
purchasers or through underwriters, broker/dealers or agents 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. See "Plan of Distribution" and
"Selling Securityholders." If required, the names of any such underwriters,
broker/dealers or agents, any discounts, commissions and other items
constituting compensation from the Selling Securityholders and any discounts,
commissions or concessions allowed or reallowed or paid to broker/dealers will
be set forth in an accompanying supplement to this Prospectus (the "Prospectus
Supplement"). The Selling Securityholders will receive all of the net proceeds
from the sale of the Offered Securities and will pay all underwriting discounts
and selling commissions, if any, applicable to any such sale. The Company is
responsible for payment of all other expenses incident to the offer and sale of
the Offered Securities. The Selling Securityholders and any underwriters,
broker/dealers or agents that participate in the distribution of Offered
Securities may be deemed to be "underwriters" within the meaning of the
Securities Act, and any profits on the sale of Offered Securities by any Selling
Securityholder and any discounts, commissions, concessions or other compensation
received by any such underwriter, broker/dealer or agent may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for a description of indemnification arrangements.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS DISCUSSED UNDER
THE CAPTION "RISK FACTORS" COMMENCING ON PAGE 6.
The Debentures are convertible at any time after September 7, 1998 and prior
to maturity, unless previously redeemed or otherwise purchased, into shares of
Common Stock at a conversion rate of 5.495 shares per $1,000 principal amount at
maturity. The conversion rate will not be adjusted for accrued Original Issue
Discount (as defined), but will be subject to adjustment in certain events. See
"Description of Debentures -- Conversion of Debentures." The reported last sale
price of the Company's Common Stock on the New York Stock Exchange on July 9,
1998 was $45 1/2 per share.
The Debentures were issued at an original price of $346.18 per $1,000
principal amount at maturity (the "Issue Price"), which represented an original
issue discount of 65.382% from the principal amount thereof payable at maturity
(the "Original Issue Discount"). The Issue Price represented a yield to maturity
of 5.375% per annum (computed on a semi-annual bond equivalent basis).
Prior to June 9, 2003, the Debentures are not redeemable at the option of
the Company. Thereafter, the Debentures are redeemable at the option of the
Company at Redemption Prices (as defined) equal to the Issue Price plus accrued
Original Issue Discount to the date of redemption. See "Description of
Debentures -- Redemption of Debentures at the Option of the Company."
Each holder may require the Company to purchase such holder's Debentures as
of June 9, 2001, June 9, 2003, June 9, 2008 and June 9, 2013 at Purchase Prices
equal to the Issue Price plus accrued Original Issue Discount from and including
the Issue Date and to but excluding such dates. Subject to certain conditions,
the Company may elect to pay any such Purchase Price in cash or Common Stock, or
any combination thereof, and, in the case of any purchase as of June 9, 2001,
the Company may elect, in lieu of the payment of cash or Common Stock, to pay
the Purchase Price in new Zero Coupon Convertible Senior Debentures due 2018.
See "Description of Debentures -- Purchase of Debentures at the Option of the
Holder." Each holder may also require the Company to redeem such holder's
Debentures if there is a Fundamental Change (as defined) at Redemption Prices
equal to the Issue Price plus accrued Original Issue Discount to the date of
redemption, subject to adjustment in certain circumstances as described herein.
See "Description of Debentures -- Redemption at Option of the Holder Upon a
Fundamental Change." The Debentures are senior unsecured indebtedness of the
Company.
The Debentures have been designated for trading in The Portal Market.
However, the Debentures sold pursuant to this Prospectus are not eligible for
trading in The Portal Market.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 3
Forward-Looking Statements............. 3
Prospectus Summary..................... 4
Risk Factors........................... 6
Use of Proceeds........................ 8
Dividend Policy........................ 8
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Ratios of Earnings to Fixed Charges.... 8
Description of Debentures.............. 9
Description of Capital Stock........... 22
Certain Federal Income Tax
Considerations....................... 27
Selling Securityholders................ 33
Plan of Distribution................... 33
Legal Matters.......................... 34
Experts................................ 34
</TABLE>
---------------
This Prospectus includes or incorporates by reference certain trademarks of
the Company.
---------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission by the Company can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at 500 West Madison Street, Room 1400,
Chicago, Illinois 60661 and at 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, Washington, D.C. 20549, at
prescribed rates, or on the World Wide Web at http://www.sec.gov. In addition,
reports, proxy statements and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange (the "NYSE"), 20 Broad
Street, New York, New York 10005.
The Company has filed with the Commission a Registration Statement on Form
S-3 (of which this Prospectus is a part (as amended from time to time, the
"Registration Statement")) under the Securities Act with respect to the Offered
Securities. This Prospectus does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or any other
document are not necessarily complete, and in each instance, reference is made
to the copy of such contract or document filed or incorporated by reference as
an exhibit or schedule to the Registration Statement, each such statement being
qualified in all respects by such reference. Copies of the Registration
Statement and the exhibits are on file with the Commission and the NYSE and may
be obtained at the above locations.
---------------
2
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the Company
pursuant to the Exchange Act (Exchange Act Commission File Number: 001-12203)
are incorporated by reference herein:
(1) The Company's Annual Report on Form 10-K for the year ended
January 3, 1998 (the "Company's 1997 Form 10-K").
(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended April 4, 1998.
(3) The Company's Proxy Statement in connection with the Company's
1998 Annual Meeting of Shareowners held on May 6, 1998.
(4) The description of the Company's Common Stock contained in the
Company's Exchange Act Registration Statement on Form 8-A dated September
19, 1996, filed with the Commission pursuant to Section 12 of the Exchange
Act, including any amendment thereto or report filed for the purpose of
updating such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus but prior to
the termination of the offering to which this Prospectus relates shall be deemed
to be incorporated by reference in this Prospectus and to be part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, in its unmodified form, to
constitute a part of this Prospectus.
Upon written or oral request, the Company will provide without charge to
each person to whom a copy of this Prospectus is delivered a copy of any of the
documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
such documents). Requests for such documents should be submitted to Ingram Micro
Inc., 1600 E. St. Andrew Place, Santa Ana, CA 92705, Attention: Senior Director,
Investor Relations (telephone number (714) 566-1000).
FORWARD-LOOKING STATEMENTS
Investors are cautioned that certain statements included or incorporated by
reference in this Prospectus are forward-looking statements that involve risks
and uncertainties. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," and variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are based on current expectations and projections about the
technology distribution industry and assumptions made by the Company's
management and are not guarantees of future performance. Therefore, actual
events and results may differ materially from those expressed or forecasted in
the forward-looking statements due to factors such as intense competition,
narrow margins, fluctuations in quarterly results, the capital intensive nature
of the Company's business, management of growth, the Company's dependence on
information systems, exposure to foreign markets, dependence on key suppliers,
acquisitions, risk of declines in inventory value, dependence on independent
shipping companies, rapid technological change, failure to achieve Year 2000
readiness, any reduction of floor planning financing for the Company's master
reseller business and other risk factors identified in "Risk Factors" and
elsewhere in this Prospectus. The Company undertakes no obligation to update any
forward-looking statements in this Prospectus.
---------------
Except as otherwise indicated, all references to the "Company" or "Ingram
Micro" refer to Ingram Micro Inc. and its consolidated subsidiaries, unless the
context otherwise requires.
3
<PAGE> 5
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more detailed
financial and other information appearing elsewhere in this Prospectus and in
the documents incorporated by reference herein.
THE COMPANY
Ingram Micro is the leading wholesale distributor of computer-based
technology products and services worldwide. The Company markets microcomputer
hardware, networking equipment, and software products to more than 100,000
reseller customers in more than 120 countries. As a wholesale distributor, the
Company markets its products to resellers as opposed to marketing directly to
end-user customers.
THE OFFERING
SECURITIES OFFERED............ Up to $1,330,000,000 principal amount at
maturity of Zero Coupon Convertible Senior
Debentures due 2018 (the "Debentures") and an
indeterminate number of shares of Common
Stock issuable upon conversion thereof (the
"Conversion Shares"). There will be no
periodic interest payments on the Debentures.
See "Description of Debentures -- General."
ISSUE PRICE................... The Debentures were originally sold by the
Initial Purchaser to qualified institutional
buyers (as defined in Rule 144A under the
Securities Act) at an issue price of 34.618%
of the principal amount at maturity (the
"Issue Price").
YIELD TO MATURITY OF
DEBENTURES.................... 5.375% per annum (computed on a semi-annual
bond equivalent basis) calculated from June
9, 1998.
CONVERSION.................... The Debentures are convertible, at the option
of the holder, at any time after September 7,
1998 and prior to maturity, unless previously
redeemed or otherwise purchased by the
Company, into Common Stock at the rate of
5.495 shares per $1,000 principal amount at
maturity of the Debentures (the "Conversion
Rate"). The Conversion Rate will not be
adjusted for accrued Original Issue Discount
(as defined), but will be subject to
adjustment upon the occurrence of certain
events. Upon conversion, the holder will not
receive any cash payment representing accrued
Original Issue Discount; such accrued
Original Issue Discount will be deemed paid
by the Common Stock received upon conversion.
See "Description of Debentures -- Conversion
of Debentures."
RANKING....................... The Debentures are senior unsecured
indebtedness of the Company, ranking pari
passu in right of payment with the Company's
existing and future unsubordinated unsecured
indebtedness. See "Description of
Debentures -- General."
ORIGINAL ISSUE DISCOUNT....... The Debentures were issued with Original Issue
Discount for Federal income tax purposes
equal to the excess of the principal amount
at maturity of the Debentures over their
Issue Price. Prospective purchasers of
Debentures should be aware that, although
there will be no periodic payments of
interest on the Debentures, accrued Original
Issue Discount will be included
4
<PAGE> 6
periodically in a holder's gross income for
Federal income tax purposes prior to
conversion, redemption, other disposition or
maturity of such holder's Debentures, whether
or not such Debentures are ultimately
converted, redeemed, sold (to the Company or
otherwise) or paid at maturity. See "Certain
Federal Income Tax Considerations."
SINKING FUND.................. None.
REDEMPTION AT THE OPTION OF
THE COMPANY................... The Debentures are not redeemable by the
Company prior to June 9, 2003. Thereafter,
the Debentures will be redeemable for cash,
at the option of the Company, in whole at any
time or in part from time to time, at
Redemption Prices equal to the Issue Price
plus accrued Original Issue Discount to the
date of redemption. See "Description of
Debentures -- Redemption of Debentures at the
Option of the Company."
FUNDAMENTAL CHANGE............ Each holder may require the Company to redeem
such holder's Debentures if there is a
Fundamental Change (as defined) at a
Fundamental Change Redemption Price equal to
the Issue Price plus accrued Original Issue
Discount to the date of redemption, subject
to adjustment in certain circumstances. See
"Description of Debentures -- Redemption at
Option of the Holder Upon a Fundamental
Change."
PURCHASE AT THE OPTION OF THE
HOLDER........................ Each holder may require the Company to purchase
such holder's Debentures as of June 9, 2001,
June 9, 2003, June 9, 2008 and June 9, 2013
at Purchase Prices equal to the Issue Price
plus accrued Original Issue Discount to such
dates. The Company may, at its option, elect
to pay any such Purchase Price in cash or
Common Stock, or any combination thereof,
and, in the case of any purchase as of June
9, 2001, the Company may elect, in lieu of
the payment of cash or Common Stock, to pay
the Purchase Price in new Zero Coupon
Convertible Senior Debentures due 2018. See
"Description of Debentures -- Purchase of
Debentures at the Option of the Holder."
USE OF PROCEEDS............... The Company will not receive any proceeds from
the sale by the Selling Securityholders of
the Offered Securities.
REGISTRATION RIGHTS........... The Company has agreed to use all reasonable
efforts to keep effective a registration
statement of which this Prospectus forms a
part covering resales of the Debentures and
Conversion Shares (the "Offered Securities")
until the earlier of (i) the sale pursuant to
the Registration Statement of all the Offered
Securities and (ii) the expiration of the
holding period applicable to the Offered
Securities held by nonaffiliates of the
Company under Rule 144(k) under the
Securities Act, or any successor provision,
subject to certain permitted exceptions. See
"Description of Debentures -- Registration
Rights."
5
<PAGE> 7
RISK FACTORS
In addition to the risk factors and other information included or
incorporated by reference in this Prospectus (including the information
contained in Exhibit 99.01 to the Company's 1997 Form 10-K and any future
updates to such exhibit), prospective investors should carefully consider the
following risk factors in connection with an investment in the Offered
Securities. This Prospectus, including the documents incorporated by reference
herein, contains forward-looking statements that involve risks and
uncertainties. The statements contained in this Prospectus or incorporated by
reference herein that are not purely historical are forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act, including without limitation statements regarding the Company's
expectations, beliefs, intentions or strategies regarding the future. All
forward-looking statements included in this document or incorporated by
reference herein are based on information available to the Company on the date
hereof, and the Company assumes no obligation to update any such forward-looking
statements. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in "Risk Factors" and elsewhere in this Prospectus.
Control by Ingram Family Stockholders; Certain Anti-takeover
Provisions. As of February 17, 1998, Martha R. Ingram, her children, certain
trusts created for their benefit, and two charitable trusts and a foundation
created by the Ingram family (collectively, the "Ingram Family Stockholders")
held 137,961 shares of Common Stock (including 115,939 shares issuable for stock
options exercisable within 60 days of February 17, 1998) in the aggregate and
89,930,326 shares of Class B Common Stock in the aggregate (amounting to 86.9%
of the aggregate voting power of the Common Equity (as defined herein)). Ingram
Industries Inc. ("Ingram Industries"), the Company's former parent (which is
controlled by the Ingram Family Stockholders), held 231,000 shares of Common
Stock as of February 17, 1998. In addition, Ingram Entertainment Inc. (which is
controlled by David B. Ingram) held 2,901 shares of Common Stock as of February
17, 1998. The Ingram Family Stockholders have entered into a Board
Representation Agreement (as defined herein) with the Company, which provides
that certain types of corporate transactions, including transactions involving
the potential sale or merger of the Company; the issuance of additional equity,
warrants, or options; certain acquisitions; or the incurrence of significant
indebtedness, may not be entered into without the written approval of at least a
majority of the voting power held by certain of the Ingram Family Stockholders
acting in their sole discretion. In addition, the Board Representation Agreement
provides for the election of certain directors designated by the Ingram Family
Stockholders. See "Description of Capital Stock -- Board Representation
Agreement." Voting control by the Ingram Family Stockholders may discourage
certain types of transactions involving an actual or potential change of control
of the Company, including transactions in which the holders of the Common Stock
(including holders of the Debentures who may desire to convert such Debentures
into shares of Common Stock) might receive a premium for their shares over the
prevailing market price of the Common Stock. In addition, certain provisions of
the Delaware General Corporation Law (as amended from time to time, the "DGCL")
and the Company's Certificate of Incorporation (the "Certificate of
Incorporation") may make any attempt to obtain control of the Company more
difficult. See "Description of Capital Stock."
Possible Volatility of Debentures and Share Price. The market price of the
Company's Common Stock has experienced significant fluctuations and may continue
to fluctuate significantly. The market price of the Debentures and the
Conversion Shares may be significantly affected by quarterly variations in the
Company's results of operations, changes in earnings estimates by market
analysts, conditions in the personal computer and technology industries, general
market or economic conditions, among other factors. Statements or changes in
opinions, ratings, or earnings estimates made by brokerage firms or industry
analysts relating to the market in which the Company does business or relating
to the Company specifically could result in an immediate and adverse effect on
the market price of the Debentures and the Conversion Shares. In addition, in
recent years the stock market has experienced extreme price and volume
fluctuations. These fluctuations have had a substantial effect on the market
prices for many companies in technology-related industries, often unrelated to
the operating performance of the specific companies. There can be no assurances
that the market price of the Debentures and the Conversion Shares will not
decline below the levels prevailing at the time of purchase of Offered
Securities hereunder.
6
<PAGE> 8
Limitations on Repurchase or Redemption of Debentures. As of June 9, 2001,
June 9, 2003, June 9, 2008 and June 9, 2013 (each, a "Purchase Date"), the
Company will become obligated to purchase, at the option of the holder thereof,
any outstanding Debenture, subject to certain conditions. In addition, upon a
Fundamental Change (as defined), each holder of the Debentures will have certain
rights, at such holder's option, to require the Company to redeem all or a
portion of such holder's Debentures. In the case of any purchase as of June 9,
2001, the Company may elect, in lieu of the payment of cash or Common Stock, to
pay the Purchase Price in new Zero Coupon Convertible Senior Debentures due
2018. There can be no assurance that the Company will have sufficient funds to
pay the repurchase price on any Purchase Date (in which case the Company could
be required to issue shares of Common Stock to pay the repurchase price at
valuations based on then prevailing market prices, or as of June 9, 2001, new
Zero Coupon Convertible Senior Debentures due 2018), or, in the event of a
Fundamental Change, the redemption price for all the Debentures tendered by the
holders thereof. Any future credit agreements or other agreements relating to
other indebtedness to which the Company becomes a party may contain restrictions
or prohibitions on the repurchase or redemption of the Debentures. In the event
a Purchase Date or a Fundamental Change occurs at a time when the Company is
prohibited from repurchasing or redeeming the Debentures, the Company could seek
the consent of its then existing lenders to repurchase or redeem the Debentures
or could attempt to refinance the borrowings that contain such prohibition. If
the Company does not obtain such a consent or repay such borrowings, the Company
would remain prohibited from repurchasing or redeeming the Debentures. In such
case, the Company's failure to repurchase or redeem Debentures required to be
repurchased or redeemed under the terms of the Indenture would constitute an
Event of Default under the Indenture and would likely constitute a default under
the terms of any other indebtedness of the Company outstanding at such time. The
term "Fundamental Change" is limited to certain specified transactions and does
not include all events that could adversely affect the Company's financial
condition or operating results. The requirement that the Company offer to redeem
the Debentures upon a Fundamental Change will not necessarily protect holders of
the Debentures in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving the Company. See "Description of
Debentures -- Redemption at Option of the Holder Upon a Fundamental Change."
Absence of a Public Market. There is a limited trading market for the
Debentures. Although in connection with the initial placement of the Debentures
the Initial Purchaser advised the Company that it intended at such time to make
a market in the Debentures, it is not obligated to do so and may discontinue
such market making at any time without notice. In addition, such market making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act. Accordingly, there can be no assurance that any active market for
the Debentures will develop or, if one does develop, that it will be maintained.
If an active market for the Debentures fails to develop or be sustained, the
trading price of the Debentures could be adversely affected.
7
<PAGE> 9
USE OF PROCEEDS
The Company will not receive any proceeds from the sale by the Selling
Securityholders of the Offered Securities.
DIVIDEND POLICY
The Company has never declared or paid any dividends on its capital stock
other than a distribution of $20 million to Ingram Industries in connection with
its split-off (the "Split-Off") from Ingram Industries in 1996. The Company
currently intends to retain its future earnings to finance the growth and
development of its business and therefore does not anticipate declaring or
paying cash dividends on its capital stock for the foreseeable future. Any
future decision to declare or pay dividends will be at the discretion of the
Board of Directors and will be dependent upon the Company's financial condition,
results of operations, capital requirements, and such other factors as the Board
of Directors deems relevant. In addition, certain of the Company's debt
facilities contain restrictions on the declaration and payment of dividends.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of earnings to fixed charges for
the Company, and such ratios pro forma for the issuance of the Debentures.
<TABLE>
<CAPTION>
THIRTEEN WEEKS
ENDED
FISCAL YEAR --------------------
-------------------------------- MARCH 29, APRIL 4,
1993 1994 1995 1996 1997 1997 1998
---- ---- ---- ---- ---- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges.............. 4.3x 3.6x 3.4x 4.2x 7.3x 7.4x 5.3x
Pro forma ratio of earnings to fixed charges.... 7.4x 5.4x
</TABLE>
8
<PAGE> 10
DESCRIPTION OF DEBENTURES
The Debentures were issued under an indenture dated as of June 9, 1998 (the
"Indenture"), between the Company and The First National Bank of Chicago, as
trustee (the "Trustee"). A copy of the Indenture, the form of Debenture and the
registration rights agreement dated as of June 9, 1998 between the Company and
the Initial Purchaser (the "Registration Rights Agreement") have been filed as
exhibits to the Registration Statement and are available from the Trustee upon
request by a registered holder of the Debentures. The following summaries of
certain provisions of the form of Debenture, the Indenture and the Registration
Rights Agreement do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all the provisions of the form of
Debenture, the Indenture and the Registration Rights Agreement, including the
definitions therein of certain terms that are not otherwise defined in this
Prospectus. Wherever particular provisions or defined terms of the Indenture (or
of the form of Debenture which is a part thereof) or the Registration Rights
Agreement are referred to, such provisions or defined terms are incorporated
herein by reference. As used in this "Description of Debentures," the "Company"
refers to Ingram Micro Inc. and does not, unless the context otherwise
indicates, include its subsidiaries.
GENERAL
The Debentures are senior unsecured obligations of the Company ranking pari
passu in right of payment with the Company's existing and future unsubordinated
unsecured indebtedness, are limited to $1,330,000,000 aggregate principal amount
at maturity and will mature on June 9, 2018.
The Debentures were issued at a substantial discount from their principal
amount at maturity. See "Certain Federal Income Tax Considerations."
There will be no periodic payments of interest on the Debentures. The
calculation of the accrual of Original Issue Discount (the difference between
the Issue Price of the Debentures and the principal amount at maturity of a
Debenture) in the period during which a Debenture remains outstanding will be on
a semi-annual bond equivalent basis using a year composed of twelve 30-day
months; such accrual commenced on June 9, 1998. Maturity, conversion, purchase
by the Company at the option of a holder or redemption of a Debenture will cause
Original Issue Discount and interest, if any, to cease to accrue on such
Debenture, under the terms and subject to the conditions of the Indenture. The
Company may not reissue a Debenture that has matured or been converted,
purchased by the Company at the option of a holder, redeemed or otherwise
canceled (except for registration of transfer, exchange or replacement thereof).
The principal amount at maturity of each Debenture will be payable at the
office or agency of the paying agent, initially the Trustee, in the Borough of
Manhattan, The City of New York, or any other office of the paying agent
maintained for such purpose. Debentures may be presented for conversion or
exchange into Common Stock at the office of the conversion agent and Debentures
in definitive form may be presented for exchange for other Debentures or
registration of transfer at the office of the registrar, each such agent
initially being the Trustee. The Company will not charge a service charge for
any registration of transfer or exchange of Debentures; however, the Company may
require payment by a holder of a sum sufficient to cover any tax, assessment or
other governmental charge payable in connection therewith.
The Indenture does not prohibit or limit the incurrence of indebtedness or
other liabilities by the Company or its subsidiaries, and the incurrence of any
such additional indebtedness and other liabilities could adversely affect the
Company's ability to perform its obligations pursuant to the Debentures. The
Company anticipates that from time to time it and its subsidiaries will incur
additional indebtedness and other liabilities.
Although a portion of the Company's operations are conducted through its
subsidiaries, the Company itself currently generates sufficient cash flow to
meet its obligations and to service its debt and expects that such cash flow
will be sufficient to meet its obligations on the Debentures. Nevertheless, it
is possible that contributions to the Company's business by its subsidiaries may
increase over time and that at some point in the future the Company's ability to
service debt, including the Debentures, may become dependent upon the earnings
of its subsidiaries and the distribution of those earnings, or upon loans or
other payments of funds by those subsidiaries, to the Company. Any right of the
Company to receive any assets of any of its subsidiaries
9
<PAGE> 11
upon their liquidation or reorganization will be subject to prior satisfaction
of the claims of that subsidiary's creditors (including trade creditors), except
to the extent that the Company is itself recognized as a creditor of such
subsidiary, in which case the claims of the Company would still be subject to
prior satisfaction of any claim secured by the assets of such subsidiary and any
indebtedness of such subsidiary senior to the claim held by the Company. The
payment of dividends or distributions and the making of loans and advances to
the Company by any such subsidiaries could be subject to statutory or
contractual restrictions, could be contingent upon the earnings of those
subsidiaries and could be subject to various business considerations. In
addition to direct borrowings by the Company's subsidiaries, indebtedness of the
Company under the Company's bank revolving credit facilities is guaranteed by
certain of the Company's subsidiaries, and claims of the creditors under such
bank indebtedness may be entitled to be satisfied prior to the rights of the
Company (and therefore the rights of the holders of the Debentures) with respect
to the assets of such subsidiaries. A substantial portion of the Company's
consolidated long-term debt is issued by or guaranteed by one or more of the
Company's subsidiaries.
FORM, DENOMINATION AND REGISTRATION
The Debentures were issued in fully registered form, without coupons, in
denominations of $1,000 principal amount at maturity and integral multiples
thereof.
Global Debenture; Book-Entry Form. The Debentures are evidenced by one or
more global Debentures (collectively, the "Global Debenture"), which were
deposited with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC") and registered in the name of Cede & Co. ("Cede") as DTC's nominee.
Except as set forth below, the Global Debenture may be transferred, in whole or
in part, only to another nominee of DTC or to a successor of DTC or its nominee.
Holders of Debentures may hold their interests in the Global Debenture
directly through DTC, or indirectly through organizations which are participants
in DTC (the "Participants"). Transfers between Participants will be effected in
the ordinary way in accordance with DTC rules and will be settled in clearing
house funds. The laws of some states require that certain persons take physical
delivery of securities in definitive form. Consequently, the ability to transfer
beneficial interests in the Global Debenture to such persons may be limited.
Holders of Debentures who are not Participants may beneficially own
interests in the Global Debenture held by DTC only through Participants or
certain banks, brokers, dealers, trust companies and other parties that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly ("Indirect Participants"). So long as Cede, as the nominee of DTC,
is the registered owner of the Global Debenture, Cede for all purposes will be
considered the sole holder of the Global Debenture. Except as provided below,
owners of beneficial interests in the Global Debenture will not be entitled to
have certificates registered in their names, will not receive or be entitled to
receive physical delivery of certificates in definitive form, and will not be
considered the holders thereof.
Payment of the redemption price and the purchase price of the Global
Debenture will be made to Cede, the nominee for DTC, as the registered owner of
the Global Debenture by wire transfer of immediately available funds. Neither
the Company, the Trustee nor any paying agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Debenture or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company has been informed by DTC that, with respect to payment of the
redemption price or the purchase price of the Global Debenture, DTC's practice
is to credit Participants' accounts on the payment date therefor with payments
in amounts proportionate to their respective beneficial interests in the
Debentures represented by the Global Debenture as shown on the records of DTC
(adjusted as necessary so that such payments are made with respect to whole
Debentures only), unless DTC has reason to believe that it will not receive
payment on such payment date. Payments by Participants to owners of beneficial
interests in Debentures represented by the Global Debenture held through such
Participants will be the responsibility of
10
<PAGE> 12
such Participants, as is now the case with securities held for the accounts of
customers registered in "street name."
Holders who desire to convert their Debentures into Common Stock should
contact their brokers or other Participants or Indirect Participants to obtain
information on procedures, including proper forms and cut-off times, for
submitting such request.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a person
having a beneficial interest in the Debentures represented by the Global
Debenture to pledge such interest to persons or entities that do not participate
in the DTC system, or otherwise take actions in respect of such interest, may be
affected by the lack of a physical certificate evidencing such interest.
Neither the Company nor the Trustee (or any registrar, paying agent or
conversion agent under the Indenture) will have any responsibility for the
performance by DTC or its Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations. DTC has advised the Company that it will take any action permitted
to be taken by a holder of Debentures (including, without limitation, the
presentation of Debentures for conversion as described below) only at the
direction of one or more Participants to whose account with DTC interests in the
Global Debenture are credited and only in respect of the principal amount at
maturity of the Debentures represented by the Global Debenture as to which such
Participant or Participants has or have given such direction.
DTC has advised the Company 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 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 to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entry
changes to accounts of its Participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations such as the Initial Purchaser. Certain of such
Participants (or their representatives), together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through, or maintain a custodial
relationship with a Participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Debenture among participants of DTC, DTC is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days, the Company will cause Debentures to be issued in
definitive form in exchange for the Global Debenture.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and Indirect Participants to beneficial
owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements that may be in effect from time to time. Redemption
notices shall be sent to Cede. If less than all of the Debentures are being
redeemed, DTC will reduce the amount of the interest of each Participant in such
Debentures in accordance with its procedures.
Certificated Debentures. Certificated Debentures will be issued in
exchange for Debentures represented by the Global Debenture if a depositary is
unwilling or unable to continue as a depositary for the Global Debenture as set
forth above under "-- Global Debenture; Book-Entry Form."
CONVERSION OF DEBENTURES
A holder of a Debenture may convert it into Common Stock at any time after
September 7, 1998 and prior to maturity; provided that if a Debenture is called
for redemption, the holder may convert it only until the close of business on
the last Trading Day prior to the Redemption Date unless the Company defaults in
the payment of the redemption price. A Debenture in respect of which a holder
has delivered a Purchase Notice exercising the option of such holder to require
the Company to purchase such Debenture may be
11
<PAGE> 13
converted only if such notice is withdrawn in accordance with the terms of the
Indenture. Similarly, a Debenture in respect of which a holder is exercising its
option to require redemption upon a Fundamental Change may be converted only if
such holder withdraws its election to exercise its option in accordance with the
terms of the Indenture. A holder may convert its Debentures in part so long as
such part is $1,000 principal amount at maturity or an integral multiple
thereof.
The initial Conversion Rate is 5.495 shares of Common Stock per $1,000
principal amount at maturity of Debentures, subject to adjustment upon the
occurrence of certain events, as described below. A holder entitled to a
fractional share of Common Stock shall receive cash equal to the then current
market value of such fractional share.
On conversion of a Debenture, a holder will not receive any cash payment
representing accrued Original Issue Discount. The Company's delivery to the
holder of the fixed number of shares of Common Stock into which the Debenture is
convertible (together with the cash payment, if any, in lieu of fractional
shares of Common Stock) will be deemed to satisfy the Company's obligation to
pay the principal amount of the Debenture including the accrued Original Issue
Discount attributable to the period from the Issue Date to the Conversion Date.
Thus, the accrued Original Issue Discount is deemed to be paid in full rather
than canceled, extinguished or forfeited. The Conversion Rate will not be
adjusted at any time during the term of the Debentures for such accrued Original
Issue Discount.
To convert a certificated Debenture into Common Stock, a holder must (i)
complete and manually sign the conversion notice on the back of the Debenture
(or complete and manually sign a facsimile thereof) and deliver such notice to
the conversion agent, (ii) surrender the Debenture to the conversion agent,
(iii) if required, furnish appropriate endorsements and transfer documents, and
(iv) if required, pay all transfer or similar taxes. Pursuant to the Indenture,
the date on which all of the foregoing requirements have been satisfied is the
Conversion Date.
The Conversion Rate is subject to adjustment under formulae as set forth in
the Indenture in certain events, including: (i) the issuance of Common Stock of
the Company as a dividend or distribution on the Common Stock; (ii) certain
subdivisions and combinations of the Common Stock; (iii) the issuance to all
holders of Common Stock of certain rights or warrants to purchase Common Stock;
(iv) the distribution to all holders of Common Stock of capital stock (other
than Common Stock) of the Company, of evidences of indebtedness of the Company
or of assets (including securities other than Common Stock, but excluding those
rights, warrants, dividends and distributions referred to in clause (i) or (iii)
above or paid in cash); (v) distributions consisting of cash, excluding any
quarterly cash dividend on the Common Stock to the extent that the aggregate
cash dividend per share of Common Stock in any fiscal quarter does not exceed
the greater of (x) the amount per share of Common Stock of the next preceding
quarterly cash dividend on the Common Stock to the extent that such preceding
quarterly dividend did not require an adjustment of the Conversion Rate pursuant
to this clause (v) (as adjusted to reflect subdivisions or combinations of the
Common Stock), and (y) 3.75 percent of the average of the last reported sales
price of the Common Stock during the ten Trading Days immediately prior to the
date of declaration of such dividend, and excluding any dividend or distribution
in connection with the liquidation, dissolution or winding up of the Company;
(vi) payment in respect of a tender offer or exchange offer by the Company or
any Subsidiary (as defined) of the Company for the Common Stock to the extent
that the cash and value of any other consideration included in such payment per
share of Common Stock exceeds the Current Market Price (as defined) per share of
Common Stock on the Trading Day next succeeding the last date on which tenders
or exchanges may be made pursuant to such tender or exchange offer; and (vii)
payment in respect of a tender offer or exchange offer by a person other than
the Company or any Subsidiary of the Company for the Common Stock to the extent
that the cash and value of any other consideration included in the payment per
share of Common Stock exceeds the Current Market Price per share of Common Stock
on the Trading Day next succeeding the last date on which tenders or exchanges
may be made pursuant to such tender or exchange offer in which, as of the
closing date of the offer, the Board of Directors is not recommending rejection
of the offer. If an adjustment is required to be made as set forth in clause (v)
above as a result of a distribution that is a quarterly dividend, such
adjustment would be based upon the amount by which such distribution exceeds the
amount of the quarterly cash dividend permitted to be excluded pursuant to
clause (v) above. If an adjustment is required to be made as set forth in clause
(v) above as a result of a distribution that is not a quarterly dividend, such
adjustment would be based upon the full amount
12
<PAGE> 14
of the distribution. The adjustment referred to in clause (vii) above will only
be made if the tender offer or exchange offer is for an amount that would
increase the offeror's ownership of Common Equity (as defined) from less than
25% to more than 25% of the total shares of Common Equity outstanding. The
adjustment referred to in clause (vii) above will generally not be made,
however, if as of the closing of such offer, the offering documents with respect
to such offer disclose a plan or an intention to cause the Company to engage in
a consolidation or merger of the Company or a sale of all or substantially all
of the Company's assets. "Current Market Price" is generally defined in the
Indenture as the average of the daily closing prices of the Common Stock for the
five consecutive Trading Days ending on and including such date of
determination.
No adjustment in the Conversion Rate will be required unless such
adjustment would require a change of at least 1% in the Conversion Rate then in
effect; provided that any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
Except as stated above, the Conversion Rate will not be adjusted for the
issuance of Common Stock or any securities convertible into or exchangeable for
Common Stock or carrying the right to purchase any of the foregoing.
In the case of (i) any reclassification of the Common Stock or (ii) a
consolidation or merger involving the Company or a sale or conveyance to another
corporation of the property and assets of the Company as an entirety or
substantially as an entirety, in each case as a result of which holders of
Common Stock shall be entitled to receive stock, securities, other property or
assets (including cash) with respect to or in exchange for such Common Stock,
the holders of the Debentures then outstanding will be entitled thereafter to
convert such Debentures into the kind and amount of shares of stock, securities
or other property or assets (including cash) which they would have owned or been
entitled to receive upon such reclassification, consolidation, merger, sale or
conveyance had such Debentures been converted immediately prior to such
reclassification, consolidation, merger, sale or conveyance assuming that a
holder of Debentures would not have exercised any rights of election as to the
stock, securities or other property or assets (including cash) receivable in
connection therewith.
In the event of a taxable distribution to holders of Common Stock or in
certain other circumstances requiring an adjustment to the Conversion Rate, the
holders of Debentures may, in certain circumstances, be deemed to have received
a distribution subject to United States income tax as a dividend; in certain
other circumstances, the absence of such an adjustment may result in a taxable
dividend to the holders of Common Stock. See "Certain Federal Income Tax
Considerations."
The Company from time to time may, to the extent permitted by law, increase
the Conversion Rate by any amount for any period of at least 20 Business Days,
in which case the Company shall give at least 15 days' notice of such increase,
if the Board of Directors has made a determination that such increase would be
in the best interests of the Company, which determination shall be conclusive.
The Company may, at its option, make such increases in the Conversion Rate, in
addition to those set forth above, as the Board of Directors deems advisable to
avoid or diminish any income tax to holders of Common Stock resulting from any
dividend or distribution of stock (or rights to acquire stock) or from any event
treated as such for income tax purposes. See "Certain Federal Income Tax
Considerations."
REDEMPTION OF DEBENTURES AT THE OPTION OF THE COMPANY
No sinking fund is provided for the Debentures. Prior to June 9, 2003, the
Debentures will not be redeemable at the option of the Company. Beginning on
June 9, 2003, the Company may redeem the Debentures for cash as a whole at any
time, or from time to time in part, upon not less than 30 days' nor more than 60
days' notice of redemption given by mail to holders of Debentures. The
Debentures will be redeemable in integral multiples of $1,000 principal amount
at maturity.
13
<PAGE> 15
The table below shows Redemption Prices of Debentures per $1,000 principal
amount at maturity thereof at June 9, 2003 and at each June 9 thereafter prior
to maturity and at maturity on June 9, 2018, which prices reflect the accrued
Original Issue Discount calculated to each such date. The Redemption Price of a
Debenture redeemed between such dates would include an additional amount
reflecting the additional Original Issue Discount accrued since the next
preceding date in the table to the actual Redemption Date.
<TABLE>
<CAPTION>
(2) (3)
(1) ACCRUED ORIGINAL REDEMPTION
DEBENTURE ISSUE DISCOUNT PRICE
REDEMPTION DATE ISSUE PRICE AT 5.375% (1)+(2)
- --------------- ----------- ---------------- ----------
<S> <C> <C> <C>
June 9, 2003.................................. $346.18 $105.14 $ 451.32
June 9, 2004.................................. 346.18 129.72 475.90
June 9, 2005.................................. 346.18 155.65 501.83
June 9, 2006.................................. 346.18 182.98 529.16
June 9, 2007.................................. 346.18 211.80 557.98
June 9, 2008.................................. 346.18 242.20 588.38
June 9, 2009.................................. 346.18 274.25 620.43
June 9, 2010.................................. 346.18 308.05 654.23
June 9, 2011.................................. 346.18 343.68 689.86
June 9, 2012.................................. 346.18 381.26 727.44
June 9, 2013.................................. 346.18 420.89 767.07
June 9, 2014.................................. 346.18 462.67 808.85
June 9, 2015.................................. 346.18 506.73 852.91
June 9, 2016.................................. 346.18 553.19 899.37
June 9, 2017.................................. 346.18 602.18 948.36
June 9, 2018.................................. 346.18 653.82 1,000.00
</TABLE>
If less than all of the outstanding Debentures held in certificated form
are to be redeemed, the Trustee shall select the Debentures held in such form to
be redeemed in principal amounts at maturity of $1,000 or integral multiples
thereof by lot, pro rata or by another method the Trustee considers fair and
appropriate (as long as such method is not prohibited by the rules of any stock
exchange on which the Debentures are then listed). If a portion of a holder's
certificated Debentures is selected for partial redemption and such holder
converts a portion of such certificated Debentures, such converted portion shall
be deemed to be the portion selected for redemption. Debentures registered in
the name of DTC or its nominee will be redeemed pro rata as described under
"-- Form, Denomination and Registration -- Global Debenture; Book-Entry Form."
REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE
If a Fundamental Change (as defined) occurs at any time prior to June 9,
2018, each holder of Debentures shall have the right, at the holder's option, to
require the Company to redeem any or all of such holder's Debentures on the date
(the "Repurchase Date") that is 45 days after the date of the Company's notice
of such Fundamental Change. The Debentures will be redeemable in integral
multiples of $1,000 principal amount at maturity.
The Company shall redeem such Debentures at a price (the "Fundamental
Change Redemption Price") equal to the Issue Price plus accrued Original Issue
Discount to the Repurchase Date; provided that if the Applicable Price (as
defined) in connection with the Fundamental Change is less than the Reference
Market Price (as defined), the Fundamental Change Redemption Price shall be a
price equal to the foregoing Fundamental Change Redemption Price multiplied by
the fraction obtained by dividing the Applicable Price by the Reference Market
Price.
The Company shall mail to all holders of record of the Debentures a notice
of the occurrence of a Fundamental Change and of the redemption right arising as
a result thereof on or before the tenth day after the occurrence of such
Fundamental Change. The Company shall deliver to the Trustee a copy of such
notice. To exercise the redemption right, holders of Debentures must deliver, on
or before the 30th day after the date
14
<PAGE> 16
of the Company's notice of a Fundamental Change (the "Fundamental Change
Expiration Time"), the Debentures to be so redeemed, duly endorsed for transfer,
together with the form entitled "Option to Elect Redemption Upon a Fundamental
Change" on the reverse thereof duly completed, to the Company (or an agent
designated by the Company for such purpose). Payment for Debentures surrendered
for redemption (and not withdrawn) prior to the Fundamental Change Expiration
Time will be made promptly following the Fundamental Change Redemption Date.
Any Fundamental Change Redemption Notice (as defined) may be withdrawn by
the holder by a written notice of withdrawal delivered to the paying agent prior
to the close of business on the Trading Day immediately preceding the
Fundamental Change Redemption Date. The notice of withdrawal shall state the
principal amount at maturity and the certificate numbers of the Debentures to
which the withdrawal notice relates and the principal amount at maturity, if
any, which remains subject to the Fundamental Change Redemption Notice.
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all Common Stock shall be
exchanged for, converted into, acquired for or constitute solely the right to
receive (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) consideration which is not all or substantially all common stock
listed (or, upon consummation of or immediately following such transaction or
event, which will be listed) on a United States national securities exchange or
approved for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities prices.
The term "Applicable Price" means (i) in the event of a Fundamental Change
in which the holders of the Common Stock receive only cash, the amount of cash
received by the holder of one share of Common Stock and (ii) in the event of any
other Fundamental Change, the average of the reported last sale price for the
Common Stock during the ten Trading Days immediately prior to the record date
for the determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such Fundamental Change,
or, if there is no such record date, the date upon which the holders of the
Common Stock shall have the right to receive such cash, securities, property or
other assets in connection with the Fundamental Change.
The term "Reference Market Price" shall initially mean $26.25 (which is
equal to 66 2/3% of the last sale price of the Common Stock on June 3, 1998) and
in the event of any adjustment to the Conversion Rate pursuant to the provisions
of the Indenture, the Reference Market Price shall also be adjusted so that the
Reference Market Price shall be equal to the initial Reference Market Price
multiplied by a fraction the numerator of which is the Conversion Rate specified
on the cover page of this Offering Memorandum (without regard to any adjustment
thereto) and the denominator of which is the Conversion Rate following such
adjustment.
The Company will comply with the provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act which may then be applicable in
connection with the redemption rights of Debenture holders in the event of a
Fundamental Change.
The redemption rights of the holders of Debentures could discourage a
potential acquiror of the Company. The Fundamental Change redemption feature,
however, is not the result of management's knowledge of any specific effort to
obtain control of the Company by means of a merger, tender offer, solicitation
or otherwise, or part of a plan by management to adopt a series of anti-takeover
provisions.
The term "Fundamental Change" is limited to certain specified transactions
and may not include other events that might adversely affect the financial
condition of the Company, nor would the requirement that the Company offer to
repurchase the Debentures upon a Fundamental Change necessarily afford the
holders of the Debentures protection in the event of a highly leveraged
transaction, reorganization, merger or similar transaction involving the
Company.
No Debentures may be redeemed at the option of holders upon a Fundamental
Change if there has occurred and is continuing an Event of Default described
under "-- Events of Default; Notice and Waiver"
15
<PAGE> 17
below (other than a default in the payment of the Fundamental Change Redemption
Price with respect to such Debentures). In the event of a Fundamental Change and
exercise by holders of the Debentures of their associated rights to require the
Company to redeem all or a portion of their Debentures, there can be no
assurance that the Company would have sufficient funds to pay the redemption
price for all the Debentures tendered by the holders thereof. Any future credit
agreements or other agreements relating to indebtedness to which the Company
becomes a party may contain restrictions or prohibitions on the redemption of
the Debentures. In the event a Fundamental Change occurs at a time when the
Company is prohibited from redeeming the Debentures, the Company could seek the
consent of its then existing lenders to redeem the Debentures or could attempt
to refinance the borrowings that contain such prohibition. If the Company does
not obtain such a consent or repay such borrowings, the Company would remain
prohibited from redeeming the Debentures. The Company's failure to redeem
Debentures required to be redeemed under the terms of the Indenture would
constitute an Event of Default under the Indenture and would likely constitute a
default under the terms of any other indebtedness of the Company outstanding at
such time.
PURCHASE OF DEBENTURES AT THE OPTION OF THE HOLDER
On June 9, 2001, June 9, 2003, June 9, 2008 and June 9, 2013 (each, a
"Purchase Date"), the Company will become obligated to purchase, at the option
of the holder thereof, any outstanding Debenture for which a written Purchase
Notice has been delivered by the holder to the office of the paying agent
(initially the Trustee) at any time from the opening of business on the date
that is 20 Business Days (as defined) prior to such Purchase Date until the
close of business on the Trading Day immediately preceding such Purchase Date
and for which such Purchase Notice has not been withdrawn in accordance with the
provisions of the Indenture, subject to certain additional conditions.
The Purchase Notice shall state (i) the certificate numbers of the
Debentures to be delivered by the holder thereof for purchase by the Company;
(ii) the portion of the principal amount at maturity of Debentures to be
purchased, which portion must be $1,000 or an integral multiple thereof; (iii)
that such Debentures are to be purchased by the Company pursuant to the
applicable provisions of the Debentures; and (iv) in the event the Company
elects, pursuant to the Company Notice (as defined), to pay the Purchase Price
to be paid as of such Purchase Date in whole or in part in Common Stock or in
whole in Extension Debentures (as defined) but such Purchase Price is ultimately
to be paid in cash because (a) if the Company has so elected to pay in Extension
Debentures, less than $25,000,000 aggregate stated issue price of Extension
Debentures would otherwise be issued in respect of the aggregate Purchase Price
to be paid as of such Purchase Date, as described below, or (b) any other
condition to payment of the Purchase Price in Common Stock or Extension
Debentures is not satisfied by the Purchase Date, as described below, whether
such holder elects (x) to withdraw such Purchase Notice as to some or all of the
Debentures to which it relates (stating the principal amount at maturity and
certificate numbers of the Debentures as to which such withdrawal shall relate),
or (y) to receive cash in respect of the entire Purchase Price for all
Debentures subject to such Purchase Notice. If the holder fails to indicate, in
the Purchase Notice and in any written notice of withdrawal relating to such
Purchase Notice, such holder's choice with respect to the election described in
clause (iv) above, such holder shall be deemed to have elected to receive cash
in respect of the entire Purchase Price for all Debentures subject to such
Purchase Notice and not previously withdrawn in such circumstances. For a
discussion of the tax treatment of a holder receiving cash, Common Stock or
Extension Debentures pursuant to its election to tender its Debentures to the
Company on a Purchase Date, see "Certain Federal Income Tax Considerations."
Any Purchase Notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
Trading Day immediately preceding the Purchase Date. The notice of withdrawal
shall state the principal amount at maturity and the certificate numbers of the
Debentures to which the withdrawal notice relates and the principal amount at
maturity, if any, which remains subject to the Purchase Notice.
16
<PAGE> 18
The Purchase Price payable in respect of a Debenture shall be equal to the
Issue Price plus accrued Original Issue Discount to the Purchase Date. The table
below shows the Purchase Prices of a Debenture as of the specified Purchase
Dates. The Company may elect to pay the Purchase Price payable as of any
Purchase Date in cash or Common Stock or any combination thereof or, in the case
of June 9, 2001, in Extension Debentures.
<TABLE>
<CAPTION>
PURCHASE
PURCHASE DATE PRICE
- ------------- --------
<S> <C>
June 9, 2001................................................ $405.89
June 9, 2003................................................ 451.32
June 9, 2008................................................ 588.38
June 9, 2013................................................ 767.07
</TABLE>
If the Company elects to pay the Purchase Price, in whole or in part, in
Common Stock, the number of shares to be delivered in respect of the portion of
the Purchase Price to be paid in Common Stock shall be equal to such portion of
the Purchase Price divided by the Market Price (as defined) of the Common Stock.
However, no fractional shares of Common Stock will be delivered upon any
purchase by the Company of Debentures through the delivery of Common Stock in
payment, in whole or in part, of the Purchase Price. Instead, the Company will
pay cash based on the Market Price for all fractional shares of Common Stock.
If the Company elects to pay the Purchase Price in Extension Debentures,
the aggregate stated issue price of Extension Debentures to be issued in respect
of the Purchase Price shall be equal to the Purchase Price. Such stated issue
price of the Extension Debentures may differ from the "issue price" of such
Debentures for U.S. federal income tax purposes (which is expected to be the
fair market value of such Debentures on the Purchase Date), in which case the
amounts of original issue discount that will be treated as accruing on such
Debentures in any period for U.S. federal income tax purposes will be different
from the amounts of Original Issue Discount that are otherwise treated as
accruing on the Debentures in such period for purposes of the Indenture. See
"Certain Federal Income Tax Considerations -- U.S. Holders -- Exchange for
Extension Debentures." However, no Extension Debentures in denominations of
other than $1,000 principal amount at maturity or an integral multiple thereof
will be delivered upon any purchase by the Company of Debentures through the
delivery of any such security in payment of the Purchase Price. Instead, the
Company will pay cash based on the stated issue price for all fractional
Extension Debentures. In addition, if as of the Purchase Date less than
$25,000,000 aggregate stated issue price of Extension Debentures would otherwise
be issued in respect of the aggregate Purchase Price to be paid as of such
Purchase Date, the Company will instead pay such Purchase Price in cash.
The Company will give notice (the "Company Notice") not less than 20
Business Days prior to the Purchase Date (the "Company Notice Date") to all
holders at their addresses shown in the register of the registrar (and to
beneficial owners as required by applicable law) stating, among other things,
whether the Company will pay the Purchase Price of the Debentures in cash,
Common Stock, or any combination thereof (specifying the percentage of each), or
Extension Debentures and, if the Company elects to pay in whole or in part in
Common Stock, the method of calculating the Market Price of such Common Stock
or, if the Company elects to pay in whole in Extension Debentures, a description
of the material terms of the Extension Debentures as hereinafter described (the
"Material Terms").
The Extension Debentures will be identical to the Debentures except that
either (a) a new Conversion Rate (which will be determined by reference to the
premium (expressed as a percentage) to the Market Price of the Common Stock to
be used for purposes of setting the new Conversion Rate as of the Purchase Date
as described below) or (b) a new yield to maturity (based on the stated issue
price per $1,000 principal amount at maturity of Extension Debentures and
calculated on a semi-annual bond equivalent basis using a year of twelve 30-day
months) will be established so as to cause the Extension Debentures deliverable
as payment of the Purchase Price to have, in the opinion of Morgan Stanley & Co.
Incorporated (or any successor thereto), an aggregate initial market value on a
fully distributed basis as of the Purchase Date (assuming the prevailing market
and other conditions existing as of the Company Notice Date) at or as near as
possible to the sum of the aggregate Issue Price and accrued Original Issue
Discount to the Purchase Date with respect to the
17
<PAGE> 19
Debentures to be purchased, and the Extension Debentures will have such other
changes from the Debentures as are appropriate as a result of the new Conversion
Rate or yield to maturity, as the case may be.
The description of the Material Terms in the Company Notice shall include
the stated issue price, the new Purchase Prices on all future Purchase Dates and
the new Redemption Prices at June 9, 2003, and at each June 9 thereafter through
maturity of the Extension Debentures, in each case, per $1,000 principal amount
at maturity of Extension Debentures and, in the case of a new Conversion Rate,
the Conversion Premium and the method for setting the new Conversion Rate per
$1,000 principal amount at maturity of Extension Debentures based on such
Conversion Premium, and, in the case of a new yield to maturity, the new yield
to maturity and new Conversion Rate per $1,000 principal amount at maturity of
Extension Debentures and the aggregate principal amount at maturity of Extension
Debentures to be issued per $1,000 principal amount at maturity of Debentures.
In the event the Company has elected to establish a new Conversion Rate, the
Conversion Rate per $1,000 principal amount at maturity of the Extension
Debentures will be equal to the stated issue price divided by the product of (a)
one plus the new Conversion Premium, and (b) the Market Price (as defined) of
the Common Stock as of the June 9, 2001 Purchase Date.
Upon determination of the actual number of shares of Common Stock or the
Material Terms of the Extension Debentures in accordance with the foregoing
provisions (including the new Conversion Rate, if applicable), the Company will
publish such determination in a daily newspaper of national circulation.
The Extension Debentures will constitute a separate series of securities
from the Debentures, and will be issued pursuant to a separate indenture, which
shall be in substantially the form of the Indenture.
The "Market Price" means the average of the Sale Prices (as defined) of the
Common Stock for the five Trading Day period ending on the third Business Day
immediately prior to the applicable Purchase Date (if the third Business Day
prior to the applicable Purchase Date is a Trading Day or, if it is not a
Trading Day, then ending on the last Trading Day prior to such third Business
Day), appropriately adjusted to take into account the occurrence during the
period commencing on the first of such Trading Days during such five Trading Day
period and ending on such Purchase Date of certain events that would result in
an adjustment of the Conversion Rate under the Indenture with respect to the
Common Stock. The "Sale Price" of the Common Stock on any date means the closing
per share sale price (or if no closing sale price is reported, the average bid
and ask prices or, if more than one in either case, the average of the average
bid and average ask prices) on such date as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is traded or, if the Common Stock is not listed on a United States
national or regional stock exchange, as reported by the Nasdaq National Market.
Because the Market Price of the Common Stock is determined prior to the
applicable Purchase Date, holders of Debentures bear the market risk with
respect to the value of the Common Stock to be received from the date of
determination of such Market Price to such Purchase Date. The Company may elect
to pay the Purchase Price in Common Stock only if the information necessary to
calculate the Market Price is reported in a daily newspaper of national
circulation.
The Company's right to purchase Debentures with Common Stock or Extension
Debentures is subject to the satisfaction of various conditions, including: (i)
the registration of the Common Stock or Extension Debentures under the
Securities Act, if required; and (ii) compliance with other applicable federal
and state securities laws, if any. If such conditions are not satisfied by a
Purchase Date, the Company will pay the Purchase Price of the Debentures to be
purchased on such Purchase Date entirely in cash. The Company will comply with
the provisions of Rule 13e-4 and any other tender offer rules under the Exchange
Act which may then be applicable and will file a Schedule 13E-4 or any other
schedule required thereunder in connection with any offer by the Company to
purchase Debentures at the option of holders.
Payment of the Purchase Price for a Debenture for which a Purchase Notice
has been delivered and not withdrawn is conditioned upon book-entry transfer or
delivery of such Debenture (together with necessary endorsements) to the paying
agent at its office in the Borough of Manhattan, The City of New York, or any
other office of the paying agent maintained for such purpose, at any time
(whether prior to, on or after the Purchase Date) after delivery of such
Purchase Notice. Payment of the Purchase Price for such Debenture will be made
promptly following the later of the Purchase Date or the time of book-entry
transfer or delivery
18
<PAGE> 20
of such Debenture. If the paying agent holds, in accordance with the terms of
the Indenture, money or securities sufficient to pay the Purchase Price of such
Debenture on the Business Day following the Purchase Date, then, on and after
such date, such Debenture will cease to be outstanding and Original Issue
Discount on such Debenture will cease to accrue whether or not book-entry
transfer of such Debenture is made or such Debenture is delivered to the paying
agent, and all other rights of the holder shall terminate (other than the right
to receive the Purchase Price upon delivery of the Debenture).
No Debentures may be purchased at the option of the holder for cash if
there has occurred (prior to, on or after the giving by the holders of such
Debentures of the required Purchase Notice) and is continuing an Event of
Default described under "-- Events of Default; Notice and Waiver" below (other
than a default in the payment of the Purchase Price with respect to such
Debentures).
If the Company becomes obligated to purchase any outstanding Debenture on a
Purchase Date, there can be no assurance that the Company would have sufficient
funds to pay the Purchase Price on that Purchase Date for all the Debentures
tendered by the holders thereof (in which case, the Company could be required to
issue shares of Common Stock to pay the Purchase Price at valuations based on
then prevailing market prices or, as of June 9, 2001, Extension Debentures).
There can be no assurance that any future credit agreements or other agreements
relating to indebtedness to which the Company becomes a party will not contain
prohibitions on or defaults with respect to the repurchase of the Debentures. In
the event a Purchase Date occurs at a time when the Company is prohibited from
repurchasing the Debentures, the Company could seek the consent of its then
existing lenders to repurchase the Debentures or could attempt to refinance the
borrowings that contain such prohibition. If the Company does not obtain such a
consent or repay such borrowings, the Company would remain prohibited from
repurchasing the Debentures. The Company's failure to repurchase Debentures
required to be repurchased under the terms of the Indenture would constitute an
Event of Default under the Indenture and would likely constitute a default under
the terms of any other indebtedness of the Company outstanding at such time.
EVENTS OF DEFAULT; NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified therein shall
have occurred and be continuing, either the Trustee or the holders of not less
than 25% in aggregate principal amount at maturity of the Debentures then
outstanding may declare the Issue Price of the Debentures plus the Original
Issue Discount on the Debentures and any Liquidated Damages under the
Registration Rights Agreement accrued to the date of such declaration to become
and be immediately due and payable. In the case of certain events of bankruptcy
or insolvency, the Issue Price of the Debentures plus the Original Issue
Discount accrued thereon to the occurrence of such event shall automatically
become and be immediately due and payable. Under certain circumstances, the
holders of a majority in aggregate principal amount at maturity of the
outstanding Debentures may rescind any such acceleration with respect to the
Debentures and its consequences. Interest shall accrue at the rate of 5.375% per
annum and be payable on demand upon a default in the payment of the Issue Price,
accrued Original Issue Discount, accrued Liquidated Damages, if any, or any
Redemption Price, Purchase Price or Fundamental Change Redemption Price to the
extent that payment of such interest shall be legally enforceable.
Under the Indenture, Events of Default are defined as: (i) default in
payment of the principal amount at maturity, Issue Price, accrued Original Issue
Discount, accrued Liquidated Damages, if any, Redemption Price, Purchase Price
or Fundamental Change Redemption Price with respect to any Debenture when such
becomes due and payable (whether or not payment is prohibited by the provisions
of the Indenture); provided that in the case of any failure to pay Liquidated
Damages, such failure continues for a period of 30 days; (ii) failure by the
Company to comply with any of its other agreements in the Debentures or the
Indenture upon the receipt by the Company of notice of such default by the
Trustee or by holders of not less than 25% in aggregate principal amount at
maturity of the Debentures then outstanding and the Company's failure to cure
such default within 60 days after receipt by the Company of such notice; or
(iii) certain events of bankruptcy or insolvency.
The Trustee shall give notice to holders of the Debentures of any
continuing Event of Default known to the Trustee within 90 days after the
occurrence thereof; provided that, except in the case of a Default as
19
<PAGE> 21
described in clause (i) of the preceding paragraph, the Trustee may withhold
such notice if it determines in good faith that withholding the notice is in the
interests of the holders.
The holders of a majority in aggregate principal amount at maturity of the
outstanding Debentures may 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 such direction shall not be in
conflict with any law or the Indenture and subject to certain other limitations.
Before proceeding to exercise any right or power under the Indenture at the
direction of such holders, the Trustee shall be entitled to receive from such
holders reasonable security or indemnity satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in complying with any
such direction. No holder of any Debenture will have any right to pursue any
remedy with respect to the Indenture or the Debentures, unless (i) such holder
shall have previously given the Trustee written notice of a continuing Event of
Default; (ii) the holders of at least 25% in aggregate principal amount at
maturity of the outstanding Debentures shall have made a written request to the
Trustee to pursue such remedy; (iii) such holder or holders shall have offered
to the Trustee reasonable indemnity satisfactory to the Trustee; (iv) the
holders of a majority in aggregate principal amount at maturity of the
outstanding Debentures shall not have given the Trustee a direction inconsistent
with such request within 60 days after receipt of such request; and (v) the
Trustee shall have failed to comply with the request within such 60-day period.
However, the right of any holder (x) to receive payment of the principal
amount at maturity, Issue Price, accrued Original Issue Discount, Redemption
Price, Purchase Price, Fundamental Change Redemption Price and any interest in
respect of a default in the payment of any such amounts on a Debenture, on or
after the due date expressed in such Debenture, (y) to institute suit for the
enforcement of any such payments or conversion or (z) to convert Debentures
shall not be impaired or adversely affected without such holder's consent. The
holders of a majority in aggregate principal amount at maturity of the
outstanding Debentures may waive an existing Default or Event of Default and its
consequences, other than (i) any default in any payment on the Debentures, (ii)
any default with respect to the conversion rights of the Debentures or (iii) any
default in respect of certain covenants or provisions in the Indenture which may
not be modified without the consent of the holder of each Debenture as described
in "Modification" below. The Company will be required to furnish to the Trustee
annually a statement as to any default by the Company in the performance and
observance of its obligations under the Indenture.
REGISTRATION RIGHTS
The Company has filed the Registration Statement with the Commission. The
Company will use all reasonable efforts to keep the Registration Statement
effective until the earlier of (i) the sale pursuant to the Registration
Statement of all the Offered Securities and (ii) the expiration of the holding
period applicable to such securities held by persons that are not affiliates of
the Company under Rule 144(k) under the Securities Act, or any successor
provision, subject to certain permitted exceptions. The Company will be
permitted to suspend the use of this Prospectus under certain circumstances
relating to pending corporate developments, public filings with the Commission
and similar events for a period not to exceed 30 days in any three-month period
or not to exceed an aggregate of 90 days in any 12-month period; provided,
however, that the Company will be permitted to suspend the use of this
Prospectus for a period not to exceed 60 days in any 3-month period under
certain circumstances relating to possible acquisitions, acquisitions,
financings or similar transactions. The Company has agreed to pay predetermined
liquidated damages as described herein ("Liquidated Damages") to holders of
Debentures and holders of Conversion Shares if this Prospectus is unavailable
for periods in excess of those permitted above. Such Liquidated Damages shall
accrue until such unavailability is cured, (i) in respect of any Debenture, at a
rate per annum equal to 0.25% for the first 90 day period after the occurrence
of such event and 0.5% thereafter of the Applicable Principal Amount (as
defined) at maturity thereof, and (ii) in respect of any Conversion Shares, at a
rate per annum equal to 0.25% for the first 90 day period and 0.5% thereafter of
the then Applicable Conversion Price (as defined). A holder who sells Debentures
and Conversion Shares pursuant to the Registration Statement generally will be
required to be named as a Selling Securityholder in this Prospectus, deliver
this Prospectus to purchasers of such Debentures and/or Conversion Shares and be
bound by certain provisions of the Registration Rights
20
<PAGE> 22
Agreement that are applicable to such holder (including certain indemnification
provisions). The Company has agreed to pay all expenses of the Registration
Statement, provide to each registered holder copies of this Prospectus, notify
each registered holder when the Registration Statement has become effective and
take certain other actions as are required to permit, subject to the foregoing,
unrestricted resales of the Debentures and the Conversion Shares. The plan of
distribution of this Prospectus permits resales of Offered Securities by Selling
Securityholders through brokers and dealers. The term "Applicable Principal
Amount" means, as of any date of determination, with respect to each $1,000
principal amount at maturity of Debentures, the sum of the initial issue price
of such Debenture ($346.18) plus accrued Original Issue Discount with respect to
such Debenture through such date of determination or, if no Debentures are then
outstanding, such sum calculated as if such Debentures were then outstanding.
The term "Applicable Conversion Price" means, as of any date of determination,
the Applicable Principal Amount per $1,000 principal amount at maturity of
Debentures as of such date of determination divided by the Conversion Rate in
effect as of such date of determination or, if no Debentures are then
outstanding, the Conversion Rate that would be in effect were Debentures then
outstanding.
MERGERS AND SALES OF ASSETS BY THE COMPANY
The Company may not consolidate with or merge into any other person or
convey, transfer or lease its properties and assets substantially as an entirety
to another person, unless, among other items, (i) the resulting, surviving or
transferee person (if other than the Company) is organized and existing under
the laws of the United States, any state thereof or the District of Columbia,
(ii) such successor person assumes all obligations of the Company under the
Debentures and the Indenture and (iii) the Company or such successor person
shall not immediately thereafter be in default under the Indenture. Upon the
assumption of the Company's obligations by such person in such circumstances,
subject to certain exceptions, the Company shall be discharged from all
obligations under the Debentures and the Indenture. Certain such transactions
which would constitute a Fundamental Change would permit each holder to require
the Company to redeem the Debentures of such holder as described under
"-- Redemption at Option of the Holder Upon a Fundamental Change."
MODIFICATION
Modification and amendment of the Indenture or the Debentures may be
effected by the Company and the Trustee with the consent of the holders of not
less than a majority in aggregate principal amount at maturity of the Debentures
then outstanding. Notwithstanding the foregoing, no such amendment may, without
the consent of each holder affected thereby: (i) reduce the principal amount at
maturity, Issue Price, Purchase Price, Fundamental Change Redemption Price or
Redemption Price, or extend the stated maturity of any Debenture or alter the
manner or rate of accrual of Original Issue Discount or interest, or make any
Debenture payable in money or securities other than that stated in the
Debenture; (ii) make any changes to the principal amount at maturity of
Debentures whose holders must consent to an amendment or any waiver under the
Indenture or modify the Indenture provisions relating to such amendments or
waivers; (iii) make any change that adversely affects the right to convert any
Debenture or the right to require the Company to purchase a Debenture or the
right to require the Company to redeem a Debenture upon a Fundamental Change; or
(iv) impair the right to institute suit for the enforcement of any payment with
respect to, or conversion of, the Debentures. The Indenture also provides for
certain modifications of its terms without the consent of the holders.
LIMITATIONS OF CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced in respect of the Company, the
claim of the holder of a Debenture is, under Title 11 of the United States Code,
limited to the initial issue price of the Debenture plus that portion of the
Original Issue Discount that has accrued from the date of issue to the
commencement of the proceeding. In addition, the Debentures will be effectively
subordinated to the indebtedness and other obligations of the Company's
subsidiaries.
21
<PAGE> 23
TAXATION OF DEBENTURES
See "Certain Federal Income Tax Considerations" for a discussion of certain
tax considerations relevant to a holder of Debentures.
INFORMATION CONCERNING THE TRUSTEE
The First National Bank of Chicago, as Trustee under the Indenture, has
been appointed by the Company as paying agent, conversion agent, registrar and
custodian with respect to the Debentures.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 265,000,000 shares
of Class A Common Stock, par value $0.01 per share ("Common Stock"), of which
38,271,346 shares were issued and outstanding as of April 4, 1998, and
135,000,000 shares of Class B Common Stock, par value $0.01 per share ("Class B
Common Stock" and, together with the Common Stock, the "Common Equity") of which
99,664,302 shares were issued and outstanding as of April 4, 1998. In addition,
the Certificate of Incorporation authorizes the issuance by the Company of up to
1,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred
Stock"), on terms determined by the Company's Board of Directors. The following
description is a summary of the capital stock of the Company and is subject to
and qualified in its entirety by reference to the provisions of the Certificate
of Incorporation and the Amended and Restated Bylaws (the "Bylaws") of the
Company, which have been filed or incorporated by reference as exhibits to the
Registration Statement.
COMMON EQUITY
The shares of Common Stock and Class B Common Stock are identical in all
respects, except for voting rights and certain conversion rights, as described
below.
Voting Rights. Each share of Common Stock entitles the holder to one vote
on each matter submitted to a vote of the Company's shareowners, including the
election of directors, and each share of Class B Common Stock entitles the
holder to ten votes on each such matter. Except as required by applicable law,
holders of the Common Stock and Class B Common Stock vote together as a single
class on all matters submitted to a vote of the shareowners of the Company.
There is no cumulative voting. See "Risk Factors -- Control by Ingram Family
Stockholders; Certain Anti-takeover Provisions."
Subject to New York Stock Exchange requirements, for so long as there are
any shares of Class B Common Stock outstanding, any action that may be taken at
a meeting of the shareowners may be taken by written consent in lieu of a
meeting if the Company receives consents signed by shareowners having the
minimum number of votes that would be necessary to approve the action at a
meeting at which all shares entitled to vote on the matter were present and
voted. This could permit certain holders of Class B Common Stock to take action
regarding certain matters without providing other shareowners the opportunity to
voice dissenting views or raise other matters. The right to take such action by
written consent of shareowners will expire at such time as all outstanding
shares of Class B Common Stock cease to be outstanding.
Dividends, Distributions, and Stock Splits. Holders of Common Stock and
Class B Common Stock are entitled to receive dividends at the same rate if, as,
and when such dividends are declared by the Board of Directors out of assets
legally available therefor after payment of dividends required to be paid on
shares of Preferred Stock, if any.
In the case of dividends or distributions payable in Common Stock or Class
B Common Stock, only shares of Common Stock will be distributed with respect to
the Common Stock and only shares of Class B Common Stock will be distributed
with respect to the Class B Common Stock. In the case of dividends or other
distributions consisting of other voting shares of the Company, the Company will
declare and pay such dividends in two separate classes of such voting
securities, identical in all respects, except that the voting rights of each
such security paid to the holders of the Common Stock shall be one-tenth of the
voting rights of each such security paid to the holders of Class B Common Stock,
and such security paid to the holders of Class B
22
<PAGE> 24
Common Stock shall convert into the security paid to the holders of the Common
Stock upon the same terms and conditions applicable to the Class B Common Stock.
In the case of dividends or other distributions consisting of securities
convertible into, or exchangeable for, voting securities of the Company, the
Company will provide that such convertible or exchangeable securities and the
underlying securities be identical in all respects, except that the voting
rights of each security underlying the convertible or exchangeable security paid
to the holders of the Common Stock shall be one-tenth of the voting rights of
each security underlying the convertible or exchangeable security paid to the
holders of Class B Common Stock, and such underlying securities paid to the
holders of Class B Common Stock shall convert into the security paid to the
holders of the Common Stock upon the same terms and conditions applicable to the
Class B Common Stock.
Neither the Common Stock nor the Class B Common Stock may be subdivided or
combined in any manner unless the other class is subdivided or combined in the
same proportion.
Conversion. The Common Stock has no conversion rights.
The Class B Common Stock is convertible into Common Stock, in whole or in
part, at any time and from time to time at the option of the holder, on the
basis of one share of Common Stock for each share of Class B Common Stock
converted. Each share of Class B Common Stock will also automatically convert
into one share of Common Stock upon the earliest to occur of (i) November 6,
2001; (ii) the sale or transfer of such share of Class B Common Stock (a) by a
holder that is a party to the Board Representation Agreement (as defined below)
to any person that is not an affiliate, spouse or descendant of such holder,
their estates or trusts for their benefit or any other party to the Exchange
Agreement which effected the Split-Off or (b) by any other holder, to a holder
that is not the spouse or descendant of such holder or their estates or trusts
for their benefit; and (iii) the date on which the number of shares of Class B
Common Stock then outstanding is less than 25% of the aggregate number of shares
of Common Equity then outstanding.
Liquidation. In the event of any dissolution, liquidation, or winding up
of the affairs of the Company, whether voluntary or involuntary, after payment
of the debts and other liabilities of the Company and making provision for the
holders of Preferred Stock, if any, the remaining assets of the Company will be
distributed ratably among the holders of the Common Stock and the Class B Common
Stock, treated as a single class.
Mergers and Other Business Combinations. Upon a merger, combination, or
other similar transaction of the Company in which shares of Common Equity are
exchanged for or changed into other stock or securities, cash and/or any other
property, holders of each class of Common Equity will be entitled to receive an
equal per share amount of stock, securities, cash, and/or any other property, as
the case may be, into which or for which each share of any other class of Common
Equity is exchanged or changed; provided that in any transaction in which shares
of capital stock are distributed, such shares so exchanged for or changed into
may differ as to voting rights and certain conversion rights to the extent and
only to the extent that the voting rights and certain conversion rights of
Common Stock and Class B Common Stock differ at that time.
Other Provisions. The holders of the Common Stock and Class B Common Stock
are not entitled to preemptive rights. There are no redemption provisions or
sinking fund provisions applicable to the Common Stock or the Class B Common
Stock.
PREFERRED STOCK
The Board of Directors is authorized, subject to any limitations prescribed
by the DGCL, or the rules of any quotation system or national securities
exchange on which stock of the Company may be quoted or listed, to provide for
the issuance of shares of Preferred Stock in one or more series; to establish
from time to time the number of shares to be included in each such series; to
fix the rights, powers, preferences, and privileges of the shares of each series
and any qualifications and restrictions thereon; and, to the extent permitted by
the DGCL, to increase or decrease the number of shares of such series, without
any further vote or action by the shareowners. Depending upon the terms of the
Preferred Stock established by the Board of Directors, any or all series of
Preferred Stock could have preference over the Common Stock with respect to
dividends and other distributions and upon liquidation of the Company or could
have voting or conversion rights that could
23
<PAGE> 25
adversely affect the holders of the outstanding Common Stock. The Company has no
present plans to issue any shares of Preferred Stock.
LIMITATION OF LIABILITY; INDEMNIFICATION
As permitted by the DGCL, the Certificate of Incorporation provides that
directors of the Company shall not be personally liable to the Company or its
shareowners for monetary damages for breach of fiduciary duty as a director to
the fullest extent permitted by the DGCL (which currently provides that such
liability may be so limited, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its shareowners, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, (iii) under Section 174 of the DGCL, relating to
prohibited dividends or distributions or the repurchase or redemption of stock,
or (iv) for any transaction from which the director derives an improper personal
benefit).
Each person who is or was a party to any action by reason of the fact that
such person is or was a director or officer of the Company shall be indemnified
and held harmless by the Company to the fullest extent permitted by the DGCL.
This right to indemnification also includes the right to have paid by the
Company the expenses incurred in connection with any such proceeding in advance
of its final disposition, to the fullest extent permitted by the DGCL. In
addition, the Company may, by action of the Board of Directors, provide
indemnification to such other employees and agents of the Company to such extent
as the Board of Directors determines to be appropriate under the DGCL.
As a result of this provision, the Company and its shareowners may be
unable to obtain monetary damages from a director for breach of his duty of
care. Although shareowners may continue to seek injunctive or other equitable
relief for an alleged breach of fiduciary duty by a director, shareowners may
not have any effective remedy against the challenged conduct if equitable
remedies are unavailable. The Company also reserves the right to purchase and
maintain directors' and officers' liability insurance.
BOARD REPRESENTATION AGREEMENT
The Company and the Ingram Family Stockholders have entered into a Board
Representation Agreement (the "Board Representation Agreement"). So long as the
Ingram Family Stockholders and their permitted transferees (as defined in the
Board Representation Agreement) own in excess of 25,000,000 shares of the
outstanding Common Equity, the Board Representation Agreement provides for the
designation of certain directors (the "Designated Nominees"): (i) not more than
three directors designated by the Ingram Family Stockholders, (ii) one director
designated by the Chief Executive Officer of the Company, and (iii) four or five
additional directors ("Independent Directors") who are not members of the Ingram
family or executive officers or employees of the Company. Directors designated
by the Ingram Family Stockholders may, but are not required to, include Martha
R. Ingram, any of her legal descendants, or any of their respective spouses.
Messrs. David B. Ingram and John R. Ingram and Mrs. Ingram are the directors
designated by the Ingram Family Stockholders; Mr. Jerre L. Stead is the director
designated by the Chief Executive Officer of the Company; and Messrs. Don H.
Davis, Jr., Philip M. Pfeffer, J. Phillip Samper and Joe B. Wyatt are
Independent Directors. Each of the parties to the Board Representation Agreement
(other than the Company) has agreed to vote its shares of Common Equity in favor
of the Designated Nominees. The Ingram Family Stockholders' holdings of Common
Equity are sufficient to guarantee the election of the Designated Nominees.
The Board Representation Agreement provides for the formation of certain
committees of the Board of Directors. As provided in the Bylaws and the Board
Representation Agreement, the Company has four committees: an Executive
Committee, a Nominating Committee, an Audit Committee, and a Human Resources
Committee.
In addition to provisions relating to the designation of directors, the
Board Representation Agreement provides that certain types of corporate
transactions, including transactions involving the potential sale or merger of
the Company; the issuance of additional equity, warrants, or options;
acquisitions involving aggregate consideration in excess of 10% of the Company's
stockholders' equity; any guarantee of indebted-
24
<PAGE> 26
ness of an entity other than a subsidiary of the Company exceeding 5% of the
Company's stockholders' equity; and the incurrence of indebtedness in a
transaction which could reasonably be expected to reduce the Company's
investment rating (i) lower than one grade below the rating in effect
immediately following the Company's initial public offering in November 1996
(the "IPO") or (ii) below investment grade, may not be entered into without the
written approval of at least a majority of the voting power deemed to be held
(for purposes of the Board Representation Agreement) by certain of the Ingram
Family Stockholders, acting in their sole discretion.
The Board Representation Agreement will terminate on the date on which the
Ingram Family Stockholders and their permitted transferees collectively cease to
beneficially own at least 25,000,000 shares of the Common Equity of the Company
(as such number may be equitably adjusted to reflect stock splits, stock
dividends, recapitalizations, and other transactions in the capital stock of the
Company). All decisions for the Ingram Family Stockholders that are trusts or
foundations will be made by the trustees thereof, who in some cases are members
of the Ingram family.
CERTAIN REGISTRATION RIGHTS
The Ingram Family Stockholders and the other shareowners of Ingram
Industries who received shares of Class B Common Stock in the Split-Off entered
into a registration rights agreement (the "Ingram Family Registration Rights
Agreement") which grants the QTIP Trust (a trust for the benefit of certain of
the Ingrams) demand registration rights. Such demand registration rights may be
exercised with respect to all or any portion (subject to certain minimum
thresholds) of the shares of Class B Common Stock owned by the QTIP Trust, one
or more of the other Ingram Family Stockholders and certain of their permitted
transferees on up to three occasions during the 84-month period following the
closing of the IPO; provided that the Company shall not be obligated to effect
(i) any registration requested by the QTIP Trust unless the QTIP Trust has
furnished the Company with an opinion of counsel to the effect that such
registration and any subsequent sale will not affect the tax-free nature of the
Split-Off or (ii) more than one demand registration during any 12-month period.
The Ingram Family Registration Rights Agreement also grants one demand
registration right (subject to certain minimum thresholds) to members of the
Ingram family (which may only be exercised during the 84-month period following
the closing of the IPO) and one demand registration right to certain minority
shareowners of the Company if a change of control of the Company occurs
following the closing of the IPO but prior to the second anniversary of the
Split-Off. The minority shareowners will not be entitled to this registration
right if they were offered the opportunity to participate in the change of
control transaction.
The Ingram Family Registration Rights Agreement restricts the exercise by
any party thereto of a demand registration right, and provides that the Company
will not grant any registration rights to any other person that are more
favorable than those granted pursuant to the Ingram Family Registration Rights
Agreement or that provide for the exercise of demand registration rights sooner
than three months following a public offering in which such person was entitled
to include its shares, unless the number of shares requested to be included in
such public offering exceeded 125% of the number of shares actually included.
In addition, the Ingram Family Registration Rights Agreement provides that
the parties thereto shall be entitled to unlimited "piggyback" registration
rights in connection with any proposed registration of equity securities by the
Company (with certain specified exceptions) during the 84-month period following
the completion of the IPO. Employees who received shares of Class B Common Stock
in the Company's July 1996 employee offering are bound by the provisions of the
Ingram Family Registration Rights Agreement as if such employees were parties
thereto, and are entitled to the "piggyback" registration rights provided
therein, with respect to the portion of their shares of Class B Common Stock
that is no longer subject to restrictions on transfer. The piggyback
registration rights under the Ingram Family Registration Rights Agreement do not
apply to offerings of the Debentures pursuant to the Registration Statement.
The Ingram Family Registration Rights Agreement contains provisions
regarding reduction of the size of an offering that has been determined by the
underwriters to have exceeded its maximum potential size and
25
<PAGE> 27
contains certain customary provisions, including those relating to holdback
arrangements, registration procedures, indemnification, contribution and payment
of fees and expenses.
The Company has filed a registration statement on Form S-3 (the "Thrift
Plan S-3") with the Commission covering 10,949,298 shares of Common Stock. The
Thrift Plan S-3, which was declared effective on November 20, 1997, relates to
the offer and sale by certain thrift plans of a total of 8,213,894 shares of
Common Stock of the Company. The Thrift Plan S-3 also relates to the offer and
sale by the Company of up to 2,735,944 shares of Common Stock upon the exercise
of certain stock options. The Thrift Plan S-3 is being kept current by the
Company.
OTHER CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS
The Bylaws provide that a majority of the total number of directors shall
constitute a quorum for the transaction of business. The Board of Directors may
act by unanimous written consent. The Board Representation Agreement contains
additional provisions relating to corporate governance, as described above.
Annual meetings of shareowners shall be held to elect the Board of
Directors and transact such other business as may be properly brought before the
meeting. Special meetings of shareowners may be called by the chairman and shall
be called by the secretary on the written request of shareowners having 10% of
the voting power of the Company. The shareowners may act by written consent in
lieu of a meeting of shareowners until such time as all shares of Class B Common
Stock cease to be outstanding.
The Certificate of Incorporation may be amended with the approval of the
Board of Directors (by the vote required as described above), and for so long
as any shares of Class B Common Stock remain outstanding, in addition to any
vote required by law, any such amendment also requires the approval of the
holders of a majority of the Company's outstanding voting power and a majority
of the members of the Board of Directors. However, any amendment to the
provisions of the Certificate of Incorporation relating to the Common Equity
also requires the consent of a majority of the outstanding voting power held by
the Ingram Family Stockholders. The Bylaws may be amended with the approval of
three-quarters of the entire Board of Directors or by the holders of 75% of the
Company's voting power present and entitled to vote at any annual or special
meeting of shareowners at which a quorum is present.
The number of directors which shall constitute the whole Board of Directors
shall be fixed by resolution of the Board of Directors. The number of directors
shall be eight or nine. The Board currently has eight members, but may be
increased to nine in accordance with the Board Representation Agreement. The
vote of a majority of the entire Board is required for all actions of the Board.
The directors shall be elected at the annual meeting of the shareowners, except
for filling vacancies. Directors may be removed with the approval of the holders
of a majority of the Company's voting power present and entitled to vote at a
meeting of shareowners. Vacancies and newly created directorships on the Board
of Directors resulting from any increase in the number of directors may be
filled by a majority of the directors then in office, although less than a
quorum, a sole remaining director, or the holders of a majority of the voting
power present and entitled to vote at a meeting of shareowners. So long as the
Ingram Family Stockholders and their permitted transferees own at least
25,000,000 shares of the Common Equity, the Bylaws will provide for the
appointment of the Designated Nominees.
The presence, in person or by proxy, of the holders of a majority of the
votes entitled to be cast by the shareowner entitled to vote generally, shall
constitute a quorum for shareowner action at any meeting.
SECTION 203 OF THE DGCL
The Company is subject to Section 203 of the DGCL which, subject to certain
exceptions, prohibits a Delaware corporation from engaging in a business
combination (as defined therein) with an "interested stockholder" (defined
generally as any person who beneficially owns 15% or more of the outstanding
voting stock of the Company or any person affiliated with such person) for a
period of three years following the date that such shareowner became an
interested stockholder, unless (i) prior to such date the board of directors of
the corporation approved either the business combination or the transaction that
resulted in the shareowner becoming an interested stockholder; (ii) upon
consummation of the transaction that resulted in the shareowner 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
26
<PAGE> 28
determining the number of shares outstanding those shares owned (a) by directors
who are also officers of the corporation 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) on or subsequent to such date the business combination is
approved by the board of directors of the corporation and authorized at a
meeting of shareowners by the affirmative vote of at least 66 2/3% of the
outstanding voting stock of the corporation not owned by the interested
stockholder.
TRANSFER AGENT
The transfer agent and registrar for the Common Stock is First Chicago
Trust Company of New York.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. federal income and certain
estate tax considerations relating to the purchase, ownership and disposition of
the Debentures and Common Stock into which Debentures may be converted, but does
not purport to be a complete analysis of all the potential tax considerations
relating thereto. This discussion is based upon the Internal Revenue Code of
1986, as amended (the "Code"), existing and proposed Treasury Regulations, and
judicial decisions and administrative interpretations thereunder, as of the date
hereof, all of which are subject to change, possibly with retroactive effect, or
different interpretations. There can be no assurance that the Internal Revenue
Service (the "IRS") will not challenge one or more of the tax results described
herein, and the Company has not obtained, nor does it intend to obtain, a ruling
from the IRS with respect to the U.S. federal tax consequences of acquiring or
holding Debentures or Common Stock.
This discussion does not purport to address all tax considerations that may
be important to a particular holder in light of the holder's circumstances (such
as the alternative minimum tax provisions of the Code), or to certain categories
of investors (such as certain financial institutions, tax-exempt organizations,
dealers in securities, persons who hold Debentures or Common Stock as part of a
hedge, conversion or constructive sale transaction, or straddle or other risk
reduction transaction or persons who have ceased to be United States citizens or
to be taxed as resident aliens) that may be subject to special rules. This
discussion is limited to holders of Debentures who hold the Debentures and any
Common Stock into which the Debentures are converted as capital assets. This
discussion also does not address the tax consequences arising under the laws of
any foreign, state or local jurisdiction.
PERSONS CONSIDERING THE PURCHASE OF A DEBENTURE SHOULD CONSULT THEIR OWN
TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF ACQUIRING,
HOLDING, CONVERTING OR OTHERWISE DISPOSING OF THE DEBENTURES AND COMMON STOCK,
INCLUDING THE EFFECT AND APPLICABILITY OF STATE, LOCAL OR FOREIGN TAX LAWS.
U.S. HOLDERS
As used herein, the term "U.S. Holder" means a holder of a Debenture or
Common Stock that is for U.S. federal income tax purposes, (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, (iii) an estate, the income of which is subject
to United States federal income taxation regardless of its source, or (iv) a
trust, the administration of which is subject to the primary supervision of a
court within the United States and which has one or more United States persons
with authority to control all substantial decisions of the trust.
Original Issue Discount on the Debentures. The Debentures were issued at a
substantial discount from their stated redemption price at maturity. For federal
income tax purposes, the excess of the stated redemption price at maturity of
each Debenture over its "issue price" constitutes original issue discount
("OID"). The "issue price" of the Debentures equals the initial price at which a
substantial amount of the Debentures was sold (not including sales to
underwriters or placement agents, including the Initial Purchasers). U.S.
Holders of the Debentures will be required to include OID in income as it
accrues, in accordance with a constant yield
27
<PAGE> 29
method, before receipt of the cash attributable to such income, regardless of
such U.S. Holder's regular method of accounting for U.S. federal income tax
purposes. Under these rules, U.S. Holders will have to include in gross income
increasingly greater amounts of OID in each successive accrual period. A U.S.
Holder's original tax basis for determining gain or loss on the sale or other
disposition of a Debenture will be increased by any accrued OID included in such
U.S. Holder's gross income.
There are several circumstances under which the Company could make a
payment on a Debenture which would affect the yield to maturity of a Debenture,
including (as described under "Description of Debentures") the payment of
Liquidated Damages due to the failure to effect the Shelf Registration
Statement, or certain redemptions or repurchases of Debentures. According to
Treasury Regulations, the possibility of a change in the yield will not be
treated as affecting the amount of OID required to be realized by a holder (or
the timing of such recognition) if the likelihood of the change, as of the date
the debt obligations are issued, is remote. The Company intends to report on the
basis that the likelihood of any change in the yield on the Notes is remote. The
Company also intends to report on the basis that there is no alternative payment
schedule that would minimize the yield on the Debentures.
Market Discount. Any principal payment or gain realized by a U.S. Holder
on disposition or retirement of a Debenture generally will be treated as
ordinary income to the extent that there is accrued market discount on the
Debenture. The amount of market discount on a Debenture with respect to a U.S.
Holder will equal the excess of the "revised issue price" (generally, the sum of
the issue price of a Debenture and the aggregate amount of accrued OID on a
Debenture) of such Debenture over the initial tax basis of such Debenture in the
hands of such holder. To the extent a U.S. Holder exchanges or converts a
Debenture into Common Stock in a transaction that is otherwise tax free, any
accrued market discount will carry over and generally be recognized upon a
disposition of the Common Stock. Unless a U.S. Holder irrevocably elects to
accrue market discount under a constant-interest method, accrued market discount
is the total market discount multiplied by a fraction, the numerator of which is
the number of days the U.S. Holder has held the obligation and the denominator
of which is the number of days from the date the holder acquired the obligation
until its maturity. A U.S. Holder may be required to defer a portion of its
interest deductions for the taxable year attributable to any indebtedness
incurred or continued to purchase or carry a Debenture purchased with market
discount. Any such deferred interest expense would not exceed the market
discount that accrues during such taxable year and is, in general, allowed as a
deduction not later than the year in which such market discount is includable in
income. If a U.S. Holder elects to include market discount in income currently
as it accrues on all market discount instruments acquired by the U.S. Holder in
that taxable year or thereafter, (i) the interest deferral described above will
not apply and (ii) market discount will not carry over into Common Stock as
described above. Any such election is terminable only with the consent of the
IRS and applies to all market discount bonds acquired during or after the year
for which it is made.
Acquisition Premium. A U.S. Holder will be considered to have "acquisition
premium" to the extent the U.S. Holder's initial tax basis in a Debenture is
greater than the adjusted issue price of such Debenture but less than the stated
redemption price at maturity of such Debenture. Acquisition premium will reduce
the amount of OID received on such Debenture that the U.S. Holder is required to
include in income.
Sale, Exchange or Retirement of the Debentures. Upon the sale, exchange or
retirement of a Debenture, including as a result of a tender upon the occurrence
of a Fundamental Change, and, except as discussed in the next paragraph or in
"Exchange for Extension Debentures" below, on a Purchase Date, a holder will
recognize gain or loss equal to the difference between the sale or redemption
proceeds (other than in respect of accrued OID not previously included in
income, which will be taxable as ordinary income) and the U.S. Holder's adjusted
tax basis in the Debenture. A holder's adjusted tax basis in a Debenture will
generally equal the holder's cost of the Debenture increased by any OID and
accrued market discount previously included in income by such holder with
respect to such Debenture. Except to the extent of any accrued market discount
not previously included in income, gain or loss realized on the sale, exchange
or retirement of a Debenture will generally be capital gain or loss and will be
long-term capital gain or loss if the Debenture is held for more than one year.
Prospective investors should consult their tax advisers regarding the treatment
of capital gains (which may be taxed at lower rates than ordinary income for
certain taxpayers who are individuals) and losses (the deductibility of which is
subject to limitations).
28
<PAGE> 30
If a U.S. Holder elects to exercise its option to tender the Debentures to
the Company on a Purchase Date and the Purchase Price is paid solely in Common
Stock, except to the extent the Common Stock is considered attributable to OID
not previously included in income (which is taxable as ordinary income), or in
the case of a fractional share as described below, a U.S. Holder will not be
required to recognize any gain or be permitted to recognize any loss. If the
Purchase Price is paid in a combination of Common Stock and cash (other than
cash received in lieu of a fractional share), gain (but not loss) realized by
the U.S. Holder will be recognized, but only to the extent of the cash received.
A U.S. Holder's initial tax basis in the Common Stock received will be equal to
such U.S. Holder's adjusted tax basis in the Debenture tendered (except for any
portion allocable to a fractional share of Common Stock), increased by the
amount of gain recognized (other than with respect to a fractional share) and
decreased by the amount of any cash received (except cash received in lieu of a
fractional share). The holding period for Common Stock received in the exchange
will include the holding period of the Debenture tendered to the Company in
exchange therefor. The receipt of cash in lieu of a fractional share of Common
Stock will generally result in capital gain or loss (except to the extent of any
accrued market discount not previously included in income that is allocable to
such fractional share), measured by the difference between the amount of cash
received for the fractional share and the U.S. Holder's tax basis in the
fractional share interest.
Exchange for Extension Debentures. It is unclear whether the exchange of a
Debenture for an Extension Debenture (a "Debt Exchange") will be treated as a
"modification" of the Debentures within the meaning of the applicable Treasury
regulations, potentially giving rise to treatment of the Debt Exchange as an
exchange for U.S. federal income tax purposes, with the U.S. federal income tax
consequences described in the next paragraph. However, even if such Debt
Exchange is treated as giving rise to a modification, if (a)(i) the only
material difference between a Debenture and an Extension Debenture is that the
latter has a higher yield to maturity and (ii) the excess of the Extension
Debenture's yield to maturity over the Debenture's yield to maturity is equal to
or less than a safe harbor amount specified in applicable Treasury Regulations
(generally, the greater of 25 basis points or 5% of the annual yield to maturity
on the Debentures) or (b) the adjustment to the Conversion Premium, based on all
facts and circumstances, is not economically significant, such modification will
not be treated as "significant" within the meaning of the applicable Treasury
regulations, with the result that a Debt Exchange will not be treated as an
exchange for U.S. federal income tax purposes, and therefore will not have any
tax consequences to a U.S. Holder who participates in the exchange, other than
that the amount of OID that accrues on the Extension Debenture after the
Exchange will be determined on the basis of the yield to maturity of the
Extension Debentures. See "-- Adjustment of Conversion Rate" for certain tax
consequences in the event of a change in the Conversion Premium.
If a Debt Exchange is treated as an exchange for U.S. federal income tax
purposes, such Debt Exchange will qualify as a reorganization for U.S. federal
income tax purposes, and except (i) to the extent an Extension Debenture is
considered attributable to OID not previously included in income (which is
taxable as ordinary income), and (ii) as described in the next paragraph, a U.S.
holder will not be required to recognize any gain or permitted to recognize any
loss. A U.S. Holder's initial tax basis in an Extension Debenture will be equal
to such U.S. Holder's adjusted tax basis in the Debenture exchanged therefor,
increased by any ordinary income recognized in respect of accrued OID not
previously included in income and by any gain recognized on the Debt Exchange
(as described in the next paragraph). If the Debenture in question is a market
discount bond in the U.S. Holder's hands, the Extension Debenture received will
also be a market discount bond with the same amount of accrued market discount.
The U.S. Holder's holding period for the Extension Debenture will generally
include the holding period of the Debenture exchanged therefor, except to the
extent that an Extension Debenture is treated as giving rise to the recognition
of gain (as described in the next paragraph).
Under Sections 354 and 356 of the Code, a U.S. Holder will be required to
recognize any gain realized on a Debt Exchange to the extent that the "principal
amount" of the Extension Debenture received exceeds the "principal amount" of
the Debenture exchanged therefor. For this purpose, realized gain (and thus the
gain recognized) will be limited to the excess of the fair market value of the
Extension Debentures over the holder's adjusted tax basis in the Debentures
(determined as described in "Sale, Exchange or Retirement of the Debentures"
above). There is no authority directly on point on the interpretation of the
term "principal amount" in the context of debt instruments issued with OID, and
for these purposes the term "principal amount" may be applied literally to refer
to the respective amounts payable at maturity on an Extension
29
<PAGE> 31
Debenture and a Debenture, in which case a U.S. Holder would be required to
recognize any gain realized on the Debt Exchange to the extent of the fair
market value of the excess of the amount payable at maturity on an Extension
Debenture over the amount payable at maturity on a Debenture. However, it is
also possible that the term "principal amount" may be interpreted for this
purpose to refer to the "issue price" of an Extension Debenture and the adjusted
issue price of a Debenture, in each case as determined at the time of the
Exchange, in which case a U.S. Holder would be required to recognize any gain
realized on the Debt Exchange to the extent that the issue price of the
Extension Debenture exceeds the adjusted issue price of the Debenture, even
though there has been no change in principal amount. The "issue price" of the
Extension Debentures will depend on whether either or both of the Debentures and
the Extension Debentures are "traded on an established market," within the
meaning of the applicable Treasury Regulations, at the time of the Debt
Exchange. A debt instrument is considered to be so traded for this purpose if
price quotations for the debt instrument are readily available from dealers,
brokers, or traders during specified time periods. The Initial Purchaser has
advised the Company that it presently intends to make a market in the Debentures
and, if issued, the Extension Debentures as permitted by applicable laws and
regulations, but is not obligated to make such a market and may discontinue any
such market making at any time in its sole discretion. Assuming that the Initial
Purchaser is making a market in the Debentures and the Extension Debentures at
the time of the Debt Exchange, the issue price of the Extension Debentures will
be equal to the fair market value of such Extension Debentures on the first date
on which a substantial amount of the Extension Debentures is issued. U.S.
Holders are urged to consult their own tax advisors with respect to the
application of Sections 354 and 356 of the Code to a Debt Exchange and the
determination of the issue price of the Extension Debentures.
The tax consequences to a U.S. Holder of the ownership and sale,
disposition, exchange or conversion of an Extension Debenture will be the same
as those described herein with respect to the Debentures, except that the timing
and amounts of OID accruals on the Extension Debentures will be based on the
issue price and the stated redemption price at maturity of the Extension
Debentures, taking into account the amounts payable in the event of the exercise
of an option by Holders or the Company to cause the Extension Debentures to be
redeemed.
The receipt of cash in lieu of a fractional Extension Debenture should
generally result in capital gain or loss (except to the extent of any accrued
market discount not previously included in income that is allocable to such
fractional Extension Debenture), measured by the difference between the amount
of cash received for the fractional Extension Debenture and the U.S. Holder's
tax basis in the fractional Extension Debenture.
Conversion of Debentures. A U.S. Holder's conversion of a Debenture into
Common Stock will generally not be a taxable event (except to the extent the
Common Stock is considered attributable to OID not previously included in income
(which is taxable as ordinary income), or with respect to cash received in lieu
of a fractional share). A U.S. Holder's basis in the Common Stock received on
conversion of a Debenture will be the same as the U.S. Holder's basis in the
Debenture at the time of conversion (exclusive of any tax basis allocable to a
fractional share), and the holding period for the Common Stock received on
conversion will include the holding period of the Debenture converted. The
receipt of cash in lieu of a fractional share of Common Stock should generally
result in capital gain or loss (measured by the difference between the cash
received for the fractional share interest and the U.S. Holder's tax basis in
the fractional share interest), except to the extent allocable to accrued market
discount not previously included in income that is allocable to such fractional
share.
Adjustment of Conversion Rate. If at any time the Company makes a
distribution of property to shareholders that would be taxable to such
shareholders as a dividend for federal income tax purposes (for example,
distributions of evidences of indebtedness or assets of the Company, but
generally not stock dividends or rights to subscribe for Common Stock) and,
pursuant to the anti-dilution provisions of the Indenture, the Conversion Rate
of the Debentures is increased, such increase may be deemed to be the payment of
a taxable dividend to U.S. Holders of Debentures. If the Conversion Rate is
increased at the discretion of the Company or in certain other circumstances
(including pursuant to a Debt Exchange that is not treated as an exchange for
U.S. federal income tax purposes), such increase also may be deemed to be the
payment of a taxable dividend to U.S. Holders of Debentures. Moreover, in
certain other circumstances, the absence of such an adjustment to the Conversion
Rate of the Debentures may result in a taxable dividend to the holders of the
Common Stock.
30
<PAGE> 32
Ownership and Disposition of Common Stock. Dividends, if any, paid on the
Common Stock generally will be includable in the income of a U.S. Holder as
ordinary income to the extent of the U.S. Holder's ratable share of the
Company's current or accumulated earnings and profits. Upon the sale, exchange
or other disposition of Common Stock, a U.S. Holder generally will recognize
capital gain or capital loss (except to the extent of ordinary income in respect
of any accrued market discount not previously included in income that has been
carried over to the Common Stock, as described in "-- Market Discount" above)
equal to the difference between the amount realized on such sale or exchange and
the holder's adjusted tax basis in such shares. Prospective investors should
consult their tax advisers regarding the treatment of capital gains (which may
be taxed at lower rates than ordinary income for certain taxpayers who are
individuals) and losses (the deductibility of which is subject to limitations).
NON-U.S. HOLDERS
The following discussion is a summary of the principal United States
federal income and estate tax consequences resulting from the ownership of the
Debentures or Common Stock by Non-U.S. Holders. As used herein, the term
"Non-U.S. Holder" means an owner of a Note that is, for United States federal
income tax purposes, (i) a nonresident alien individual, (ii) a foreign
corporation, (iii) a nonresident alien fiduciary of a foreign estate or trust or
(iv) a foreign partnership one or more of the members of which is a nonresident
alien individual, a foreign corporation or a nonresident alien fiduciary of a
foreign estate or trust.
Withholding Tax on Payments of Principal and Original Issue Discount on
Debentures. The payment of principal (including any OID included therein) on a
Debenture by the Company or any paying agent of the Company to any Non-U.S.
Holder will not be subject to United States federal withholding tax, provided
that in the case of payment of cash in respect of OID (i) the 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 the Company, (ii) the Non-U.S. Holder is not a
controlled foreign corporation that is related to the Company within the meaning
of the Code and, (iii) either (A) the beneficial owner of the Debenture
certifies to the applicable payor or its agent, under penalties of perjury, that
it is not a U.S. Holder and provides its name and address on United States
Treasury Form W-8 (or a suitable substitute form), or (B) a securities clearing
organization, bank or other financial institution, that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the Debenture, certifies under penalties of perjury that
such a Form W-8 (or suitable substitute form) has been received from the
beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes the payor with a copy thereof. Except to the
extent otherwise provided under an applicable tax treaty, a Non-U.S. Holder
generally will be taxed in the same manner as a U.S. Holder with respect to OID
on a Debenture if such OID is effectively connected with a U.S. trade or
business of the Non-U.S. Holder. Effectively connected OID received by a
corporate Non-U.S. Holder may also, under certain circumstances, be subject to
an additional "branch profits tax" at a 30% rate (or, if applicable, a lower
treaty rate), subject to certain adjustments. Such effectively connected OID
will not be subject to withholding tax if the holder delivers the appropriate
form (currently IRS Form 4224 and, beginning January 1, 2000, a Form W-8) to the
payor.
Dividends. Dividends, if any, paid on the Common Stock to a Non-U.S.
Holder (and, after December 31, 1999, any deemed dividends resulting from an
adjustment to the Conversion Rate (see "Adjustment of Conversion Rate" above))
generally will be subject to a 30% United States federal withholding tax,
subject to reduction for Non-U.S. Holders eligible for the benefits of certain
income tax treaties. Currently, for purposes of determining whether tax is to be
withheld at the 30% rate or at a reduced treaty rate, the Company will
ordinarily presume that dividends paid to an address in a foreign country are
paid to a resident of such country absent knowledge that such presumption is not
warranted. Under Treasury Regulations effective for payments after December 31,
1999, holders will be required to satisfy certain applicable certification
requirements to claim treaty benefits. Except to the extent otherwise provided
under an applicable tax treaty, a Non-U.S. Holder generally will be taxed in the
same manner as a U.S. Holder on dividends paid (or deemed paid) that are
effectively connected with the conduct of a trade or business in the U.S. by the
Non-U.S. Holder. If such Non-U.S. Holder is a foreign corporation, it may also
be subject to a United States branch profits tax on such effectively connected
income at a 30% rate or such lower rate as may be specified by an applicable
income tax treaty, subject to certain adjustments.
31
<PAGE> 33
Gain on Disposition of the Debentures and Common Stock. A Non-U.S. Holder
generally will not be subject to United States federal income tax on gain
realized on the sale, exchange or redemption of a Debenture, including the
exchange of a Debenture for Common Stock, or the sale or exchange of Common
Stock unless (i) in the case of an individual Non-U.S. Holder, such holder is
present in the United States for 183 days or more in the year of such sale,
exchange or redemption and either (A) has a "tax home" in the United States and
certain other requirements are met, or (B) the gain from the disposition is
attributable to an office or other fixed place of business in the United States,
(ii) the gain is effectively connected with the conduct of a United States trade
or business of the Non-U.S. Holder, or (iii) in the case of the disposition of
Common Stock, the Company is a U.S. real property holding corporation. The
Company does not believe that it is currently a "United States real property
holding corporation" or that it will become one in the future.
U.S. Federal Estate Tax. A Debenture held by an individual who at the time
of death is not a citizen or resident of the United States (as specially defined
for United States federal estate tax purposes) will not be subject to United
States federal estate tax if the individual did not actually or constructively
own 10% or more of the total combined voting power of all classes of stock of
the Company and, at the time of the individual's death, payments with respect to
such Debenture would not have been effectively connected with the conduct by
such individual of a trade or business in the United States. Common Stock held
by an individual who at the time of death is not a citizen or resident of the
United States (as specially defined for United States federal estate tax
purposes) will be included in such individual's estate for U.S. federal estate
tax purposes, unless an applicable estate tax treaty otherwise applies.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. Holders. Information reporting will apply to payments of interest or
dividends made by the Company on, or the proceeds of the sale or other
disposition of, the Debentures or shares of Common Stock with respect to certain
noncorporate U.S. Holders, and backup withholding at a rate of 31% may apply
unless the recipient of such payment supplies a taxpayer identification number,
certified under penalties of perjury, as well as certain other information or
otherwise establishes an exemption from backup withholding. Any amount withheld
under the backup withholding rules is allowable as a credit against the U.S.
Holder's federal income tax, provided that the required information is provided
to the IRS.
Non-U.S. Holders. The Company must report annually to the IRS and to each
Non-U.S. Holder the amount of any dividends paid to, and the tax withheld with
respect to, such holder, regardless of whether any tax was actually withheld.
Copies of these information returns may also be made available under the
provisions of a specific treaty or agreement to the tax authorities of the
country in which the Non-U.S. Holder resides.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments of principal, including cash payments in
respect of OID, on the Debentures by the Company or any agent thereof to a
Non-U.S. Holder if the Non-U.S. Holder certifies as to its Non-U.S. Holder
status under penalties of perjury or otherwise establishes an exemption
(provided that neither the Company nor its agent has actual knowledge that the
holder is a U.S. person or that the conditions of any other exemptions are not
in fact satisfied). The payment of the proceeds on the disposition of Debentures
or shares of Common Stock to or through the United States office of a United
States or foreign broker will be subject to information reporting and backup
withholding unless the owner provides the certification described above or
otherwise establishes an exemption. The proceeds of the disposition by a
Non-U.S. Holder of Debentures or shares of Common Stock to or through a foreign
office of a broker will not be subject to backup withholding or information
reporting. However, if such broker is a U.S. person, a controlled foreign
corporation for United States tax purposes, a foreign person, 50% or more of
whose gross income from all sources for certain periods is from activities that
are effectively connected with a U.S. trade or business, or, in the case of
payments made after December 31, 1999, a foreign partnership with certain
connections to the United States, information reporting requirements will apply
unless such broker has documentary evidence in its files of the holder's
Non-U.S. status and has no actual knowledge to the contrary or unless the holder
otherwise establishes an exemption. Any amount withheld under the backup
withholding rules is allowable as a credit against the Non-U.S. Holder's federal
income tax, provided that the required information is provided to the IRS.
32
<PAGE> 34
SELLING SECURITYHOLDERS
The Debentures offered hereby were originally issued by the Company and
sold by the initial purchaser in the June 1998 private placement (the "Initial
Purchaser") in transactions exempt from the registration requirements of the
Securities Act to "qualified institutional buyers" (as defined in Rule 144A
under Securities Act). The Selling Securityholders (which term includes their
transferees, pledgees, donees or their successors) may from time to time offer
and sell pursuant to this Prospectus any or all of the Offered Securities.
Prior to any use of this Prospectus in connection with an offering of the
Offered Securities, this Prospectus will be supplemented to set forth the name
and number of shares beneficially owned by the Selling Securityholder intending
to sell such Offered Securities and the number of Debentures and/or Conversion
Shares to be offered. The Prospectus Supplement will also disclose whether any
Selling Securityholder has held any position or office with, been employed by or
otherwise has had a material relationship with, the Company or any of its
affiliates during the three years prior to the date of the Prospectus
Supplement.
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds of the sale of the Offered
Securities. The Offered Securities may be offered and sold by the Selling
Securityholders from time to time to purchasers directly. Alternatively, the
Selling Securityholders may from time to time offer and sell the Offered
Securities to or through underwriters, broker/dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Securityholders and/or the purchasers of the Offered Securities
for whom they may act as agents. The Selling Securityholders and any such
underwriters, broker/ dealers or agents that participate in the distribution of
Offered Securities may be deemed to be "underwriters" within the meaning of the
Securities Act, and any profits on the sale of Offered Securities by any Selling
Securityholders and any discounts, commissions, concessions or other
compensation received by any such underwriter, broker/dealer or agent may be
deemed to be underwriting discounts or commissions under the Securities Act. To
the extent the Selling Securityholders may be deemed to be underwriters, the
Selling Securityholders may be subject to certain statutory liabilities,
including, but not limited to, Sections 11, 12 and 17 of the Securities Act and
Rule 10b-5 under the Exchange Act.
The Offered Securities may be offered and sold from time to time 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.
The sale of the Offered Securities may be effected in transactions (which may
involve crosses or block transactions) (i) on any national securities exchange
or quotation service on which the Offered 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. At the time a particular offering of the
Offered Securities is made, a Prospectus Supplement, if required, will be
distributed which will set forth the aggregate amount and type of Offered
Securities being offered and the terms of the offering, including the name or
names of any underwriters, broker/dealers or agents, any discounts, commissions
and other items constituting compensation from the Selling Securityholders and
any discounts, commissions or concessions allowed or reallowed or paid to
broker/ dealers. Such Prospectus Supplement and, if necessary, a post-effective
amendment to the Registration Statement of which this Prospectus is a part, will
be filed with the Commission to reflect the disclosure of additional information
with respect to the distribution of the Offered Securities. In addition, the
Offered Securities covered by this Prospectus may be sold in private
transactions or under Rule 144 rather than pursuant to this Prospectus.
To the best knowledge of the Company, there are currently no plans,
arrangements or understandings between any Selling Securityholders and any
broker/dealer, agent or underwriter regarding the sale of the Offered Securities
by the Selling Securityholders. There is no assurance that any Selling
Securityholder will sell any or all of the Offered Securities or that any such
Selling Securityholder will not transfer such Offered Securities by other means
not described herein.
33
<PAGE> 35
To comply with the securities laws of certain jurisdictions, if applicable,
the Offered Securities will be offered or sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
jurisdictions the Offered Securities may not be offered or sold unless they have
been registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and is complied with.
The Selling Securityholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M of the Exchange Act which may limit the timing of purchases and sales of any
of the Offered Securities by the Selling Securityholders and any other such
person. Furthermore, Regulation M may restrict the ability of any person engaged
in the distribution of the Offered Securities to engage in market-making
activities with respect to the particular Offered Securities being distributed
for a period of up to five business days prior to the commencement of such
distribution. All of the foregoing may affect the marketability of the Offered
Securities and the ability of any person or entity to engage in market-making
activities with respect to the Offered Securities.
Pursuant to the Registration Rights Agreement entered into in connection
with the offer and sale of the Debentures by the Company, each of the Company
and the Selling Securityholders will be indemnified by the other against certain
liabilities, including certain liabilities under the Securities Act, or will be
entitled to contribution in connection therewith.
The Selling Securityholders will not pay any expenses incidental to the
registration, offering and sale of the Offered Securities to the public other
than commissions, fees and discounts of underwriters, brokers, dealers and
agents.
Pursuant to the Registration Rights Agreement, the Selling Securityholders
will not pay any expenses of the registration of the Offered Securities,
including, without limitation, all registration and filing fees (including,
without limitation, (x) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and (y) of compliance with
federal and state securities or Blue Sky laws); provided, however, that the
Selling Securityholders will pay all registration expenses to the extent the
Company is prohibited by applicable Blue Sky laws from paying such expenses for
or on behalf of such Selling Securityholders. The Company will register or
qualify or cooperate with the Selling Securityholders in connection with the
registration or qualification (or exemption from such registration or
qualification) of the Offered Securities for offer and sale under securities or
Blue Sky laws of such jurisdictions within the United States as any Selling
Securityholder reasonably requests in writing (which request may be included in
the Questionnaire). The Selling Securityholders will be indemnified by the
Company against certain civil liabilities, including certain liabilities under
the Securities Act, or will be entitled to contribution in connection therewith.
The Company will be indemnified by the Selling Securityholders severally against
certain civil liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith.
LEGAL MATTERS
The validity of the Debentures offered hereby and the Common Stock issuable
upon conversion of the Debentures will be passed upon for the Company by Davis
Polk & Wardwell.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Company's 1997 Form 10-K have been so incorporated in reliance
on the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
34
<PAGE> 36
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
An itemized statement of the estimated amount of the expenses, other than
underwriting discounts and commissions, incurred and to be incurred in
connection with the distribution of the securities registered pursuant to this
Registration Statement follows. Except for the Securities and Exchange
Commission registration fee, all amounts are estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $142,973
Printing and engraving expenses............................. 25,000
Accounting fees and expenses................................ 15,000
Legal fees and expenses..................................... 50,000
Trustee fees and expenses................................... 5,000
Transfer Agent fees and expenses............................ 5,000
Miscellaneous............................................... 7,027
--------
Total............................................. $250,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides,
in effect, that any person made a party to any action by reason of the fact that
he is or was a director, officer, employee or agent of the Company may and, in
certain cases, must be indemnified by the Company against, in the case of a
non-derivative action, judgments, fines, amounts paid in settlement and
reasonable expenses (including attorneys' fees) incurred by him as a result of
such action, and in the case of a derivative action, against expenses (including
attorneys' fees), if in either type of action he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Company. This indemnification does not apply, in a derivative action, to
matters as to which it is adjudged that the director, officer, employee or agent
is liable to the Company, unless upon court order it is determined that, despite
such adjudication of liability, but in view of all the circumstances of the
case, he is fairly and reasonably entitled to indemnity for expenses, and, in a
non-derivative action, to any criminal proceeding in which such person had
reasonable cause to believe his conduct was unlawful.
Section 102 of the DGCL allows the Company to eliminate or limit the
personal liability of a director to the Company or to any of its stockholders
for monetary damage for a breach of fiduciary duty as a director, except in the
case where the director (i) breaches such person's duty of loyalty to the
Company or its stockholders, (ii) fails to act in good faith, engages in
intentional misconduct or knowingly violates a law, (iii) authorizes the payment
of a dividend or approves a stock purchase or redemption in violation of Section
174 of the DGCL or (iv) obtains an improper personal benefit. Article Tenth of
the Company's Certificate of Incorporation includes a provision which eliminates
directors' personal liability to the fullest extent permitted under the Delaware
General Corporation Law.
Article Tenth of the Company's Certificate of Incorporation provides that
the Company shall indemnify any person (and the heirs, executors or
administrators of such person) who was or is a party or is threatened to be made
a party to, or is involved in any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was a director or officer of the
Company or is or was serving at the request of the Company as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, to the fullest extent permitted by Delaware Law. Each such
indemnified party shall have the right to be paid by the Company for any
expenses incurred in connection with any such proceeding in advance of its final
disposition to the fullest extent authorized by Delaware Law. Article Tenth of
the Company's Certificate of Incorporation also provides that the Company may,
by action of its Board of Directors, provide indemnification to such of the
employees and agents of the Company to such extent and to such effect as the
Board of Directors shall determine to be appropriate and authorized by Delaware
Law.
II-1
<PAGE> 37
As permitted by Delaware Law and the Company's Certificate of
Incorporation, the Company maintains insurance covering its directors and
officers against certain liabilities incurred by them in their capacities as
such, including among other things, certain liabilities under the Securities Act
of 1933, as amended.
ITEM 16. EXHIBITS
(a) List of Exhibits.
<TABLE>
<S> <C> <C>
4.01 -- Indenture, dated as of June 9, 1998, between Ingram Micro
Inc. and The First National Bank of Chicago
4.02 -- Form of Zero Coupon Convertible Senior Debentures due 2018
(included in Exhibit 4.01)
4.03 -- Registration Rights Agreement dated as of June 9, 1998
between Ingram Micro Inc. and Morgan Stanley & Co.
Incorporated as Initial Purchaser
5.01 -- Opinion of Davis Polk & Wardwell
12.01 -- Statement re: computation of ratios
23.01 -- Consent of PricewaterhouseCoopers LLP
23.02 -- Consent of Davis Polk & Wardwell (included in Exhibit 5.01)
24.01 -- Powers of Attorney of certain officers and directors of
Ingram Micro Inc. (included on the signature pages hereof)
25.01 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National Bank of
Chicago, as Trustee under the Indenture
99.01 -- Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995 (incorporated by reference to Exhibit 99.01 to
Ingram Micro Inc.'s Annual Report on Form 10-K for the
fiscal year ended January 3, 1998, filed with the Commission
on April 1, 1998)
</TABLE>
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% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(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 if the information required to be included in a
post-effective amendment by paragraphs (1) (i) and (ii) above 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,
paragraphs (1) (i) and (ii) shall not apply.
II-2
<PAGE> 38
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(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, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement relating to 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 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise,
the Company 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 Company of expenses incurred or paid by a director,
officer or controlling person of the Company 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
Company 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 of 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> 39
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Ingram Micro
Inc. 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 Santa Ana, State of California, on this 10th day of
July, 1998.
INGRAM MICRO INC.
By: /s/ JAMES E. ANDERSON, JR.
-------------------------------------
Name: James E. Anderson, Jr.
Title: Senior Vice President,
Secretary and General Counsel
POWER OF ATTORNEY
The Registrant and each person whose signature appears below constitutes
and appoints Jerre L. Stead, Jeffrey R. Rodek, Michael J. Grainger, and James E.
Anderson, Jr., and any agent for service named in this Registration Statement
and each of them, his, her, or its true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him, her, or it and in
his, her, or its name, place and stead, in any and all capacities, to sign and
file (i) any and all amendments (including post-effective amendments) to this
Registration Statement, with all exhibits thereto, and other documents in
connection therewith, and (ii) a registration statement, and any and all
amendments thereto, relating to the offering covered hereby filed pursuant to
Rule 462(b) under the Securities Act of 1933, 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 or necessary to be done in and about the premises, as fully to all
intents and purposes as he, she, or it 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/ JERRE L. STEAD Chief Executive Officer (Principal Executive July 10, 1998
- --------------------------------------------- Officer); Chairman of the Board
Jerre L. Stead
/s/ MICHAEL J. GRAINGER Executive Vice President and Worldwide Chief July 10, 1998
- --------------------------------------------- Financial Officer (Principal Financial Officer
Michael J. Grainger and Principal Accounting Officer)
/s/ MARTHA R. INGRAM Director July 10, 1998
- ---------------------------------------------
Martha R. Ingram
/s/ JOHN R. INGRAM Director July 10, 1998
- ---------------------------------------------
John R. Ingram
/s/ DAVID B. INGRAM Director July 10, 1998
- ---------------------------------------------
David B. Ingram
/s/ PHILIP M. PFEFFER Director July 10, 1998
- ---------------------------------------------
Philip M. Pfeffer
/s/ DON H. DAVIS, JR. Director July 10, 1998
- ---------------------------------------------
Don H. Davis, Jr.
/s/ J. PHILLIP SAMPER Director July 10, 1998
- ---------------------------------------------
J. Phillip Samper
/s/ JOE B. WYATT Director July 10, 1998
- ---------------------------------------------
Joe B. Wyatt
</TABLE>
II-4
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C> <C>
4.01 -- Indenture dated as of June 9, 1998 between Ingram Micro Inc.
and The First National Bank of Chicago
4.02 -- Form of Zero Coupon Convertible Senior Debentures due 2018
(included in Exhibit 4.01)
4.03 -- Registration Rights Agreement dated as of June 9, 1998
between Ingram Micro Inc. and Morgan Stanley & Co.
Incorporated as Initial Purchaser
5.01 -- Opinion of Davis Polk & Wardwell
12.01 -- Statement re: computation of ratios
23.01 -- Consent of PricewaterhouseCoopers LLP
23.02 -- Consent of Davis Polk & Wardwell (included in Exhibit 5.01)
24.01 -- Powers of Attorney of certain officers and directors of
Ingram Micro Inc. (included on the signature pages hereof)
25.01 -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of The First National Bank of
Chicago, as Trustee under the Indenture
99.01 -- Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995 (incorporated by reference to Exhibit 99.01 to
Ingram Micro Inc.'s Annual Report on Form 10-K for the
fiscal year ended January 3, 1998, filed with the Commission
on April 1, 1998)
</TABLE>
<PAGE> 1
EXHIBIT 4.01
================================================================================
Zero Coupon Convertible Senior Debentures due 2018
Ingram Micro Inc.
Issuer
-----------------
INDENTURE
Dated as of June 9, 1998
-----------------
The First National Bank of Chicago
Trustee
================================================================================
<PAGE> 2
CROSS REFERENCE TABLE*
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- -------
<S> <C>
310(a)(1)................................................................................. 7.10
(a)(2).............................................................................. 7.10
(a)(3)..............................................................................N.A.**
(a)(4)..............................................................................N.A.
(b).............................................................................7.08; 7.10
(c).................................................................................N.A.
3.11(a)................................................................................... 7.11
(b)................................................................................ 7.11
(c)................................................................................ N.A.
3.12(a)................................................................................... 2.05
(b)................................................................................11.03
(c)................................................................................11.03
(d)................................................................................ 7.06
3.13(a)................................................................................... 7.06
(b)(1)............................................................................. N.A.
(b)(2)............................................................................. 7.06
(c)................................................................................11.02
(d)................................................................................ 7.06
3.14(a)...............................................................................4.02;11.02
(b)................................................................................ N.A.
(c)(1).............................................................................11.04
(c)(2).............................................................................11.04
(c)(3)............................................................................. N.A.
(d)................................................................................ N.A.
(e)................................................................................11.05
(f)................................................................................ 4.03
3.15(a)................................................................................... 7.01
(b)............................................................................7.05;11.02
(c)................................................................................ 7.01
(d)................................................................................ 7.01
(e)................................................................................ 6.11
3.16(a) (last sentence)................................................................... 2.08
(a)(1)(A).......................................................................... 6.05
(a)(1)(B).......................................................................... 6.04
(a)(2)............................................................................. N.A.
(b)................................................................................ 6.07
3.17(a)(1)................................................................................ 6.08
(a)(2)............................................................................. 6.09
(b)................................................................................ 2.04
3.18(a)...................................................................................11.01
</TABLE>
- ----------
* Note: This Cross Reference Table shall not, for any purpose, be deemed to be
part of the Indenture
** Note: N.A. means Not Applicable
<PAGE> 3
TABLE OF CONTENTS(1)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE...........................................1
Section 1.01. Definitions................................................................1
Section 1.02. Other Definitions..........................................................7
Section 1.03. Incorporation by Reference of Trust Indenture Act..........................7
Section 1.04. Rules of Construction......................................................8
ARTICLE 2 THE SECURITIES.......................................................................8
Section 2.01. Form and Dating............................................................8
Section 2.02. Execution and Authentication...............................................8
Section 2.03. Registrar, Paying Agent and Conversion Agent...............................9
Section 2.04. Paying Agent to Hold Money and Securities in Trust........................10
Section 2.05. Holder Lists..............................................................10
Section 2.06. Exchange and Registration of Transfer of Securities; Restrictions on
Transfers; Depositary.....................................................10
Section 2.07. Replacement Securities....................................................16
Section 2.08. Outstanding Securities; Determinations of Holders' Action.................17
Section 2.09. Temporary Securities......................................................17
Section 2.10. Cancellation..............................................................18
Section 2.11. Persons Deemed Owners.....................................................18
ARTICLE 3 REDEMPTION AND PURCHASES............................................................19
Section 3.01. Right to Redeem; Notices to Trustee.......................................19
Section 3.02. Selection of Securities to be Redeemed....................................19
Section 3.03. Notice of Redemption......................................................19
Section 3.04. Effect of Notice of Redemption............................................20
Section 3.05. Deposit of Redemption Price...............................................21
Section 3.06. Securities Redeemed in Part...............................................21
Section 3.07. Conversion Arrangement on Call for Redemption.............................21
Section 3.08. Purchase of Securities at Option of the Holder............................22
Section 3.09. Redemption at Option of the Holder upon a Fundamental Change..............30
Section 3.10. Effect of Purchase Notice or Fundamental Change Redemption Notice.........31
Section 3.11. Deposit of Purchase Price or Fundamental Change Redemption Price..........32
Section 3.12. Securities Purchased in Part..............................................32
Section 3.13. Covenant to Comply with Securities Laws upon Purchase of Securities.......33
Section 3.14. Repayment to the Company..................................................33
</TABLE>
- --------
(1) This Table of Contents shall not, for any purpose, be deemed to be part of
the Indenture.
-i-
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 4 COVENANTS...........................................................................33
Section 4.01. Payment of Securities.....................................................33
Section 4.02. Financial Information; SEC Reports........................................34
Section 4.03. Compliance Certificate....................................................34
Section 4.04. Further Instruments and Acts..............................................35
Section 4.05. Maintenance of Office or Agency...........................................35
Section 4.06. Existence.................................................................35
Section 4.07. Payment of Taxes and Other Claims.........................................35
ARTICLE 5 SUCCESSOR CORPORATION...............................................................36
Section 5.01. When the Company May Merge or Transfer Assets.............................36
ARTICLE 6 DEFAULTS AND REMEDIES...............................................................37
Section 6.01. Events of Default.........................................................37
Section 6.02. Acceleration..............................................................38
Section 6.03. Other Remedies............................................................38
Section 6.04. Waiver of Past Defaults...................................................38
Section 6.05. Control by Majority.......................................................38
Section 6.06. Limitation on Suits.......................................................39
Section 6.07. Rights of Holders to Receive Payment......................................39
Section 6.08. Collection Suit by Trustee................................................39
Section 6.09. Trustee May File Proofs of Claim..........................................39
Section 6.10. Priorities................................................................40
Section 6.11. Undertaking for Costs.....................................................41
Section 6.12. Waiver of Stay, Extension or Usury Laws...................................41
ARTICLE 7 TRUSTEE.............................................................................41
Section 7.01. Duties of Trustee.........................................................41
Section 7.02. Rights of Trustee.........................................................43
Section 7.03. Individual Rights of Trustee..............................................43
Section 7.04. Trustee's Disclaimer......................................................43
Section 7.05. Notice of Defaults........................................................43
Section 7.06. Reports...................................................................44
Section 7.07. Compensation and Indemnity................................................44
Section 7.08. Replacement of Trustee....................................................45
Section 7.09. Successor Trustee by Merger...............................................45
Section 7.10. Eligibility; Disqualification.............................................45
</TABLE>
-ii-
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 7.11. Preferential Collection of Claims Against Company.........................46
ARTICLE 8 DISCHARGE OF INDENTURE..............................................................46
Section 8.01. Discharge of Liability on Securities......................................46
Section 8.02. Repayment to the Company..................................................46
ARTICLE 9 AMENDMENTS..........................................................................47
Section 9.01. Without Consent of Holders................................................47
Section 9.02. With Consent of Holders...................................................47
Section 9.03. Compliance with Trust Indenture Act.......................................48
Section 9.04. Revocation and Effect of Consents, Waivers and Actions....................48
Section 9.05. Notation on or Exchange of Securities.....................................48
Section 9.06. Trustee to Sign Supplemental Indentures...................................48
Section 9.07. Effect of Supplemental Indentures.........................................49
ARTICLE 10 CONVERSION.........................................................................49
Section 10.01. Conversion Privilege......................................................49
Section 10.02. Conversion Procedure......................................................49
Section 10.03. Fractional Shares.........................................................50
Section 10.04. Taxes on Conversion.......................................................50
Section 10.05. Company to Provide Stock..................................................50
Section 10.06. Adjustment for Change in Capital Stock....................................51
Section 10.07. Adjustment for Rights Issue...............................................51
Section 10.08. Adjustment for Other Distributions........................................52
Section 10.09. When Adjustment May be Deferred...........................................55
Section 10.10. When No Adjustment Required...............................................55
Section 10.11. Notice of Adjustment......................................................56
Section 10.12. Voluntary Increase........................................................56
Section 10.13. Notice of Certain Transactions............................................56
Section 10.14. Effect of Reclassification, Consolidation, Merger or Sale.................56
Section 10.15. Company Determination Final...............................................57
Section 10.16. Trustee's Adjustment Disclaimer...........................................57
Section 10.17. Simultaneous Adjustments..................................................57
Section 10.18. Successive Adjustments....................................................58
Section 10.19. Rights Issued in Respect of Common Stock Issued Upon Conversion...........58
Section 10.20. General Considerations....................................................58
</TABLE>
-iii-
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 11 MISCELLANEOUS......................................................................59
Section 11.01. Trust Indenture Act.......................................................59
Section 11.02. Notices...................................................................59
Section 11.03. Communication by Holders with other Holders...............................60
Section 11.04. Certificate and Opinion as to Conditions Precedent........................60
Section 11.05. Statements Required in Certificate or Opinion.............................60
Section 11.06. Separability Clause.......................................................61
Section 11.07. Rules by Trustee, Paying Agent, Conversion Agent and Registrar............61
Section 11.08. Governing Law.............................................................61
Section 11.09. No Recourse Against Others................................................61
Section 11.10. Successors................................................................61
Section 11.11. Multiple Originals........................................................61
</TABLE>
EXHIBIT A--Form of Security
-iv-
<PAGE> 7
INDENTURE, dated as of June 9, 1998, between Ingram Micro Inc., a
Delaware corporation (the "Company"), and The First National Bank of Chicago, a
national banking association organized and existing under the laws of the United
States of America (the "Trustee").
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of the Company's Zero Coupon
Convertible Senior Debentures due 2018:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. DEFINITIONS.
"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 or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of Voting Stock, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Applicable Price" means (i) in the event of a Fundamental Change in
which the holders of the Common Stock receive only Cash, the amount of Cash
received by the holder of one share of Common Stock and (ii) in the event of any
other Fundamental Change, the average of the last reported sale price for the
Common Stock (determined as set forth in the definition of Current Market Price)
during the ten Trading Days immediately prior to the record date for the
determination of the holders of Common Stock entitled to receive Cash,
securities, property or other assets in connection with such Fundamental Change,
or, if there is no such record date, the date upon which the holders of Common
Stock shall have the right to receive such Cash, securities, property or other
assets in connection with the Fundamental Change.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of such board.
"Business Day" means each day of the year on which banking institutions
are not required or authorized to close in The City of New York or the city in
which the Corporate Trust Office is located.
"Common Equity" means the Common Stock and the Class B Common Stock, par
value $0.01 per share, of the Company, and any other stock of any class of the
Company which has no preference in respect of dividends or of amounts payable in
the event of any voluntary or involuntary liquidation, dissolution or winding up
of the Company and which is not subject to redemption by the Company, as each
such class exists on the date of this Indenture, or shares of any class or
classes resulting from any reclassification or reclassifications thereof and
which have no preference in
<PAGE> 8
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Common Stock" means the Class A Common Stock, par value $0.01 per
share, of the Company, as such class exists on the date of this instrument as
originally executed. Subject to the provisions of Section 10.14, shares issuable
upon conversion of the 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 and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the party named as the "Company" in the first paragraph
of this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by (i) its Chairman of the Board, a Vice
Chairman, its President or a Vice President, and (ii) its Treasurer, an
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to
the Trustee.
"Conversion Rate" has the meaning specified in Section 10.01.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office is, at the date as of which this Indenture is dated,
located at One First National Plaza, Suite 0126, Chicago, Illinois 60602.
"Current Market Price" per share of the Common Stock on any date of
determination means the average of the daily closing prices of the Common Stock
on the NYSE for the 5 consecutive trading days ending on and including such date
of determination. The last reported sale price for each day shall be (i) if the
Common Stock is listed on the NYSE or listed or admitted for trading on any
national securities exchange, the last sale price, or the closing bid price if
no sale occurred, of the Common Stock on the principal securities exchange on
which the Common Stock is listed, (ii) if the Common Stock is not listed or
admitted for trading as described in clause (i), the last reported sale price of
Common Stock on the Nasdaq National Market, or any similar system of automated
-2-
<PAGE> 9
dissemination of quotations of securities prices then in common use, if so
quoted, or (iii) if not quoted as described in clause (ii), the mean between the
high bid and low asked quotations for Common Stock as reported by the National
Quotation Bureau Incorporated if at least two securities dealers have inserted
both bid and asked quotations for the Common Stock on at least 5 of the 10
immediately preceding Trading Days. If none of the conditions set forth above is
met, the last reported sale price of Common Stock on any day or the average of
such last reported sale prices for any period shall be the fair market value of
the Common Stock as determined by a member firm of the NYSE selected by the
Company.
"Custodian" means The First National Bank of Chicago, as custodian with
respect to the Securities in global form, or any successor entity thereto.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Depositary" means, with respect to the Securities issuable or issued in
whole or in part in global form, the Person specified in Section 2.06 as the
Depositary with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Extension Debentures" means the Company's new Zero Coupon Convertible
Senior Debentures due 2018 authenticated and delivered under the New Indenture.
"Fundamental Change" means the occurrence of any transaction or event in
connection with which all or substantially all Common Stock shall be exchanged
for, converted into, acquired for or constitute solely the right to receive
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) consideration which is not all or substantially all common stock
listed (or, upon consummation of or immediately following such transaction or
event, which will be listed) on a United States national securities exchange or
approved for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities prices.
"Holder" means a Person in whose name a Security is registered on the
Registrar's books.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Initial Purchaser" means Morgan Stanley & Co. Incorporated.
"Issue Date" of any Security means the date on which the Security was
originally issued or deemed issued as set forth on the face of the Security.
-3-
<PAGE> 10
"Issue Price" of any Security means, in connection with the original
issuance of such Security, the initial issue price at which the Security is
issued as set forth on the face of the Security.
"Legal Holiday" is any day other than a Business Day. If any specified
date (including a date for giving notice) is a Legal Holiday, the action shall
be taken on the next succeeding date that is not a Legal Holiday, and to the
extent applicable no Original Issue Discount or interest, if any, shall accrue
for the intervening period.
"Liquidated Damages" shall have the meaning specified in the
Registration Rights Agreement.
"Nasdaq National Market" means the electronic inter-dealer quotation
system operated by Nasdaq Stock Market, Inc., a subsidiary of the National
Association of Securities Dealers, Inc.
"New Indenture" means the indenture to be entered into by the Company
and the trustee thereunder in accordance with the provisions of Section 3.08(e)
of this Indenture providing for the authentication and delivery of the Extension
Debentures.
"NYSE" means The New York Stock Exchange, Inc.
"Officer" means the Chairman of the Board, any Vice Chairman, the
President, any Vice President, the Treasurer or the Secretary or any Assistant
Treasurer or Assistant Secretary of the Company.
"Officers' Certificate" means a written certificate containing the
information specified in Sections 11.04 and 11.05, signed in the name of the
Company by (i) its Chairman of the Board, a Vice Chairman, its President or a
Vice President, and (ii) its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion containing the information
specified in Sections 11.04 and 11.05, from legal counsel who is acceptable to
the Trustee. The counsel may be an employee of, or counsel to, the Company or
the Trustee.
"Original Issue Discount" of any Security means the difference between
the Issue Price and the Principal Amount of the Security as set forth on the
face of the Security. For purposes of this Indenture and the Securities, accrual
of Original Issue Discount shall be calculated on a semi-annual bond equivalent
basis using a 360 day year of twelve 30 day months.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
"Portal Market" means The Portal Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.
-4-
<PAGE> 11
"Principal" or "Principal Amount" of a Security means the Principal
Amount as set forth on the face of such Security, or on Schedule A thereto in
the case of a Security in global form.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redemption Date" means a date specified for redemption of the
Securities (other than redemption upon a Fundamental Change at the option of the
Holder) in accordance with the terms of the Securities and Section 3.01 of this
Indenture.
"Redemption Price" shall have the meaning set forth in paragraph 5 of
the Securities.
"Reference Market Price" shall initially mean $26.25 and in the event of
any adjustment to the Conversion Rate pursuant to Article 10, the Reference
Market Price shall be adjusted to equal the initial Reference Market Price
multiplied by a fraction the numerator of which is the Conversion Rate specified
in the form of Security attached hereto as Exhibit A (without regard to any
adjustment thereto), and the denominator of which is the Conversion Rate
following such adjustment.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of the date hereof, between the Company and the Initial
Purchaser.
"Rule 144A" means Rule 144A as promulgated under the Securities Act, or
any successor rule.
"Rule 144(k)" means Rule 144(k) as promulgated under the Securities Act,
or any successor rule.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Zero Coupon Convertible Senior Debentures due
2018.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Significant Subsidiary" means, with respect to any Person, a Subsidiary
of such Person organized under the laws of any State of the United States of
America or the District of Columbia that would constitute a "significant
subsidiary" as such term is defined under Rule 1-02 of Regulation S-X of the
Securities and Exchange Commission.
"Stated Maturity", when used with respect to any Security, means the
date specified in such Security as the fixed date on which an amount equal to
the Principal of such Security is due and payable.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled
-5-
<PAGE> 12
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or managing general partner of which is such Person or a
subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more subsidiaries of such Person (or any combination
thereof).
"TIA" means the Trust Indenture Act of 1939, as amended, as in effect on
the date of this Indenture, except as provided in Section 9.03.
"Trading Day" means a day during which trading in securities generally
occurs on the NYSE or, if the applicable security is not listed on the NYSE, on
the principal other national or regional securities exchange on which the
applicable security is then listed or, if the applicable security is not listed
on a national or regional securities exchange, on the Nasdaq National Market or,
if the applicable security is not quoted on the Nasdaq National Market, on the
principal other market on which the applicable security is then traded.
"Trust Officer" means any officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Trustee" means the party named as the "Trustee" in the first paragraph
of this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.
"Voting Stock" means stock of any class or classes, however designated,
having ordinary voting power for the election of a majority of the board of
directors of a corporation, other than stock having such power only by reason of
the occurrence of a contingency.
-6-
<PAGE> 13
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
- --------------------------------------------------------- ----------------
<S> <C>
"Bankruptcy Law"........................................ 6.01
"Cash".................................................. 3.08(b)
"Company Notice"........................................ 3.08(f)
"Company Notice Date"................................... 3.08(c)
"Conversion Agent"...................................... 2.03
"Expiration Time"....................................... 10.08(c)
"Event of Default"...................................... 6.01
"Fundamental Change Redemption Date".................... 3.09(a)
"Fundamental Change Redemption Notice".................. 3.09(a)
"Fundamental Change Redemption Price"................... 3.09(a)
"Market Price".......................................... 3.08(d)
"Material Terms"........................................ 3.08(e)
"Notice of Default"..................................... 6.01
"Paying Agent".......................................... 2.03
"Purchase Date"......................................... 3.08(a)
"Purchase Notice"....................................... 3.08(a)
"Purchase Price"........................................ 3.08(a)
"Purchased Shares"...................................... 10.08(c)
"Registrar"............................................. 2.03
"Restricted Securities"................................. 2.06(d)
"Sale Price"............................................ 3.08(d)
"Tender Expiration Time"................................ 10.08(d)
"Tender Purchased Shares"............................... 10.08(d)
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"Indenture Securities" means the Securities.
"Indenture Security Holder" means a Holder.
"Indenture to be Qualified" means this Indenture.
"Indenture Trustee" or "Institutional Trustee" means the Trustee.
-7-
<PAGE> 14
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rules have the
meanings assigned to them by such definitions.
SECTION 1.04. RULES OF CONSTRUCTION. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles as in
effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the
plural include the singular.
ARTICLE 2
THE SECURITIES
SECTION 2.01. FORM AND DATING. The Securities and the Trustee's
certificate of authentication for the Securities shall be substantially in the
form of Exhibit A, which is a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or usage
(provided that any such notation, legend or endorsement required by usage is in
a form acceptable to the Company). The Company shall provide any such notations,
legends or endorsements to the Trustee in writing. Each Security shall be dated
the date of its authentication.
Any Security in global form shall represent such of the outstanding
Securities as shall be specified therein and shall provide that it shall
represent the aggregate amount of outstanding Securities from time to time
endorsed thereon and that the aggregate amount of outstanding Securities
represented thereby may from time to time be increased or reduced to reflect
transfers or exchanges permitted hereby. Any endorsement of a Security in global
form to reflect the amount of any increase or decrease in the amount of
outstanding Security represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in such manner and upon instructions
given by the Holder of such Security in accordance with this Indenture. Payment
of Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price, Fundamental Change
Redemption Price or interest, if any, on any Security in global form shall be
made to the Holder of such Security.
SECTION 2.02. EXECUTION AND AUTHENTICATION. The Securities shall be
executed on behalf of the Company by its Chairman of the Board, one of its Vice
Chairmen, its President or one of its Vice
-8-
<PAGE> 15
Presidents and attested by its Treasurer or Secretary or one of its Assistant
Treasurers or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of authentication of such Securities.
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 duly
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
The Trustee shall authenticate and deliver Securities for original issue
in an aggregate principal amount at maturity not to exceed $1,330,000,000 upon a
Company Order without any further action by the Company. The aggregate Principal
Amount of Securities outstanding at any time may not exceed the amount set forth
in the foregoing sentence, subject to the parenthetical statement set forth
therein, except as provided in Section 2.07.
SECTION 2.03. REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The Company
shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange ("Registrar"), an office or agency
where Securities may be presented for purchase or payment ("Paying Agent") and
an office or agency where Securities may be presented for conversion into Common
Stock ("Conversion Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have one or more
co-registrars, one or more additional paying agents and one or more additional
conversion agents. The term Paying Agent includes any additional paying agent.
The term Conversion Agent includes any additional conversion agent, including
any named pursuant to Section 4.05.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar (if not the Trustee or
an Affiliate of the Trustee). The agreement shall implement the provisions of
this Indenture that relate to such agent and the Security. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee
shall act as such and shall be entitled to appropriate compensation therefor
pursuant to Section 7.07. The Company or an Affiliate of the Company may act as
Paying Agent, Registrar, Conversion Agent or co-registrar.
The Company initially appoints the Trustee as Registrar, Conversion
Agent and Paying Agent in connection with the Securities.
SECTION 2.04. PAYING AGENT TO HOLD MONEY AND SECURITIES IN TRUST. Except
as otherwise provided herein, prior to or on each due date of payments in
respect of any Security, the Company
-9-
<PAGE> 16
shall deposit with the Paying Agent a sum of money or securities sufficient to
make such payments when such payments are due. The Company shall require the
Paying Agent (if not the Trustee) to agree in writing that the Paying Agent
shall hold in trust for the benefit of Holders or the Trustee all money and
securities held by the Paying Agent for the making of payments in respect of the
Securities and shall notify the Trustee of any default by the Company in making
any such payment. At any time during the continuance of any such default, the
Paying Agent shall, upon the written request of the Trustee, forthwith pay to
the Trustee all money and securities so held in trust. If the Company or an
Affiliate of the Company acts as Paying Agent, it shall segregate the money and
securities held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require the Paying Agent to pay all money and securities
held by it to the Trustee and to account for any funds and securities disbursed
by it. Upon doing so, the Paying Agent shall have no further liability for such
money or securities.
SECTION 2.05. HOLDER LISTS. The Trustee shall preserve in as current a
form as is reasonably practicable the most recent list available to it of the
names and addresses of Holders. If the Trustee is not the Registrar, the Company
shall cause to be furnished to the Trustee at least semiannually on June 9 and
December 9 a listing of Holders dated within 15 days of the date on which the
list is furnished and at such other times as the Trustee may request in writing
a list, in such form and as of such date as the Trustee may reasonably require,
of the names and addresses of Holders.
SECTION 2.06. EXCHANGE AND REGISTRATION OF TRANSFER OF SECURITIES;
RESTRICTIONS ON TRANSFERS; DEPOSITARY.
(a) Upon surrender for registration of transfer of any Security at any
office or agency of the Company designated as Registrar or co-registrar pursuant
to Section 2.03 and satisfaction of the requirements for such transfer set forth
in this Section 2.06, 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.
Securities may be exchanged for a like aggregate Principal Amount of
Securities of other authorized denominations. Securities to be exchanged shall
be surrendered at any office or agency to be maintained by the Company
designated as Registrar or co-registrar pursuant to Section 2.03 and the Company
shall execute and register and the Trustee shall authenticate and deliver in
exchange therefor the Security or Securities which the Holder making the
exchange shall be entitled to receive, bearing registration numbers not
contemporaneously outstanding.
All Securities presented for registration of transfer or for exchange
into like Securities, purchase, redemption or conversion into Common Stock or
payment shall (if so required by the Company, the Trustee, the Registrar or any
co-registrar) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company and the Trustee,
duly executed by the Holder or such Holder's attorney duly authorized in
writing.
-10-
<PAGE> 17
No service charge shall be charged to the Holder for any exchange for
like Securities or registration of transfer of Securities, but the Company may
require payment of a sum sufficient to cover any tax, assessments or other
governmental charges that may be imposed in connection therewith.
None of the Company, the Trustee, the Registrar or any co-registrar
shall be required to exchange for like Securities or register a transfer of (a)
any Securities for a period of 15 days next preceding any selection of
Securities to be redeemed, or (b) any Securities or portions thereof selected or
called for redemption, or (c) any Securities or portion thereof surrendered for
conversion into Common Stock, or (d) any Securities or portion thereof
surrendered for purchase or redemption (and not withdrawn) pursuant to
Sections 3.08 or 3.09, respectively.
All Securities issued upon any transfer or exchange for like Securities
shall be valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture as the Securities surrendered
upon such exchange or transfer.
(b) So long as the Securities are eligible for book-entry settlement
with the Depositary, or unless otherwise required by law, all Securities that
are so eligible may be represented by a Security in global form registered in
the name of the Depositary or the nominee of the Depositary, except as otherwise
specified below. The transfer and exchange of beneficial interests in such
Security in global form shall be effected through the Depositary in accordance
with this Indenture and the procedures of the Depositary therefor.
Securities that upon initial issuance are beneficially owned by QIBs
will be represented by one or more Securities in global form. Transfers of
interests in a Security in global form will be made in accordance with the
standing instructions and procedures of the Depositary and its participants. The
Trustee shall make appropriate endorsements to reflect increases or decreases in
the Principal Amounts of such Securities in global form as set forth on the face
of the Security to reflect any such transfers.
Except as provided below, beneficial owners of a Security in global form
shall not be entitled to have certificates registered in their names, will not
receive or be entitled to receive physical delivery of certificates in
definitive form and will not be considered Holders of such Securities in global
form.
(c) So long as the Securities are eligible for book-entry settlement, or
unless otherwise required by law, upon any transfer of a definitive Security to
a QIB in accordance with Rule 144A, and upon receipt of the definitive Security
or Securities being so transferred, together with a certification, substantially
in the form of the reverse of the Security, from the transferor that the
transfer is being made in compliance with Rule 144A, as the case may be (or
other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Security in global form to reflect an increase in the
aggregate Principal Amount of the Securities represented by the Security in
global form, the Trustee shall cancel such Security or Securities in
certificated form in accordance with the standing instructions and procedures of
the Depositary and the aggregate Principal Amount
-11-
<PAGE> 18
of Securities represented by the Security in global form to be increased
accordingly; provided that no definitive Security, or portion thereof, in
respect of which the Company or an Affiliate of the Company held any beneficial
interest shall be included in such Security in global form until such definitive
Security is freely tradable in accordance with Rule 144(k); provided further
that the Trustee shall issue Securities in definitive form upon any transfer of
a beneficial interest in any Security in global form to the Company or any
Affiliate of the Company.
Any Security in global form may be endorsed with or have incorporated in
the text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the
Depositary, by the NYSE or by the National Association of Securities Dealers,
Inc. in order for the Securities to be tradeable on The Portal Market or as may
be required for the Securities to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations of
any securities exchange upon which the Securities may be listed or traded or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Securities are subject.
(d) Every Security that bears or is required under this Section 2.06(d)
to bear the legend set forth in this Section 2.06(d) (together with any Common
Stock issued upon conversion of the Securities and required to bear the legend
set forth in Section 2.06(e), collectively, the "Restricted Securities") shall
be subject to the restrictions on transfer set forth in this Section 2.06(d)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the holder of each such Restricted Security, by such Holder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.06(d) and 2.06(e), the term "transfer" encompasses any sale, pledge,
transfer or other disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales thereof
under Rule 144(k), any certificate evidencing such Security (and all securities
issued in exchange therefor or substitution thereof, other than Common Stock, if
any, issued upon conversion therefor, which shall bear the legend set forth in
Section 2.06(e), if applicable) shall bear a legend in substantially the
following form, unless such Security has been sold pursuant to a registration
statement that has been declared effective under the Securities Act (and which
continues to be effective at the time of such transfer), or unless otherwise
agreed by the Company in writing, with written notice thereof to the Trustee:
THE DEBENTURE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT, PRIOR TO
EXPIRATION OF THE HOLDING PERIOD
-12-
<PAGE> 19
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE
144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION),
RESELL OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE
COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY EXCEPT (A)
TO INGRAM MICRO INC. OR ANY SUBSIDIARY THEREOF, (B) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE) OR (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH
CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3)
PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
2(D) ABOVE), IT WILL FURNISH TO THE FIRST NATIONAL BANK OF
CHICAGO, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE
TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE
SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED
HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX
SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE FIRST NATIONAL BANK
OF CHICAGO, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE).
THIS LEGEND WILL BE REMOVED UPON THE TRANSFER OF THE SECURITY
EVIDENCED HEREBY PURSUANT TO CLAUSE 2(C) OR CLAUSE 2(D) ABOVE OR
UPON ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY UNDER
RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION).
Any Security (or security issued in exchange or substitution therefor)
as to which such restrictions on transfer shall have expired in accordance with
their terms or as to which the conditions for removal of the foregoing legend
set forth therein have been satisfied may, upon surrender of such Securities for
exchange to the Registrar in accordance with the provisions of this
-13-
<PAGE> 20
Section 2.06, be exchanged for a new Security or Securities, of like tenor and
aggregate principal amount, which shall not bear the restrictive legend required
by this Section 2.06(d).
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in this Section 2.06(d)), a Security in global form may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee or to a successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the Exchange
Act. The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Securities in global form. Initially, a Security
in global form shall be issued to the Depositary, registered in the name of Cede
& Co., as the nominee of the Depositary, and deposited with the Custodian for
Cede & Co.
If at any time the Depositary for the Security in global form notifies
the Company that it is unwilling or unable to continue as Depositary for such
Security, the Company may appoint a successor Depositary with respect to such
Security. If a successor Depositary for the Security is not appointed by the
Company within 90 days after the Company receives such notice, the Company will
execute, and the Trustee, upon receipt of an Officers' Certificate for
authentication and delivery of Securities, will authenticate and deliver,
Securities in certificated form, in an aggregate Principal Amount equal to the
Principal Amount of the Security in global form, in exchange for such Security
in global form.
Securities in certificated form issued in exchange for all or a part of
a Security in global form pursuant to this Section 2.06 shall be registered in
such names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such Securities in certificated form to the Persons in whose names such
Securities in certificated form are so registered.
At such time as all interests in a Security in global form have been
redeemed, converted, exchanged, repurchased or canceled for Securities in
certificated form, or transferred to a transferee who receives Securities in
certificated form, such Security in global form shall be, upon receipt thereof,
canceled by the Trustee in accordance with the standing procedures and
instructions existing between the Custodian and Depositary. At any time prior to
such cancellation, if any interest in a Security in global form is exchanged for
Securities in certificated form, redeemed, converted, exchanged, repurchased by
the Company or canceled, or transferred for part of a Security in global form,
the Principal Amount of such Security in global form shall, in accordance with
the standing procedures and instructions existing between the Custodian and the
Depositary, be reduced or increased, as the case may be, and an endorsement
shall be made on such Security in global form, by the Trustee or the Custodian,
at the direction of the Trustee, to reflect such reduction or increase.
(e) Until the expiration of the holding period applicable to sales
thereof under Rule 144(k), any stock certificate representing Common Stock
issued upon conversion of a Security shall bear a legend in substantially the
following form, unless such Common Stock has been sold
-14-
<PAGE> 21
pursuant to a registration statement that has been declared effective under the
Securities Act (and which continues to be effective at the time of such
transfer) or such Common Stock has been issued upon conversion of Securities
that have been transferred pursuant to a registration statement that has been
declared effective under the Securities Act, or unless otherwise agreed by the
Company in writing with written notice thereof to the transfer agent for the
Common Stock:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS, AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN
THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT UNTIL THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
COMMON STOCK EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT
RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY
EXCEPT (A) TO INGRAM MICRO INC. OR ANY SUBSIDIARY THEREOF, (B) TO
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) PURSUANT TO
THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (D) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); (2) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER
PURSUANT TO CLAUSE 1(D) ABOVE), IT WILL FURNISH TO FIRST CHICAGO
TRUST COMPANY OF NEW YORK, AS TRANSFER AGENT (OR A SUCCESSOR
TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS THE TRANSFER AGENT MAY
REASONABLE REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3)
IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY EVIDENCED
HEREBY IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE 1(D) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. THIS LEGEND WILL BE REMOVED UPON THE TRANSFER OF THE
COMMON STOCK EVIDENCED HEREBY PURSUANT TO CLAUSE 1(C) OR CLAUSE
1(D) ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK EVIDENCED
HEREBY AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES OF THE COMMON
-15-
<PAGE> 22
STOCK EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION).
Any such Common Stock as to which such restrictions on transfer shall
have expired in accordance with their terms or as to which the conditions for
removal of the foregoing legend set forth therein have been satisfied may, upon
surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.06(e).
(f) Any Security or Common Stock issued upon the conversion or exchange
of a Security that, prior to the expiration of the holding period applicable to
sales thereof under Rule 144(k), is purchased or owned by the Company or any
Affiliate thereof may not be resold by the Company or such Affiliate unless
registered under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction which results
in such Securities or Common Stock, as the case may be, no longer being
"restricted securities" (as defined under Rule 144).
SECTION 2.07. REPLACEMENT SECURITIES. If (a) any mutilated Security is
surrendered to the Trustee or (b) the Company and the Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Security, and
there is delivered to the Company and the Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security has been acquired by a
bona fide purchaser, the Company shall execute and, upon its written request,
the Trustee shall authenticate and deliver, in exchange for any such mutilated
Security or in lieu of any such destroyed, lost or stolen Security, a new
Security of like tenor and Principal Amount, 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, or is about to be purchased or
redeemed by the Company pursuant to Article 3 hereof, the Company in its
discretion may, instead of issuing a new Security, pay, purchase or redeem such
Security, as the case may be.
Upon the issuance of any new Securities under this Section 2.07, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
If, after the delivery of such substitute Security, a bona fide
purchaser of the original Security in lieu of which such substitute Security was
issued presents for payment or registration such original Security, the Company
shall be entitled to recover such substitute Security from the person to whom it
was delivered or any person taking therefrom, except a bona fide purchaser, and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any
-16-
<PAGE> 23
loss, damage, cost or expense incurred by the Company or the Trustee, or any
agent of such Persons, in connection therewith.
Every new Security issued pursuant to this Section 2.07 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 shall be entitled to all benefits of this Indenture equally and
proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 2.07 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.08. OUTSTANDING SECURITIES; DETERMINATIONS OF HOLDERS' ACTION.
Securities outstanding at any time are all the Securities authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation
and those described in this Section 2.08 as not outstanding. A Security does not
cease to be outstanding because the Company or an Affiliate thereof holds the
Security; provided, however, that in determining whether the Holders of the
requisite Principal Amount of Securities have given or concurred in any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Securities owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Subject to the foregoing,
only Securities outstanding at the time of such determination shall be
considered in any such determination (including, without limitation,
determinations pursuant to Articles 6 and 9).
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following a Purchase Date or a
Fundamental Change Redemption Date, or on Stated Maturity, money or securities,
if permitted hereunder, sufficient to pay Securities payable on that date, then
on and after that date such Securities shall cease to be outstanding and
Original Issue Discount and interest, if any, on such Securities shall cease to
accrue; 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.
If a Security is converted in accordance with Article 10, then from and
after such conversion such Security shall cease to be outstanding and Original
Issue Discount and interest, if any, shall cease to accrue on such Security.
SECTION 2.09. TEMPORARY SECURITIES. Pending the preparation of
definitive Securities, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver,
-17-
<PAGE> 24
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as conclusively evidenced
by their execution of such Securities.
If temporary Securities are issued, the Company shall cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 2.03,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like Principal Amount of
definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 2.10. CANCELLATION. All Securities surrendered for payment,
purchase, conversion, redemption or registration of transfer or exchange for the
Securities shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled by
the Trustee. The Company may not issue new Securities to replace Securities it
has paid for or delivered to the Trustee for cancellation or that any Holder has
converted pursuant to Article 10. No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section 2.10,
except as expressly permitted by this Indenture. All canceled Securities held by
the Trustee shall be destroyed by the Trustee and, following such destruction,
the Trustee shall deliver a certificate of destruction to the Company, unless
the Company directs by the Company Order that the Trustee deliver canceled
Securities to the Company.
SECTION 2.11. 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 Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price, Fundamental Change
Redemption Price and interest, if any, in respect thereof, for the purpose of
conversion and for all other purposes whatsoever, whether or not such Security
be overdue, and none of the Company, the Trustee or any agent of the Company or
the Trustee shall be affected by notice to the contrary.
-18-
<PAGE> 25
ARTICLE 3
REDEMPTION AND PURCHASES
SECTION 3.01. RIGHT TO REDEEM; NOTICES TO TRUSTEE. The Company, at its
option, may redeem the Securities in accordance with the provisions of
paragraphs 5 and 7 of the Securities. If the Company elects to redeem Securities
pursuant to paragraph 5 of the Securities, it shall notify the Trustee in
writing of the Redemption Date, the Principal Amount of Securities to be
redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this
Section 3.01 (i) in the case of any redemption of fewer than all of the
Securities, at least 45 days before the Redemption Date and (ii) in the case of
a redemption of all of the Securities, no later than the date that the Company
is required to give notice to the Holders pursuant to Section 3.03, in each case
unless a shorter notice shall be satisfactory to the Trustee.
SECTION 3.02. SELECTION OF SECURITIES TO BE REDEEMED. If less than all
the Securities held in definitive form are to be redeemed pursuant to
Section 3.01, the Trustee shall select the definitive Securities to be redeemed
pro rata or by lot or by a method the Trustee considers fair and appropriate (as
long as such method is not prohibited by the rules of any securities exchange on
which the Securities are then listed). The Trustee shall make the selection at
least 35 days, but not more than 60 days, before the Redemption Date from
outstanding definitive Securities not previously called for redemption. The
Trustee may select for redemption portions of the Principal Amount of Securities
that have denominations larger than $1,000. Securities and portions of them the
Trustee selects shall be in Principal Amounts of $1,000 or an integral multiple
of $1,000. Provisions of this Indenture that apply to definitive Securities
called for redemption also apply to portions of definitive Securities called for
redemption. The Trustee shall notify the Company promptly of the definitive
Securities or portions of definitive Securities to be redeemed.
Any interest in a Security held in global form by and registered in the
name of the Depositary or its nominee to be redeemed in whole or in part will be
redeemed in accordance with the procedures of the Depositary.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed may be treated by
the Trustee as outstanding for the purpose of such selection.
SECTION 3.03. NOTICE OF REDEMPTION. At least 30 days but not more than
60 days before a Redemption Date, the Company shall mail a notice of redemption
by first-class mail, postage prepaid, to each Holder of Securities to be
redeemed.
-19-
<PAGE> 26
The notice shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Rate;
(4) the name and address of the Paying Agent and Conversion Agent;
(5) that Securities called for redemption may be converted at any
time before the close of business on the last Trading Day prior to the
Redemption Date;
(6) that Holders who want to convert Securities must satisfy the
requirements set forth in paragraph 9 of the Securities;
(7) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price;
(8) if fewer than all the outstanding Securities are to be redeemed,
the certificate number and Principal Amounts of the particular Securities to be
redeemed;
(9) that Original Issue Discount on Securities called for redemption
will cease to accrue on and after the Redemption Date; and
(10) the CUSIP number or numbers for the Securities.
The notice if mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. In any case, failure to give such notice by mail or any defect in the
notice to the Holder of any Security designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of any
other Security.
At the Company's request (which shall be at least 15 days before notice
is required to be given to the Holders), the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption
is given pursuant to Section 3.03, Securities called for redemption become due
and payable on the Redemption Date and at the Redemption Price stated in the
notice except for Securities which are converted in accordance with the terms of
this Indenture.
Upon the later of the Redemption Date or the date such Securities are
surrendered to the Paying Agent, such Securities shall be paid at the Redemption
Price stated in the notice.
-20-
<PAGE> 27
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE. Prior to or on the Redemption
Date, the Company shall deposit with the Paying Agent (or if the Company or an
Affiliate of the Company is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the Redemption Price of all Securities to be redeemed on
that date other than Securities or portions of Securities called for redemption
which prior thereto have been delivered by the Company to the Trustee for
cancellation or have been converted into Common Stock, and on or after the
Redemption Date (unless the Company shall default in the payment of the
Securities at the Redemption Price), Original Issue Discount on the Securities
or portion of Securities called for redemption shall cease to accrue and such
Securities shall cease after the close of business on the Business Day
immediately preceding the Redemption Date to be convertible into Common Stock
and, except as provided in Section 8.02, to be entitled to any benefit or
security under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the Redemption Price
thereof and unpaid interest to, but excluding, the Redemption Date. The Paying
Agent shall as promptly as practicable return to the Company any money, with
interest, if any, thereon not required for that purpose because of conversion of
Securities. If such money is then held by the Company in trust and is not
required for such purpose it shall be discharged from such trust.
SECTION 3.06. SECURITIES REDEEMED IN PART. Upon surrender of a Security
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder a new Security in an authorized
denomination equal in Principal Amount to the unredeemed portion of the Security
surrendered.
SECTION 3.07. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In
connection with any redemption of Securities, the Company may arrange for the
purchase and conversion into Common Stock of any Securities called for
redemption by an agreement with one or more investment bankers or other
purchasers to purchase such Securities by paying to the Paying Agent in trust
for the Holders, on or before the close of business on the Redemption Date, an
amount that, together with any amounts deposited with the Paying Agent by the
Company for the redemption of the Securities, is not less than the Redemption
Price to the Redemption Date, of such Securities. Notwithstanding anything to
the contrary contained in this Article 3, the obligation of the Company to pay
the Redemption Price of such Securities shall be deemed to be satisfied and
discharged to the extent such amount is so paid by such purchasers. If such an
agreement is entered into, any Securities not duly surrendered for conversion by
the Holders thereof may, at the option of the Company, be deemed, to the fullest
extent permitted by law, acquired by such purchasers from such Holders and
(notwithstanding anything to the contrary contained in Article 10) surrendered
by such purchasers for conversion, all immediately prior to the close of
business on the Redemption Date, subject to payment of the above amount as
aforesaid. The Paying Agent shall hold and pay to the Holders whose Securities
are selected for redemption any such amount paid to it in the same manner as it
would money deposited with it by the Company for the redemption of Securities.
Without the Paying Agent's prior written consent, no arrangement between the
Company and such purchasers for the purchase and conversion of any Securities
shall increase or otherwise affect any of the powers, duties, responsibilities
or obligations of the Paying Agent as set forth in this Indenture, and the
Company agrees to indemnify the Paying Agent from, and hold it harmless
-21-
<PAGE> 28
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 incurred by the
Paying Agent in the defense of any claim or liability arising out of or in
connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under this Indenture.
SECTION 3.08. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER.
(a) General. Securities shall be purchased by the Company pursuant to
paragraph 6 of the Securities as of June 9, 2001, June 9, 2003, June 9, 2008 and
June 9, 2013 (each, a "Purchase Date"), at the purchase price specified therein
(each, a "Purchase Price") at the option of the Holder thereof, upon:
(1) delivery to the Paying Agent by the Holder of a written
notice of purchase (a "Purchase Notice") at any time from the opening of
business on the date that is 20 Business Days prior to a Purchase Date until the
close of business on the Trading Day immediately preceding such Purchase Date,
stating:
(A) the certificate number of the Security which the
Holder will deliver to be purchased;
(B) the portion of the Principal Amount of the Security
which the Holder will deliver to be purchased, which portion must be $1,000 in
Principal Amount or an integral multiple thereof;
(C) that such Security shall be purchased as of the
Purchase Date pursuant to the terms and conditions specified in paragraph 6 of
the Securities and in this Indenture; and
(D) if the Company elects, pursuant to a Company Notice,
to pay the Purchase Price to be paid as of such Purchase Date, in whole or in
part, in Common Stock or, in the case of the June 9, 2001 Purchase Date, in
whole in Extension Debentures, but such portion of the Purchase Price shall
ultimately be payable to such Holder in Cash because (i) if the Company has
elected to pay in Extension Debentures in the case of the June 9, 2001 Purchase
Date, less than $25,000,000 aggregate stated issue price of Extension Debentures
would otherwise be issued in respect of the aggregate Purchase Price to be paid
as of such Purchase Date, or (ii) any of the conditions to the payment of the
Purchase Price in Common Stock or Extension Debentures are not satisfied prior
to or on the Purchase Date, as set forth in Section 3.08(d) or Section 3.08(e),
as applicable, whether such Holder elects (x) to withdraw such Purchase Notice
as to some or all of the Securities to which such Purchase Notice relates
(stating the Principal Amount and certificate numbers of the Securities as to
which such withdrawal shall relate), or (y) to receive Cash in respect of the
entire Purchase Price for all Securities (or portions thereof) to which such
Purchase Notice relates; and
-22-
<PAGE> 29
(2) delivery of such Security to the Paying Agent prior to, on or
after the Purchase Date (together with all necessary endorsements) at the
offices of the Paying Agent, such delivery being a condition to receipt by the
Holder of the Purchase Price therefor; provided, however, that such Purchase
Price shall be so paid pursuant to this Section 3.08 only if the Security so
delivered to the Paying Agent shall conform in all respects to the description
thereof in the related Purchase Notice.
If a Holder, in such Holder's Purchase Notice (and in any written
notice of withdrawal of a portion of such Holder's Securities previously
submitted for purchase pursuant to a Purchase Notice, the portion that remains
subject to the Purchase Notice), fails to indicate such Holder's choice with
respect to the election set forth in clause (D) of Section 3.08(a)(1), such
Holder shall be deemed to have elected to receive Cash in respect of the entire
Purchase Price for all Securities subject to such Purchase Notice in the
circumstances set forth in such clause (D).
The Company shall purchase from the Holder thereof, pursuant to
this Section 3.08, a portion of a Security if the Principal Amount of such
portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to the purchase of all of a Security also apply to the
purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the
provisions of this Section 3.08 shall be consummated by the delivery of the
consideration to be received by the Holder promptly following the later of the
Purchase Date and the time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder
delivering to the Paying Agent the Purchase Notice contemplated by this Section
3.08(a) shall have the right at any time prior to the close of business on the
Trading Day immediately preceding the Purchase Date to withdraw such Purchase
Notice by delivery of a written notice of withdrawal to the Paying Agent in
accordance with Section 3.10.
The Paying Agent shall promptly notify the Company of the receipt
by it of any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price. The
Company may elect with respect to any Purchase Date to pay the Purchase Price in
respect of the Securities to be purchased pursuant to Section 3.08(a) as of such
Purchase Date in U.S. legal tender ("Cash") or Common Stock, or in any
combination of Cash and Common Stock, or in Extension Debentures in the case of
the June 9, 2001 Purchase Date, subject to the conditions set forth in Sections
3.08(c), (d) and (e), as applicable. The Company shall designate, in the Company
Notice delivered pursuant to Section 3.08(f), whether the Company will purchase
the Securities for Cash or Common Stock, or, if a combination thereof, the
percentages of the Purchase Price of Securities in respect of which it will pay
in Cash and/or Common Stock or, in the case of the June 9, 2001 Purchase Date,
in Extension Debentures; provided that the Company will pay Cash for fractional
interests in shares of Common Stock or Extension Debentures. For purposes of
determining the existence of potential fractional interests, all Securities
subject to purchase by the Company held
-23-
<PAGE> 30
by a Holder shall be considered together (no matter how many separate
certificates are to be presented). Each Holder whose Securities are purchased
pursuant to this Section 3.08 shall receive the same percentage of Cash and/or
Common Stock or, in the case of the June 9, 2001 Purchase Date, Extension
Debentures, in payment of the Purchase Price for such Securities, except (i) as
provided in Section 3.08(d) with regard to the payment of Cash in lieu of
fractional interests in shares of Common Stock, (ii) as provided in Section
3.08(e) with regard to the payment of Cash based on the stated issue price for
all fractional Extension Debentures and (iii) in the event that the Company is
unable to purchase the Securities of a Holder or Holders for Common Stock or
Extension Debentures because any necessary qualifications or registrations of
the Common Stock or Extension Debentures under applicable federal or state
securities laws cannot be obtained, the Company may purchase the Securities of
such Holder or Holders for Cash. The Company may not change its election with
respect to the consideration (or components or percentages of components
thereof) to be paid once the Company has given its Company Notice to Holders
except pursuant to this Section 3.08(b), Section 3.08(d) or, in the case of the
June 9, 2001 Purchase Date, Section 3.08(e).
At least two Business Days before the Company Notice Date (as
defined in Section 3.08(c)), the Company shall deliver an Officers' Certificate
to the Trustee specifying:
(i) the manner of payment selected by the Company,
(ii) the information required by Section 3.08(f),
(iii) if the Company elects to pay the Purchase Price, or a
specified percentage thereof, in Common Stock, that the conditions to such
manner of payment set forth in Section 3.08(d) have been or will be complied
with,
(iv) if, in the case of the June 9, 2001 Purchase Date, the
Company elects to pay the Purchase Price in Extension Debentures, that the
conditions to such manner of payment set forth in Section 3.08(e) have been or
will be complied with, and
(v) whether the Company desires the Trustee to give the
Company Notice required by Section 3.08(f).
(c) Purchase with Cash. At the option of the Company, the Purchase Price
of Securities in respect of which a Purchase Notice pursuant to Section 3.08(a)
has been given, or a specified percentage thereof, may be paid by the Company
with Cash equal to the aggregate Purchase Price, or such specified percentage
thereof, as the case may be, of such Securities. If the Company elects to
purchase Securities with Cash, a Company Notice as provided in Section 3.08(f)
shall be sent to Holders (and to beneficial owners as required by applicable
law) not less than 20 Business Days prior to the Purchase Date (the "Company
Notice Date").
(d) Payment by Issuance of Common Stock. At the option of the Company,
the Purchase Price of Securities in respect of which a Purchase Notice pursuant
to Section 3.08(a) has
-24-
<PAGE> 31
been given, or a specified percentage thereof, may be paid by the Company by the
issuance of a number of shares of Common Stock equal to the quotient obtained by
dividing (i) the amount of Cash to which the Holders would have been entitled
had the Company elected to pay all or such specified percentage, as the case may
be, of the Purchase Price of such Securities in Cash by (ii) the Market Price of
a share of Common Stock, subject to the next succeeding paragraph.
The Company will not issue a fractional share of Common Stock in payment
of the Purchase Price. Instead the Company will pay Cash for the current market
value of the fractional share. The current market value of a fraction of a share
shall be determined by multiplying the Market Price by such fraction and
rounding the product to the nearest whole cent. It is understood that if a
Holder elects to have more than one Security purchased, the number of shares of
Common Stock shall be based on the aggregate amount of Securities to be
purchased.
If the Company elects to purchase the Securities by the issuance of
shares of Common Stock, a Company Notice as provided in Section 3.08(f) shall be
sent to the Holders (and to beneficial owners as required by applicable law) not
later than the Company Notice Date.
The Company's right to exercise its election to purchase the Securities
pursuant to Section 3.08 through the issuance of shares of Common Stock shall be
conditioned upon:
(i) the Company having given a timely Company Notice of
election to purchase all or a specified percentage of the Securities with Common
Stock as provided herein;
(ii) the registration of the shares of Common Stock to be
issued in respect of the payment of the specified percentage of the Purchase
Price under the Securities Act, unless the shares of Common Stock so issued can
be freely resold by the Holder (unless such Holder is the Company or an
Affiliate of the Company) receiving such shares without registration under the
Securities Act;
(iii) any necessary qualification or registration under
applicable state securities laws or the availability of an exemption from such
qualification and registration; and
(iv) the receipt by the Trustee of an Officers' Certificate
and an Opinion of Counsel each stating that (A) the terms of the issuance of the
Common Stock are in conformity with this Indenture and (B) the shares of Common
Stock to be issued by the Company in payment of the specified percentage of the
Purchase Price in respect of Securities have been duly authorized and, when
issued and delivered pursuant to the terms of this Indenture in payment of the
specified percentage of the Purchase Price in respect of Securities, will be
validly issued, fully paid and nonassessable, and, in the case of such Officers'
Certificate, stating that conditions (i), (ii) and (iii) above have been
satisfied and, in the case of such Opinion of Counsel, stating that conditions
(ii) and (iii) above have been satisfied.
Such Officers' Certificate shall also set forth the number of shares of
Common Stock to be issued for each $1,000 Principal Amount of Securities and the
Sale Price of a share of Common
-25-
<PAGE> 32
Stock on each Trading Day during the period during which the Market Price is
calculated and ending on the Purchase Date. The Company may elect to pay the
Purchase Price (or any portion thereof) in Common Stock only if the information
necessary to calculate the Market Price is reported in a daily newspaper of
national circulation. If such conditions are not satisfied with respect to a
Holder or Holders prior to or on the Purchase Date and the Company elected to
purchase the Securities to be purchased as of such Purchase Date pursuant to
this Section 3.08 through the issuance of shares of Common Stock, the Company
shall pay the entire Purchase Price in respect of such Securities of such Holder
or Holders in Cash.
The "Market Price" means the average of the Sale Prices of the Common
Stock for the five Trading Day period ending on the third Business Day
immediately prior to the applicable Purchase Date (if the third Business Day
prior to the applicable Purchase Date is a Trading Day or, if it is not a
Trading Day, then ending on the last Trading Day prior to such third Business
Day), appropriately adjusted to take into account the occurrence, during the
period commencing on the first of such Trading Days during such five Trading Day
period and ending on such Purchase Date, of any event described in Section
10.06, 10.07 or 10.08; subject, however, to the conditions set forth in Sections
10.09 and 10.10. The "Sale Price" of the Common Stock on any date means the
closing per share sale price (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one, in either case, the
average of the average bid and average ask prices) on such date as reported in
the composite transactions for the principal United States securities exchange
on which the Common Stock is traded or, if the Common Stock is not listed on a
United States national or regional stock exchange, as reported by the Nasdaq
National Market.
(e) Payment by Issuance of Extension Debentures. At the option of the
Company with respect to the June 9, 2001 Purchase Date, the Purchase Price of
the Securities in respect of which a Purchase Notice pursuant to Section 3.08(a)
has been given may be paid by the Company by the issuance of Extension
Debentures at an aggregate stated issue price of the Extension Debentures equal
to the aggregate Purchase Price; provided, however, that (i) the Extension
Debentures will be issued only in denominations of $1,000 and integral multiples
of $1,000 and Cash shall be paid in lieu of fractional Extension Debentures,
(ii) if a Holder elects to have more than one Security purchased, the principal
amount of Extension Debentures shall be based on the aggregate amount of
Securities to be purchased from such Holder, and (iii) if as of the Purchase
Date less than $25,000,000 aggregate stated issued price of Extension Debentures
would otherwise be issued in respect of the aggregate Purchase Price to be paid
as of such Purchase Date, the Company shall instead pay such Purchase Price in
Cash. If the Company elects to purchase the Securities by the issuance of
Extension Debentures, the Company Notice, as provided in Section 3.08(f), shall
be sent to the Holders (and to beneficial owners as required by applicable law,
including without limitation, Rule 13e-4) on the Company Notice Date.
The Extension Debentures will be identical to the Securities except that
either (a) a new Conversion Rate (which will be determined by reference to the
premium (expressed as a percentage) to the Market Price of the Common Stock to
be used for purposes of setting the new Conversion Rate as of the Purchase Date
as described in this Section 3.08(e)) or (b) a new yield to maturity (based on
the stated issue price per $1,000 principal amount at maturity of Extension
-26-
<PAGE> 33
Debentures and calculated on a semi-annual bond equivalent basis using a year of
twelve 30-day months) will be established so as to cause the Extension
Debentures deliverable as payment of the Purchase Price to have, in the opinion
of Morgan Stanley & Co. Incorporated (or any successor thereto), an aggregate
initial market value on a fully distributed basis as of the Purchase Date
(assuming the prevailing market and other conditions existing as of the Company
Notice Date) at or as near as possible to the sum of the aggregate Issue Price
and accrued Original Issue Discount to the Purchase Date with respect to the
Securities to be purchased, and the Extension Debentures will have such other
changes from the Securities as are appropriate as a result of the new Conversion
Rate or yield to maturity, as the case may be.
The description of the material terms (the "Material Terms") in the
Company Notice shall include the stated issue price, the new Purchase Prices on
all future Purchase Dates and the new Redemption Prices as of June 9, 2003, and
at each June 9 thereafter through maturity of the Extension Debentures, in each
case, per $1,000 principal amount at maturity of Extension Debentures and, in
the case of a new Conversion Rate, the Conversion Premium and the method for
setting the new Conversion Rate per $1,000 principal amount at maturity of
Extension Debentures based on such Conversion Premium, and, in the case of a new
yield to maturity, the new yield to maturity and new Conversion Rate per $1,000
principal amount at maturity of Extension Debentures and the aggregate principal
amount at maturity of Extension Debentures to be issued per $1,000 principal
amount at maturity of Securities. In the event the Company has elected to
establish a new Conversion Rate, the Conversion Rate per $1,000 principal amount
at maturity of the Extension Debentures will be equal to the stated issue price
divided by the product of (a) one plus the new Conversion Premium, and (b) the
Market Price of the Common Stock as of the June 9, 2001 Purchase Date.
Upon determination of the Material Terms of the Extension Debentures in
accordance with this Indenture (including the new Conversion Rate, if
applicable), the Company will publish such determination in a daily newspaper of
national circulation.
The Company's right to exercise its election to purchase the Securities
pursuant to this Section 3.08 on the June 9, 2001 Purchase Date through the
issuance of Extension Debentures shall be conditioned upon:
(i) the Company's not having given a Company Notice of an
election to pay in Common Stock or Cash and its giving of a timely Company
Notice of election to purchase with Extension Debentures as provided herein;
(ii) the issuance of the Extension Debentures in accordance with
the provisions of this Indenture and the New Indenture, the terms of such New
Indenture to be substantially in the form of this Indenture with such changes
from this Indenture as are contemplated by this Section 3.08(e).
(iii) the qualification of the New Indenture, and of the trustee
thereunder to act as trustee thereunder, under the TIA;
-27-
<PAGE> 34
(iv) the registration of the Extension Debentures to be issued in
respect of payment of the Purchase Price under the Securities Act and the
Exchange Act, in each case if required;
(v) any necessary qualification or registration under applicable
state law or the availability of an exemption from such qualification or
registration; and
(vi) the receipt by the Trustee of an Officers' Certificate and
an Opinion of Counsel each stating that the terms of the Extension Debentures
have been established in conformity with the provisions of this Indenture and
the New Indenture and that the New Indenture has been duly authorized, executed
and delivered by the Company and (assuming due authorization, execution and
delivery of the New Indenture by the trustee thereunder) is a valid and binding
agreement of the Company, and the Extension Debentures have been duly authorized
by the Company and, when executed by the Company and authenticated and delivered
in the manner provided for in the New Indenture (assuming due authorization,
execution and delivery of the New Indenture by the trustee thereunder) will be
valid and binding obligations of the Company, in each case enforceable against
the Company in accordance with their respective terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws relating to or affecting creditors'
rights generally or by general equitable principles, and the Extension
Debentures will be entitled to the benefits of the New Indenture; and, in the
case of such Officers' Certificate, that the conditions set forth in clauses
(i), (ii), (iii), (iv) and (v) above have been satisfied and, in the case of
such Opinion of Counsel, that the conditions set forth in clauses (ii), (iii),
(iv) and (v) above have been satisfied.
(f) Notice of Election. The Company's notices of election to purchase
with Cash or Common Stock, or any combination thereof, or, in the case of the
June 9, 2001 Purchase Date, Extension Debentures, shall be sent to the Holders
(and to beneficial owners as required by applicable law) in the manner provided
in Section 11.02 at the time specified in Section 3.08(c), (d) or (e), as
applicable (each, a "Company Notice"). Such Company Notices shall state the
manner of payment elected and shall contain the following information:
In the event the Company has elected to pay the Purchase Price as of the
June 9, 2001 Purchase Date with Extension Debentures, the Company Notice shall
include a description of each of the Material Terms of the Extension Debentures.
In the event the Company has elected to pay a Purchase Price (or a
specified percentage thereof) with Common Stock, the Company Notice shall:
(1) state that each Holder will receive Common Stock with a Market Price
determined as of a specified date prior to the Purchase Date equal to such
specified percentage of the Purchase Price of the Securities held by such Holder
(except any Cash amount to be paid in lieu of fractional share); and
-28-
<PAGE> 35
(2) set forth the method of calculating the Market Price and state that
because the Market Price of Common Stock will be determined prior to the
Purchase Date, the Holders will bear the market risk with respect to the value
of the Common Stock to be received from the date such Market Price is determined
to the Purchase Date.
In any case, each Company Notice shall include a form of Purchase Notice
to be completed by a Securityholder and shall state:
(i) the Purchase Price and Conversion Rate;
(ii) the name and address of the Paying Agent and the
Conversion Agent;
(iii) that Securities as to which a Purchase Notice has been
given may be converted only if the applicable Purchase Notice has been withdrawn
in accordance with the terms of this Indenture;
(iv) that Securities must be surrendered to the Paying Agent
to collect payment;
(v) that the Purchase Price for any Security as to which a
Purchase Notice has been given and not withdrawn will be paid promptly following
the later of the Purchase Date and the time of surrender of such Security as
described in (iv);
(vi) the procedures the Holder must follow to exercise
rights under Section 3.08 and a brief description of those rights;
(vii) briefly, the conversion rights of the Securities; and
(viii)the procedures for withdrawing a Purchase Notice
(including, without limitation, for a conditional withdrawal pursuant to the
terms of Section 3.08 (a) (1) (D) or Section 3.10).
At the Company's request, the Trustee shall give the Company
Notice in the Company's name and at the Company's expense; provided, however,
that, in all cases, the text of the Company Notice shall be prepared by the
Company.
(g) Covenants of the Company. All shares of Common Stock delivered upon
conversion or purchase of the Securities shall be newly issued shares or
treasury shares, shall be fully paid and nonassessable and shall be free from
preemptive rights and free of any lien or adverse claim.
The Company shall use its best efforts to list or cause to have
quoted all such shares of Common Stock on each United States national securities
exchange or over-the-counter or other domestic market on which the Common Stock
is then listed or quoted.
-29-
<PAGE> 36
(h) Procedure upon Purchase. On the Business Day following the Purchase
Date, the Company shall deposit with the Paying Agent Cash (in respect of a Cash
purchase under Section 3.08(c) or for fractional interests, as applicable), or
shares of Common Stock, or a combination thereof, as applicable, or, in the case
of the June 9, 2001 Purchase Date, Extension Debentures, sufficient to pay the
aggregate Purchase Price in respect of the Securities to be purchased pursuant
to this Section 3.08. As soon as practicable after the Purchase Date, the
Company shall deliver to each Holder entitled to receive Extension Debentures or
Common Stock, through the Paying Agent, a certificate for the number of full
Extension Debentures or shares of Common Stock, as applicable, issuable in
payment of such Purchase Price, along with Cash or a check in lieu of any
fractional interests. Original Issue Discount on the Extension Debentures will
accrue from and including the June 9, 2001 Purchase Date. The Person in whose
name the certificate for Extension Debentures or Common Stock is registered
shall be treated as the stockholder of record on and after the Purchase Date.
Subject to Section 3.08(d), no payment or adjustment will be made for dividends
on the Common Stock the record date for which occurred on or prior to the
Purchase Date. Notwithstanding anything contained herein to the contrary, the
Company shall not have any obligation to deposit or deliver Cash or shares of
Common Stock or Extension Debentures pursuant to this Section 3.08(h) except
with respect to Securities as to which the Holder thereof shall have complied
with all of the requirements of this Section 3.08 (other than with respect to
any Securities which the Company has accepted for payment pursuant to this
Section 3.08 as a result of the Company having waived any noncompliance by such
Holder with the requirements of this Section 3.08).
(i) Taxes. If a Holder is paid in Extension Debentures or Common Stock,
the Company shall pay any documentary, stamp or similar issue or transfer tax
due on such issue of Extension Debentures or shares of Common Stock. However,
the Holder shall pay any such tax which is due because the Holder requests the
Extension Debentures or shares of Common Stock to be issued in a name other than
the Holder's name. The Paying Agent may refuse to deliver the certificates
representing Extension Debentures or the Common Stock being issued in a name
other than the Holder's name until the Paying Agent receives a sum sufficient to
pay any tax which will be due because the Extension Debentures or the shares of
Common Stock, as the case may be, are to be issued in a name other than the
Holder's name. Nothing herein shall preclude any income tax withholding required
by law or regulations.
SECTION 3.09. REDEMPTION AT OPTION OF THE HOLDER UPON A FUNDAMENTAL
CHANGE.
(a) If a Fundamental Change shall occur at any time prior to June 9,
2018, each Holder of Securities shall have the right, at such Holder's option,
to require the Company to redeem any or all of such Holder's Securities on the
date (the "Fundamental Change Redemption Date") that is 45 days after the date
of the Company's notice of such Fundamental Change (or if such date is not a
Business Day, the next succeeding Business Day). The Securities will be
redeemable in integral multiples of $1,000 of Principal Amount. The Company
shall redeem such Securities at a price (the "Fundamental Change Redemption
Price") equal to the Issue Price plus accrued Original Issue Discount to the
Fundamental Change Redemption Date; provided that if the Applicable Price in
connection with the Fundamental Change is less than the Reference Market Price,
the Fundamental
-30-
<PAGE> 37
Change Redemption Price shall be a price equal to the foregoing Fundamental
Change Redemption Price multiplied by the fraction obtained by dividing the
Applicable Price by the Reference Market Price. No Securities may be redeemed at
the option of the Holders as a result of a Fundamental Change if there has
occurred and is continuing an Event of Default (other than a default in the
payment of the Fundamental Change Redemption Price with respect to such
Securities).
(b) The Company, or at its request (which must be received by the
Trustee at least three Business Days prior to the date the Trustee is requested
to give such notice as described below) the Trustee in the name of and at the
expense of the Company, shall mail to all Holders of record of the Securities a
notice (a "Fundamental Change Redemption Notice") of the occurrence of a
Fundamental Change and of the redemption right arising as a result thereof on or
before the tenth day after the occurrence of such Fundamental Change. The
Company shall promptly furnish the Trustee a copy of such notice.
(c) For a Security to be so redeemed at the option of the Holder, the
Paying Agent must receive such Security with the form entitled "Option to Elect
Redemption Upon a Fundamental Change" on the reverse thereof duly completed,
together with such Security duly endorsed for transfer, on or before the 30th
day after the date of such notice (or if such 30th day is not a Business Day,
the immediately preceding Business Day). All questions as to the validity,
eligibility (including time of receipt) and acceptance of any Security for
redemption shall be determined by the Company, whose determination shall be
final and binding.
SECTION 3.10. EFFECT OF PURCHASE NOTICE OR FUNDAMENTAL CHANGE REDEMPTION
NOTICE. Upon receipt by the Company of the Purchase Notice or Fundamental Change
Redemption Notice specified in Section 3.08(a) or Section 3.09(b), as
applicable, the Holder of the Security in respect of which such Purchase Notice
or Fundamental Change Redemption Notice, as the case may be, was given shall
(unless such Purchase Notice or Fundamental Change Redemption Notice is
withdrawn as specified in the following two paragraphs) thereafter be entitled
to receive solely the Purchase Price or Fundamental Change Redemption Price, as
the case may be, with respect to such Security. Such Purchase Price or
Fundamental Change Redemption Price shall be paid to such Holder promptly
following the later of (x) the Purchase Date or the Fundamental Change
Redemption Date, as the case may be, with respect to such Security (provided the
conditions in Section 3.08(a) or Section 3.09(c), as applicable, have been
satisfied) and (y) the time of delivery of such Security to the Paying Agent by
the Holder thereof in the manner required by Section 3.08(a) or Section 3.09(c),
as applicable. Securities in respect of which a Purchase Notice or Fundamental
Change Redemption Notice, as the case may be, has been given by the Holder
thereof may not be converted for shares of Common Stock on or after the date of
the delivery of such Purchase Notice (or Fundamental Change Redemption Notice,
as the case may be), unless such Purchase Notice (or Fundamental Change
Redemption Notice, as the case may be) has first been validly withdrawn as
specified in the following two paragraphs.
A Purchase Notice or Fundamental Change Redemption Notice, as the case
may be, may be withdrawn by means of a written notice of withdrawal delivered to
the office of the Paying Agent at any time prior to the close of business on the
Trading Day immediately preceding the Purchase
-31-
<PAGE> 38
Date or the Fundamental Change Redemption Date, as the case may be, to which it
relates specifying:
(1) the certificate number of the Security in respect of which such
notice of withdrawal is being submitted,
(2) the Principal Amount of the Security with respect to which such
notice of withdrawal is being submitted, and
(3) the Principal Amount, if any, of such Security which remains subject
to the original Purchase Notice or Fundamental Change Redemption Notice, as the
case may be, and which has been or will be delivered for purchase or redemption
by the Company.
A written notice of withdrawal of a Purchase Notice may be in the form
of (i) a conditional withdrawal contained in a Purchase Notice pursuant to the
terms of Section 3.08(a)(1)(D) or (ii) a conditional withdrawal containing the
information set forth in Section 3.08(a)(1)(D) and the preceding paragraph and
contained in a written notice of withdrawal delivered to the Paying Agent as set
forth in the preceding paragraph.
There shall be no purchase of any Securities pursuant to Section 3.08
(other than through the issuance of Common Stock in payment of the Purchase
Price, including Cash in lieu of any fractional shares) or redemption pursuant
to Section 3.09 if there has occurred (prior to, on or after, as the case may
be, the giving, by the Holders of such Securities, of the required Purchase
Notice or Fundamental Change Redemption Notice, as the case may be) and is
continuing an Event of Default (other than a default in the payment of the
Purchase Price or Fundamental Change Redemption Price, as the case may be, with
respect to such Securities).
SECTION 3.11. DEPOSIT OF PURCHASE PRICE OR FUNDAMENTAL CHANGE REDEMPTION
PRICE. On or before the Business Day following a Purchase Date or a Fundamental
Change Redemption Date, as the case may be, the Company shall deposit with the
Trustee or with the Paying Agent (or, if the Company or an Affiliate of the
Company is acting as the Paying Agent, shall segregate and hold in trust as
provided in Section 2.04) an amount of money and/or securities, if permitted
hereunder, sufficient to pay the aggregate Purchase Price or Fundamental Change
Redemption Price, as the case may be, of all the Securities or portions thereof
which are to be purchased as of such Purchase Date or Fundamental Change
Redemption Date, as the case may be.
SECTION 3.12. SECURITIES PURCHASED IN PART. Any Security that is to be
purchased or redeemed only in part shall be surrendered at the office of the
Paying Agent (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 such Holder's attorney duly
authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder in aggregate Principal
-32-
<PAGE> 39
Amount equal to, and in exchange for, the portion of the Principal Amount of the
Security so surrendered which is not purchased or redeemed.
SECTION 3.13. COVENANT TO COMPLY WITH SECURITIES LAWS UPON PURCHASE OF
SECURITIES. In connection with any purchase or redemption of Securities under
Section 3.08 or 3.09 hereof, the Company shall (i) comply with Rule 13e-4 (which
term, as used herein, includes any successor provision thereto) under the
Exchange Act, if applicable, (ii) file the related Schedule 13E-4 (or any
successor schedule, form or report) under the Exchange Act, if applicable, and
(iii) otherwise comply with all Federal and state securities laws so as to
permit the rights and obligations under Section 3.08 and 3.09 to be exercised in
the time and in the manner specified in Section 3.08 and 3.09.
SECTION 3.14. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent
shall return to the Company any cash or shares of Common Stock or Extension
Debentures that remain unclaimed as provided in paragraph 13 of the Securities,
together with interest or dividends, if any, thereon, held by them for the
payment of a Purchase Price or Fundamental Change Redemption Price, as the case
may be; provided, however, that to the extent that the aggregate amount of cash
or shares of Common Stock or Extension Debentures deposited by the Company
pursuant to Section 3.11 exceeds the aggregate Purchase Price or Fundamental
Change Redemption Price, as the case may be, of the Securities or portions
thereof which the Company is obligated to purchase as of the Purchase Date or
Fundamental Change Redemption Date, as the case may be, then promptly after the
Business Day following the Purchase Date or Fundamental Change Redemption Date,
as the case may be, the Trustee and the Paying Agent shall return any such
excess to the Company together with interest or dividends, if any, thereon.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SECURITIES. The Company shall promptly make all
payments in respect of the Securities on the dates and in the manner provided in
the Securities or pursuant to this Indenture. Principal Amount, Issue Price,
accrued Original Issue Discount, accrued Liquidated Damages, if any, Redemption
Price, Purchase Price, Fundamental Change Redemption Price and interest, if any,
shall be considered paid on the applicable date due or, in the case of a
Purchase Price or Fundamental Change Redemption Price, on the Business Day
following the applicable Purchase Date or Fundamental Change Redemption Date, as
the case may be, if on such date the Trustee or the Paying Agent holds, in
accordance with this Indenture, money or securities, if permitted hereunder,
sufficient to pay all such amount then due.
The Company shall pay interest on overdue amounts at the rate set forth
in paragraph 1 of the Securities and it shall pay interest on overdue interest
at the same rate compounded semiannually (to the extent that the payment of such
interest shall be legally enforceable), which
-33-
<PAGE> 40
interest on overdue interest shall accrue from the date such amounts became
overdue and shall be in lieu of, and not in addition to, the continued accrual
of Original Issue Discount.
SECTION 4.02. FINANCIAL INFORMATION; SEC REPORTS. The Company will
deliver to the Trustee (a) as soon as available and in any event within 90 days
after the end of each fiscal year of the Company (i) a consolidated balance
sheet of the Company and its Subsidiaries as of the end of such fiscal year and
the related consolidated statements of operations, stockholders' equity and cash
flows for such fiscal year, all reported on by an independent public accountant
of nationally recognized standing and (ii) a report containing a management's
discussion and analysis of the financial condition and results of operations and
a description of the business and properties of the Company and (b) as soon as
available and in any event within 45 days after the end of each of the first
three quarters of each fiscal year of the Company (i) an unaudited consolidated
financial report for such quarter and (ii) a report containing a management's
discussion and analysis of the financial condition and results of operations of
the Company; provided that the foregoing shall not be required for any fiscal
year or quarter, as the case may be, with respect to which the Company files or
expects to file with the Trustee an annual report or quarterly report, as the
case may be, pursuant to the third paragraph of this Section 4.02.
So long as the Securities or the Common Stock issued upon conversion of
the Securities are Restricted Securities, if the Company is not subject to
either Section 13 or 15(d) of the Exchange Act, the Company shall at the request
of any Holder (or holders of Common Stock issued upon conversion of the
Securities) provide to such Holder (or holders of such Common Stock) and any
prospective purchaser designated by such Holders (or holders of such Common
Stock), as the case may be, such information, if any, required by Rule
144A(d)(4) under the Securities Act.
The Company shall file with the Trustee, within 15 days after it files
such annual and quarterly reports, information, documents and other reports with
the SEC, copies of its annual report and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Company is required to file with the
SEC pursuant to Section 13 or 15(d) of the Exchange Act.
SECTION 4.03. COMPLIANCE CERTIFICATE. The Company shall deliver to the
Trustee, within 120 days after the end of each fiscal year of the Company, an
Officers' Certificate in which one of the two Officers signing such certificate
is either the principal executive officer, principal financial officer or
principal accounting officer of the Company, stating whether or not to the best
knowledge of the signers thereof a Default exists (without regard to any period
of grace or requirement of notice provided hereunder) and, if a Default exists,
specifying all such Defaults and the nature and status thereof of which the
signers may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming aware
of any Default 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.
-34-
<PAGE> 41
Any notice required to be given under this Section 4.03 shall be
delivered to the Trustee at its Corporate Trust Office.
SECTION 4.04. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.
SECTION 4.05. MAINTENANCE OF OFFICE OR AGENCY. 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 for payment, where Securities may be
surrendered for registration of transfer, exchange, purchase, redemption or
conversion and where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served. The office or agency of the
Trustee, care of First Chicago Trust Company of New York, an Affiliate of the
Trustee, located at 14 Wall Street, 8th Floor, New York, New York 10005, shall
be such office or agency for all of the aforesaid purposes unless the Company
shall maintain some other office or agency for such purposes and shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such other office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, for such purposes.
SECTION 4.06. EXISTENCE. Subject to Article 5, the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence and rights (charter and statutory); provided, however, that
the Company shall not be required to preserve any such right if the Company
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 4.07. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or
discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Significant Subsidiary or upon the income,
profits or property of the Company or any Significant Subsidiary, (ii) 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 Significant Subsidiary,
and (iii) 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 (i) and (ii),
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax,
-35-
<PAGE> 42
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.
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. WHEN THE COMPANY MAY MERGE OR TRANSFER ASSETS. The Company
shall not consolidate with or merge with or into any other Person (other than in
a merger or consolidation in which the Company is the surviving Person) or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, unless:
(i) the Person (if other than the Company) formed by such consolidation
or into which the Company is merged or the Person which acquires by conveyance,
transfer or lease the properties and assets of the Company substantially as an
entirety shall be a corporation, limited liability company, partnership or trust
organized and validly existing under the laws of the United States or 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 Amount, Issue
Price, accrued Original Issue Discount, accrued Liquidated Damages, if any,
Redemption Price, Purchase Price, Fundamental Change Redemption Price or
interest, if any, on the Securities, according to their tenor, and the due and
punctual performance of all of the covenants and obligations of the Company
under the Securities and this Indenture, and shall have provided for conversion
rights in accordance with this Indenture;
(ii) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing; and
(iii) the Company shall have 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 5 and that all conditions precedent herein provided for
relating to such transaction have been satisfied.
The successor Person formed by such consolidation or into which the
Company is merged or the successor Person 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 had been named as the Company herein; and thereafter, except in
the case of a lease, the Company shall be discharged from all obligations and
covenants under this Indenture and the Securities.
-36-
<PAGE> 43
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT. An "Event of Default" occurs if:
(1) the Company defaults in the payment of the Principal Amount, Issue
Price, accrued Original Issue Discount, accrued Liquidated Damages, if any,
Redemption Price, Purchase Price or Fundamental Change Redemption Price on any
Security when the same becomes due and payable at its Stated Maturity, upon
redemption, upon declaration, when due for purchase by the Company or otherwise
(provided that in the case of a default in the payment of Liquidated Damages,
such default in payment of Liquidated Damages continues for a period of 30
days);
(2) the Company fails to comply with any of its agreements or covenants
in the Securities or this Indenture (other than those referred to in clause (1)
above) and such failure continues for 60 days after receipt by the Company of a
Notice of Default;
(3) a decree or order by a court having jurisdiction in the premises
shall have been entered adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization of the Company
under any Bankruptcy Law, and such decree or order shall have continued
undischarged and unstayed for a period of 60 consecutive days; or a decree or
order of a court having jurisdiction in the premises of the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the
Company or of its property, or for the winding-up or liquidation of its affairs,
shall have been entered, and such decree or order shall have remained in force
undischarged and unstayed of a period of 60 consecutive days; or
(4) the Company shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking reorganization
under any Bankruptcy Law, or shall consent to the filing of any such petition,
or shall consent to the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of it or of its property or shall make an
assignment for the benefit of creditors, or shall admit in writing its inability
to pay its debts generally as they become due.
"Bankruptcy Law" means Title 11, United States Code, or any similar
Federal or state law for the relief of debtors.
A Default under clause (2) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
Principal Amount of the Securities at the time outstanding notify the Company
and the Trustee, of the Default and the Company does not cure such Default (and
such Default is not waived) within the time specified in clause (2) above after
actual receipt of such notice (a "Notice of Default"). Any such notice must
specify the Default, demand that it be remedied and state that such notice is a
Notice of Default.
-37-
<PAGE> 44
SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event
of Default specified in Section 6.01(3) or (4)) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in aggregate
Principal Amount of the Securities at the time outstanding by notice to the
Company and the Trustee, may declare the Issue Price and accrued Original Issue
Discount to the date of declaration (and Liquidated Damages, if any) on all the
Securities to be immediately due and payable. Upon such a declaration, such
Issue Price and accrued Original Issue Discount shall become and be due and
payable immediately. If an Event of Default specified in Section 6.01(3) or (4)
occurs and is continuing, the Issue Price and accrued Original Issue Discount
(and Liquidated Damages, if any) on all the Securities shall become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. The Holders of a majority in aggregate Principal
Amount of the Securities at the time outstanding, by notice to the Company and
the Trustee (and without notice to any other Holder), may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of the Issue Price and accrued Original Issue Discount
(and Liquidated Damages, if any) that have become due solely as a result of
acceleration and if all amounts due to the Trustee under Section 7.07 have been
paid. No such rescission shall affect any subsequent or other Default or Event
of Default or impair any consequent right.
SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the Issue Price and accrued Original Issue Discount on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if the Trustee does not
possess any of the Securities or does not produce any of the Securities in the
proceeding. A delay or omission by the Trustee or any Holder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of, or acquiescence in, the Event of Default. No
remedy is exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. WAIVER OF PAST DEFAULTS. The Holders of a majority in
aggregate Principal Amount of the Securities at the time outstanding, by notice
to the Company and the Trustee (and without notice to any other Holder), may
waive an existing Default or Event of Default and its consequences except (1) an
Event of Default described in Section 6.01(l), (2) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Holder affected or (3) a Default that constitutes a failure to convert any
Security in accordance with the terms of Article 10. When a Default or Event of
Default is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any consequent right.
SECTION 6.05. CONTROL BY MAJORITY. The Holders of a majority in
aggregate Principal Amount of the Securities at the time outstanding may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with any
law or this Indenture or that the Trustee determines in good faith is unduly
-38-
<PAGE> 45
prejudicial to the rights of other Holders or would involve the Trustee in
personal liability unless the Trustee is offered indemnity satisfactory to it.
SECTION 6.06. LIMITATION ON SUITS. A Holder may not pursue any remedy
with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Company and the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate Principal Amount of the
Securities at the time outstanding make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 60 days after
receipt of the notice, the request and the offer of security or indemnity; and
(5) the Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding do not give the Trustee a direction
inconsistent with the request during such 60 day period.
A Holder may not use this Indenture to prejudice the rights of any other
Holder or to obtain a preference or priority over any other Holder.
SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any
other provision of this Indenture the right of any Holder to receive payment of
the Principal Amount, Issue Price, accrued Original Issue Discount, Redemption
Price, Purchase Price, Fundamental Change Redemption Price or interest, if any,
in respect of the Securities held by such Holder, on or after the respective due
dates expressed in the Securities or any date of redemption and to convert the
Securities in accordance with Article 10, or to bring suit for the enforcement
of any such payment on or after such respective dates or the right to convert,
shall not be impaired or affected adversely without the consent of each such
Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default
described in Section 6.01(1) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount owing with respect to the Securities and the amounts
provided for in Section 7.07.
SECTION 6.09. 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 their creditors, the Trustee (irrespective
of whether the Principal Amount, Issue Price, accrued Original Issue Discount,
-39-
<PAGE> 46
accrued Liquidated Damages, if any, Redemption Price, Purchase Price,
Fundamental Change Redemption Price or interest, if any, in respect of 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 any such amount) shall be entitled and
empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the Principal
Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
Damages, if any, Redemption Price, Purchase Price, Fundamental Change Redemption
Price or interest, if any, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the Trustee
shall consent to the making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder 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 claims of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for amounts due and unpaid on the Securities for the
Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price, Fundamental Change
Redemption Price or interest, if any, as the case may be, ratably, without
preference or priority of any kind, according to such amounts due and payable on
the Securities; and
Third: the balance, if any, to the Company.
The Trustee may fix a proposed record date and payment date for any
payment to Holders pursuant to this Section 6.10 and shall notify the Company in
writing of such proposed record date and payment date. At least 15 days before
such record date, the Company shall (or the Trustee at
-40-
<PAGE> 47
the request of the Company shall) mail to each Holder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS. 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 or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant (other than the Trustee) in the suit of
an undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.11 does not apply
to a suit by the Trustee, any suit by a Holder for the enforcement of the
payment of the Principal Amount, Issue Price, accrued Original Issue Discount,
Redemption Price, Purchase Price, Fundamental Change Redemption Price or
interest, if any, on or after the due date expressed in such Security or to any
suit for the enforcement of the right to convert the security pursuant to
Article 10, or a suit by Holders of more than 10% in aggregate Principal Amount
of the Securities at the time outstanding.
SECTION 6.12. WAIVER OF STAY, EXTENSION OR USURY 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 or extension law or any usury or other law
wherever enacted, now or at any time hereafter in force, which would prohibit or
forgive the Company from paying all or any portion of the Principal Amount,
Issue Price, accrued Original Issue Discount, accrued Liquidated Damages, if
any, Redemption Price, Purchase Price or Fundamental Change Redemption Price in
respect of Securities, or any interest on any such amounts, as contemplated
herein, or 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 laws and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in its exercise as a prudent person would exercise
or use under the circumstances in the conduct of his or her own affairs.
-41-
<PAGE> 48
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others; 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. However, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
This Section 7.01(b) shall be in lieu of Section 315(a) of the TIA and such
Section 315(a) is hereby expressly excluded from this Indenture, as permitted by
the TIA.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) this paragraph (c) does not limit the effect of paragraph (b)
of this Section 7.01;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.05.
Subparagraphs (c)(1),(2) and (3) shall be in lieu of Sections 315(d)(1),
315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and
315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the
TIA.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01.
(e) The Trustee may refuse to perform any duty or exercise any right or
power or extend or risk its own funds or otherwise incur any financial liability
unless it receives indemnity satisfactory to it against any loss, liability or
expense.
(f) Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law.
-42-
<PAGE> 49
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require a
Company Order, an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on a Company Order, Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) Subject to the provisions of Section 7.01(c), the Trustee shall not
be liable for any action it takes or omits to take in good faith which it
believes to be authorized or within its rights or powers.
(e) The Trustee may consult with counsel selected by it and any advice
or Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture, unless the Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, Conversion
Agent or co-registrar may do the same with the like rights. However, the Trustee
must comply with Sections 7.10 and 7.11.
SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Securities; it shall not
be accountable for the Company's use of the proceeds from the Securities; and it
shall not be responsible for any statement in the offering memorandum for the
Securities or in this Indenture or the Securities (other than its certificate of
authentication), the acts of a prior Trustee hereunder, or the determination as
to which beneficial owners are entitled to receive any notices hereunder.
SECTION 7.05. NOTICE OF DEFAULTS. If a Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall give to each Holder notice
of the Default within 90 days after it occurs. Except in the case of a Default
described in Section 6.01(1), the Trustee may withhold the
-43-
<PAGE> 50
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Holders. The
second sentence of this Section 7.05 shall be in lieu of the proviso to Section
315(b) of the TIA and such provision is hereby expressly excluded from this
Indenture, as permitted by the TIA. The Trustee shall not give notice of a
Default pursuant to Section 6.01(2) until at least sixty days have passed since
its occurrence.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each
May 1, beginning with the May 1 following the date of this Indenture, the
Trustee shall mail to each Holder a brief report dated as of such May 1 that
complies with TIA Section 313(a), if required by such Section 313(a). The
Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Holders shall be
filed with the SEC and each securities exchange on which the Securities are
listed. The Company agrees to notify the Trustee whenever the Securities become
listed on any securities exchange and of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY. The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);
(b) 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 expense, advances 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
(c) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense 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 costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay the Principal
Amount, Issue Price, accrued Original Issue Discount, accrued Liquidated
Damages, if any, Redemption Price, Purchase Price, Fundamental Change Redemption
Price or interest, if any, as the case may be, on particular Securities.
The Company's payment obligations pursuant to this Section 7.07 shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.01(3) or (4), the expenses
are intended to constitute expenses of administration under any Bankruptcy Law.
-44-
<PAGE> 51
SECTION 7.08. REPLACEMENT OF TRUSTEE. The Trustee may resign by so
notifying the Company; provided, however, that no such resignation shall be
effective until a successor Trustee has accepted its appointment pursuant to
this Section 7.08. The Holders of a majority in aggregate Principal Amount of
the Securities at the time outstanding may remove the Trustee by so notifying
the Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with, or ceases to be eligible under,
Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint, by
resolution of its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the lien provided for
in Section 7.07.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in aggregate Principal Amount of the Securities at the
time outstanding may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trustee business (including the trust created by this Indenture) or
assets to, another corporation, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall at all
times satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The Trustee
shall have a combined capital and surplus of at least $50,000,000 (or if the
Trustee is a member of a bank holding company system, its bank holding company
shall have a combined capital and surplus of at least $50,000,000) as set forth
in its most recent published annual report of conditions. Nothing herein
contained shall prevent the Trustee from filing with the SEC the application
referred to in the penultimate
-45-
<PAGE> 52
paragraph of TIA Section 310(b). If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 7.10, it shall resign
immediately in the manner and with the effect specified in this Article 7.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.01. DISCHARGE OF LIABILITY ON SECURITIES. When (i) the Company
delivers to the Trustee all outstanding Securities (other than Securities
replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding
Securities have become due and payable and the Company deposits with the Trustee
Cash and/or securities, as permitted by the terms hereof, sufficient to pay at
Stated Maturity the Principal Amount of all outstanding Securities (other than
Securities replaced pursuant to Section 2.07), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Section 7.07, cease to be of further effect. The Trustee shall join
in the execution of a document prepared by the Company acknowledging
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and Opinion of Counsel and at the cost
and expense of the Company.
SECTION 8.02. REPAYMENT TO THE COMPANY. The Trustee and the Paying Agent
shall return to the Company upon written request any money or securities held by
them for the payment of any amount with respect to the Securities that remains
unclaimed for two years; provided, however, that the Trustee or such Paying
Agent, before being required to make any such return, shall, in the event that
the Securities are no longer held in global form, at the expense of the Company
cause to be published once in a newspaper of general circulation in The City of
New York or mail to each such Holder notice that such money or securities
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication or mailing, any unclaimed
money or securities then remaining will be returned to the Company. After return
to the Company, Holders entitled to the money or securities must look to the
Company for payment as general creditors unless an applicable abandoned property
law designates another Person.
-46-
<PAGE> 53
ARTICLE 9
AMENDMENTS
SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee
may amend this Indenture and the Securities without the consent of any Holder:
(1) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions with regard to matters or questions
arising under this Indenture which shall not materially adversely affect the
interests of the Holders of the Securities;
(2) to comply with Article 5 or Section 10.14;
(3) to provide for uncertificated Securities in addition to certificated
Securities so long as such uncertificated Securities are in registered form for
purposes of the Internal Revenue Code of 1986, as amended;
(4) to make any change that does not adversely affect the right of any
Holder; or
(5) to make any change to comply with the TIA, or any amendment thereto,
or to comply with any requirement of the SEC in connection with the
qualification, if any, of the Indenture under the TIA.
SECTION 9.02. WITH CONSENT OF HOLDERS. The Company and the Trustee, with
the written consent of the Holders of at least a majority in aggregate Principal
Amount of the Securities at the time outstanding, may amend this Indenture or
the Securities. However, without the consent of each Holder affected, an
amendment or supplement to this Indenture or the Securities may not:
(1) make any change to the Principal Amount of Securities whose Holders
must consent to an amendment;
(2) make any change to the manner or rate of accrual in connection with
Original Issue Discount or interest, if any, reduce the rate of interest
referred to in paragraph 1 of the Securities or extend the time for payment of
Original Issue Discount or interest, if any, on any Security;
(3) reduce the Principal Amount or the Issue Price of or extend the
Stated Maturity of any Security;
(4) reduce the Redemption Price, Purchase Price or Fundamental Change
Redemption Price of any Security;
-47-
<PAGE> 54
(5) make any Security payable in money or securities other than that
stated in the Security;
(6) make any change in Section 6.04, Section 6.07 or this Section 9.02,
except to increase any such percentage;
(7) make any change that adversely affects the right to convert any
Security; or
(8) make any change that adversely affects the right to require the
Company to purchase the Securities, or the right to require the Company to
redeem the Securities upon a Fundamental Change, in accordance with the terms
thereof and this Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the
Company shall mail to each Holder a notice briefly describing the amendment.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT. Every supplemental
indenture executed pursuant to this Article 9 shall comply with the TIA as then
in effect, if then required to so comply.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS, WAIVERS AND ACTIONS.
Until an amendment, waiver or other action becomes effective, a consent to it or
any other action by a Holder of a Security is a continuing consent by the Holder
and every subsequent Holder of that Security or portion of the Security that
evidences the same obligation as the consenting Holder's Security, even if
notation of the consent, waiver or action is not made on the Security. However,
any such Holder or subsequent Holder may revoke the consent, waiver or action as
to such Holder's Security or portion of the Security if the Trustee receives the
notice of revocation before the date the amendment, waiver or action becomes
effective. After an amendment, waiver or action becomes effective, it shall bind
every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SECURITIES. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article 9 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 Trustee and the Board of
Directors, 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 9.06. TRUSTEE TO SIGN SUPPLEMENTAL INDENTURES. The Trustee shall
sign any supplemental indenture authorized pursuant to this Article 9 if the
amendment does not adversely affect the rights, duties, liabilities or
immunities of the Trustee. If it does, the Trustee may, but
-48-
<PAGE> 55
need not, sign such supplemental indenture. In signing such amendment the
Trustee shall be entitled to receive, and (subject to the provisions of Section
7.01) shall be fully protected in relying upon, an Officers' Certificate and an
Opinion of Counsel stating that such amendment is authorized or permitted by
this Indenture.
SECTION 9.07. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of
any supplemental indenture under this Article 9, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
ARTICLE 10
CONVERSION
SECTION 10.01. CONVERSION PRIVILEGE. A Holder of a Security may convert
such Security for Common Stock at any time during the period stated in paragraph
8 of the Securities. The number of shares of Common Stock issuable upon
conversion of a Security per $1,000 of Principal Amount thereof (the "Conversion
Rate") shall be that set forth in paragraph 8 of the Securities, subject to
adjustment as herein set forth.
A Holder may convert a portion of the Principal Amount of a Security if
the portion is $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to conversion of all of a Security also apply to conversion
of a portion of a Security.
SECTION 10.02. CONVERSION PROCEDURE. To convert a Security a Holder must
satisfy the requirements in paragraph 8 of the Securities. The date on which the
Holder of Securities satisfies all those requirements is the conversion date
(the "Conversion Date"). As soon as practicable after the Conversion Date the
Company shall deliver to the Holder, through the Conversion Agent, a certificate
for the number of full shares of Common Stock issuable upon the conversion and
Cash in lieu of any fractional share determined pursuant to Section 10.03. The
Person in whose name the certificate is registered shall be treated as the
stockholder of record on and after the Conversion Date; provided, however, that
no surrender of a Security on any date when the stock transfer books of the
Company shall be closed shall be effective to constitute the Person or Persons
entitled to receive the shares of Common Stock upon such conversion as the
record holder or holders of such shares of Common Stock on such date, but such
surrender shall be effective to constitute the Person or Persons entitled to
receive such shares of Common Stock as the record holder or holders thereof for
all purposes at the close of business on the next succeeding day on which such
stock transfer books are open; such conversion shall be at the Conversion Rate
in effect on the date that such Security shall have been surrendered for
conversion, as if the stock transfer books of the Company had not been closed.
Upon conversion of a Security, such Person shall no longer be a Holder of such
Security.
-49-
<PAGE> 56
No payment on the Securities or adjustment of the Conversion Rate will
be made for dividends on or other distributions with respect to any Common Stock
except as provided in this Article 10. On conversion of a Security, that portion
of accrued Original Issue Discount attributable to the period from the Issue
Date of the Security to the Conversion Date with respect to the converted
Security shall not be canceled, extinguished or forfeited, but rather shall be
deemed to be paid in full to the Holder thereof through delivery of the Common
Stock (together with the Cash payment, if any, in lieu of fractional shares) in
exchange for the Security being converted pursuant to the provisions hereof.
If a Holder converts more than one Security at the same time, the number
of shares of Common Stock issuable upon the conversion shall be based on the
total Principal Amount of the Securities converted.
Upon surrender of a Security that is converted in part, the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder, a
new Security in an authorized denomination equal in Principal Amount to the
unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal Holiday
in a place where a Conversion Agent is located, the Security may be surrendered
to that Conversion Agent on the next succeeding day that it is not a Legal
Holiday.
SECTION 10.03. FRACTIONAL SHARES. The Company will not issue a
fractional share of Common Stock upon conversion of a Security. Instead the
Company will deliver Cash for the current market value of the fractional share.
The current market value of a fractional share shall be determined to the
nearest 1/10,000th of a share by multiplying the last reported sale price
(determined as set forth in the definition of Current Market Price) on the last
Trading Day prior to the Conversion Date of a full share by the fractional
amount and rounding the product to the nearest whole cent.
SECTION 10.04. TAXES ON CONVERSION. If a Holder converts a Security, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
the issue of shares of Common Stock upon the conversion. However, the Holder
shall pay any such tax which is due because the Holder requests the shares to be
issued in a name other than the Holder's name. The Conversion Agent may refuse
to deliver the certificates representing the Common Stock being issued in a name
other than the Holder's name until the Conversion Agent receives a sum
sufficient to pay any tax which will be due because the shares are to be issued
in a name other than the Holder's name. Nothing herein shall preclude any tax
withholding required by law or regulations.
SECTION 10.05. COMPANY TO PROVIDE STOCK. The Company shall, prior to
issuance of any Securities hereunder, and from time to time as may be necessary,
reserve out of its authorized but unissued Common Stock a sufficient number of
shares of Common Stock to permit the conversion of the Securities.
-50-
<PAGE> 57
All shares of Common Stock delivered upon conversion of the Securities
shall be newly issued shares or treasury shares, shall be duly and validly
issued and fully paid and nonassessable and shall be free from preemptive rights
and free of any lien or adverse claim.
The Company covenants that if any shares of Common Stock to be provided
for the purpose of conversion of Securities hereunder require registration with
or approval of any governmental authority under any federal or state law before
such shares may be validly issued upon conversion, the Company will in good
faith and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be.
The Company further covenants that if at any time the Common Stock shall
be listed on the NYSE or the Nasdaq National Market or any other national
securities exchange or automated quotation system the Company will, if permitted
by the rules of such exchange or automated quotation system, list and keep
listed, so long as the Common Stock shall be so listed on such exchange or
automated quotation system, all shares of Common Stock issuable upon conversion
of the Securities; provided, however, that if the rules of such exchange or
automated quotation system permit the Company to defer the listing of such
Common Stock until the first conversion of the Securities into Common Stock in
accordance with the provisions of this Indenture, the Company covenants to list
such Common Stock issuable upon conversion of the Securities in accordance with
the requirements of such exchange or automated quotation system at such time.
SECTION 10.06. ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. In case the
Company shall (i) pay a dividend, or make a distribution, in shares of its
Common Stock, on its Common Stock, (ii) subdivide its outstanding Common Stock
into a greater number of shares or (iii) combine its outstanding Common Stock
into a smaller number of shares, the Conversion Rate in effect immediately prior
thereto shall be adjusted so that the holder of any Security thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock which such Holder would have owned or have been entitled to receive
after the occurrence of any of the events described above had such Security been
converted immediately prior to the occurrence of such event. If any dividend or
distribution of the type described in clause (i) above is not so paid or made,
the Conversion Rate shall again be adjusted to the Conversion Rate which would
then be in effect if such dividend or distribution had not been declared. An
adjustment made pursuant to this Section 11.06 shall become effective
immediately after the record date in the case of a dividend and shall become
effective immediately after the effective date in the case of a subdivision or
combination.
SECTION 10.07. ADJUSTMENT FOR RIGHTS ISSUE. In case the Company shall
issue rights or warrants to all holders of its Common Stock entitling them (for
a period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Common Stock at a price per share less than the
Current Market Price per share of Common Stock at the record date for the
determination of stockholders entitled to receive such rights or warrants, the
Conversion Rate in effect immediately prior thereto shall be adjusted so that
the same shall equal the Conversion Rate determined by multiplying the
Conversion Rate in effect immediately prior to the date of issuance
-51-
<PAGE> 58
of such rights or warrants by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock offered
to holders of Common Stock for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights or warrants plus the number of shares of Common
Stock which the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price. Such adjustment shall be
made successively whenever any such rights or warrants are issued, and shall
become effective immediately after the opening of business on the day following
the record date for the determination of the stockholders entitled to receive
such rights or warrants. To the extent that shares of Common Stock are not
delivered after the expiration of such rights or warrants, the Conversion Rate
shall be readjusted to the Conversion Rate which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered. If such rights or warrants are not so issued, the Conversion Rate
shall again be adjusted to be the Conversion Rate which would then be in effect
if such record date for the determination of stockholders entitled to receive
such rights or warrants had not been fixed. In determining whether any rights or
warrants entitle the holders to subscribe for or purchase shares of Common Stock
at less than such Current Market Price of the Common Stock, and in determining
the aggregate offering price of such shares of Common Stock, there shall be
taken into account any consideration received by the Company for such rights or
warrants, the value of such consideration, if other than Cash, to be determined
by the Board of Directors.
SECTION 10.08. ADJUSTMENT FOR OTHER DISTRIBUTIONS.
(a) In case the Company shall distribute to all holders of its Common
Stock (excluding any distribution in connection with the liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary) any
shares of any class of capital stock of the Company (other than Common Stock),
of evidences of indebtedness of the Company or of assets (other than cash) or
rights or warrants to subscribe for or purchase any of its securities (excluding
those referred to in Section 10.07 hereof) (any of the foregoing hereinafter in
this Section 10.08(a) called the "Distributed Securities"), then, the Conversion
Rate shall be adjusted so that the same shall equal the Conversion Rate
determined by multiplying the Conversion Rate in effect immediately prior to the
date of such distribution by a fraction of which the numerator shall be the
Current Market Price per share of the Common Stock on the record date mentioned
below and the denominator shall be the Current Market Price per share of the
Common Stock on such record date less the fair market value on such record date
(as determined by the Board of Directors of the Company, whose determination
shall be conclusive, and described in a certificate filed with the Trustee) of
the Distributed Securities so distributed applicable to one share of Common
Stock. Such adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive such distribution.
Notwithstanding the foregoing, in the event that the then fair market value (as
so determined) of the portion of the Distributed Securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price of the Common Stock on the record date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder shall have the
right to receive upon conversion the amount of
-52-
<PAGE> 59
Distributed Securities such Holder would have received had such Holder converted
each Security immediately prior to such record date. In the event that such
distribution is not so paid or made, the Conversion Rate shall again be adjusted
to the Conversion Rate which would then be in effect if such distribution had
not been declared. If the Board of Directors determines the fair market value of
any distribution for purposes of this Section 10.08(a) by reference to the
actual or when issued trading market for any securities, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price of the Common Stock.
Notwithstanding the foregoing provisions of this Section 10.08(a), no
adjustment shall be made thereunder for any distribution of Distributed
Securities if the Company makes proper provision so that each Holder of a
Security who converts such Security (or any portion thereof) after the record
date for such distribution shall be entitled to receive upon such conversion, in
addition to the shares of Common Stock issuable upon such conversion, the amount
and kind of Distributed Securities that such Holder would have been entitled to
receive if such Holder had, immediately prior to such record date, converted
such Security for Common Stock; provided that, with respect to any Distributed
Securities that are convertible, exchangeable or exercisable, the foregoing
provision shall only apply to the extent (and so long as) the Distributed
Securities receivable upon conversion of such Security would be convertible,
exchangeable or exercisable, as applicable, without any loss of rights or
privileges for a period of at least 60 days following conversion of such
Security.
(b) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock Cash (excluding (x) any quarterly cash dividend
on the Common Stock to the extent the aggregate Cash dividend per share of
Common Stock in any fiscal quarter does not exceed the greater of (A) the amount
per share of Common Stock of the next preceding quarterly Cash dividend on the
Common Stock to the extent that such preceding quarterly dividend did not
require any adjustment of the Conversion Rate pursuant to this Section 10.08(b)
(as adjusted to reflect subdivisions or combinations of the Common Stock), and
(B) 3.75% of the average of the last reported sales price of the Common Stock
(determined as provided in the definition of Current Market Price) during the
ten Trading Days immediately prior to the date of declaration of such dividend
and (y) any dividend or distribution in connection with the liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary),
then, in such case, unless the Company elects to reserve such Cash for
distribution to the holders of the Securities upon the conversion of the
Securities so that any such holder converting Securities will receive upon such
conversion in addition to the shares of Common Stock to which such holder is
entitled, the amount of Cash which such holder would have received if such
holder had, immediately prior to the record date for such distribution of Cash,
converted its Securities for Common Stock, the Conversion Rate shall be
increased so that the same shall equal the Conversion Rate determined by
multiplying the Conversion Rate in effect immediately prior to the record date
by a fraction of which the numerator shall be such Current Market Price of the
Common Stock and the denominator shall be the Current Market Price of the Common
Stock on the record date less the amount of Cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock, such
increase to be effective immediately prior to the opening of business on the day
following the record date; provided, however, that in the event that the portion
of the Cash so distributed applicable to one
-53-
<PAGE> 60
share of Common Stock is equal to or greater than the Current Market Price of
the Common Stock on the record date, in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder shall have the right to
receive upon conversion the amount of Cash such Holder would have received had
such Holder converted each Security on the record date. If such dividend or
distribution is not so paid or made, the Conversion Rate shall again be adjusted
to be the Conversion Rate which would then be in effect if such dividend or
distribution had not been declared. If any adjustment is required to be made as
set forth in this Section 10.08(b) as a result of a distribution that is a
quarterly dividend, such adjustment shall be based upon the amount by which such
distribution exceeds the amount of the quarterly cash dividend permitted to be
excluded pursuant hereto. If an adjustment is required to be made as set forth
in this Section 10.08(b) above as a result of a distribution that is not a
quarterly dividend, such adjustment shall be based upon the full amount of the
distribution.
(c) In case a tender or exchange offer made by the Company or any
Subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer shall involve the payment by the
Company or such Subsidiary of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive, and described in a resolution of such Board of Directors at
the last time (the "Expiration Time") tenders or exchanges may be made pursuant
to such tender or exchange offer (as it shall have been amended)) that exceeds
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, the Conversion Rate shall be increased so that the same
shall equal the Conversion Rate determined by multiplying the Conversion Rate in
effect immediately prior to the Expiration Time by a fraction of which the
numerator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to holders of Common Stock
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares of Common Stock validly tendered or exchanged
and not withdrawn as of the Expiration Time (the shares deemed so accepted up to
any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) on the Expiration Time and the Current Market Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, and the denominator
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) on the Expiration Time multiplied by the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such increase to become effective immediately prior to the
opening of business on the day following the Expiration Time. In the event that
the Company is obligated to purchase shares pursuant to any such tender or
exchange offer, but the Company is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the Conversion
Rate shall again be adjusted to be the Conversion Rate which would then be
effect if such tender or exchange offer had not been made.
(d) In case of a tender or exchange offer by a Person other than the
Company or any Subsidiary for an amount which increases the offeror's ownership
of Common Equity from 25% or less to more than 25% of the total shares of Common
Equity outstanding and that is for the Common Stock to the extent that the cash
and value of any other consideration included in the
-54-
<PAGE> 61
payment per share of Common Stock having a fair market value (as determined by
the Board of Directors, whose determination shall be conclusive, and described
in a resolution of the Board of Directors at the last time (the "Tender
Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended)) at the Tender Expiration Time
that exceeds the Current Market Price of the Common Stock on the Trading Day
next succeeding the Tender Expiration Time, and in which, as of the Tender
Expiration Time the Board of Directors is not recommending rejection of the
offer, the Conversion Rate shall be increased so that the same shall equal the
Conversion Rate determined by multiplying the Conversion Rate in effect
immediately prior to the Tender Expiration Time by a fraction of which the
numerator shall be the sum of (x) the fair market value (determined as
aforesaid) of the aggregate consideration payable to holders of Common Stock
based on the acceptance (up to an maximum specified in the terms of the tender
or exchanged offer) of all shares of Common Stock validly tendered or exchanged
and not withdrawn as of the Tender Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Tender Purchased
Shares") and (y) the product of the number of shares of Common Stock outstanding
(less any Tender Purchased Shares) on the Tender Expiration Time and the Current
Market Price of the Common Stock on the Trading Day next succeeding the Tender
Expiration Time and the denominator shall be the number of shares of Common
Stock outstanding (including any tendered or exchanged shares) on the Tender
Expiration Time multiplied by the Current Market Price of the Common Stock on
the Trading Day next succeeding the Tender Expiration Time, such increase to
become effective immediately prior to the opening of business on the day
following the Tender Expiration Time. In the event that such Person is obligated
to purchase shares pursuant to any such tender or exchange offer, but such
Person is permanently prevented by applicable law from effecting any such
purchases or all such purchases are rescinded, the Conversion Rate shall again
be adjusted to be the Conversion Rate which would then be in effect if such
tender or exchange offer had not been made. Notwithstanding the foregoing, the
adjustment described in this Section 10.08(d) shall not be made if, as of the
Tender Expiration Time, the offering documents with respect to such offer
disclose a plan or intention to cause the Company to engage in any transaction
described in Article 5.
SECTION 10.09. WHEN ADJUSTMENT MAY BE DEFERRED. No adjustment in the
Conversion Rate need be made unless the adjustment would require an increase or
decrease of at least 1% in the Conversion Rate. Any adjustments that are made
shall be carried forward and taken into account any subsequent adjustment.
All calculations under this Article 10 shall be made to the nearest cent
or to the nearest 1/10,000th of a share, as the case may be.
SECTION 10.10. WHEN NO ADJUSTMENT REQUIRED. No adjustment need be made
for rights to purchase Common Stock pursuant to a Company plan for reinvestment
of dividends or interest.
No adjustment need be made for a change in the par value or no par value
of the Common Stock.
-55-
<PAGE> 62
To the extent the Securities become convertible into Cash, assets,
property or securities (other than capital stock of the Company), no adjustment
need be made thereafter as to the Cash, assets, property or such securities.
Interest will not accrue on the Cash.
SECTION 10.11. NOTICE OF ADJUSTMENT. Whenever the Conversion Rate is
adjusted, the Company shall promptly mail to Holders a notice of the adjustment.
The Company shall file with the Trustee and the Conversion Agent such notice.
The certificate shall, absent manifest error, be conclusive evidence that the
adjustment is correct. Neither the Trustee nor any Conversion Agent shall be
under any duty or responsibility with respect to any such certificate except to
exhibit the same to any Holder desiring inspection thereof.
SECTION 10.12. VOLUNTARY INCREASE. The Company may make such increases
in the Conversion Rate, in addition to those required by Sections 10.06, 10.07
and 10.08, as the Board of Directors considers to be advisable to avoid or
diminish any income tax to holders of Common Stock or rights to purchase Common
Stock resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. To the extent
permitted by applicable law, the Company may from time to time increase the
Conversion Rate by any amount for any period of time if the period is at least
20 days, the increase is irrevocable during the period and the Board of
Directors shall have made a determination that such increase would be in the
best interests of the Company, which determination shall be conclusive. Whenever
the Conversion Rate is so increased, the Company shall mail to Holders and file
with the Trustee and the Conversion Agent a notice of such increase. The Company
shall mail such notice at least 15 days before the date the increased Conversion
Rate takes effect. The notice shall state the increased Conversion Rate and the
period it will be in effect.
SECTION 10.13. NOTICE OF CERTAIN TRANSACTIONS. If:
(1) the Company makes any distribution or dividend that would require an
adjustment in the Conversion Rate pursuant to Section 10.06, 10.07 or 10.08; or
(2) the Company takes any action that would require a supplemental
indenture pursuant to Section 10.14; or
(3) there is a liquidation, dissolution or winding up of the Company;
then the Company shall mail to Holders and file with the Trustee and the
Conversion Agent a notice stating the proposed record date for a dividend or
distribution or the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. The Company shall file and mail the notice at least
15 days before such date. Failure to file or mail the notice or any defect in it
shall not affect the validity of the transaction.
SECTION 10.14. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. If any of the following events occur, namely (i) any reclassification or
change of outstanding shares of Common
-56-
<PAGE> 63
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision or combination),
(ii) any consolidation, merger or combination of the Company with another
corporation as a result of which holders of Common Stock shall be entitled to
receive stock, securities or other property or assets (including Cash) with
respect to or in exchange for such Common Stock, or (iii) any sale or conveyance
of the properties and assets of the Company as, or substantially as, an entirety
to any other corporation as a result of which holders of Common Stock shall be
entitled to receive stock, securities or other property or assets (including
Cash) with respect to or in exchange for such Common Stock, then the Company or
the successor or purchasing corporation, as the case may be, shall execute with
the Trustee a supplemental indenture, providing that each Security shall be
convertible into the kind and amount of shares of stock and other securities or
property or assets (including Cash) receivable upon such reclassification,
change, consolidation, merger, combination, sale or conveyance by a holder of a
number of shares of Common Stock issuable upon conversion of such Securities
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance. Such supplemental indenture shall provide for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article.
The Company shall cause notice of the execution of such supplemental
indenture to be mailed to each Holder at such Holder's address appearing on the
Security register provided for in Section 2.03 of this Indenture.
The above provisions of this Section shall similarly apply to successive
reclassifications, consolidations, mergers, combinations, and sales.
If this Section 10.14 applies, neither Section 10.06, 10.07 nor 10.08
applies.
SECTION 10.15. COMPANY DETERMINATION FINAL. Any determination that the
Company or the Board of Directors must make pursuant to Section 10.03, 10.06,
10.07, 10.08, 10.09, 10.10, 10.14 or 10.17 is conclusive.
SECTION 10.16. TRUSTEE'S ADJUSTMENT DISCLAIMER. The Trustee has no duty
to determine when an adjustment under this Article 10 should be made, how it
should be made or what it should be. The Trustee has no duty to determine
whether a supplemental indenture under Section 10.14 need be entered into or
whether any provisions of any supplemental indenture are correct. The Trustee
shall not be accountable for and makes no representation as to the validity or
value of any securities or assets issued upon conversion of Securities. The
Trustee shall not be responsible for the Company's failure to comply with this
Article 10, and shall not be deemed to have knowledge of any adjustment unless
and until it shall have received a notice of adjustment pursuant to Section
10.11. Each Conversion Agent shall have the same protection under this Section
10.16 as the Trustee.
SECTION 10.17. SIMULTANEOUS ADJUSTMENTS. In the event that this Article
10 requires adjustments to the Conversion Rate under more than one of Sections
10.06, 10.07, 10.08(a) or 10.08(b), and the record dates for the distributions
giving rise to such adjustments shall occur on
-57-
<PAGE> 64
the same date, then such adjustments shall be made by applying, first, the
provisions of Section 10.08(a), second, the provisions of Section 10.08(b),
third the provisions of Section 10.06 and, fourth, the provisions of Section
10.07.
SECTION 10.18. SUCCESSIVE ADJUSTMENTS. After an adjustment to the
Conversion Rate under this Article 10, any subsequent event requiring an
adjustment under this Article 10 shall cause an adjustment to the Conversion
Rate as so adjusted.
SECTION 10.19. RIGHTS ISSUED IN RESPECT OF COMMON STOCK ISSUED UPON
CONVERSION. Rights or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger Event"):
(i) are deemed to be transferred with such shares of
Common Stock,
(ii) are not exercisable, and
(iii) are also issued in respect of future issuances of
Common Stock,
shall not be deemed distributed for purposes of Section 10.08(a) until the
occurrence of the earliest Trigger Event. In addition, in the event of any
distribution of rights or warrants, or any Trigger Event with respect thereto,
that shall have resulted in an adjustment to the Conversion Rate under Section
10.08(a), (1) in the case of any such rights or warrants which shall all have
been redeemed or repurchased without exercise by any holders thereof, the
Conversion Rate shall be readjusted upon such final redemption or repurchase to
give effect to such distribution or Trigger Event, as the case may be, as though
it were a Cash distribution, equal to the per share redemption or repurchase
price received by a holder of Common Stock with respect to such rights or
warrants (assuming such holder had retained such rights or warrants), made to
all holders of Common Stock as of the date of such redemption or repurchase, and
(2) in the case of any such rights or warrants all of which shall have expired
without exercise by any holder thereof, the Conversion Rate shall be readjusted
as if such issuance had not occurred.
SECTION 10.20. GENERAL CONSIDERATIONS. Whenever successive adjustments to
the Conversion Rate are called for pursuant to this Article 10, such adjustments
shall be made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Article 10 and to avoid unjust or inequitable
results as determined in good faith by the Board of Directors.
-58-
<PAGE> 65
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT. This Indenture is hereby made subject
to, and shall be governed by, the provisions of the TIA required to be part of
and to govern indentures qualified under the TIA; provided, however that this
Section 11.01 shall not require this Indenture or the Trustee to be qualified
under the TIA prior to the time such qualification is in fact required under the
terms of the TIA, nor shall it constitute any admission or acknowledgment by any
party that any such qualification is required prior to the time such
qualification is in fact required under the terms of the TIA. If any provision
hereof limits, qualifies or conflicts with another provision hereof which is
required to be included in an indenture qualified under the TIA, such required
provision shall control.
SECTION 11.02. NOTICES. Any request, demand, authorization, notice, waiver,
consent or communication shall be in writing and delivered in Person or mailed
by first class mail, postage prepaid, addressed as follows or transmitted by
facsimile transmission (confirmed by overnight courier) to the following
facsimile numbers:
if to the Company:
Ingram Micro Inc.
1600 East Saint Andrew Place
Santa Ana, California 92705
Attn: General Counsel
Telephone Number: (714) 566-1000
Facsimile Number: (714) 566-9370
if to the Trustee:
The First National Bank of Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60602
Attn: Diane Swanson
Telephone Number: (312) 407-5483
Facsimile Number: (312) 407-1708
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
-59-
<PAGE> 66
Any notice or communication given to a Holder shall be mailed to the
Holder, by first class mail, postage prepaid, at the Holder's address as it
appears on the registration books of the Registrar and shall be sufficiently
given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not received by the addressee.
If the Company mails a notice or communication to the Holders, it shall
mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or
co-registrar.
SECTION 11.03. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Holders may
communicate pursuant to TIA Section 312(b) with other Holders with respect to
their rights under this Indenture or the Securities. The Company, the Trustee,
the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any
request or application by the Company to the Trustee to take any action under
this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each
Officers' Certificate or Opinion of Counsel with respect to compliance with a
covenant or condition provided for in this Indenture shall include:
(1) a statement that each individual making such Officers' Certificate
or Opinion of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such Officers'
Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such individual, he or she
has made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement that, in the opinion of such individual, such covenant
or condition has been complied with.
-60-
<PAGE> 67
SECTION 11.06. SEPARABILITY CLAUSE. In case any provision in this Indenture
or in the Securities shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 11.07. RULES BY TRUSTEE, PAYING AGENT, CONVERSION AGENT AND
REGISTRAR. The Trustee may make reasonable rules for action by or a meeting of
Holders. The Registrar, Conversion Agent and the Paying Agent may make
reasonable rules for their functions.
SECTION 11.08. GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 11.09. NO RECOURSE AGAINST OTHERS. A 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. The waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 11.10. SUCCESSORS. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 11.11. MULTIPLE ORIGINALS. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
-61-
<PAGE> 68
IN WITNESS WHEREOF, the undersigned, being duly authorized, has executed
this Indenture on behalf of the respective parties hereto as of the date first
written above.
Ingram Micro Inc.
By ____________________________________
Name:
Title:
The First National Bank of Chicago
By ____________________________________
Authorized Signatory
-62-
<PAGE> 69
EXHIBIT A
[FORM OF FACE OF SECURITY]
FOR UNITED STATES FEDERAL INCOME TAX PURPOSES, THIS SECURITY BEARS ORIGINAL
ISSUE DISCOUNT. INFORMATION INCLUDING THE ISSUE PRICE, AMOUNT OF ORIGINAL ISSUE
DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY WILL BE MADE AVAILABLE TO
HOLDERS UPON REQUEST TO THE WORLDWIDE TREASURER OF THE COMPANY AT (714)
566-1000.
[FORM OF LEGEND FOR GLOBAL SECURITY
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO INGRAM MICRO INC.
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.]
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET
FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT); (2) AGREES THAT IT WILL NOT, PRIOR TO EXPIRATION OF
THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER
RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY OR THE COMMON STOCK ISSUABLE
UPON CONVERSION OF SUCH SECURITY EXCEPT (A) TO INGRAM MICRO INC. OR ANY
SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (D)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE
2(D) ABOVE), IT WILL FURNISH TO THE FIRST NATIONAL BANK OF CHICAGO, AS TRUSTEE
(OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO
<PAGE> 70
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND (4) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE SECURITY
EVIDENCED HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE SECURITY EVIDENCED HEREBY PRIOR
TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE FIRST NATIONAL BANK OF CHICAGO, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE). THIS LEGEND WILL BE REMOVED UPON THE TRANSFER OF THE SECURITY
EVIDENCED HEREBY PURSUANT TO CLAUSE 2(C) OR CLAUSE 2(D) ABOVE OR UPON ANY
TRANSFER OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES
ACT (OR ANY SUCCESSOR PROVISION).
A-2
<PAGE> 71
INGRAM MICRO INC.
ZERO COUPON CONVERTIBLE SENIOR DEBENTURE DUE 2018
No.
Issue Date: June 9, 1998 Original Issue Discount: $653.82
Issue Price: $346.18 (for each $1,000 Principal Amount)
(for each $1,000 Principal Amount)
CUSIP: ________
Ingram Micro Inc., a Delaware corporation, promises to pay to or
registered assigns, on June 9, 2018 [the Principal Amount of
Dollars ($ )].(1)
This Security shall not bear interest except as specified on the other
side of this Security. Original Issue Discount will accrue as specified on the
other side of this Security. This Security is convertible as specified on the
other side of this Security.
Additional provisions of this Security are set forth on the other side
of this Security.
IN WITNESS WHEREOF, Ingram Micro Inc. has caused this instrument to be
duly executed.
INGRAM MICRO INC.
By ____________________________________
Title:
Attest:
By ____________________________________
Title:
Dated: ________
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
The First National Bank of Chicago
as Trustee, certifies that this is one of the Securities
referred to in the within-mentioned Indenture.
By ____________________________________
Authorized Signatory
- --------
(1) The global Security will read instead: "The Principal Amount then shown on
Schedule A hereto."
A-3
<PAGE> 72
[FORM OF REVERSE SIDE OF SECURITY]
INGRAM MICRO INC.
ZERO COUPON CONVERTIBLE SENIOR DEBENTURE DUE 2018
1. INTEREST
This Security shall not bear interest, except that if the Principal
Amount hereof or any portion of such Principal Amount is not paid when due
(whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the
date set for payment of the Redemption Price pursuant to paragraph 5 hereof,
upon the date set for payment of a Purchase Price or Fundamental Change
Redemption Price pursuant to paragraph 6 hereof or upon the Stated Maturity of
this Security), then in each such case the overdue amount shall bear interest at
the rate of 5.375% per annum, compounded semiannually (to the extent that the
payment of such interest shall be legally enforceable), which interest shall
accrue from the date such overdue amount was due to the date payment of such
amount, including interest thereon, has been made or duly provided for. All such
interest shall be payable on demand. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
Original Issue Discount.
The Original Issue Discount (the difference between the Issue Price and
the Principal Amount of the Security) in the period during which a Security
remains outstanding, shall accrue at 5.375% per annum, on a semiannual bond
equivalent basis using a 360-day year composed of twelve 30-day months,
commencing on the Issue Date of this Security.
2. METHOD OF PAYMENT
Subject to the terms and conditions of the Indenture, the Company will
make payments in respect of the Securities to the Persons who are registered
Holders of Securities at the close of business on the Business Day preceding the
Redemption Date or Stated Maturity, as the case may be, or at the close of
business on a Purchase Date or Fundamental Change Redemption Date, as the case
may be. Holders must surrender Securities to the Paying Agent to collect such
payments in respect of the Securities. The Company will pay cash amounts in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. However, the Company may make such cash
payments by check payable in such money.
3. PAYING AGENT, CONVERSION AGENT AND REGISTRAR
Initially, The First National Bank of Chicago, a national banking
association organized under the laws of the United States of America (the
"Trustee"), will act as Paying Agent, Conversion Agent and Registrar. The
Company may appoint and change any Paying Agent, Conversion Agent, Registrar or
co-registrar without notice, other than notice to the Trustee. The Company or
any of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Conversion Agent, Registrar or co-registrar.
A-4
<PAGE> 73
4. INDENTURE
The Company issued the Securities under an Indenture (the "Indenture"),
dated as of June 9, 1998, between the Company and the Trustee. Capitalized terms
used herein and not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Holders are
referred to the Indenture for a statement of those terms.
The Securities are general unsecured obligations of the Company limited
to $1,330,000,000 aggregate Principal Amount (subject to Section 2.07 of the
Indenture). The Indenture does not limit other indebtedness of the Company,
secured or unsecured.
5. REDEMPTION AT THE OPTION OF THE COMPANY
No sinking fund is provided for the Securities. The Securities are
redeemable as a whole, or from time to time in part, at any time at the option
of the Company at the Redemption Prices set forth below, provided that the
Securities are not redeemable prior to June 9, 2003.
The table below shows Redemption Prices of a Security per $1,000
Principal Amount on the dates shown below and at Stated Maturity, which prices
reflect accrued Original Issue Discount calculated to each such date. The
Redemption Price of a Security redeemed between such dates would include an
additional amount reflecting the additional Original Issue Discount accrued
since the next preceding date in the table to the actual Redemption Date.
<TABLE>
<CAPTION>
(1) (2) (3)
ACCRUED
ORIGINAL ISSUE
SECURITY DISCOUNT REDEMPTION PRICE
REDEMPTION DATE ISSUE PRICE AT 5.375% (1) + (2)
- ------------------------------- ----------- --------------- ----------------
<S> <C> <C> <C>
June 9, 2003................... $346.18 $105.14 $451.32
June 9, 2004................... 346.18 129.72 475.90
June 9, 2005................... 346.18 155.65 501.83
June 9, 2006................... 346.18 182.98 529.16
June 9, 2007................... 346.18 211.80 557.98
June 9, 2008................... 346.18 242.20 588.38
June 9, 2009................... 346.18 274.25 620.43
June 9, 2010................... 346.18 308.05 654.23
June 9, 2011................... 346.18 343.68 689.86
June 9, 2012................... 346.18 381.26 727.44
June 9, 2013................... 346.18 420.89 767.07
June 9, 2014................... 346.18 462.67 808.85
June 9, 2015................... 346.18 506.73 852.91
June 9, 2016................... 346.18 553.19 899.37
June 9, 2017................... 346.18 602.18 948.36
At maturity.................... 346.18 653.82 1000.00
</TABLE>
A-5
<PAGE> 74
6. PURCHASE BY THE COMPANY AT THE OPTION OF THE HOLDER; REDEMPTION AT THE
OPTION OF THE HOLDER UPON A FUNDAMENTAL CHANGE
(a) Subject to the terms and conditions of the Indenture, the
Company shall become obligated to purchase, at the option of the Holder, the
Securities held by such Holder on the following Purchase Dates and at the
following Purchase Prices per $1,000 Principal Amount, upon delivery of a
Purchase Notice containing the information set forth in the Indenture, from the
opening of business on the date that is 20 Business Days prior to such Purchase
Date until the close of business on the Trading Day immediately preceding such
Purchase Date and upon delivery of the Securities to the Paying Agent by the
Holder as set forth in the Indenture. Such Purchase Prices may be paid, at the
option of the Company, in cash or by the issuance and delivery of shares of
Common Stock of the Company, or in any combination thereof, or, in the case of
the June 9, 2001 Purchase Date, in Extension Debentures.
<TABLE>
<CAPTION>
PURCHASE DATE PURCHASE PRICE
- ------------- --------------
<S> <C>
June 9, 2001........................... $405.89
June 9, 2003........................... 451.32
June 9, 2008........................... 588.38
June 9, 2013........................... 767.07
</TABLE>
Securities in denominations larger than $1,000 of Principal Amount may be
purchased in part, but only in integral multiples of $1,000 of Principal Amount.
(b) At the option of the Holder and subject to the terms and
conditions of the Indenture, the Company shall become obligated to redeem the
Securities held by such Holder 45 days after the date of the Company's notice of
a Fundamental Change occurring on or prior to June 9, 2018 for a Fundamental
Change Redemption Price equal to the Issue Price plus accrued Original Issue
Discount to the Fundamental Change Redemption Date, which Fundamental Change
Redemption Price shall be paid in Cash; provided that if the Applicable Price in
connection with the Fundamental Change is less than the Reference Market Price,
the Fundamental Change Redemption Price shall be a price equal to the foregoing
Fundamental Change Redemption Price multiplied by the fraction obtained by
dividing the Applicable Price by the Reference Market Price. Securities in
denominations larger than $1,000 of Principal Amount may be redeemed in part in
connection with a Fundamental Change, but only in integral multiples of $1,000
of Principal Amount.
(c) Holders have the right to withdraw any Purchase Notice or
Fundamental Change Redemption Notice, as the case may be, by delivering to the
Paying Agent a written notice of withdrawal in accordance with the provisions of
the Indenture.
(d) If Cash (and/or securities if permitted under the Indenture)
sufficient to pay a Purchase Price or Fundamental Change Redemption Price, as
the case may be, of all Securities or portions thereof to be purchased as of the
Purchase Date or the Fundamental Change Redemption Date, as the case may be, is
deposited with the Paying Agent on the Business Day following the Purchase Date
or the Fundamental Change Redemption Date, as the case may be, Original Issue
Discount ceases to accrue on such Securities (or portions thereof) on and after
such date, and the Holder thereof shall
A-6
<PAGE> 75
have no other rights as such (other than the right to receive the Purchase Price
or Fundamental Change Redemption Price, as the case may be, upon surrender of
such Security).
7. NOTICE OF REDEMPTION AT THE OPTION OF THE COMPANY
Notice of redemption at the option of the Company will be mailed at
least 30 days but not more than 60 days before the Redemption Date to each
Holder of Securities to be redeemed at the Holder's registered address. If money
sufficient to pay the Redemption Price of all Securities (or portions thereof)
to be redeemed on the Redemption Date is deposited with the Paying Agent prior
to or on the Redemption Date, on and after such date Original Issue Discount
ceases to accrue on such Securities or portions thereof. Securities in
denominations larger than $1,000 of Principal Amount may be redeemed in part but
only in integral multiples of $1,000 of Principal Amount.
8. CONVERSION
Subject to the next two succeeding sentences, a Holder of a Security may
convert this Security for Common Stock at any time after 90 days following the
latest date of original issuance of the Securities and prior to maturity. If
this Security is called for redemption, the Holder may convert it at any time
before the close of the last Trading Day prior to the Redemption Date. A
Security in respect of which a Holder has delivered a notice of exercise of the
option to require the Company to purchase such Security or to redeem such
Security in the event of a Fundamental Change may be converted only if the
notice of exercise is withdrawn in accordance with the terms of the Indenture.
The initial Conversion Rate is 5.495 shares of Common Stock per $1,000
Principal Amount, subject to adjustment in certain events described in the
Indenture. The Company will deliver Cash or a check in lieu of any fractional
share of Common Stock.
To convert this Security a Holder must (1) complete and manually sign
the conversion notice on the back of this Security (or complete and manually
sign a facsimile of such notice) and deliver such notice to the Conversion
Agent, (2) surrender this Security to the Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by the Conversion
Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if
required.
A Holder may convert a portion of this Security if the Principal Amount
of such portion is $1,000 or an integral multiple of $1,000. No payment or
adjustment will be made for dividends on the Common Stock except as provided in
the Indenture. On conversion of this Security, that portion of accrued Original
Issue Discount attributable to the period from the Issue Date to the Conversion
Date with respect to the converted portion of this Security shall not be
canceled, extinguished or forfeited, but rather shall be deemed to be paid in
full to the Holder thereof through the delivery of the Common Stock (together
with any cash payment in lieu of fractional shares) in exchange for the portion
of this Security being converted pursuant to the terms hereof.
A-7
<PAGE> 76
9. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION
Any Securities called for redemption, unless surrendered for conversion
before the close of business on the last Trading Day prior to the Redemption
Date, may be deemed to be purchased from the Holders of such Securities at an
amount not less than the Redemption Price, by one or more investment bankers or
other purchasers who may agree with the Company to purchase such Securities from
the Holders, to convert them for Common Stock and to make payment for such
Securities to the Trustee in trust for such Holders.
10. REGISTRATION RIGHTS
The Holder of this Security and the Common Stock issuable upon
conversion thereof is entitled to the benefits of a Registration Rights
Agreement (subject to the provisions thereof), dated as of June 9, 1998, between
the Company and the Initial Purchaser.
11. DENOMINATIONS; TRANSFER; EXCHANGE
The Securities are in registered form, without coupons, in denominations
of $1,000 of Principal Amount and integral multiples of $1,000. A Holder may
transfer or convert Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements
and transfer documents and to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar need not transfer or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities in respect of which a Purchase Notice or Fundamental Change
Redemption Notice has been given and not withdrawn (except, in the case of a
Security to be purchased in part, the portion of the Security not to be
purchased) or any Securities for a period of 15 days before a selection of
Securities to be redeemed.
12. PERSONS DEEMED OWNERS
The registered Holder of this Security may be treated as the owner of
this Security for all purposes.
13. UNCLAIMED MONEY OR SECURITIES
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any
amount with respect to the Securities that remains unclaimed for two years;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such return, shall at the expense of the Company cause to be
published once in a newspaper of general circulation in The City of New York or
mail to each Holder notice that such money or securities remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication or mailing, any unclaimed money or securities then
remaining will be returned to the Company. After return to the Company, Holders
entitled to the money or securities must look to the Company for payment as
general creditors unless an applicable abandoned property law designates another
Person.
A-8
<PAGE> 77
14. AMENDMENT; WAIVER
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount of the Securities
at the time outstanding and (ii) certain Defaults and Events of Defaults may be
waived with the written consent of the Holders of a majority in aggregate
Principal Amount of the Securities at the time outstanding. Subject to certain
exceptions set forth in the Indenture, without the consent of any Holder, the
Company and the Trustee may amend the Indenture or the Securities to cure any
ambiguity, defect or inconsistency, or to comply with Article 5 or Section 10.14
of the Indenture, to provide for uncertificated Securities in addition to or in
place of certificated Securities or to make any change that does not adversely
affect the rights of any Holder or to comply with any requirement of the SEC in
connection with the qualification of the Indenture under the TIA.
15. DEFAULTS AND REMEDIES
Under the Indenture, Events of Default include (i) default in payment of
the Principal Amount, Issue Price, accrued Original Issue Discount, accrued
Liquidated Damages, if any, Redemption Price, Purchase Price or Fundamental
Change Redemption Price, as the case may be, in respect of the Securities when
the same becomes due and payable, provided that in the case of any failure to
pay Liquidated Damages, such failure to pay continues for a period of 30 days;
(ii) failure by the Company to comply with other agreements in the Indenture or
the Securities, subject to notice and lapse of time; and (iii) certain events of
bankruptcy or insolvency. If an Event of Default occurs and is continuing, the
Trustee, or the Holders of at least 25% in aggregate Principal Amount of the
Securities at the time outstanding, may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being declared due and payable
immediately upon the occurrence of such Events of Default.
Holders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders notice of any continuing
Default (except a Default in payment of amounts specified in clause (i) above)
if it determines that withholding notice is in their interests.
16. TRUSTEE DEALINGS WITH THE COMPANY
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or its Affiliates and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee.
17. NO RECOURSE AGAINST OTHERS
A 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 the Indenture or for any claim based
A-9
<PAGE> 78
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Holder waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
18. AUTHENTICATION
This Security shall not be valid until an authorized officer of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.
19. ABBREVIATIONS
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TENANT (=tenants by the
entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. GOVERNING LAW
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE
AND THIS SECURITY.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture which has in it the text of this Security in
larger type. Requests may be made to:
Ingram Micro Inc.
1600 East Saint Andrew Place
Santa Ana, California 92705
Attn: General Counsel
A-10
<PAGE> 79
[FORM OF CONVERSION NOTICE]
CONVERSION NOTICE
To: Ingram Micro Inc.
The undersigned registered holder of this Security hereby irrevocably
exercises the option to convert this Security, or portion hereof (which is
$1,000 principal amount or an integral multiple thereof) below designated, for
shares of Common Stock of Ingram Micro Inc. in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Securities representing any unconverted principal
amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this
Security not converted are to be issued in the name of a Person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
Dated:
______________________________
______________________________
Signature (s)
Fill in for registration of shares
if to be delivered, and Securities
if to be issued other than to and in
the name of the registered holder:
______________________________
(Name)
______________________________
(Street Address)
______________________________
(City, state and zip code)
Please print name and address
Principal amount to be
converted (if less than all):
$___,000
______________________________
Social Security or Other
Taxpayer Identification Number
A-11
<PAGE> 80
[FORM OF OPTION TO ELECT REDEMPTION
UPON A FUNDAMENTAL CHANGE]
To: Ingram Micro Inc.
The undersigned registered holder of this Security hereby acknowledges
receipt of a notice from Ingram Micro Inc. (the "Company") as to the occurrence
of a Fundamental Change with respect to the Company and requests and instructs
the Company to redeem this Security, or the portion hereof (which is $1,000
Principal Amount or a multiple thereof) below designated, in accordance with the
terms of the Indenture referred to in this Security.
Dated:___________________
______________________________
______________________________
Signature(s)
Principal amount to be
redeemed (if less than all):
$____________
______________________________
Social Security or Other
Taxpayer Identification Number
A-12
<PAGE> 81
ASSIGNMENT
For value received ___________________ hereby sell(s), assign(s) and transfer(s)
unto __________________ (Please insert social security or other Taxpayer
Identification Number of assignee) the within Security, and hereby irrevocably
constitutes and appoints ________________ attorney to transfer the said Security
on the books of the Company, with full power of substitution in the premises.
In connection with any transfer of the Security during the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) (other than any transfer pursuant to a registration statement that has
been declared effective under the Securities Act) under the Securities Act (or
any successor provision), the undersigned confirms that such Security is being
transferred:
[ ] To Ingram Micro Inc. or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities
Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms that to its
knowledge such Security is not being transferred to an "affiliate" of the
Company as defined in Rule 144 under the Securities Act of 1933, as amended (an
"Affiliate").
[ ] The transferee is an Affiliate of the Company.
Dated:________________________
______________________________
______________________________
Signature(s)
Signature(s) must be
guaranteed by a commercial
bank or trust company or a
member firm of a major stock
exchange if shares of Common
Stock are to be issued, or
Securities to be delivered,
other than to or in the name
of the registered holder.
______________________________
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of the Security in every particular without
alteration or enlargement or any change whatever.
A-13
<PAGE> 82
[FORM OF SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITY
TO REFLECT CHANGES IN PRINCIPAL AMOUNT]
Schedule A
Changes to Principal Amount of Global Security
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
SECURITIES BY WHICH THIS
GLOBAL SECURITY IS TO BE
REDUCED OR INCREASED, AND
REASON FOR REMAINING PRINCIPAL AMOUNT NOTATION
DATE REDUCTION OR INCREASE OF THIS GLOBAL SECURITY MADE BY
<S> <C> <C> <C>
- ------------- ------------------------------ ------------------------------- -------------------------
- ------------- ------------------------------ ------------------------------- -------------------------
- ------------- ------------------------------ ------------------------------- -------------------------
- ------------- ------------------------------ ------------------------------- -------------------------
- ------------- ------------------------------ ------------------------------- -------------------------
- ------------- ------------------------------ ------------------------------- -------------------------
- ------------- ------------------------------ ------------------------------- -------------------------
- ------------- ------------------------------ ------------------------------- -------------------------
</TABLE>
A-14
<PAGE> 1
EXHIBIT 4.03
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of June
9, 1998 by and among Ingram Micro Inc., a Delaware corporation ("the Company"),
and Morgan Stanley & Co. Incorporated (the "Initial Purchaser") pursuant to the
Purchase Agreement, dated as of June 4, 1998 (the "Purchase Agreement"), between
the Company and the Initial Purchaser. In order to induce the Initial Purchaser
to enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution of this Agreement
is a condition to the closing under the Purchase Agreement.
The Company agrees with the Initial Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the beneficial owners (including
the Initial Purchaser) from time to time of the Debentures (as defined herein)
and the beneficial owners from time to time of the Underlying Common Stock (as
defined herein) issued upon conversion of the Debentures (each of the foregoing
a "Holder" and together the "Holders"), as follows:
SECTION 1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following meanings:
Affiliate: With respect to any specified person, an "affiliate," as
defined in Rule 144, of such person.
Amendment Effectiveness Deadline Date: See Section 2(d) hereof.
Applicable Conversion Price: The Applicable Conversion Price as of any
date of determination means the Applicable Principal Amount per $1,000 principal
amount at maturity of Debentures as of such date of determination divided by the
Conversion Rate in effect as of such date of determination or, if no Debentures
are then outstanding, the Conversion Rate that would be in effect were
Debentures then outstanding.
Applicable Principal Amount: Applicable Principal Amount as of any date
of determination, with respect to each $1,000 principal amount at maturity of
Debentures means the sum of the initial issue price of such Debenture ($346.18)
plus accrued original issue discount with respect to such Debenture through such
date of determination or, if no Debentures are then outstanding, such sum
calculated as if such Debentures were then outstanding.
<PAGE> 2
Business Day: Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in The City of New York or Los
Angeles, California are authorized or obligated by law or executive order to
close.
Common Stock: The shares of Class A common stock, par value $0.01 per
share, of the Company, and any other shares of common stock as may constitute
"Common Stock" for purposes of the Indenture, including the Underlying Common
Stock.
Conversion Rate: Conversion Rate shall have the meaning assigned such
term in the Indenture.
Damages Accrual Period: See Section 2(e) hereof.
Damages Payment Date: Each June 9 and December 9 in the case of
Debentures and the Underlying Common Stock.
Debentures: The Zero Coupon Convertible Senior Debentures due 2018 of
the Company to be purchased by the Initial Purchaser pursuant to the Purchase
Agreement, and all references in this Agreement to "Debentures" shall include
the Extension Debentures, if any, issued pursuant to the terms of the New
Indenture.
Deferral Notice: See Section 3(i) hereof.
Deferral Period: See Section 3(i) hereof.
Effectiveness Deadline Date: See Section 2(a) hereof.
Effectiveness Period: The period of two years from the later of (a) the
Issue Date or (b) the last date of original issuance of the Debentures or such
shorter period ending on the date that all Registrable Securities have ceased to
be Registrable Securities.
Event: See Section 2(e) hereof.
Event Date: See Section 2(e) hereof.
Event Termination Date: See Section 2(e) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Extension Debentures: The term Extension Debentures shall have the
meaning set forth in the Indenture.
2
<PAGE> 3
Filing Deadline Date: See Section 2(a) hereof.
Holder: See the second paragraph of this Agreement.
Indenture: The Indenture dated as of the date hereof between the Company
and The First National Bank of Chicago, as trustee, pursuant to which the
Debentures are being issued, and all references in this Agreement to "Indenture"
shall include the New Indenture pursuant to which the Extension Debentures, if
any, would be issued.
Initial Purchaser: Morgan Stanley & Co. Incorporated.
Initial Shelf Registration Statement: See Section 2(a) hereof.
Issue Date: June 9, 1998.
Liquidated Damages Amount: See Section 2(e) hereof.
Losses: See Section 6 hereof.
Material Event: See Section 3(i) hereof.
New Indenture: The term New Indenture shall have the meaning set forth
in the Indenture.
Notice and Questionnaire: A written notice delivered to the Company
containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company dated June 4, 1998 relating to the Debentures.
Notice Holder: On any date, any Holder that has delivered a Notice and
Questionnaire to the Company on or prior to such date.
Prospectus: The prospectus included in any 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 promulgated under the Securities Act), as
amended or supplemented by any amendment or prospectus supplement, including
post-effective amendments, and all materials incorporated by reference or
explicitly deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the first paragraph of this Agreement.
Record Holder: With respect to any Damages Payment Date relating to any
Debenture or Underlying Common Stock as to which any Liquidated Damages Amount
has accrued, the
3
<PAGE> 4
registered holder of such Debenture or Underlying Common Stock, as the case may
be, 15 days prior to the next succeeding Damages Payment Date.
Registrable Securities: The Debentures and the Underlying Common Stock,
until such securities have been converted or exchanged, and, at all times
subsequent to any such conversion or exchange, any securities into or for which
such securities have been converted or exchanged, and any security issued with
respect thereto upon any stock dividend, split or similar event until, in the
case of any such security, (A) the earliest of (i) its effective registration
under the Securities Act and resale in accordance with the Registration
Statement covering it, (ii) expiration of the holding period that would be
applicable thereto under Rule 144(k) were it not held by an Affiliate of the
Company or (iii) its sale to the public pursuant to Rule 144, and (B) as a
result of the event or circumstance described in any of the foregoing clauses
(i) through (iii), the legends with respect to transfer restrictions required
under the Indenture are removed or removable in accordance with the terms of the
Indenture.
Registration Expenses: See Section 5 hereof.
Registration Statement: Any registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.
Restricted Securities: As this term is defined in Rule 144.
Rule 144: Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
Shelf Registration Statement: See Section 2(a) hereof.
Subsequent Shelf Registration Statement: See Section 2(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
4
<PAGE> 5
Trustee: The First National Bank of Chicago (or any successor entity),
the Trustee under the Indenture.
Underlying Common Stock: The Common Stock into which the Debentures are
convertible or issued upon any such conversion.
SECTION 2. Shelf Registration. (a) The Company shall prepare and file or
cause to be prepared and filed with the SEC, as soon as practicable but in any
event by the date (the "Filing Deadline Date") ninety (90) days after the Issue
Date, a Registration Statement for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act (a "Shelf
Registration Statement") registering the resale from time to time by Holders
thereof of all of the Registrable Securities (the "Initial Shelf Registration
Statement"). The Initial Shelf Registration Statement shall be on Form S-3 or
another appropriate form permitting registration of such Registrable Securities
for resale by such Holders in accordance with the methods of distribution
elected by the Holders and set forth in the Initial Shelf Registration
Statement. The Company shall use all reasonable efforts to cause the Initial
Shelf Registration Statement to be declared effective under the Securities Act
as promptly as is practicable but in any event by the date (the "Effectiveness
Deadline Date") that is one hundred and eighty (180) days after the Issue Date,
and to keep the Initial Shelf Registration Statement (or any Subsequent Shelf
Registration Statement) continuously effective under the Securities Act until
the expiration of the Effectiveness Period. At the time the Initial Shelf
Registration Statement is declared effective, each Holder that became a Notice
Holder on or prior to the date 10 Business Days prior to such time of
effectiveness shall be named as a selling securityholder in the Initial Shelf
Registration Statement and the related Prospectus in such a manner as to permit
such Holder to deliver such Prospectus to purchasers of Registrable Securities
in accordance with applicable law. None of the Company's security holders (other
than the Holders of Registrable Securities) shall have the right to include any
of the Company's securities in the Shelf Registration Statement.
(b) If the Initial Shelf Registration Statement or any Subsequent Shelf
Registration Statement ceases to be effective for any reason at any time during
the Effectiveness Period (other than because all Registrable Securities
registered thereunder shall have been resold pursuant thereto or shall have
ceased to be Registrable Securities), the Company shall use all reasonable
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within thirty (30) days of such
cessation of effectiveness amend the Shelf Registration Statement in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional Shelf Registration Statement
covering all of the securities that as of the date of such filing are
Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, the Company shall use all
reasonable efforts to cause the Subsequent Shelf Registration Statement to
become effective as promptly as is practicable after such filing and to keep
such Subsequent Shelf Registration Statement continuously effective until the
end of the Effectiveness Period.
5
<PAGE> 6
(c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or, to the extent to which the Company does
not reasonably object, as reasonably requested by the Initial Purchaser or by
the Trustee on behalf of the registered Holders.
(d) Each Holder of Registrable Securities agrees that if such Holder
wishes to sell Registrable Securities pursuant to a Shelf Registration Statement
and related Prospectus, it will do so only in accordance with this Section 2(d)
and Section 3(i). Each Holder of Registrable Securities wishing to sell
Registrable Securities pursuant to a Shelf Registration Statement and related
Prospectus agrees to deliver a Notice and Questionnaire to the Company at least
three (3) Business Days prior to any intended distribution of Registrable
Securities under the Shelf Registration Statement. From and after the date the
Initial Shelf Registration Statement is declared effective, the Company shall,
as promptly as is practicable after the date a Notice and Questionnaire is
delivered, and in any event within five (5) Business Days after such date, (i)
if required by applicable law, file with the SEC a post-effective amendment to
the Shelf Registration Statement or prepare and, if required by applicable law,
file a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that the Holder delivering such Notice and Questionnaire is named as a
selling securityholder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such Prospectus
to purchasers of the Registrable Securities in accordance with applicable law
and, if the Company shall file a post-effective amendment to the Shelf
Registration Statement, use all reasonable efforts to cause such post-effective
amendment to be declared effective under the Securities Act as promptly as is
practicable, but in any event by the date (the "Amendment Effectiveness Deadline
Date") that is forty-five (45) days after the date such post-effective amendment
is required by this clause to be filed; (ii) provide such Holder copies of any
documents filed pursuant to Section 2(d)(i); and (iii) notify such Holder as
promptly as practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to Section 2(d)(i); provided, that if
such Notice and Questionnaire is delivered during a Deferral Period, the Company
shall so inform the Holder delivering such Notice and Questionnaire and shall
take the actions set forth in clauses (i), (ii) and (iii) above upon expiration
of the Deferral Period in accordance with Section 3(i). Notwithstanding anything
contained herein to the contrary, the Company shall be under no obligation to
name any Holder that is not a Notice Holder as a selling securityholder in any
Registration Statement or related Prospectus; provided, however, that any Holder
that becomes a Notice Holder pursuant to the provisions of this Section 2(d)
(whether or not such Holder was a Notice Holder at the time the Registration
Statement was declared effective) shall be named as a selling securityholder in
the Registration Statement or related Prospectus in accordance with the
requirements of this Section 2(d).
(e) The parties hereto agree that the Holders of Registrable Securities
will suffer damages, and that it would not be feasible to ascertain the extent
of such damages with
6
<PAGE> 7
precision, if (i) the Initial Shelf Registration Statement has not been filed on
or prior to the Filing Deadline Date, (ii) the Initial Shelf Registration
Statement has not been declared effective under the Securities Act on or prior
to the Effectiveness Deadline Date, (iii) the Company has failed to perform its
obligations set forth in Section 2(d) within the time period required therein,
(iv) the aggregate duration of Deferral Periods in any period exceeds the number
of days permitted in respect of such period pursuant to Section 3(i) hereof or
(v) the number of Deferral Periods in any period exceeds the number permitted in
respect of such period pursuant to Section 3(i) (each of the events of a type
described in any of the foregoing clauses (i) through (v) are individually
referred to herein as an "Event," and the Filing Deadline Date in the case of
clause (i), the Effectiveness Deadline Date in the case of clause (ii), the date
by which the Company is required to perform its obligations set forth in Section
2(d) in the case of clause (iii) (including the filing of any post-effective
amendment prior to the Amendment Effectiveness Deadline Date), the date on which
the aggregate duration of Deferral Periods in any period exceeds the number of
days permitted by Section 3(i) hereof in the case of clause (iv), and the date
of the commencement of a Deferral Period that causes the limit on the number of
Deferral Periods in any period under Section 3(i) hereof to be exceeded in the
case of clause (v), being referred to herein as an "Event Date"). Events shall
be deemed to continue until the "Event Termination Date," which shall be the
following dates with respect to the respective types of Events: the date the
Initial Shelf Registration Statement is filed in the case of an Event of the
type described in clause (i), the date the Initial Shelf Registration Statement
is declared effective under the Securities Act in the case of an Event of the
type described in clause (ii), the date the Company performs its obligations set
forth in Section 2(d) in the case of an Event of the type described in clause
(iii) (including, without limitation, the date the relevant post-effective
amendment to the Shelf Registration Statement is declared effective under the
Securities Act), termination of the Deferral Period that caused the limit on the
aggregate duration of Deferral Periods in a period set forth in Section 3(i) to
be exceeded in the case of the commencement of an Event of the type described in
clause (iv), and termination of the Deferral Period the commencement of which
caused the number of Deferral Periods in a period permitted by Section 3(i) to
be exceeded in the case of an Event of the type described in clause (v).
Accordingly, commencing on (and including) any Event Date and ending on
(but excluding) the next date on which there are no Events that have occurred
and are continuing (a "Damages Accrual Period"), the Company agrees to pay, as
liquidated damages and not as a penalty, an amount (the "Liquidated Damages
Amount"), payable on the Damages Payment Dates to Record Holders of Debentures
that are Registrable Securities and of shares of Underlying Common Stock issued
upon conversion of Debentures that are Registrable Securities, as the case may
be, accruing, for each portion of such Damages Accrual Period beginning on and
including a Damages Payment Date (or, in respect of the first time that the
Liquidation Damages Amount is to be paid to Holders on a Damages Payment Date as
a result of the occurrence of any particular Event, from the Event Date) and
ending on but excluding the first to occur of (A) the date of the end of the
Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum
equal to one-quarter of one percent (.25%) for the
7
<PAGE> 8
first 90-day period from the Event Date and thereafter at a rate per annum equal
to one-half of one percent (.5%) of the aggregate Applicable Principal Amount of
such Debentures and the Applicable Conversion Price of such shares of Underlying
Common Stock, as the case may be, in each case determined as of the Business Day
immediately preceding the next Damages Payment Date; provided, that in the case
of a Damages Accrual Period that is in effect solely as a result of an Event of
the type described in clause (iii) of the immediately preceding paragraph, such
Liquidated Damages Amount shall be paid only to the Holders that have delivered
Notice and Questionnaires that caused the Company to incur the obligations set
forth in Section 2(d) the non-performance of which is the basis of such Event;
provided, further, that any Liquidated Damages Amount accrued with respect to
any Debenture or portion thereof called for redemption on a redemption date or
converted into Underlying Common Stock on a conversion date prior to the Damages
Payment Date, shall, in any event, be paid instead to the Holder who submitted
such Debenture or portion thereof for redemption or conversion on the applicable
redemption date or conversion date, as the case may be, on such date (or
promptly following the conversion date, in the case of conversion), with such
Liquidated Damages Amount to be paid by check mailed to the address set forth in
the Notice and Questionnaire delivered by such Holder. Notwithstanding the
foregoing, no Liquidated Damages Amounts shall accrue as to any Registrable
Security from and after the earlier of (x) the date such security is no longer a
Registrable Security and (y) expiration of the Effectiveness Period. The rate of
accrual of the Liquidated Damages Amount with respect to any period shall not
exceed the rate provided for in this paragraph notwithstanding the occurrence of
multiple concurrent Events. Following the cure of all Events requiring the
payment by the Company of Liquidated Damages Amounts to the Holders of
Registrable Securities pursuant to this Section 2(e), the accrual of Liquidated
Damages Amounts will cease (without in any way limiting the effect of any
subsequent Event requiring the payment of Liquidated Damages Amounts by the
Company).
The Trustee shall be entitled, on behalf of Holders of Debentures or
Underlying Common Stock, to seek any available remedy for the enforcement of
this Agreement, including for the payment of any Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude a Notice Holder or Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with respect to this
Agreement.
All of the Company's obligations set forth in this Section 2(e) that are
outstanding with respect to any Registrable Security at the time such security
ceases to be a Registrable Security shall survive until such time as all such
obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).
The parties hereto agree that the liquidated damages provided for in
this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared
8
<PAGE> 9
effective or available for effecting resales of Registrable Securities in
accordance with the provisions hereof.
SECTION 3. Registration Procedures. In connection with the registration
obligations of the Company under Section 2 hereof, the Company shall:
(a) Before filing any Registration Statement or Prospectus or any
amendments or supplements thereto with the SEC, furnish to the Initial Purchaser
copies of all such documents proposed to be filed and use all reasonable efforts
to reflect in each such document when so filed with the SEC such comments as the
Initial Purchaser reasonably shall propose within two (2) Business Days of the
delivery of such copies to the Initial Purchaser.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the applicable period
specified in Section 2(a); cause the related Prospectus to be supplemented by
any required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 (or any similar provisions then in force) under the Securities Act;
and use all reasonable efforts to comply with the provisions of the Securities
Act applicable to it with respect to the disposition of all securities covered
by such Registration Statement during the Effectiveness Period in accordance
with the intended methods of disposition by the sellers thereof set forth in
such Registration Statement as so amended or such Prospectus as so supplemented.
(c) As promptly as practicable give notice to the Notice Holders and the
Initial Purchaser (i) when any Prospectus, Prospectus supplement, Registration
Statement or post-effective amendment to a Registration Statement has been filed
with the SEC and, with respect to a Registration Statement or any post-effective
amendment, when the same has been declared effective, (ii) of any request,
following the effectiveness of the Initial Shelf Registration Statement under
the Securities Act, by the SEC or any other federal or state governmental
authority for amendments or supplements to any Registration Statement or related
Prospectus or for additional information, (iii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of any Registration Statement or the initiation of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, (v) of the
occurrence of (but not the nature of or details concerning) a Material Event and
(vi) of the determination by the Company that a post-effective amendment to a
Registration Statement will be filed with the SEC, which notice may, at the
discretion of the Company (or as required pursuant to Section 3(i)), state that
it constitutes a Deferral Notice, in which event the provisions of Section 3(i)
shall apply.
(d) Use all reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement or the lifting of any
suspension of the qualification (or
9
<PAGE> 10
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction in which they have been qualified for sale, in either case at
the earliest possible moment.
(e) If reasonably requested by the Initial Purchaser or any Notice
Holder, as promptly as practicable incorporate in a Prospectus supplement or
post-effective amendment to a Registration Statement such information as the
Initial Purchaser or such Notice Holder shall, on the basis of an opinion of
nationally-recognized counsel experienced in such matters, determine to be
required to be included therein by applicable law and make any required filings
of such Prospectus supplement or such post-effective amendment; provided, that
the Company shall not be required to take any actions under this Section 3(e)
that are not, in the reasonable opinion of counsel for the Company, required to
be taken in order to comply with applicable law.
(f) As promptly as practicable furnish to each Notice Holder and the
Initial Purchaser, without charge, at least one (1) conformed copy of the
Registration Statement and any amendment thereto, including financial statements
but excluding schedules, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits (unless requested in writing to the
Company by such Notice Holder or the Initial Purchaser, as the case may be).
(g) During the Effectiveness Period, deliver to each Notice Holder in
connection with any sale of Registrable Securities pursuant to a Registration
Statement, without charge, as many copies of the Prospectus or Prospectuses
relating to such Registrable Securities (including each preliminary prospectus)
and any amendment or supplement thereto as such Notice Holder may reasonably
request; and the Company hereby consents (except during such periods that a
Deferral Notice is outstanding and has not been revoked) to the use of such
Prospectus or each amendment or supplement thereto by each Notice Holder in
connection with any offering and sale of the Registrable Securities covered by
such Prospectus or any amendment or supplement thereto in the manner set forth
therein.
(h) Prior to any public offering of the Registrable Securities pursuant
to the Shelf Registration Statement, register or qualify or cooperate with the
Notice Holders in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Notice Holder reasonably requests
in writing (which request may be included in the Notice and Questionnaire);
prior to any public offering of the Registrable Securities pursuant to the Shelf
Registration Statement, keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period in connection
with such Notice Holder's offer and sale of Registrable Securities pursuant to
such registration or qualification (or exemption therefrom) and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of such Registrable Securities in the manner set forth in the
relevant Registration Statement and the related Prospectus; provided, that the
Company will not be required to (i) qualify as a foreign
10
<PAGE> 11
corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Agreement or (ii) take any action
that would subject it to general service of process in suits or to taxation in
any such jurisdiction where it is not then so subject.
(i) Upon (A) the issuance by the SEC of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact (a "Material Event") as a result of which any Registration Statement
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (C) the occurrence or existence
of any pending corporate development that, in the discretion of the Company,
makes it appropriate to suspend the availability of the Shelf Registration
Statement and the related Prospectus, (i) in the case of clause (B) above,
subject to the next sentence, as promptly as practicable prepare and file, if
necessary pursuant to applicable law, a post-effective amendment to such
Registration Statement or a supplement to the related Prospectus or any document
incorporated therein by reference or file any other required document that would
be incorporated by reference into such Registration Statement and Prospectus so
that such Registration Statement does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and such Prospectus
does not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, as thereafter delivered to the purchasers of the Registrable
Securities being sold thereunder, and, in the case of a post-effective amendment
to a Registration Statement, subject to the next sentence, use all reasonable
efforts to cause it to be declared effective as promptly as is practicable, and
(ii) give notice to the Notice Holders that the availability of the Shelf
Registration Statement is suspended (a "Deferral Notice") and, upon receipt of
any Deferral Notice, each Notice Holder agrees not to sell any Registrable
Securities pursuant to the Registration Statement until such Notice Holder's
receipt of copies of the supplemented or amended Prospectus provided for in
clause (i) above, or until it is advised in writing by the Company that the
Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such Prospectus. The Company will use all reasonable efforts to ensure that
the use of the Prospectus may be resumed (x) in the case of clause (A) above, as
promptly as is practicable, (y) in the case of clause (B) above, as soon as, in
the sole judgment of the Company, public disclosure of such Material Event would
not be prejudicial to or contrary to the interests of the Company or, if
necessary to avoid unreasonable burden or expense, as soon as practicable
thereafter and (z) in the case of clause (C) above, as soon as, in the
discretion of the Company, such suspension is no longer appropriate. The Company
shall be entitled to exercise its right
11
<PAGE> 12
under this Section 3(i) to suspend the availability of the Shelf Registration
Statement or any Prospectus, without incurring any obligation to pay liquidated
damages pursuant to Section 2(e), no more than one (1) time in any three (3)
month period or three (3) times in any twelve (12) month period, and any such
period during which the availability of the Registration Statement and any
Prospectus is suspended (the "Deferral Period") shall, without incurring any
obligation to pay liquidated damages pursuant to Section 2(e), not exceed thirty
(30) days; provided, that in the case of a Material Event relating to an
acquisition or a possible acquisition or financing, recapitalization, business
combination or other similar transaction, the Company may, without incurring any
obligation to pay liquidated damages pursuant to Section 2(e), deliver to Notice
Holders a second notice to the effect set forth above, which shall have the
effect of extending the Deferral Period by up to an additional thirty (30) days,
or such shorter period of time as is specified in such second notice; provided,
that the aggregate duration of any Deferral Periods shall not, without incurring
any obligation to pay liquidated damages pursuant to Section 2(e), exceed sixty
(60) days in any three (3) month period or ninety (90) days in any twelve (12)
month period.
(j) If requested in writing in connection with a disposition of
Registrable Securities pursuant to a Registration Statement, make reasonably
available for inspection during normal business hours by a representative for
the Notice Holders of such Registrable Securities and any broker-dealers,
attorneys and accountants retained by such Notice Holders, all relevant
financial and other records, pertinent corporate documents and properties of the
Company and its subsidiaries, and cause the appropriate executive officers,
directors and designated employees of the Company and its subsidiaries to make
reasonably available for inspection during normal business hours all relevant
information reasonably requested by such representative for the Notice Holders
or any such broker-dealers, attorneys or accountants in connection with such
disposition, in each case as is customary for similar "due diligence"
examinations; provided, however, that such persons shall first agree in writing
with the Company that any information that is reasonably and in good faith
designated by the Company in writing as confidential at the time of delivery of
such information shall be kept confidential by such persons and shall be used
solely for the purposes of exercising rights under this Agreement, unless (i)
disclosure of such information is required by court or administrative order or
is necessary to respond to inquiries of regulatory authorities, (ii) disclosure
of such information is required by law (including any disclosure requirements
pursuant to federal securities laws in connection with the filing of any
Registration Statement or the use of any Prospectus referred to in this
Agreement), (iii) such information becomes generally available to the public
other than as a result of a disclosure or failure to safeguard by any such
person or (iv) such information becomes available to any such person from a
source other than the Company and such source obtained such information
legitimately and is not bound by a confidentiality agreement; and provided
further, that the foregoing inspection and information gathering shall, to the
greatest extent possible, be coordinated on behalf of all the Notice Holders and
the other parties entitled thereto by the counsel referred to in Section 5.
12
<PAGE> 13
(k) Use all reasonable efforts to comply with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earning statements (which need not be audited) satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company commencing after the effective date of a Registration Statement, which
statements shall cover said 12-month periods.
(l) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold pursuant to a Registration Statement, which certificates shall not bear any
restrictive legends, and cause such Registrable Securities to be in such
denominations as are permitted by the Indenture and registered in such names as
such Notice Holder may request in writing at least two Business Days prior to
any sale of such Registrable Securities.
(m) Provide a CUSIP number for all Registrable Securities covered by each
Registration Statement not later than the effective date of such Registration
Statement and provide the Trustee and the transfer agent for the Common Stock
with printed certificates for the Registrable Securities that are in a form
eligible for deposit with The Depository Trust Company.
(n) Provide such information as is required for any filings required to
be made with the NASD Regulation, Inc.
(o) Upon (i) the filing of the Initial Registration Statement and (ii)
the effectiveness of the Initial Registration Statement, announce the same, in
each case by release to Reuters Economic Services and Bloomberg Business News.
SECTION 4. Holder's Obligations. Each Holder agrees, by acquisition of
the Registrable Securities, that no Holder of Registrable Securities shall be
entitled to sell any of such Registrable Securities pursuant to a Registration
Statement or to receive a Prospectus relating thereto, unless such Holder has
furnished the Company with a Notice and Questionnaire as required pursuant to
Section 2(d) hereof (including the information required to be included in such
Notice and Questionnaire) and the information set forth in the next sentence.
Each Notice Holder agrees promptly to furnish to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Notice Holder not misleading and any other information
regarding such Notice Holder and the distribution of such Registrable Securities
as the Company may from time to time reasonably request. Any sale of any
Registrable Securities by any Holder shall constitute a representation and
warranty by such Holder that the information relating to such Holder and its
plan of distribution is as set forth in the Prospectus delivered by such Holder
in connection with such disposition, that such Prospectus does not as of the
time of such sale contain any
13
<PAGE> 14
untrue statement of a material fact relating to or provided by such Holder or
its plan of distribution and that such Prospectus does not as of the time of
such sale omit to state any material fact relating to or provided by such Holder
or its plan of distribution necessary to make the statements in such Prospectus,
in the light of the circumstances under which they were made, not misleading.
SECTION 5. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any of the
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the NASD Regulation, Inc. and (y) of compliance with federal and state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of the counsel specified in the next sentence in connection with
Blue Sky qualifications of the Registrable Securities under the laws of such
jurisdictions as the Notice Holders of a majority of the Registrable Securities
being sold pursuant to a Registration Statement may designate), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with The Depository Trust
Company), (iii) duplication expenses relating to copies of any Registration
Statement or Prospectus delivered to any Holders hereunder, (iv) fees and
disbursements of counsel for the Company in connection with the Shelf
Registration Statement, and (v) reasonable fees and disbursements of the Trustee
and its counsel and of the registrar and transfer agent for the Common Stock. In
addition, the Company shall bear or reimburse the Notice Holders for the
reasonable fees and disbursements of one firm of legal counsel for the Holders,
which shall initially be Wilson Sonsini Goodrich & Rosati, Professional
Corporation, but which may, with the written consent of the Initial Purchaser
(which shall not be unreasonably withheld), be another nationally recognized law
firm experienced in securities law matters designated by the Company. In
addition, the Company shall pay the internal expenses of the Company (including,
without limitation, all salaries and expenses of officers and employees
performing legal or accounting duties), the expense of any annual audit, the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange on which similar securities of the Company
are then listed and the fees and expenses of any person, including special
experts, retained by the Company. Notwithstanding the provisions of this Section
5, each seller of Registrable Securities shall pay all registration expenses to
the extent required by applicable law. Notwithstanding the provisions of this
Section 5, (i) each Holder selling Registrable Securities shall pay all selling
expenses (including the fees, discounts, or commissions of any broker-dealer or
underwriter in connection with the offering of Registrable Securities) and (ii)
each Holder selling Registrable Securities shall pay all registration expenses
to the extent the Company is prohibited by Blue Sky laws from paying such
registration expenses for or on behalf of such Holder selling such Registrable
Securities.
14
<PAGE> 15
SECTION 6. Indemnification.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless each Notice Holder and each person, if any, who controls any
Notice Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (collectively, "Losses"), caused by any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to such
Holder furnished to the Company in writing by such Holder expressly for use
therein; provided, further, that the indemnification contained in this paragraph
shall not inure to the benefit of any Holder of Registrable Securities (or to
the benefit of any person controlling such Holder) on account of any such
losses, claims, damages or liabilities caused by any untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus if either (A) (i) such Holder failed to send or deliver a copy of the
Prospectus with or prior to the delivery of written confirmation of the sale by
such Holder of Registrable Securities to the person asserting the claim from
which such losses, claims, damages or liabilities arise and (ii) the Prospectus
would have corrected such untrue statement or omission or alleged untrue
statement or omission, or (B) (x) such untrue statement or omission or alleged
untrue statement or omission is corrected in an amendment or supplement to the
Prospectus and (y) having previously been furnished by or on behalf of the
Company with copies of the Prospectus as so amended or supplemented, such Holder
thereafter fails to deliver such Prospectus as so amended or supplemented, with
or prior to the delivery of written confirmation of the sale of a Registrable
Security to the person asserting the claim from which such losses, claims,
damages or liabilities arise.
(b) Indemnification by Holders of Registrable Securities. Each Holder
agrees severally and not jointly to indemnify and hold harmless the Company, its
directors, its officers and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Holder but only (i) with reference to information relating to such Holder
furnished to the Company in writing by such Holder expressly for use in any
Registration Statement or Prospectus or amendment or supplement thereto and (ii)
to the extent of any losses, claims, damages or liabilities caused by (A) the
failure of such Holder to send or deliver a copy of the Prospectus with or prior
to the delivery of written confirmation of the sale of a Registrable Security by
such Holder to the person asserting the claim from which such losses, claims,
damages or liabilities arise (if the Prospectus would have corrected such untrue
statement or omission or alleged untrue statement
15
<PAGE> 16
or omission) or (B) the failure of such Holder, having previously been furnished
by or on behalf of the Company with copies of the Prospectus as amended or
supplemented to correct an untrue statement or omission or alleged untrue
statement or omission, to deliver such Prospectus as so amended or supplemented,
with or prior to the delivery of written confirmation of the sale of a
Registrable Security to the person asserting the claim from which such losses,
claims, damages or liabilities arise. In no event shall the liability of any
selling Holder of Registrable Securities hereunder be greater in amount than the
dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities pursuant to the Registration Statement giving rise to
such indemnification obligation.
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the "indemnifying
party") in writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the reasonable fees and disbursements
of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all indemnified parties, and that all such fees and expenses shall be reimbursed
as they are incurred. Such separate firm shall be designated in writing by, in
the case of parties indemnified pursuant to Section 6(a), the Holders of a
majority (with Holders of Debentures deemed to be the Holders, for purposes of
determining such majority, of the number of shares of Underlying Common Stock
into which such Debentures are or would be convertible or exchangeable as of the
date on which such designation is made) of the Registrable Securities covered by
the Registration Statement held by Holders that are indemnified parties pursuant
to Section 6(a) and, in the case of parties indemnified pursuant to Section
6(b), the Company. The indemnifying party shall not be liable for any settlement
of any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be
16
<PAGE> 17
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) Contribution. To the extent the indemnification provided for in
Section 6(a) or 6(b) is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying party or parties on the one hand and of
the indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the initial placement pursuant to the Purchase Agreement (before deducting
expenses) of the Registrable Securities to which such losses, claims, damages or
liabilities relate. Benefits received by any Holder shall be deemed to be equal
to the value of receiving Registrable Securities that are registered under the
Securities Act. The relative fault of the Company on the one hand and the
Holders 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 the Company or by the Holders, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this paragraph are several in proportion to the respective number of
Registrable Securities they have sold pursuant to a Registration Statement, and
not joint.
The parties hereto agree that it would not be just or equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending
17
<PAGE> 18
any such action or claim. Notwithstanding this Section 6(d), an indemnifying
party that is a selling Holder of Registrable Securities shall not be required
to contribute any amount in excess of the amount by which the total price at
which the Registrable Securities sold by such indemnifying party and distributed
to the public were offered to the public exceeds the amount of any damages that
such indemnifying party has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The remedies provided for in
this Section 6 are not exclusive and shall not limit any rights or remedies
which may otherwise be available to any indemnified party at law or in equity.
(e) The indemnity and contribution provisions contained in this Section 6
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
any Holder or any person controlling any Holder or by or on behalf of the
Company, its officers or directors or any person controlling the Company and
(iii) the sale of any Registrable Securities by any Holder.
SECTION 7. Information Requirements. The Company covenants that, if at
any time before the end of the Effectiveness Period the Company is not subject
to the reporting requirements of the Exchange Act, it will cooperate with any
Holder of Registrable Securities and take such further reasonable action as any
Holder of Registrable Securities may reasonably request in writing (including,
without limitation, making such reasonable representations as any such Holder
may reasonably request), all to the extent required from time to time to enable
such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144 and
Rule 144A under the Securities Act and customarily taken in connection with
sales pursuant to such exemptions. Upon the written request of any Holder of
Registrable Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such filing requirements, unless
such a statement has been included in the Company's most recent report required
to be filed and filed pursuant to Section 13 or Section 15(d) of Exchange Act.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities (other than the Common
Stock) under any section of the Exchange Act.
SECTION 8. Miscellaneous.
(a) No Conflicting Agreements. The Company is not, as of the date hereof,
a party to, nor shall it, on or after the date of this Agreement, enter into,
any agreement with respect to its securities that conflicts with the rights
granted to the Holders of Registrable Securities in this Agreement. The Company
represents and warrants that the rights granted to the Holders of Registrable
Securities hereunder do not in any way conflict with the rights granted to the
holders of the Company's securities under any other agreements.
18
<PAGE> 19
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, 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 Holders of a
majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Debentures deemed to be the Holders, for
purposes of this Section 8(b), of the number of outstanding shares of Underlying
Common Stock into which such Debentures are or would be convertible or
exchangeable as of the date on which such consent is requested). Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; provided, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence. Each Holder of Registrable
Securities outstanding at the time of any such amendment, modification,
supplement, waiver or consent or thereafter shall be bound by any such
amendment, modification, supplement, waiver or consent effected pursuant to this
Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:
(w) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in a Notice and
Questionnaire or any amendment thereto;
(x) if to the Company, to:
Ingram Micro Inc.
1600 East Saint Andrew Place
Santa Ana, California 92705
Attention: General Counsel
Telecopy No.: (714) 566-9370
and
19
<PAGE> 20
(y) if to the Initial Purchaser, to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York
Attention: Equity Capital Markets
Telecopy No.: (212) 761-0356
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) Approval of Holders. Whenever the consent or approval of Holders of a
specified percentage of Registrable Securities is required hereunder,
Registrable Securities held by the Company or its affiliates (as such term is
defined in Rule 405 under the Securities Act) (other than the Initial Purchaser
or subsequent Holders of Registrable Securities if such subsequent Holders are
deemed to be such affiliates solely by reason of their holdings of such
Registrable Securities) shall not be counted in determining whether such consent
or approval was given by the Holders of such required percentage.
(e) Successors and Assigns. Any person who purchases any Registrable
Securities from the Initial Purchaser shall be deemed, for purposes of this
Agreement, to be an assignee of the Initial Purchaser. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties and shall inure to the benefit of and be binding upon each Holder
of any Registrable Securities.
(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 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 REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated thereby, and the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction, it
being intended
20
<PAGE> 21
that all of the rights and privileges of the parties shall be enforceable to the
fullest extent permitted by law.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties with respect to such registration rights. No
party hereto shall have any rights, duties or obligations other than those
specifically set forth in this Agreement. Without limiting the generality of the
foregoing, the Company shall have no obligation to participate in "road show"
or, except as specifically provided in this Agreement, "due diligence"
activities in connection with any underwritten public offering of Registrable
Securities, and the Company shall have no obligation to enter into underwriting
or indemnification agreements with respect to, or deliver opinions, comfort
letters or closing certificates in connection with, any such underwritten public
offering.
(k) Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Sections 4, 5 or 6 hereof and the
obligations to make payments of and provide for liquidated damages under Section
2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
their terms.
21
<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
INGRAM MICRO INC.
By: ___________________________________
Name:
Title:
Accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
(for the benefit of itself and for the benefit of the Holders)
By: MORGAN STANLEY & CO. INCORPORATED
By: __________________________________
Name:
Title:
22
<PAGE> 1
EXHIBIT 5.01
Davis Polk & Wardwell
450 Lexington Avenue
New York, N.Y. 10017
212-450-4000
FAX: 212-450-4800
July 10, 1998
Ingram Micro Inc.
1600 E. St. Andrew Place
Santa Ana, CA 92705
Ladies and Gentlemen:
Re INGRAM MICRO INC. REGISTRATION STATEMENT ON FORM S-3 -- ZERO
COUPON CONVERTIBLE SENIOR DEBENTURES DUE 2018
We have acted as counsel to Ingram Micro Inc. (the "Company") in
connection with the Company's Registration Statement on Form S-3 (the
"Registration Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, for the registration of (i)
$1,330,000,000 principal amount at maturity of Zero Coupon Convertible Senior
Debentures due 2018 (the "Debentures") and (ii) a presently indeterminate number
of shares (the "Shares") of Class A Common Stock, par value $0.01 per share, of
the Company issuable upon conversion of the Debentures.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments as we have deemed necessary for the
purposes of rendering this opinion.
We are of the opinion that the Debentures have been duly authorized by
the Company and, assuming execution and authentication in accordance with the
terms of the Indenture (the "Indenture") referred to in the prospectus contained
in the Registration Statement and delivery and payment therefor in accordance
with the Purchase Agreement dated June 4, 1998, constitute valid and binding
obligations of the Company, enforceable in accordance with their terms, subject
to applicable bankruptcy, insolvency or similar laws affecting creditors' rights
<PAGE> 2
Ingram Micro Inc. 2 July 10, 1998
generally and general principles of equity, and are entitled to the benefits of
the Indenture.
On the basis of the foregoing and assuming the due execution and
delivery of certificates representing the Shares, we are of opinion that the
Shares have been duly authorized and, when issued and delivered upon conversion
of the Debentures in accordance with the terms of the Debentures and the
Indenture, will be validly issued, fully paid and non-assessable.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to our name under the
caption "Legal Matters" in the prospectus contained in the Registration
Statement.
Very truly yours,
/s/ Davis Polk & Wardwell
<PAGE> 1
EXHIBIT 12.01
Ingram Micro Inc.
Computation of Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Proforma
----------------------
Thirteen
Thirteen Weeks Ended Weeks
Fiscal Year -------------------- Ended
----------------------------------------------- March 29, April 4, Fiscal Year April 4,
1993 1994 1995 1996 1997 1997 1998 1997 1998
------- ------- ------- ------- ------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pre-tax income from
continuing operations... 82,855 100,705 134,616 196,757 326,489 69,045 94,037 326,489 94,037
Minority interest in the
income of subsidiary
with fixed charges...... 840 (2,243) (2,834) 1,189 1,386 215 27 1,386 27
------- ------- ------- ------- ------- ------ ------ ------- -------
83,695 98,462 131,782 197,946 327,875 69,260 94,064 327,875 94,064
------- ------- ------- ------- ------- ------ ------ ------- -------
Fixed Charges:
Interest expense and
amortization of debt
discount/premium
and costs............... 21,092 32,933 46,057 49,935 37,940 7,308 19,272 37,437 18,844
Portion of rental expense
representative of
interest factor......... 3,980 5,525 9,456 11,595 14,107 3,527 2,679 14,107 2,679
------- ------- ------- ------- ------- ------ ------ ------- -------
Total fixed charges.. 25,072 38,458 55,513 61,530 52,047 10,835 21,951 51,544 21,523
------- ------- ------- ------- ------- ------ ------ ------- -------
Earnings before income
taxes, minority interest
and fixed charges....... 108,767 136,920 187,295 259,476 379,922 80,095 116,015 379,419 115,587
======= ======= ======= ======= ======= ====== ======= ======= =======
Ratio of earnings to
fixed charges........... 4.3x 3.6x 3.4x 4.2x 7.3x 7.4x 5.3x 7.4x 5.4x
======= ======= ======= ======= ======= ====== ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23.01
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 17, 1998, which appears on page 25 of the 1997 Annual Report to
Shareowners of Ingram Micro Inc., which is incorporated by reference in Ingram
Micro Inc.'s Annual Report on Form 10-K for the year ended January 3, 1998. We
also consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears in such Annual Report on Form 10-K. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PricewaterhouseCoopers LLP
Costa Mesa, California
July 6, 1998
<PAGE> 1
EXHIBIT 25.01
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
--------------------
STATEMENT OF ELIGIBILITY
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)
--------------------
The First National Bank of Chicago
(Exact Name of Trustee as Specified in its Charter)
A National Banking Association 36-0899825
(I.R.S. Employer
Identification Number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of Principal Executive Offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, Address and Telephone Number of Agent for Service)
--------------------
Ingram Micro Inc.
(Exact Name of Obligors as Specified in their Trust Agreements)
Delaware 62-1644402
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
1600 E. St. Andrew Place
Santa Ana, California 92705
(Address of Principal Executive Offices) (Zip Code)
Zero Coupon Convertible Senior Debentures due 2018
(Title of Indenture Securities)
<PAGE> 2
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 Currency, Washington, D.C.; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System, Washington D.C.
(b) Whether it is Authorized to Exercise Corporate Trust Powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with the Obligor. If the Obligor is an Affiliate of the
Trustee, Describe Each Such Affiliation.
No such affiliation exists with the trustee.
Item 16. List of Exhibits. List Below All Exhibits Filed as a Part of This
Statement of Eligibility.
1. A copy of the articles of association of the trustee now in effect.*
2. A copy of the certificates of authority of the trustee to commence
business.*
3. A copy of the authorization of the trustee to exercise corporate
trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of the Act.
2
<PAGE> 3
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.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 6th day of July,
1998.
The First National Bank of Chicago,
Trustee
By: /s/ SANDRA L. CARUBA
-------------------------------
Sandra L. Caruba
Vice President
- ------------------------
* Exhibit 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 16 of the Form T-1 of the First National Bank of
Chicago, filed as Exhibit 25 to the Registration Statement on Form S-3 of
U S WEST Capital Funding, Inc., filed with the Securities and Exchange
Commission on May 6, 1998 (Registration No. 333-51907-01).
3
<PAGE> 4
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION 321(b) OF THE ACT
July 6, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
In connection with the qualification of an indenture of Ingram Micro Inc. to The
First National Bank of Chicago, as Trustee, the undersigned, in accordance with
Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby consents
that the reports of examinations of the undersigned, made by Federal or State
authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ SANDRA L. CARUBA
-------------------------------
Sandra L. Caruba
Vice President
4
<PAGE> 5
EXHIBIT 7
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/98
ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands C400
-------------- --------------------------
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A): ................................................................ RCFD
----
a. Noninterest-bearing balances and currency and coin(1) ............... 0081 4,141,168 1.a
b. Interest-bearing balances(2) ........................................ 0071 5,142,787 1.b
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A) ........... 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) ........ 1773 7,819,811 2.b
3. Federal funds sold and securities purchased under agreements
to resell .............................................................. 1350 5,619,157 3.
4. Loans and lease financing receivables: RCFD
----
a. Loans and leases, net of unearned income (from Schedule RC-C) ....... 2122 26,140,376 4.a
b. LESS: Allowance for loan and lease losses ........................... 3123 417,371 4.b
c. LESS: Allocated transfer risk reserve ............................... 3128 0 4.c
RCFD
d. Loans and leases, net of unearned income, allowance, and reserve ----
(item 4.a minus 4.b and 4.c) ....................................... 2125 25,723,005 4.d
5. Trading assets (from Schedule RD-D) ................................... 3545 5,795,159 5.
6. Premises and fixed assets (including capitalized leases) ............... 2145 757,033 6.
7. Other real estate owned (from Schedule RC-M) ........................... 2150 6,547 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M) ......................................... 2130 135,327 8.
9. Customers' liability to this bank on acceptances outstanding ........... 2155 512,763 9.
10. Intangible assets (from Schedule RC-M) ................................ 2143 261,456 10.
11. Other assets (from Schedule RC-F) ..................................... 2160 2,223,495 11.
12. Total assets (sum of items 1 through 11) .............................. 2170 58,137,708 12.
</TABLE>
- ---------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
5
<PAGE> 6
Legal Title of Bank: The First National Bank of Chicago Call Date: 03/31/98
ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
Schedule RC-Continued
<TABLE>
<CAPTION>
Dollar Amounts in
Thousands RCON
----------------- ----
<S> <C> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part 1) ...................................... 2200 21,551,932 13.a
(1) Noninterest-bearing(1) .................................. 6631 9,361,049 13.a
(2) Interest-bearing ........................................ 6636 12,190,883 13.a
RCFN
----
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E, part II) ............................... 2200 14,511,110 13.b
(1) Noninterest bearing ..................................... 6631 604,859 13.b
(2) Interest-bearing ........................................ 6636 13,906,251 13.b
14. Federal funds purchased and securities sold under agreements
to repurchase: ................................................. RCFD 2800 3,887,022 14
15. a. Demand notes issued to the U.S. Treasury .................... RCON 2840 63,092 15.a
b. Trading Liabilities(from Sechedule RC-D) .................... RCFD 3548 5,918,194 15.b
16. Other borrowed money: RCFD
----
a. With original maturity of one year or less .................. 2332 3,134,696 16.a
b. With original maturity of more than one year ............... A547 381,681 16.b
c. With original maturity of more than three years ............. A548 326,551 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding ........ 2920 512,763 18.
19. Subordinated notes and debentures .............................. 3200 2,000,000 19.
20. Other liabilities (from Schedule RC-G) ......................... 2930 1,163,747 20.
21. Total liabilities (sum of items 13 through 20) ................. 2948 53,450,788 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus .................. 3838 0 23.
24. Common stock ................................................... 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock) ....... 3839 3,107,585 25.
26. a. Undivided profits and capital reserves ...................... 3632 1,359,598 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities .................................................. 8434 18,975 26.b
27. Cumulative foreign currency translation adjustments ............ 3284 (96) 27.
28. Total equity capital (sum of items 23 through 27) .............. 3210 4,686,920 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28) .......................... 3300 58,137,708 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed
for the bank by independent external auditors as of any date during
1996..................RCFD 6724 ................... [2]
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which
submits a report on the consolidated holding company 6 = Compilation of the bank's financial statements by external
(but not on the bank separately) auditors
3 = Directors' examination of the bank conducted in 7 = Other audit procedures (Excluding tax preparation work)
accordance with generally accepted auditing standards
by a certified public accounting firm (may be 8 = No external audit work
required by state chartering authority)
</TABLE>
- ------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
6
